Today, many global business leaders believe that they must have a strategy for China and India. For many, China is seen as the place to produce or procure goods while India is the place to procure business and IT services. Yet in the future this discrete division of labor might not be so clear, or even relevant.

Future direction of China and India

China and India, despite their massive populations and growing importance, are quite different. Their economic structures, sources of growth, areas of competitive advantage, and the impact they have will remain different in the coming years. What will the future bring for India and China?

Historical share of global GDP

Source: Maddison, Angus, The World Economy Historical Statistics

• Sources of growth
  Both will grow rapidly, taking a much larger share of global GDP. Yet for the foreseeable future, it is likely that China will continue to grow more rapidly than India. In both countries, the domestic market will become increasingly attractive to global companies.
• Doing business in China and India
  The division of labor between India and China will become blurred as both countries excel in services and manufacturing.
• Economic relations between China and India
  Trade between India and China will expand, enabling companies in both countries to achieve critical mass. For global companies selling in these markets, this means more local competition.
• Eastern competition
  Both countries will create new world-class companies that will be competitive with companies based in the West. For some Western companies, this will create new challenges.
• Consumer markets
  Both countries, while remaining relatively poor, will experience rapid growth of the middle class, creating vast new opportunities for Western companies to sell in those markets.

About the study

It has become conventional wisdom that China is the biggest story of our time. Now, as India goes through a similar process characterized by historically high rates of growth and further integration into the global economy, it appears that the path that China and India follow will influence the global economy and business environment. Perhaps, then, India is the next big story.

This publication offers some thoughts on the future direction of India and China, the risks and opportunities of doing business in each country, and the likely impact they will have on global business. Learn more in the document attached below.