The story of the china's development in the past 20 years has been nothing but phenomenal. With comapritive advantages of cheap labour and a 150 million strong middle class providing the necessary market, china was able to attract huge amounts of investments from the Industrial gaints of the western world. Inspite of being a late entrant into the race another rising Economic powerhouse in Asia, India, too had a fair amount of success in attracting Foreign Direct Investment(FDI) over a span of Ten years starting from 1990-92 when India opened it's gates for FDI in various sectors. This article is a comparison between the two nations which, have the potential and the necessary resources to cajole the framework in which the global market operates.
The 19th century undoubtedly belonged to the western world. With the rapid progress in technology, sectors like manufacturing became more productive. This led to the rise of comapnies like General motors, Ford etc... which gradually became the giants of the industry. However,the rising costs of labour and costs of other resources in the western countries forced these companies to look at other alternative territories that are rich in cheap labour and resources, thus came the term Global Companies and GLOBALIZATION. Countries in the east especially china and India accounting for 2/3 of the total world population provided these companies the ideal base to relocate their operations.
China opened its economy in the late 70s and the early 80s while India was able to do so only in the 90s (Communism Vs Democracy). This led to the establishment of huge manufacturing facilities in china by the fore mentioned companies and the others followed their suit. Industries like automotives, Textile, Leather have registered high CAGRs(compounded annual growth rate) in the past ten years in china.SEZs ( special Economic Zones) with attractive dollops like evasion of tax and other costs, were setup and Infrastructure was given the highest priority. Highways, Express ways, Bullet trains along with loads of other facilities like hospitals, shopping malls, Schools were built which attracted the foreign companies to put their money in the Dragon's basket. Soon most of the manufacturing has shifted to china and it got the sobriquet "The Factory Of the World".
While much of china's development and progress can be attributed to the manufacturing sector which requires cheap and unskilled labour force, India's success ( though less in comaprison to china) can be attributed to the semi skilled or high skilled sectors of IT, BPO and Pharmaceuticals. With huge pool of English speaking labour force and a democratic environment supported by a good legal setup(better than chinese communism) has prompted the western investors to put their money in India. Software Goliaths like IBM, Microsoft, Dell found India to be the ideal place for their BPO and IT Development business. The progress though is not only restricted to IT, Pharmaceuticals has also had it's share of growth. Comapnies like Ranbaxy, Cipla have made their mark in the Western World and have setup their operations over there.
Inspite of the much hyped Globalization taking place in both the countries it should be said that the fruits have not been reaped fully. The development in both the countries has been restricted only to a few cities. The likes of Shanghai and Beijing in china and Delhi, Mumbai and Bangalore in India are the few cities where development has taken place. While the lack of a proper democratic setup along with a rigid legal system to protect the investments, a poor banking sector(gave away NPLs of 133bn$) are a major hitch for china, corruption and lack of proper infrastructure are proving to be the road blocks on India's path. Taking into consideration the fact that these nations are very young in the internatonal markets these problems very soon may fade into oblivion ( though china's case is doubtful).
On the Whole The rise of the Indian tiger and the Chinese Dragon have forced the world to sit up and take a look towards Asia. The global companies have realised the importance of India and China in their plans and now it is not a quetion of India or China but it is both India and China and making most of the synergies that are existing between them. As The great French Conquerer Naploean Bonaparte once quoted "Let China Sleep because when she awakes she will shake the world" he probably would have forgotten India in this quote but we can say the tremors from asia are already bieng felt all across the world.... are we in for an Earthquake ?? only time can answer.
Reference : Business Outlook (Special Issue, 5th june 2006)
The 19th century undoubtedly belonged to the western world. With the rapid progress in technology, sectors like manufacturing became more productive. This led to the rise of comapnies like General motors, Ford etc... which gradually became the giants of the industry. However,the rising costs of labour and costs of other resources in the western countries forced these companies to look at other alternative territories that are rich in cheap labour and resources, thus came the term Global Companies and GLOBALIZATION. Countries in the east especially china and India accounting for 2/3 of the total world population provided these companies the ideal base to relocate their operations.
China opened its economy in the late 70s and the early 80s while India was able to do so only in the 90s (Communism Vs Democracy). This led to the establishment of huge manufacturing facilities in china by the fore mentioned companies and the others followed their suit. Industries like automotives, Textile, Leather have registered high CAGRs(compounded annual growth rate) in the past ten years in china.SEZs ( special Economic Zones) with attractive dollops like evasion of tax and other costs, were setup and Infrastructure was given the highest priority. Highways, Express ways, Bullet trains along with loads of other facilities like hospitals, shopping malls, Schools were built which attracted the foreign companies to put their money in the Dragon's basket. Soon most of the manufacturing has shifted to china and it got the sobriquet "The Factory Of the World".
While much of china's development and progress can be attributed to the manufacturing sector which requires cheap and unskilled labour force, India's success ( though less in comaprison to china) can be attributed to the semi skilled or high skilled sectors of IT, BPO and Pharmaceuticals. With huge pool of English speaking labour force and a democratic environment supported by a good legal setup(better than chinese communism) has prompted the western investors to put their money in India. Software Goliaths like IBM, Microsoft, Dell found India to be the ideal place for their BPO and IT Development business. The progress though is not only restricted to IT, Pharmaceuticals has also had it's share of growth. Comapnies like Ranbaxy, Cipla have made their mark in the Western World and have setup their operations over there.
Inspite of the much hyped Globalization taking place in both the countries it should be said that the fruits have not been reaped fully. The development in both the countries has been restricted only to a few cities. The likes of Shanghai and Beijing in china and Delhi, Mumbai and Bangalore in India are the few cities where development has taken place. While the lack of a proper democratic setup along with a rigid legal system to protect the investments, a poor banking sector(gave away NPLs of 133bn$) are a major hitch for china, corruption and lack of proper infrastructure are proving to be the road blocks on India's path. Taking into consideration the fact that these nations are very young in the internatonal markets these problems very soon may fade into oblivion ( though china's case is doubtful).
On the Whole The rise of the Indian tiger and the Chinese Dragon have forced the world to sit up and take a look towards Asia. The global companies have realised the importance of India and China in their plans and now it is not a quetion of India or China but it is both India and China and making most of the synergies that are existing between them. As The great French Conquerer Naploean Bonaparte once quoted "Let China Sleep because when she awakes she will shake the world" he probably would have forgotten India in this quote but we can say the tremors from asia are already bieng felt all across the world.... are we in for an Earthquake ?? only time can answer.
Reference : Business Outlook (Special Issue, 5th june 2006)
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