Doing business with China
Emerging opportunities for Indian companies
China cannot be ruled out as an important economy for India; as a market, as a competitor, and as a partner. The fact that it is currently the third largest economy and stated to become the world's largest economy by 2025, further provides impetus to the fact that Indian businesses cannot overlook China in their
They are two of the fastest growing economies of the world. They are the two most populous nations and also the oldest civilizations in the world. The two countries started their individual journeys after India gained independence in 1947 and the People’s Republic of China was established in 1949. At the same time, their differences are quite apparent – both have different forms of government, both follow different models of growth – China follows an export oriented, manufacturing economy whereas India is a domestic consumption-led service oriented economy. This is, perhaps, a result of the planning ideologies that the two countries adopted in the 1960s when the divergence in growth patterns of the two countries emerged.
If one looks at the macro economic factors – the Chinese GDP has grown at 10% per annum for the last 3 decades compared to 6% for India. In terms of aggregate GDP numbers India stands at the spot where China stood in 2000 and in terms of Per Capita GDP, India currently stands where China stood about 15 years back. India has had a higher fiscal deficit and public debt compared to China, which has resulted in lower sovereign ratings. As a result, the Indian economy has been unable to increase its capital base at a pace in sync with China.
However, India and China both stand to grow and benefit with greater commercial interactions with one another. Interestingly, while most investment bankers and companies look at India and China as competitors to the capital that they can invest, there are more complementary factors between India and China than one can imagine. India could learn from the Chinese especially in the fields of urban development, power projects, and road, rail and port infrastructure. China, on the other hand, could take a leaf out of the Indian success story in the sectors of information technology and IT enabled services. The Chinese government is focused on increasing their English speaking population, a feat already achieved by India. Another major focus area for collaboration could be in the space of services.
China, like India, has a concentration of industries across different regions. The cities of Beijing and Shanghai are often cited as being very similar to the cities of New Delhi and Mumbai for being political, cultural and financial centres. They are reckoned as global cities owing to the highly skilled labour force found here and the predominant cosmopolitan style of living.