Globalisation and China Vs. India

Deng Xiaoping unshackled the Chinese economy Thereafter China’s transitory reforms towards building a Capitalist order and its global economic boom sparked a new wave of ‘China fever’ for the Multinationals (Engardio, 2007, p. VII)

1. Indian economy for a long time remained suffocated under the rules and regulations and bureaucratic clutches A time close economy model.

2. Today, China and India are recognised worldwide as emerging economic superpowers of the new century.

3. China claimed an average annual growth rate of around 9.5% over the last decades.

4. It the global trade scenario today China has sun paned Japan

5. Since 1995, Indian economic growth has been around 6% per annum on average.

6. China has achieved remarkably well in the manufacturing sector.

7. China’s share of world trade in manufactured products has jumped from 2% in 1990 to 11.5% today.

8. India has excelled and exported well in software design, and back-office service on the global platform.

9. The global business leaders and policy-rulers should understand the comparative advantage and internal as well international dynamics of China as well as India which have came up as formidable players in prominent sectors such as, low-cost manufacturing, high-tech industries and services.

10. China and India have radically divergent – economic models and business environment in today’s global arena.

11. China economic models is akin to the mobilisation of huge amount of capital.

12. India suffers due to poor infrastructural development, bureaucratic controls, conservative industries, trade and foreign investment policies.

13. FDI inflows in India around USD 4 billion per annum, while that of China is over USD 60 billion.

14. China has built-up modern, huge-investment oriented plants to produce petrochemical, digital displays, silicon wafers, automobiles, steel, ship-building, and many high-tech products.

15. China and India are regarded as emerging mega consumer markets.

16. China’s PCI is 3 times more than that of India. There are 3,00,000 millionaires in China.

17. Chinese buyers are ready to pay high prices for quality products.

18. Indian buyers demand quality products but want them to be cheaper as well.

19. 50% of the all garments in the US imports are made in China.

20. World’s economy is flooded by the Chinese toys, shoes, watches and tools.

21. China has also started producing high-end manufacturing goods on a large-scale.

22. Chinese production costs are 30-50% lower than those in the US

23. China’s low-cost labour pool include first-rate engineers, managers, office staff and factory workers are well as cargo hard less.

24. China’s economic integration with Hong Kong and Taiwan pose an added advantage. Taiwan controls 70% of China’s electronic items exports HK also mangers export-trade of all Chinese product from clothes, Shoes to Jewellerie on a large scale.

25. China serves as the world’s biggest export base. It is also a big domestic market for myriad of industrial goods.

26. China is becoming a global drives of innovation and technology trends in an array of industries (Engardio 2007, p. 5).

27. India is fearing of a global base of Software and integration of multimedia technologies.

28. India’s global growth take-off is based on exports of service sector rather than manufacturing.

29. Indian Knowledge workers and exports are in great demand in the global economy.

30. Indian companies are becoming vital links in innovation ladders from autos to pharmaceuticals.

31. India possesses a competitive strength in the production of medical equipment, power generators and precision auto parts.

32. India’s industrial development and growth is retarded by the bottlenecks, such as, poor infrastructure, red tapism of bureaucracy and conservative labour and industrial policy.

33. China’s business culture is non-transparent and government ownership and controls..

34. China Inc. is handicapped due to lack of depth in management and poor governance.

35. India lacks good road, power grid and air-ports.

36. Indian Business has learned to manage well with scarcity and constraints.

37. India also claimed to have top-ranked institution in management, such as IIM.

38. Indian entrepreneurs are forced to devise creative business models for high quality products at low-prices, i.e., at the bottom of the Pyramid.

39. Socially China is facing a problem of democratic time bomb with its dire economic repercussion. By 2015, its working population will decrease in number.

40. To exploit full economic potential, the country should manage well the social, financial and political challenges.

41. In the new world economic order, the balance of economic power will tend to shift to the east from west, when China and India evolve and collaborate rather than compete. If this happens CHINDIA would be the super economic power against the U.S the Crux a of the matter is both these giant economies, should complement each other’s strength through collaboration and competition. Both nations have ample untapped business resources: 6 Ms. A developmental focus is needed with a common and integrated business resources and planning approach (BRP). Only a cardinal political relations and understanding for mutual benefit can help in this regard.

42. China’s capital output ratio (COR) is lower than that of India due to its lower capital productivity, though, labour-cost is cheap. China’s ROI is low due to huge industrial power.

43. China is capital-efficient in comparison to India.

44. Indian companies have higher return on equity and invested capital, it is estimated to be 16.7% for the Indian companies and 12.8% in the case of China.

45. India can increase employment-opportunities by providing export manufacturing.

46. It will take a larger time for India to develop highways, power plants and airports and overcome infrastructure bottlenecks.

47. Motorola appreciates the value of leveraging both nations to low-cost and get competitive advantage of both its RCD centre in Bengaluru for the software and Hardware is assembled in China.

48. Chindia should be a source of great opportunity rather than threat.

49. China and India will have to tackle the following challenges:

i. Protecting Environment

ii. Maintaining Political Balancing and Peace.

iii. Strengthening of Financial System.

iv. Public Health Care.

v. Avoid War. Indo-Pak China-Taiwan clash.

50. Keystone-India a Consultancy firm argued that India can overtake China in future, because of:

i. Demographic

ii. Capital efficiency

iii. Investment Growth

iv. Indigenous than FDI dependency

v. New Indian entrepreneurs coming up in family business culture and ready to take risk as they are trained and educated

vi. Stronger management compared to China.

vii. Higher Productivity.

viii. Degree of openness increased from 15% of GDP in 1991 to 26% in 2007.

ix. Surge in manufacturing sector. Currently of course, it is hard for India to race with China. But, in future, India’s may hence, plus points in terms of work force, investment and productivity.