Local firms, such as Bharat Forge, have been shedding unskilled labour, investing in technology and building brands and distribution overseas.

ECONOMIST: Manufacturing in India

With no inventory worries, they do not have to navigate entrenched distribution systems in overseas markets.

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Small companies should exploit this freedom, building in-house marketing and distribution and diversifying overseas.

ECONOMIST: Small Japanese companies

The new owners promised to invest in Siwei and expand distribution in China and overseas.

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Through expansion overseas, they aim to gain access to new distribution channels, international managers, brand recognition and technological expertise in global markets.

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If acquiring overseas companies to gain access to technology, marketing and distribution channels in international markets is such an attractive proposition, why has it taken so long for industrial firms in China to venture abroad?

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The principles of substitution states when a several similar or commensurate commodities, goods or services are available, the one with the lowest price will attract the greatest demand and wide distribution which is why many US companies move their manufacturing overseas, lower labor cost.

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