India vs China

This is a popular discussion topic considering China and India are the big emerging economies in Asia after Japan. (via Foreign Policy) and (via HBS) Yasheng Huang (of MIT) and Tarun Khanna (of HBS) illustrate the state of the two economies and some astute observations. People also seek my opinion, since I work in Hong Kong and manage a team that has participation across Asia. I first visited Shanghai in 1997 and was spellbound by the progress China had made. China is and continues to be the market of choice for any Multinational. India is always a distant second, but there are trends you tend to dismiss but should not ignore. India is a functioning democracy, with a strong tradition of entrepreneurship, and a decent legal system have given India the underpinnings necessary for free enterprise to flourish. After the Enron saga, Far Eatern Economic Review searched for the best governed companies in Asia. They shortlisted 6 companies, of which 3 were from India. CNBC instituted an Asian Business Leader Award 2 years ago and both times the award went to Indian CEOs. Everyone expected Chinese CEOs to win, there are big companies in China but none with good quality leaders, quoted the dean of Insead for the Singapore campus, who was part of the selection committee. China has huge amounts of FDI, great infrastructure, hardworking people but also a large share of non-performing loans, unofficial estimates claim it at around 30%.

The authors, Tarun and Yasheng, have an intriguing way to look at a centuries-old comparison. The best endorsement for our article is the way in which it has been disseminated. In India, it has spread by word of mouth and been reprinted in numerous newspapers and magazines. In China, one is hard pressed to find public discussion of the article; though the message is being discussed, we’ve been told, in other, less transparent forums. This is, in some sense, part of the very point of the article!

The best comparison goes like this, China has great macro but below average micro, India is moderate macro but brilliant micro!.

12 thoughts on “India vs China”

  1. I have been reading these sort of articles a lot. There was one by CK Prahalad.

    Living in Bangalore I see some signs of what they talk about. Like Enterpreneurs fighting it out and hanging in there but when I see the chaos which still exists I just shake my head…

    Take the example of Intel’s Airport road office. It sometimes takes half an hour to cover the 1 kilometer around it. Two new office space buildings are going to open in the next month or so right next to it. The traffic is going quadriple due to that and what will happen after that?

    Roads and Water are seriously lacking here in this city and the rest of the country. Thats one reason why I really like our current Prime minister’s dreams: Interlinking of rivers, interlinking of roads (golden quadrilateral) and Kashmir. It these things succeed then we will really start seeing the benifits of the advancements the hi-tech, bio-tech reach the whole country and reach the people who really need it (the lower class and the lower middle class….they form the huge chunk of the population and their potential is still largely untapped)

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