Getting China and India Right
NEW YORK, May 11, 2009 – As the vortex of power shifts east, China and India are becoming increasingly critical for an overall corporate strategy, according Anil K. Gupta and Haiyan Wang, co-authors of Getting China and India Right.
Speaking at Asia Society headquarters, Dr. Gupta and Ms. Wang said of the twelve largest economies, only China and India have exhibited some resilience during the global recession. The discussion was moderated by S. Mitra Kalita, The Wall Street Journal's deputy economics bureau chief.
“Companies that had already established a footprint in China and India before the recession, are finding this economic crisis as an opportunity,” said Dr. Gupta. He said smart corporations must recognize where the countries are similar and where they differ, in order to carefully devise growth strategies.
The authors spoke about one formula, I=C-12, as a way to understand the two economies. It indicates China is about 12 years ahead of India in economic reform, something that should be factored in when comparing investment prospects.
Ms. Wang said one of the challenges of the two economies is their “vast markets with low per capita income.” Experienced multi-nationals typically operate in rich-to-rich markets or poor-to-poor markets but in China and India, the middle and the bottom of the pyramid markets are vast. By 2025, this segment is likely to be as large as the entire US consumer base.
“China and India account for 40% of the world population and 10% of world’s GDP, ” said Dr. Gupta. They offer the lowest cost structures for both blue collar and while collar workers and are increasingly becoming hubs for innovation. They are the largest producers of scientists and engineers and most of the world’s technological patents. In the coming years, they will likely represent a larger portion of the Fortune 500 list. With the rest of the world demonstrating greater interest, we should expect to see more cross-investment between India and China.
Ms. Wang said that the policies and stimulus packages set by the Chinese government have been very effective at rescuing China’s economy from the recession. Governments in both countries have taken an active and crucial role in their current economic plan.
Dr. Gupta believes that having sidelined political issues, the two governments are increasingly engaging in a dialogue on economic issues that will strengthen the two superpowers resolve in the future.
Reported by Yoshie Ito and Chandani Punia
Getting India and China Right by Anil Gupta and Haiyan Wang is available from the AsiaStore.