The weekend deal for the sale of Ford Motors’ Volvo brand to Chinese company Geely is yet another sign that the balance of global economic power is shifting away from the West and towards Asia.

Illustration: Jayachandran / Mint

Volvo gives Geely access to a luxury brand name and new technology, which it hopes to strengthen with low-cost manufacturing in China. The parallels with what Tata Motors is doing with its Jaguar Land Rover unit are striking.

Such deals between Asian multinationals and Western firms will grow in the coming years, but equally interesting are deals between companies from emerging markets. The proposed takeover of the African assets of Kuwaiti telecom company Zain by Bharti Airtel is perhaps the best known example. The other is the recent acquisition of Singapore hospital chain Parkway by Fortis Healthcare.

Such South-South investment is already a growing component of the global foreign direct investment (FDI) story. There are three main drivers of FDI from one emerging economy to another. First, the rush for resources in places such as Africa has led to a scramble for deals by Asian governments and public sector natural resource companies. Second, there have been synergistic mergers and acquisitions between two companies in emerging economies. Third, some emerging market multinationals are trying to export their business models to other countries with characteristics and income levels that are similar to those of their home countries.

The Bharti-Zain deal will be a clear example of the third type. Bharti has more or less created a unique business model—with low costs driving its famous minutes factory— that could be profitably transplanted to Africa, though that is yet not a proven conclusion. The Fortis-Parkway deal is a synergistic marriage between two similar companies in high-growth markets.

Even as the developed countries struggle to come to terms with the bursting of their asset bubbles and the painful recession that has ensued, the most juicy markets in terms of growth and profitability right now are those in Asia, Africa and Latin America. Emerging multinationals can have immense competitive advantage in these markets because they already know how to negotiate through the bureaucratic maze in these countries, get approvals from corrupt government departments and deliver products and services that low-income consumers can afford to buy.

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