INDIA AND CHINA LOOKING BELOW THE SURFACE TO COMPARE THESE TWO RISING ASIAN BUSINESS GIANTS

(Picture left) Infosys campus in India, and (picture right) A street in New Delhi India has emerged as a trading superpower and as an increasing magnet for FDI. Its role in the international economy to this point has been less remarked than the rise and dominance of China but increasingly India will be appreciated for the opportunities it is creating for its citizens, employers and foreign and domestic firms. At first glance, India doesnt look like a major trading superpower or a place where your company should be considering siting a factory. Major complaints heard by visit execs often involve the poor state of infrastructure, the chaotic traffic, that the democratic process hinders development, that corruption is endemic and that bureaucracy is rampant. To this, many manufacturers must factor in that relations between China and India are formal but not warm and that apparently neither side trusts the other, which to this point has limited either location from generally serving the other for exports.

You only have to drive the roads from Bangalore out to Infosys or to some of the major biotech companies located in the South to appreciate that roads are in fact overcrowded and need expansion. An interview with Chris Runckel, the author, on the Also, ports are a problem. According to several sources, Shanghai can turn around a ship in eight hours. In Bombay, it takes three content of this article. Listen to the show - From days. Competitiveness studies (please see this website for more on Business Now Asia Pacific this) also make the case that India needs to reform procedures and lessen red tape. Despite this, India shouldnt be neglected - things Radio, a weekly 30 min are changing here and India should be on every businesspersons online program featuring radar. reports and original analysis on the Asia Pacific region (www.businessnowasiapacific.com) To better understand what India is and what it is not, lets compare it to China. First, forget the hype about both China and India. Keep in mind that despite all the talk of China or Indias rising status, both China and India are still desperately poor countries with large disparities in incomes across each country. In China nearly half of the country's labor force remains in agriculture (about 60 percent in India). Also, despite all the talk about Indian software engineers and Nobel laureates and Chinese engineering whizzes, India has the largest number of illiterate people in the world and China also is burdened with a large number of rural poorly educated who will offer continued challenges for economic development. (Indias illiteracy rate is nearly 40 percent and Chinas is nearly 10 percent according to World Bank statistics.) Of the total of 2.3 billion people in these two countries, nearly 1.5 billion earn less than US$2 a day, according to World Bank calculations. The opportunities in both countries are substantial; the challenges are also large. With this in mind, lets compare the two countries by size: China is the worlds third-largest country after Russia and Canada and is the second largest country by land area. India is about a third of Chinas size. In terms of population, China tops India at 1.3 billion people compared to India at just over 1 billion but India is growing at a faster rate and has a younger population. In terms of political systems, China is a communist country which economically is following market reforms that encourage free trade and capitalist-based business models. India, by comparison, is the worlds largest democracy, but with a system of commerce that until the 1980s was based on the Soviet model and has since been reforming itself to follow more free trade and capitalist-based models. China has been reforming its economy since 1978; India has been working since 1991 but at a faster rate of speed. Top 15 Manufactuing Nations Further, in terms of manufacturing Chinas lead over India in terms of manufacturing is considerable. China is the worlds third largest nation in terms of manufacturing after the U.S. and Japan. India is a still impressive, but much further back 12th place in the same list according to Global Insight and the Financial Times. This points out the fact that to this point, Indias success in expanding its service industry has yet to be as firmly demonstrated in the manufacturing sector. In terms of performance, here are some charts comparing and contrasting the two economies in terms of first GDP, then exports and finally imports: 2006 1 2 3 4 5 6 7 8 9 10 11 12 13 14 US Japan China Germany France UK South Korea Italy Brazil Canada Russia India Spain Mexico 1 2 3 4 5 6 7 8 9 10 11 12 13 14 2025 China US Japan Germany South Korea France India UK Italy Brazil Russia Indonesia Mexico Taiwan

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Canada