General Motors being the world’s third largest automobile US based MNC company has made hash of its business in India till, finally has to pull its plug.Enough to say to how little it matters.The fact is General Motors never made a difference to India and in turn India contributed little to the auto-maker’s fortune.
It came in 1996 about 21 years, long before Nissan and Renault still could’nt make a mark in the Indian Market neither among the customers.General Motors on Thursday said that it will focus on its growing vehicle export manufacturing operations and cease sales in the domestic market by the end of this year.
In the past, many MNCs were pushed into global expansion by high taxation rates as well as labour costs in the US. Adding to that were the incentives newly liberalizing countries were willing to hand out. Not any more as US firms are increasingly being incentivized to stay at home. According to Good Jobs First, a Washington D.C.-based non-profit that tracks federal, state and local economic development subsidies, a few years ago, Washington state awarded Boeing Co. the largest corporate tax break any state had given any corporation—a massive $8.7 billion handout aimed at encouraging Boeing “to maintain and grow its workforce within the state”. That’s the kind of red carpet India isn’t willing to lay out for MNCs.
It isn’t just India. An equal number of multinationals have found China a bridge too far. McDonald’s spent 26 years in the country before selling off 80% of its operations this January to a consortium led by China’s CITIC and the private equity firm Carlyle. Mattel shut down its ambitious 36,000 square feet store in Shanghai within two years of opening it.
In the spirit of Donald Trump’s America for Americans, older US MNCs are in retreat while a new generation of them, companies like Google and Facebook are now laying their markers. So far though, even this latter set has little to show by way of returns on their investments. Could it be that the cult of multinationalism, the favourite prescription of every consulting firm over the last 30 years, isn’t quite what it has been cracked up to be?
After all, what’s the point of Coca Cola when the very US triumphalism that it represented is itself under threat!