Research Project Global Innovation, TU Hamburg-Harburg - Indian Multinationals Buoyant on Germany

Market Size and Technological Prowess Boost Germany’s Attractiveness for Foreign Direct Investments from India -

Hamburg (28.01.2009): Germany has become a above focal point for Indian bunch enterprises (MNEs) in their active following of advance opportunities overseas. In 2008, Indian firms invested an estimated aggregate of $ 2 billion in Germany, up from $ 825 actor in 2007 and $ 850 actor in 2006. Sixteen (16) mergers and accretion (M&A) deals involving Indian firms in Germany were monitored in 2008, up from 7 in 2007 and 11 in 2006. The deals aswell complex a abundant access in the boilerplate accord amount over accomplished few years. A abstraction conducted by the Institute of Technology and Innovation Management (TIM) at Hamburg University of Technology (TUHH) in Germany has now articular “proximity to customers” and “access to technology” as above drivers for this trend.

Of late, Indian firms accept been venturing abroad in a big way. According to official statistics, India’s across FDI banal about quintupled from $ 10 billion in March 2005 to $ 46 billion in March 2008. In contrast, just a decade aback in March 1997 India’s across FDI banal stood at a bare $ 617 million. Rajnish Tiwari, who led the abstraction at TIM/TUHH, estimates the banal of Indian FDI in Germany at over $ 4 billion. With amazing deals like that of Suzlon/REpower, Indian FDI has surpassed Germany’s FDI banal in India clearly appear at $ 2.3 billion. In fact, Indian MNEs – amid May 2004 and June 2007 – were the better individual broker accumulation in Germany from arising countries, as a Deloitte abstraction (2007) suggested. Between 2001 and 2006 Indian MNEs were complex in 32 M&A deals in Germany. In adverse alone 21 M&A deals in this aeon in Germany complex Chinese MNEs.

“Germany has become a key destination for Indian investments”, emphasizes Prof. Cornelius Herstatt, Director of TIM/TUHH, who has been carefully ecology contempo Indo-German business developments. “So far there had not been any austere bookish analysis on Indian investments in Germany, abnormally on its motives, experiences, and application accoutrement on the bounded economy”, says Prof. Herstatt, whose convention has launched a analysis activity alleged “Global Innovation” with a able focus on India. TIM/TUHH is one of the alone few bookish institutions in Germany that appoint in bookish analysis on business and bread-and-butter issues accompanying to India. “German bookish analysis has commonly focused on issues accompanying to language, ability and socio-political themes, as far as India is concerned”, says Prof. Herstatt affirmation the charge for a new focus on Indo-German business context.

The abstraction “The Emergence of Indian Multinationals: An Empirical Study of Motives, Status-quo and Trends of Indian Investments in Germany” was conducted by an all-encompassing abstracts analysis and an empiric analysis of Indian subsidiaries in Germany. The study, apparently the alone empiric abstraction of Indian firms across so far, provides different insights into the motives, operations, experiences, and approaching affairs of Indian firms. The research, agitated out by Rajnish Tiwari and Jayachandran K. Mani, was focused on accumulated investments from firms headquartered in India. The abstraction has articular 123 Indian MNEs and their 167 subsidiaries in Germany, excluding boyhood stakes and captivation companies. The “Indian” firms apply approx. 20 000 full-time advisers in Germany on an anniversary average. Additionally, they accommodate abstruse training to about 1000 apprentices.

All accepted Indian firms in Germany were arrive to participate in the survey. Twenty one (21) firms (17% of the absolute population) alternate in the empiric survey. The respondents belonged to top management. “Proximity to customers” and “access to technology” were most-often cited affidavit for investments in Germany. Selection of investment locations was in abounding instances “accidental” as firms absitively to play it safe and adopted brownfield investment (acquisitions) as their approach of entry. The firms absolutely generally aswell faced cogent challenges in their circadian operations. “Differences in plan culture”, “language problems” and “high operational costs” airish above challenges. Especially IT area firms – with a beyond amount of expatriates – aswell complained about bulky acceptance and work-permit procedures.

The analysis about aswell appear that a lot of Indian firms were accomplishing able-bodied in Germany and had been able to abound both in agreement of turn-over and headcount in contempo years. “Most Indian firms in Germany are absolutely annoyed with the all-embracing progress”, confirms Rajnish Tiwari citation it as a acumen for the flurry of Indian investments in Germany. “India has become a key antecedent of ‘Emerging Market’ FDI in Germany after accepting reflected in the official statistics”, says Tiwari. The alterity in the monitored absolute investments and the official abstracts is explained by the abstraction authors Tiwari and Mani as consistent from the convenance of Indian MNEs application their already accustomed European or added foreign-based subsidiaries for amplification deals in Germany.

The abstraction is optimistic on the angle of Indian investments in Germany in 2009. “The present banking crisis is not traveling to subdue Indian FDI in Germany”, asserts Tiwari and cites the contempo Visiocorp accord to accomplish his point. On 2nd January 2009 Indian auto basic maker, Motherson Sumi Systems Ltd, appear the buy out of Visiocorp (annual turn-over € 700 million) with four subsidiaries in Germany, including: Visiocorp Automotive GmbH (Wolfsburg/Hattorf) and Visiocorp Group Services GmbH (Stuttgart). More afresh on 13th January 2009, India’s IT above Infosys, armed with $1.9 billion in banknote and banknote equivalents, appear that it was analytic for accretion targets in consulting and ERP amplitude in continental Europe.

“Indian MNEs accept just amorphous to ascertain Germany”, summarizes Prof. Herstatt, “there is still a huge beginning abeyant for alternate cooperation”.

For downloading abstraction after-effects visit:
www.global-innovation.net/projects/grd/india/outbound-fdi...

'Research Project Global Innovation' (RPGI) is a activity of the Institute of Technology and Innovation Management (TIM) at Hamburg University of Technology, aswell accepted as Technical University Hamburg-Harburg (TUHH).

The TUHH is one of the youngest universities in Germany as able-bodied as one of the a lot of successful. Between 1982 and today an adorable architectural ensemble was created on the TUHH campus in the south of Hamburg. The campus, with its avant-garde buildings, fits a lot of by itself into the surrounding parkland. With the aggregate of adorableness and action the university has become a battleground in city-planning. For added advice see:
www.tuhh.de/about/

The Instiute for Technology and Innovation Management at the Hamburg University of Technology (TUHH) was founded in 1998 and is headed by Prof. Cornelius Herstatt PhD, MBA. Prof. Herstatt has formed for abounding years in authoritative positions in both Industry and Consulting. Before abutting TUHH, he was teaching at the University of Zurich and St. Gall (Switzerland). The administration is still in the building-up phase, and we abet with a amount of analysis institutes in and alfresco of Germany as able-bodied as with a amount of companies and federal/private institutions. For added advice see:
www.tu-harburg.de/tim/en/index.html

Dipl.-Kfm. Rajnish Tiwari
Research Project Global Innovation
Institute of Technology and Innovation Management
Hamburg University of Technology (TUHH)
Schwarzenbergstr. 95
D-21073 Hamburg, Germany

Tel.: +49 – (0)40 – 428 78 – 3776
Fax: +49 – (0)40 – 428 78 – 2867
E-Mail: tiwari@tuhh.de
www.global-innovation.net
www.tu-harburg.de/tim/index_en.html