getting china & india right

Monday 23 March, 2009

I attended this Chicago Council on Global Affairs event Getting China and India Right which actually focused on international business…imagine that.  It featured Anil Gupta, coauthor of the book Getting China and India Right: Strategies for Leveraging the World’s Fastest Growing Economies for Global Advantage.

Gupta extrapolates the current pace of change to bring out that the GDP of China will exceed that of the US by 2025 & will double US GDP by 2050.  India’s GDP growth trails China’s by 12-14 years.  In this era, China & India together will equal the US, Europe, & Japan combined.   The financial crisis is impacting China & India, but has only slowed their growth rates to 5-8%, which closes the gap at a faster pace.  This is a structural non-linear shift which we simply need to accept like gravity.

There are 4 main stories-

  • offshoring-cost reduction arbitrage opportunities
  • market size-the GDP/population growth creates 25% of growth in the world
  • innovations hubs-the number of engineers, patents, etc. being created there blows away everyplace else
  • rise of competitors-like Lenovo & Tata, etc., Chinese & Indian firms are buying US brands here


  • Black & Decker power tools leverages cost arbitrage because there’s no market for do-it-yourselfers & their tools are too expensive even for professionals
  • Motorola created a touch phone for China in China even before the iPhone debuted.  The US is no longer the center of gravity in the world.
  • AT&T sold out of India in 1997 for $205M & may now have to buy back in @ $2B.


  • Small firms can get involved in China & India by focusing & choosing 1 & not the other & finding a local partner as a co-owner.  To pick which 1 depends on the goal & the industry.  For consumer products, China has superior distribution.  India has better technology.
  • Managed trade could be the answer for the US.  The world might not allow China to take over most of the manufacturing for the world.
  • Chinese & Indian firms are buying foreign brands like Jaguar & LandRover rather than building their own here.
  • State-owned companies have huge shares but are badly mangaged & very inefficient.  Some industries are highly fragmented & must consolidate.  Corruption is on the wane.
  • Intellectual property protection has improved vastly over the last 5 years although the regulatory framework is still highly protective of local companies.  M&A is not easy, but positioning yourself as a partner help.  B2B companies are wary of being sued in other countries.

My only beef is this was very skewed to the big company perspective.  Gupta freely admitted it takes deep pockets to endure upfront & fixed costs required to start up in these countries.  The most difficult thing is to take advantage of these opportunities on scarce resources & nobody seems to be able to shed light in this way.


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