India vs China: borderless finance, leadership, hightech, investment, politics:
George Zhibin Gu of China responds to the 12 March posts of Tor Guimaraes and
William Ratliff of World Association of International Studies hosted at Stanford University.
(taken from http://www.wais.Stanford.edu.)
On the cheap labor issue, there are several factors involved. Cheap labor is a key concern for multinationals when deciding where to do
investment, but it is not the most important issue.
For example, India's labor cost is less than half of China, but India is far behind China in attracting outside investments. Why? India does
not have a complete business chain, especially in the manufacturing and infrastructure areas. But China has been able to come up with these things quickly in these eras. One exception is India's info tech industry, which does have a complete business chain. As a result, India's info tech is far ahead of China's, even though China's
domestic software market is over twice the size of that of India.
China has yet to produce brands in the software industry, which now has over 8,000 small players, but no big players yet.
Another issue is openness. India has been opening up only since 1991,while China has been doing this since 1978. As such, China has already become the biggest global business theater. In so many ways, China is more open than both Japan and India today on the economic side.Indeed, foreign market share in China is already about one third of its GDP.
At the same time, one must also note this: China's greater openness has been forced upon the Chinese government. This is because the
bureaucratic economy went completely dead when Mao died. Attracting foreign capital has become a top government strategy to help it reign
the nation, and little more.
But things have not completely followed the government's design inside China. For example, the sharp rise of the domestic private sector is
both an accident and great shock, especially considering that it now takes about one third of China's economy.
There are many more issues involved. I must refer to my books for further discussions
1. China's global reach: markets, multinationals, globalization;
2. China and the new world order: how entrepreneurship, globalization, and borderless business reshape China and world.
3. Made in China: players and challengers in the 21st century.