CHINA-INDIA MARKET STRATEGY

China strategy, Whenever we talk about Asian economy, or if you are planning for further Asian expansion, the first question that comes to the mind is that “Is India the next China”?

Economic perspective:

First, India needs to be understood on its own terms. It will always march to its own tune. It is the only country with the scale to match China but it will not be the next China.
The comparisons with China can only get in the way of understanding the nature of the opportunities in the Indian market. Transposing the business models from China or other markets and applying on the Indian market would not work often.china strategy

For China, the manufacturing sector will continue to play a significant role in the economy in the coming year. The resistance in the form of the government’s efforts to strengthen environmental protection or pressure due to other factors will have a little role to play. India on the other hand, will be driven by consumption and services, not exports.

No Indian government will be able to direct the economy in the way China does. Nor will it ever have the control over the resource management, which has been intrinsic to China’s economic success. China is already moving into a smart growth strategy with an emphasis on IT and other technologies. India is still struggling with increasing its simple manufacturing and employment-generating growth sectors.china strategy.

Political perspective:

Second, China has a discipline to its economic planning which flows from its one party political system. China has a strong Han Chinese core which has no counterpart in the linguistic and cultural diversity of India. India cannot be approached as a single country, it is a made up of countries within a country, something like European union can be a good analogy here. However, India is very different from European Union. India as a country is very much divided along religious, socioeconomic, ethnic, cultural, and geographical lines, long story short, Indians are divided.

The main difference between the two countries is that the Chinese leaders are not constantly campaigning and trying to score political points with the electorate. In India, political posters are everywhere and democracy has become India’s worst enemy.china strategy

One refuses to see that democracy tends not to work in poor countries (it is debatable whether it worked in the West). The voter turn-out of the last general election was 66.4%. Among 66.4%, a big share goes to the voters from rural India. The voter turn-out in the metros is relatively poor. Approximately 69% of population live in rural India.

Can I invest in India now?

The Indian growth drivers are deeply structural at the same time sustainable. The key drivers are the urbanisation of the world’s largest rural population, the gradual movement of the informal economy, currently comprising 90 per cent of India’s workers, into the formal economy, a young demographic with a mean age of 27, considerable investment in infrastructure, and the beginnings of an ambitious program to up-skill 400 million Indians.

The agriculture is the backbone of the Indian economy and India is shifting away from agriculture and focusing on services, where it has seen a strong growth. What’s uncommon in India’s development is the limited role played by manufacturing. For a typical developing especially in east Asia, the manufacturing has played a major role and the role of services would come at a much higher levels.

Final thing:

Lastly, India does have great potential and a more organic growth structure and economic fundamentals than China and can prove an attractive long-term destination for FDI. We need to navigate between the hype that India is the next China and the outdated pessimism that India is just too hard.china strategy

While you try to figure out your Asian expansion strategy, as of end of 2017, Chinese investments into India added up to more than USD eight billion.  India has become an important market for infrastructure cooperation among Chinese companies and a major investment destination.