Introduction
There is a rising trend outward FDI (OFDI) from emerging market, mostly dominated by countries such as China and India (Gao, Liu, & Zhou, 2013). China’s outward FDI increased from $27 billion in the year 2000 to $230 billion by the end of the year 2009. Since the late 1990s, India’s OFDI has increased to $77 billion by the end of the year 2009 (Buckley, Forsans, & Munjal, 2012). Porter’s national competitive advantage emphasizes productivity growth as the focus of success in international trade. John Dunning went on to explain in detail the drivers of OFDI using his eclectic theory of ownership, location, and internalization advantage including four major motives: market-seeking, resource-seeking, efficiency-seeking and strategic asset seeking (Gao, Liu, & Zhou, 2013).

Market seeking
Firms aim to capitalise on ownership of well-established brands, marketing skills and overseas distribution networks by seeking large foreign markets (Buckley, Forsans, & Munjal, 2012). Since China’s WTO accession, because of over-capacity in some sectors, Chinese manufacturers have started to invest in developed countries as well as in developing countries. Shanghai Automobile Industry Corp. bought over 50 percent stake in Korean Ssangyong Motor Co. in 2004, and TCL acquired the colour TV manufacturing from French Thomson in 2004 in order to expand their markets and achieve economies of scale. CDC Software, a wholly owned subsidiary of Chinese CDC Corporation, acquired American Catalyst International to seek global supply chain execution solutions services. In the same year, China Mobile Communications Corp. purchased 88.9 percent stake in Pakistani wireless operator Paktel from Millicom International cellular in 2007 for the local market and as a trial for further internationalization (Rasiah, Gammeltoft, & Yang, 2010).
In Indian OFDI, the market seeking motive is also prominent. Before 1990, Indian MNCs located mainly in developing countries in low and medium technology manufacturing sectors, and utilised their ownership advantages of low labour cost and natural resources such as iron, wood, and paper. After 1991, service sectors emerged as another important outward investor and developed countries attracted Indian OFDI. In particular, after 2003, Indian acquisitions rise tremendously to gain market access into developed countries. They are dominated by IT, telecommunications, and manufacturing sectors (pharmaceuticals, automotive, steel, chemicals, and consumer goods) (Bhaumik, Driffield, & Pal, 2010). A crucial factor behind this trend is the increased level of technology that can be utilised and adopted in international markets. In addition, the limited size of the domestic market is another reason for Indian companies to venture out in order to pursue sales and global competitiveness. Examples include Tata Steel’s wholly acquisition of British Corus Steel in 2007 (Rasiah, Gammeltoft, & Yang, 2010).

Strategic-assets seeking
Firms aim at acquiring strategic assets such as brands, high technology and scarce skills. Foreign acquisitions by Indian firms have been directed at the acquisition of knowledge and technology. Many software companies from India with ownership advantages might have moved abroad to acquire further knowledge, skill and technology that were not available at home. There are various examples of acquisitions in knowledge-based industries where acquisitions were made to access foreign technology and know-how, such as the acquisition of Phoenix Global Solutions (I) Pvt Ltd, an application services provider by Tata Consultancy Services Ltd (Buckley, Forsans, & Munjal, 2012).
Lenovo, a Chinese multinational technology company purchased IBM’s computer division for US$1.75 billion in 2005. In 2007, Chinese Ufida Software Company set up a mobile e-commerce company in Japan called Fidatone jointly with Japan-based telecom company NTT DoCoMo. Ufida held two thirds of Fidatone shares targeted at increasing its competitiveness in mobile e-commerce through obtaining DoCoMo’s technology (Rasiah, Gammeltoft, & Yang, 2010).
Since 1992, Indian OFDI has pursued technology as an important target in developed countries. Indian MNCs have also been active in takeovers in Europe. For example, Lupin entered into an agreement with Belgium’s Artifex Finance to acquire a 51 percent majority stake in Dafra Pharma giving the Indian firm access to 25 African countries and Dr Reddy’s bought Germany’s Betapharm and Aurobindo Pharma acquired UK generics firm Milpharma in 2006 (Rasiah, Gammeltoft, & Yang, 2010).
A variety of foreign-owned assets, both tangible and intangible, are of potential interest to Chinese enterprise. In the past, the principal intangible resource sought by Chinese MNCs was information, especially about external economic and trade conditions. Chinese MNCs have been obligated to assimilate and disseminate experience and knowledge of foreign management practices to advance the international competitiveness of Chinese enterprises. However, Chinese MNCs are becoming less interested in market information and operations-related knowledge and instead are looking to tap foreign knowledge of technology-intensive production and local markets. To achieve the previously specified goal, Chinese enterprise are now establishing research-oriented affiliates in high-income countries to assist in the development of high technology, knowledge intensive products manufactured in China and exported via sales affiliate.
Intangible asset increasingly sought by Chinese MNCs relates to brands and complementary assets (see Table). While some companies, such as Lenovo Corporation and Haier, have extended their key brands and trade names into foreign markets themselves, with some success, others have found it quicker and more effective to simply acquire established western brands and associated marketing channel.
Table: International Brand Acquisition by Chinese Companies - Some Successes and Attempts

Source: CIBUL China M&A database
By associating themselves with a top brand name, Chinese and Indian companies can quickly raise their international profile as well as gain instant access to new markets. When Tata Steel acquired NatSteel Asia in 2005, Mr Ratan Tasta, chairman of Tata Steel, said that “ the acquisition of the steel business of NatSteel Asia is an important step in Tata Steel’s plans to build a global business. NatSteel’s business provides Tata Steel access to key Asian steel markets including China.
Natural resource seeking
Firms aim at controlling and accessing natural resources available in a host economy. Internalisation theory asserts that the greater the net benefits of internalizing cross-border intermediate product markets, the more likely a firm will prefer to engage in foreign production itself rather than license the right to do so. This strategic move to acquire natural resources is generally made by firms operating in the manufacturing sector. India is prominently a service driven economy, yet there are important instances where Indian MNCs have secured access to inputs to sustain their growth. For example, acquisition of Russia’s Sakhalin and Sudan’s Greater Nile by ONGC, USA’s General Chemicals by Tata Chemicals in 2008 and Corus by Tata Steel in 2006 (Buckley, Forsans, & Munjal, 2012).
The next area we examine is access to natural resources. This has been an important conventional factor explaining FDI. Moreover, China and India are the two biggest and fastest developing countries in the world. The need to secure access to overseas natural resources, such as energy and raw materials, is becoming increasingly important (Duanmu & Guney, 2009). The importance of accessing overseas natural resources has also attracted government attention in China. Locational advantage refers to the alternative countries or regions, for undertaking the value adding activities of MNCs (Buckley, Cross, Tan, Xin, & Voss, 2008). The more the immobile, natural or created resources, which firms need to use for their own competitive advantages, the more firms will choose to augment exploit specific advantages from other foreign countries by engaging in FDI. Hence, Chinese authorities have been aggressively courting the governments of host countries by strengthening bilateral trade relations, awarding aid and providing much-needed transport and communications infrastructure to enable Chinese firms to access strategically important raw materials. Securing natural resources is also becoming an important driver for Indian outward FDI.
Soaring commodity prices since 2005 has driven the rapidly growing economies of China and India aggressively to seek supplies from Central Asia and Africa. China’s expansion into extracting petroleum and natural gas began to grow strongly from 1993 when it began to experience a net trade deficit in these commodities. India’s rapid growth since 1991 has generated the same growth effects with growing demand-supply deficits in oil and gas. Both governments have been at the forefront supporting the state-owned firms’ efforts to seek new sources of oil and gas supplies from Africa and Asia. Whereas the developed countries supported their private oil investments abroad, Chinese and Indian oil and gas firms investing abroad are all state owned. China’s OFDI was largely in natural resources in Southeast Asia in the 1990s. The accumulation of foreign reserves from the late 1990s helped China to aggressively pursue natural resources overseas for energy security. Although some products from overseas operations are traded in the global market, they are mainly shipped back to China. Although the volume of natural resource investment is relatively small compared with services, the former is an important element of the government’s economic strategy given China’s limited resources and the need to sustain economic growth. The CEO of China National Offshore Oil Corporation (CNOOC) described its acquisition of the North West Shelf Gas Project in Australia as “a significant step in realizing CNOOC’s strategy of supplying natural gas to the rapidly growing market in China” (Rasiah, Gammeltoft, & Yang, 2010).
Mergers and acquisitions have become popular forms of OFDI for energy MNCs in recent years. Chinese companies acquired Spanish, American, Canadian, and Norwegian companies, amongst others, for their oil and gas fields in Indonesia, Syria, Kazakhstan, and the Middle East. Chinese is an active player in acquiring Western and local companies for minerals and metals in various locations around the globe. Compared with China, India’s MNCs in oil and gas are far fewer. India had limited investment in natural resources abroad, apart from market seeking activities before 1991. For instance, Indian steel producers have expanded abroad to seek markets, scale, and strategic assets. However, the rising demand for steel and other raw materials has resulted in Indian companies increasingly competing for resources overseas. Tata steel has acquired minority share in Carborough Downs coal project in Australia, total ownership of Thai Millenium Steel. Essar Steel acquired part of Minnesota Steel based in the USA. Indian oil companies have also acquired foreign assets through acquisitions. O.N.G.C. Videsh acquired petroleum assets in Brazil, Sudan, Angola, and Russia (Rasiah, Gammeltoft, & Yang, 2010).

Value chain control seeking
OFDI investments were predominantly horizontal, largely replicating similar activities in different countries. However, with time MNCs have increasingly become vertically integrated, i.e. when a company expands its business into areas that are at different points on the same production path, such as when a manufacturer owns its supplier and/or distributor. Both in buyer-driven industries such as apparel, footwear and retail, and in producer-driven industries such as automobiles and telecommunications equipment, the dynamics of coordination and control will influence OFDI.
In February 2006, Beijing Hualian Group, the sixth largest commercial chain retailer of China, acquired Seiyu Singapore, a retail department store operator. The latter is a branch of Japan Seiyu Ltd, a subsidiary of the US retailer giant Wal-Mart. Hualian’s move was targeted at the retailing market in Singapore and from there it hoped to expand to other Southeast Asian countries (Rasiah, Gammeltoft, & Yang, 2010).
Lead firms in buyer- and producer-driven chains invest abroad to reduce costs and increase efficiency across the value chain in R&D, manufacturing and sales. In addition to its widespread distribution, sales and support network, Chinese Lenovo operates research centers in China, USA, and Japan. The company inherited a manufacturing plant in India when buying IBM’s PC division in 2005. In 2007, an additional plant was opened in northern India to serve the growing Indian market while a factory was opened in Mexico in 2008 to supply customers in the Americas (Rasiah, Gammeltoft, & Yang, 2010).

Institutional theory
Although Dunning’s eclectic paradigm includes location advantages of both home and host countries, and these incorporate such variables as government ownership and domestic competition, it focuses on the firm as an economic actor and less on its institutional environment (Wang, Hong, Kafouros, & Boateng, 2012). Some specific regulatory policies introduced by home country governments will encourage firms to engage in overseas expansion if they are supportive (Wang, Hong, Kafouros, & Boateng, 2012). On the other hand, poor institutional and environmental factors in the home country, such as regional protectionism, quota allocations, high tax rates, corruption, regulatory uncertainty, insufficient protection of intellectual property rights and governmental interference, may act as an institutional barrier pushing the firm to move abroad in pursuit of more efficient institutions (Wang, Hong, Kafouros, & Boateng, 2012). Due to regulations constrained, Lakshmi Mittal starts expanding across national borders.

Conclusion
An increasing numbers of Chinese as well as Indian MNCs are using OFDI as a tool to enhance international competitiveness, and become multinationals by acquiring foreign companies, manufacturing facilities and brands (Zhao, 2011). From a managerial standpoint, Cui & Jiang (2012) suggests that firms need to take their political affiliations into account when formulating FDI strategies. Some of the Chinese and Indian firms are now among the world most largest conglomerate company due to their rapid internationalization and growing role in world business. They are firms with global mindset that strive for innovation and achieve common goals using proactive entrepreneurial behavior by optimising risk-taking. (2173 words)

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