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“Chindia”
Once you have decided to develop a strategy in Asia, which should you choose: China or India? Both countries pursue different political and economic lines, so some companies have decided that instead of choosing, they will set up shop in both countries, which is known as “Chindia.” As it is by no means clear which one will be the winner, or even whether there will be a winner, opting for both countries seems to be a sound strategy in which the risk is shared. India has the language advantage, since many Indians speak fluent English. However, China is experiencing swifter growth, plus it has better infrastructures and more outside support.
A common advantage: Economic development before anything else
Both countries place economic development far above their other priorities. In 2006, their leaders decided to set the goal of doubling the trade exchanges between the two countries in order to reach $400 billion by 2010. This agreement illustrates a much higher level of pragmatism than most countries in the world, which is even more exceptional if we bear in mind that the pact was signed between the two most populous countries in the world. The result of this trade opening can already be seen: the largest companies in each country are losing no time in taking up their positions in the other country’s market. For example, the Chinese company Haier is already one of the most important washing machine purveyors in India. Meanwhile, Tata Consultancy Services has set up a joint venture with the National Reform and Development Commission, a governmental agency, and Microsoft to develop IT in China, where it expects to have around 5,000 employees in the near future.
Different degrees of development
The development in these two countries is quite distinct. China has made serious efforts to build and update its basic infrastructures, ranging from highways to telecommunications networks. In contrast, India’s inroads in these realms are more sluggish. These differences have a political explanation: while the Chinese authoritarian regime does whatever it pleases, whether it be planning highways, ports, and industrial estates or demolishing old neighborhoods to build new developments, politicians in democratic India are beholden to their voters, so they must also take other social priorities into account as well.
Industry versus services
In the past ten years, China has become an industrial behemoth focusing on production, while India has made a name for itself in IT exports and services. China’s volume of product exports is twenty times higher than India’s volume of IT exports and services.
Adopting technology
China and India are the two markets experiencing the steepest growth in technological expansion. Between the two, there are over 12 million new telephone systems installed per month. The number of private Internet service subscribers in China exceeded that in the United States in 2005, and it is now close to being twice the figure. In contrast, Internet growth in India is much more modest. In terms of mobile telephones, the total number of users in China is now twice that in the United States. India, though lagging far behind, is rapidly catching up.
Perception: India is winning
In the technology and IT race, the majority of Western business leaders point out that India is better positioned than China. Nevertheless, this perception may well be due to the fact that China is not as well known, that it is more difficulty to communicate with potential Chinese partners, and that the country’s business culture is so different from the West. |
