The rise of the Asian backbone
April 15, 2014

img-chinasworldwidereachjanuary20141500pxinfographic_101104395042In a small yet significant trend, the worlds companies are gradually being run by Indian executives and Chinese investors.

Over the past few months it has been observed by Inchin Closer, that a large number of multinational companies have elected Indian CEO’s to their helm, while being fueled by funds from the Mainland. In a story corroborated with by the Wall Street Journal, there are more Indians heading global Fortune 500 companies than Chinese while there is more money invested in these Fortune 500 companies either directly or indirectly from China than India.

As the world’s axis maintains its Eastward tilt, companies are beginning to work with a more Asian bent in operations, catering more to Asian consumer tastes and focusing increasingly on services, a trait well ingrained in Asia.

According to the WSJ article, Indian’s head quite a few global companies. The list includes the most recent appointment of 47 year old, Mr. Nadella to Microsoft, Indra Nooyi, CEO of PepsiCo Inc., Anshu Jain, Co-CEO of Deutsche Bank AG,  Ajay Banga, CEO of MasterCard Inc,  Shantanu Narayen, CEO of Adobe Systems, Nikesh Arora, chief business officer at Google Inc., Ajay Waghray, chief information officer of Verizon Enterprise Solutions, Ajit Jain at Berkshire Hathaway Inc., Harmit Singh at Levi Strauss & Co. and Padmasree Warrior at Cisco Systems Inc.

The reason analysts attribute is multi-fold. All the above mentioned CEO’s followed the trend of studying in elite US universities and gaining valuable industry experience internationally – a trend followed by many urban Indian youth today. Secondly, the lack of talent recognition, opportunity to shine and growth potential back home in India kept them abroad, which consequently allowed them to scale the executive ladder. While salaries abroad were definitely a big draw, the opportunity cost and ability to maintain a higher standard of living were also large incentives, which kept these executives outside India. Conversely, jobs with a high aspirational value and salaries to match, kept Chinese executives at home.

According to Time Magazine, just as the Japanese bought large tracts of American enterprises in the 1980’s the Chinese are guzzling into multinational companies now. China last year overtook the U.S. as the world’s biggest trading nation. And increasingly, like the Japanese, Chinese firms are morphing themselves form manufacturers and exporters into major global investors. According to data from the American Enterprise Institute and Heritage Foundation, Chinese outward investment reached US$85 billion in 2013 and is likely to reach US$100 billion annually by 2015, a dramatic increase from a mere US$10 billion in 2005. The U.S. has been the No.1 destination, luring more than US$14 billion of investment last year alone. Energy, metals, and real estate are the prime targets.

Analysts attribute the rise in investments are two fold, one because of the government and the second in spite of it. While President Xi Jinping,  has been promoting Chinese investors to sink their money internationally to distribute risk and earn rich dividends, his policy of weeding out corruption has also led to many smaller yet significant investors scurrying their hard earned money aboard lest the government sniff it out. As a result, as both these trends increase, Chinese outward investments  are expected to rise 10 fold from 2005 – 2015.

While these investments not only allow China to maneuver international foreign policy, it also allows her to keep a strong tab on America with which she shares a love – hate relationship.

As a result, of Asia’s high influence in both capital and talent within multinational companies, the shift to Asian working philosophies, efficiencies and ethics will dominate operations, finances and marketing. Companies will be run differently, people will feel different about enterprises and investors will change their portfolios. The switch will be an interesting trend to watch.

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