China versus India: Market Comparison
India
The globalisation of a company goes always along with a great amount of opportunities but also with many risks. India and China are both very interesting countries to move into.
India became democratic after gaining independence from Britain in 1947. From then, up to the early 1990s India has had a mixed economy, which was identified by a lot of state-owned businesses, centralized planning, and subsidies. This lead to a dramatic constriction of the private sector. During this time it was really hard for the private sector to expand because they needed a permission of the government to do so. Sometimes the companies had to wait for month to get the allowance for normal business activities
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In 1999 only 60 of the 300 state-owned businesses went over into private hands.
All these reforms have been very successful, India managed to grow 6.1 per cent in the 1990s and in spite of the global economic slowdown they still managed a growth of 5.5 per cent in 2002. The foreign investments rose from $150 million in 1991 to $ 5 billion in 2002.
But still the political opposition has slowed down further import tariff reductions because they fear India to get flooded from cheap Chinese products as soon as the barriers get lowered again. The strict labour laws have not been loosened yet and some products are, according to the actual law, only allowed to be produced by a small company.
China
China is one of the countries which turned despite a communist government, from a command to a mixed economy. In 1949 the people's Republic of China was founded by the Chinese Communist Party under Mao Zedong. Under his leadership of almost 30 years to 1976 the GDP already had an average annual growth 6.7 per cent with was mostly due to mobilizing additional resources. But the investments became inefficient with the time and the relatively high growth could only be implemented in very small parts to a higher consume of the population. After the death of Mao Zedong in 1976 his successor Deng Xiaoping introduced economic reforms in 1978. Since the middle of the 1980s private companies in the
The Indian economy following the 1991 crisis swiftly moved away from central planning economy towards market-based economy with the government having less intervention and control. As a result, companies were operating in what is called emerging
It is inevitable if firms increase their global operations because every country has something different to offer, something new, and without the current innovation being promoted to the market, the company will start to lose its edge on
When it comes to the political and economic effects that China and India felt, their experiences were both similar. The wealth made from markets in India went to Britain and money made from selling opium to the Chinese also went to Britain. In regards to the war in China and India, both countries experienced a strong sense of nationalism after having to endure the exploitation and mistreatment of the British. Both countries also lost many of their battles. However they were fought over different reasons. The social effects the Indians and the Chinese felt were also different. Even though India experienced some negative effects, the British was able to modernize and improve many parts of India. On the other hand, China’s population was left in pieces after opium entered the country. Overall, China and India were similar economic and political wise, but the social effects differed greatly.
Since the market orientated economic reforms were introduced in 1978 (Khan, Hu (1997, P103) China’s economy has seen a 10% increase in Gross Domestic Product (GDP) Per year (Vincellete, Manoel,
China economy started at 1978, the first economic growth reforms in 1979, the average annual Gross Domestic Product or for short GDP growth rate in China was about 5.3% from 1960-1978. China 's economy was mainly widespread of poverty, very low-income inequalities.The average national life expectancy has more than triple, rising thirty-two years in 1949 to sixty-nine years in 1985.
Although China has a reputation of being a communist nation, China employs a mixed economy: Communism with a flare of Capitalism. In recent years, China has been easing up economic restrictions by displaying characteristics of a free-enterprise economy.
Since the implementation of the "reform and opening-up" policy in 1978, China's economy has been undergoing a rapid and healthy development. Over the past 27 years, China's annual GDP growth has averaged 9.4 per cent, more than doubled that of the world as well as more than two folds that of the developed nations over the same period. In 2004, China's GDP reached USD1650billion, an increase of 9.5 per cent over 2003.(The Embassy of the People's Republic of China in Australia, June 2005)
In Classical India and Classical China, the development of institutions and traditions were very different yet very similar in many ways. For instance, India and China both put women below men and considered merchants as a middle class. However, they differed in areas such as centralized government. Outside of the Mauryas and the Guptas, India was run by the religion-based caste system while China had a very centralized government, except for the Warring States period and the Three Kingdoms period. If you look closely, Classical China and Classical India are like opposites drawn in the same colours. They both socially stratified their people in ways dictated by their beliefs but while India made it impossible to move any way but down, China allowed movement in any direction through the pyramid of society if you could earn it. Furthermore, while China worshipped their ancestors and looked to learn from the past, India believed in reincarnation and looked to the future.
During the 1950s and 1960s, the Maoist government in China implemented a socialistic economy wherein the state controlled nearly every aspect of national and economic development. The process of making the Chinese economy public took the better part of the decade, but resulted in an explosive rate of expansion. Both the nation’s industrial and agricultural sectors grew exponentially until finally reaching a tapering off point during the late 1960s.
India has a highly dynamic and entrepreneurial business environment (Ford, 2011). The freedom of democracy in India supports the country’s private enterprise greatly. India’s characteristics of sovereignty could very well succeed China’s Communist led, authoritarian growth model (Schuman, 2012).
China's transition from the leadership under the iron fist of Mao Zedong to the more liberal Deng Xiao Ping gave the People's Republic a gradual increase in economic freedom while maintaining political stability. During Mao's regime, the country focused on bolstering and serving the community, while subsequently encumbering individual growth and prosperity. Deng advocated a more capitalist economic ideology, which established China as an economic force in the global community while endowing its citizens with more liberties and luxuries than previously granted.
Based on Tata Group’s experience, we can see the advantages and drawbacks of going international as follows:
China's economic output for 2006 was $2.68 trillion USD. Its per capita GDP in 2006 was approximately US $2,000, still low by world standards (110th of 183 nations in 2005), but rising rapidly. As of 2005, 70 per cent of China's GDP is in the private sector. The smaller public sector is dominated by about 200 large state enterprises concentrated mostly in utilities, heavy industries, and energy resources.
. Xiaoping implemented significant change going from a centrally planned economy run by the state, towards a private entrepreneur market based economy. This transition to a new type of socialist thinking, known as the socialist market economy, proved highly successful as it allowed China to move from a nation in poverty ruled by a single person to the second largest economy in the world. A more sudden or abrupt change could have easily resulted in the fall of China’s economy, similar to what certain European countries experienced in 1991 at the end of the cold war between the super powers.
From April to June 2005, India’s GDP grew at 8.1 per cent, compared with 7.6 per cent in the same period the year before. More impressively, India is achieving this result with just half of China’s level of domestic investment in new factories and equipment, and only 10 per cent of China’s foreign direct investment…