should mncs STOP PAYING RENT OVERSEAS? A Cushman & Wakefield Research Publication
august 2014
INTRODUCTION Global economic integration as an international trend may be an intensely debated subject today, but in a globalized world it makes sense for companies to expand operations beyond borders and capitalize on the substantial cost benefits and revenue gains that arise from operating in emerging markets. It is true that many companies have become cautious about such expansion following the 2008 global economic crisis, especially in the banking, financial services and insurance (BFSI) sectors. Still, investing in emerging markets means cashing in where the growth is. In turn, leading emerging markets are doing their bit to attract foreign investments in a bid to shore up growth. For instance, after having established itself as the number one
global destination for information technology – information technology enabled services (IT-ITES) outsourcing, India now aspires to be a global manufacturing base; it is also opening channels of foreign direct investments (FDI) in sectors such as pharmaceuticals. Meanwhile, China is widening avenues for its insurance sector. For these reasons, global multinational corporations’ (MNCs) investments in highgrowth markets such as India and China are here to stay and are expected only to gain momentum. However, as markets mature, we expect MNCs to modify their investment strategies, particularly how they manage their real estate needs in international markets – an important component of their total costs.