This paper has focused on foreign direct investment（FDI）from emerging economies and mergers & acquisitions（M&A）in recent years, and compared the case of China with that of India. Although many previous studies concerning FDI have showed that developing countries had been the acceptance countries of FDI for long time, some emerging countries have also been the investment countries since 2000．Today, MNEs（multinational enterprises）from these countries have played an important role in FDI outflow and cross border M&A in the world.
Both Chinese enterprises and Indian ones have the business strategy for their development making use of M&A and tax haven. Otherwise, there are apparently the different points between China and India. Chinese enterprises including private enterprises have got the financial support by Government through the domestic funds, finance companies, and in addition to such support, they have also used the finance support from the foreign investment banks as M&A advisor.
Indian enterprises have also used the finance from the commercial banks and the investment banks. But there are a few on the governmental support and domestic banks, then they have to depend on external commercial borrowing. The most different point between China and India on the performance of FDI outflow is the structure of macro economy on external sector. Basically, Chinese economy is export oriented, and has gotten huge trade surplus. Therefore, it has often faced on economic overheating such as high inflation rate, money over plus and overinvestment in domestic market. As the result, Chinese Government had to promote FDI outflow.
FDI from China has partly come back to China through tax haven. Therefore, this investment trend may partly offset the effects of the FDI promotion policy. Otherwise, Indian MNEs can’t expect the financial support from Indian Government because India has not gotten trade surplus after Independence. But Indian enterprises has showed active attitude in pharmaceutical sector, IT software and automotive industries on cross border M&A after the policy makers have adopted the deregulation on FDI outflow and cross border M&A in 2005．In other words, the cross border M&A by Chinese enterprises have been more sustainable than those by India’s enterprises, and Indian MNEs has been influenced on the change of the world economic circumstance and the financial market. Neverthless, their cross border M&A have been not prudent, but also positive to expand the overseas operation.