India vs China: the next global leader in business, politics and finance?

China and the New World Order:

How Entrepreneurship, Globalization, and Borderless Business are Reshaping China and the World (Book Excerpts)

by George Zhibin Gu
Foreword by William Ratliff
Publisher: Fultus; 248 pages

Part VII
India vs. China: Moving Ahead at the Same Time

SUMMARY

Today China and India are moving fast in tandem. In both cases the new growth, which started from a long-standing poverty, is led by new entrepreneurial armies in an increasing open environment. Involving more than 2.3 billion people eager to improve their lives through their own efforts, the growth, development, and modernity of these nations will impact humankind in no small way.

At the same time, the growth paths of the two countries have been somewhat different. This has created unique strengths and challenges for both nations. However, one reality is this: There are mutual benefits for them to share with each other. Closer ties between them will do the world only good.

Furthermore, with the development of these ancient societies just beginning, sustained growth will demand fundamental changes—institutional and government reforms in particular. All this demands greater openness as well as greater individual private initiative for both nations.

Chapter 23. China and India: Can They Do Better Together?

In this era of globalization, the elephant (India) and the dragon (China) both have a sense of urgency about catching up with the developed world. There is a high degree of rivalry between the two nations, but this competition will produce a creative and productive partnership in the end. This new trend is already gaining great momentum.

Mutual Benefits

The mutual benefits of an India-China partnership are many. India has built up a world-class IT army while China has created a fast-expanding manufacturing force. Their strengths are complementary in numerous ways; all they have to do is team up in a more productive fashion.

So far, India's IT army has successfully courted the big boys' club in the developed world, but there are limits to how far this can go. Indian software companies are service oriented. They have not had large space for developing their proprietary products. China can provide them that space.

China Inc. will benefit from this partnership as well. Although the Chinese companies have developed an extensive manufacturing capability and can produce nearly anything, China has lagged behind in terms of intellectual development, especially in software and design. This is where the Indian software giants come in. Leveraging on this combination of knowledge and production, India and China together will be able to supply the world better and cheaper products of all sorts, which will promote greater growth for both nations as well.

One could estimate that trade between China and India should reach $200 billion in two decades or so. But in comparison, the present level is very low. In 2005, bilateral trade reached $18.71 billion. That was a record, up nearly 38% from 2004. China is now India's second biggest trading partner and will likely take the top slot soon. All this points toward a mutually beneficial partnership in the making. More and more Chinese and Indians now understand the importance of increased collaboration.

Reaching this stage of cooperation between the two nations has required huge efforts already. In many ways, businesspeople in the two countries are far ahead of the governments, having sensed the potential for partnership much earlier and tapped into each other's resources quickly.

China Inc.’s presence in India is increasing as time goes on; this is especially the case with respect to manufacturing and R&D centers. Konka and TCL, two leading Chinese consumer products companies, have extensive operations there that target the Indian consumer market. Haier, the biggest Chinese consumer products maker, is adding a handset factory in India as well as expanding its durable goods production. Haier aims to become one of the top three players in India by 2010.

With regard to Chinese R&D centers in India, a high-profile example involves Huawei, the biggest Chinese telecom network manufacturer. Huawei has been operating a sizable R&D center in Bangalore for several years now, with some 700 employees, mostly Indians, and an investment of $80 million. Satisfied with the general environment and the talent base, the company is putting in another $100 million to expand its programs there. ZTE, the second biggest Chinese telecom network maker, is also active in India.
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Chapter 24. Uneven Development: India vs. China

Both China and India have already overcome enormous man-made barriers to reach their current stage of development. To move forward, they need to institute greater political and institutional reforms, aimed at clearing away bureaucratic problems. A basic fact is this: Their openness to the world should make the transition much less painful.

Commonalities

China and India have several characteristics in common as late developers. One of these is their mammoth populations. In recent history, it has been in the less populated nations that development occurred first. The largest developed nation is the United States with its 270 million people. This is a small population compared to those of India and China, which together have more than 2.3 billion people—over one-third of humankind.

The movement of so many people into the world development orbit is a new chapter in the story of humankind. Indeed, their advancement will be influential to an unprecedented degree. Once these countries move solidly ahead on this new path, life on earth will rise to a new level.

In the past, the massive populations in these nations were a huge burden, which was made worse under a closed society. Today, the people of India and China are becoming a hugely productive force. The creative outburst of over 2.3 billion people is something the world has never seen before. Countless Chinese and Indian entrepreneurs have appeared seemingly from nowhere.
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This book consists of 26 chapters, which are organized into eight parts:
I. China’s New Role in the World Development

Ch 1. China's social changes vs tourism
Ch 2. Whose 21st century?
Ch 3. Go east, young man!
Ch 4. Everyone in the same boat
ch 5. Power and limits of later developers

II. The Yuan, Trade, and Investment

ch 6. China's competitiveness vs rising yuan.
ch 7. Where to invest your money?
ch 8. Behind a rising yuan
ch 9. Beyond textile trade wars

III. China’s Fast-Changing Society, Politics, and Economy (in light of Chinese and global history)

ch 10. Lessons from Shenzhen, China's new powerhouse.
ch 11. Hunan province: from red state to supergirl and superrice.
ch 12. A revolution of Chinese professions
ch 13. What is the Chinese bureaucratic tradition?
ch 14. Why does Beijing want to reform?

IV. China’s Banking, Insurance, and Stock Market Reforms

ch 15. The explosive insurance market
ch 16. Chinese banks on the move, finally.
ch 17. lessons from China's stock market.

V. Chinese Multinationals vs. Global Giants

ch 18. The coming of age of Chinese multinationals.
ch 19. Behind Chinese multinationals' global efforts.
ch 20. China's technology development.

VI. The Taiwan Issue : Current Affairs and Trends (federation as an alternate way for unity)

ch 21. Federation: the best choice for Taiwan and mainland China.
ch 22. Taiwanese businesses in the mainland.
a vibrant Taiwanese force.
Hightech.
Other sectors.
What is the next?
Will Spring follow winter?

VII. India vs. China : Moving Ahead at the Same Time

ch. 23. China and India: can they do better together?
ch 24. Uneven development: India vs China.

VIII. The Japan-China Issue : Evolving Relations in Light of History

ch 25. Japanese business in China.
ch 26. Japan's past aggressions vs current affairs.

Author George Zhibin Gu is a journalist/consultant based in China. He has written three other books: 1. China’s Global Reach: Markets, Multinationals and Globalization (Fultus, 2006); 2. Made in China: National and Business Players and Challengers under Globalization and Capitalism (English edition forthcoming, 2007); and 3. China Beyond Deng: Reform in the PRC (McFarland, 1991)