As global economic growth begins to pick up, there are decidedly two types of trains on the move – the steam locomotive (most of the world’s developed economies) and the bullet train (high-growth emerging markets).  While it’s not surprising that European, American and Japanese firms laid low during the crisis, many continue to be hampered by uncertainty in their own home markets.  And while European investors are still sending money to their existing affiliates in the United States, CEOs from the ‘bullet-train markets’ have also decided to go global.

Ever since Jim O’Neill of Goldman Sachs coined the term ‘BRICs’ in 2001, economists and policy makers have looked to these countries (Brazil, Russia, India and China) as drivers of emerging market growth.  I’ve decided to include Mexico in this club given its proximity to the US and estimates that (along with the US) the BRICs plus Mexico will be the 6 most dominate economies by 2050.

Over the past decade, exports from these markets have surged and foreign direct investment from the United States and other developed economies have helped fuel their growth.  But this is not another discussion about trade imbalances or outsourcing.  Instead, it briefly explores the question:  to what extent are companies from these countries investing abroad, especially in the United States?

A quick glance at the FDI numbers seems to tell us that the answer is ‘not much’.  But dig a little deeper and a growing trend of outward FDI from the BRIC + M emerges.

It might surprise some to know that Mexican activity in the US market is much more sophisticated than migrant labor, neighborhood restaurants and narcotics.  In fact, Mexico is the largest Latin American investor in the United States and the 14^th largest foreign investor overall.   Mexican FDI in the United States amounts to a little over US$11 billion (stock as of 2009).  Since 2005, Mexican FDI in the United States has risen on average about 34% each year.  In total, from 2005 – 2009 it rose 216%.  Mexican FDI is concentrated in the manufacturing, wholesale trade and banking sectors with Mexican companies employing about 60,000 people across the US.  A few examples are Grupo Lala (Mexico’s largest Dairy company), Grupo Bimbo (Latin America’s largest baked goods company), Cemex (world’s 3rd largest cement maker), and America Movil (the company behind the contract cell phones such as TracFone, Straight Talk and Net10).

Of the BRICs, India spends the most on US assets with about US$4.4 billion in FDI stock (2009) – a 60% increase from 2007.  Indian companies tend to like investing in the IT, professional, scientific and technical service sectors.  High-profile Indian companies in the US include Apollo Health Street, the global IT services provider Birlasoft, Infotech Enterprises America, and the multinational conglomerate Esser America.

Brazil is another country to watch.  Despite decreasing outward investment from 2007 to 2008, Brazilian CEOs went on a bargain hunt in 2009 – 2010.  Most of Brazil’s FDI in the United States is in the manufacturing and financial / insurance sectors.  Recent purchases have focused on the meatpacking, oil and chemical industries.  With its purchase of Keystone Foods, the Brazilian meatpacker Marfrig became the main supplier to food chains such as Subway and McDonalds and Brazil’s oil company, Petrobras, bought part of Devon Energy’s stake in the Gulf of Mexico’s Cascade field.  Banco do Brasil also has plans to expand its 3 retail-banking operations to 15 more branches around the US.

Chinese and Russian FDI in the US is perhaps more complicated due to a lack of clear data and political sensitivities surrounding certain types of investments.  Official estimates of Chinese FDI in the US put it at around US$791 million (stock as of 2009).  Regardless of the numbers, Chinese companies are on the move, particularly in resource-rich countries such as Kazakhstan and South Africa.  While the US and other developed economies only saw a small percentage of the record US$43.3 billion Chinese companies invested overseas in 2009, there appears to be an emerging shift in focus to opportunities in the advanced technologies, brands and other assets that would allow Chinese enterprises to ascend the value chain.  An estimated US$2.8 billion in greenfield investment was announced in 2010 including a steel pipe mill in Texas and a solar power assembly plant in Arizona.  Chinese M&A activity includes Beijing Automotive Industry Company’s purchase of General Motor’s Saab car designs and technology, Jingjiang International Hotels Group joint venture with Thayer Lodging Group to purchase Interstate Hotels and Resorts, and China Investment Corporation’s (CIC) agreement to acquire a 15% interest in AES Corporation.  CIC’s deal with AES was one of the largest energy deals in 2009 and underscores the growing role of sovereign wealth funds in FDI ventures (CIC is one of the world’s largest SWFs).

The US relationship with Russia is currently undergoing, according to Vice President Biden, a “commercial reset”.  Russian FDI stock in the US only amounts to about US$757 million – mostly in the steel industry.  Russia also was hit hardest of all the BRIC economies by the global recession and is only now starting to get its sea legs back.  With renewed economic confidence and a successful push of the “reset” button, Russia could start to increasingly look outside its CIS comfort zone.  In fact, some evidence points to renewed interest by Russian oil companies in investing in US sectors such as shale gas.

As the two-track trains continue to pick up speed, more and more CEOs from BRIC+M’s will be watching developments in the US and deciding whether the US market is the right place for them.  Stay-tuned for the next “Global Perspective” which will look at how these CEOs decide where to set up business.