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China and India: Competition and Customers
Transcript of China and India: Competition and Customers
Competition or Customers? Competition between China and India
They Are the Competitors!! Competition with the World Consumption from the World Consumption from Each Other Consumers of the United States Competing with the World
The largest economies compete for the markets of the world
Today, those economies include (in order), The United States, China, Japan, India, Germany, etc.
The emergence of China and India is recent - only in the past thirty years!
“The emerging world, long a source of cheap labour, now rivals the rich countries for business innovation.”
By Adrian Wooldridge China Vs. India China is BIG! General Information about China
Population: 1.34 billion (world’s largest)
- About 1/5th world’s population
- 91.5% Han Chinese; 8.5% minorities
Language: Mandarin (official language); Cantonese (Hong Kong); many dialects & minority languages
Currency: Yuan 1st. Half of 20th Century
China plagued by problems
- Major famines
- Civil unrest & rebellion
- Occupation by foreign nations
- Invasion by Japan
- 2 Civil Wars (one during & after WWII)
People's Republic of China formed in 1949
- Communist government led by Mao Zedong
- Initially, improved China, but became
- Resulted in economic failures & persecution Late 20th. Century to the Present
Post 1978: Economic Reform
Mao’s successor Deng Xiaoping focused on market-oriented economic growth & attracting foreign investment
Resulted in huge economic growth
About 400 million brought out of poverty
Overall living standards improved & personal choice expanded
Communist Party still exerts strict political control
China gradually taking international leadership role
“Soft power” approach: Developing friendly relations rather than threatening & bullying
“We owe a lot to the Indians,
who taught us how to count,
without which no worthwhile scientific discovery
could have been made.”
By Albert Einstein General Information about India
Population: 1.14 billion (2nd highest)
Capital: New Delhi (Mumbai = largest city)
Languages: Hindi, English, many others
British colony prior to 1947 China Vs. India
R&D, Investment Economy in China
GDP: $8.8 trillion (2009)
2nd highest by PPP
Per capita: $6,567
Move from central (government controlled) to market economy began in 1978
Annual economic growth averaged about 10% over past 30 yrs.
About 400,000 middle class & growing Economy in India
GDP: $3.526 trillion
Only $2,940 Per capita
High rate of economic growth over past 2 decades R&D and its Investments
The international competition is intense and getting more so
Chinese R&D has been rising by 20% a year over the past 5 years
Indian R&D is even more astonishing - it has trebled in a decade The True Innovation
and its Challenges What is a global economy?
The definition of a global economy is the integration of fragmented national markets for goods and services into a single global market.
India and China are dependent on other countries to satisfy their consumption needs. India’s Consumption
India’s middle class and population are increasing
Rapidly expanding middle class
Booming economy and population size and predicated growth rate will continue to increase consumption of goods What India Imports
70% of its oil is imported, 30% is produced domestically
Oil consumption has steadily increased, and domestic production has remained the same.
China’s large population paired with high consumption rate, has made China a major importer
China’s main imports are machinery, mineral fuel, chemical, iron and steel, copper, and cotton
The population is large but is controlled by the government
According to the U.S. Census Bureau, by 2045 it is believed that India will have a larger population than China
China will remain a significant consumer in the global economy Production in China
"Producers in China specialize in goods that are especially attractive to consumers in the United States. Most of what we import from China fits in the category of consumer goods." (Griswold, 2007).
The tendency in China is to produce as cheaply as possible... Decline in quality over time. India's Workforce
Growth in India has also spurred a wave of outsourcing to India’s "large, educated, trained and technically skilled manpower." (Outsource2India.com)
The majority of India is still very poor, but the country has “capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers” (CIA Factbook on Idia). For the United States...
China and India are not slowing down.
This means that job competition, production competition, and economic competition in general will only increase in the future.
For the World...
Creativity and effienciency will be key to successfully competing with these growing economies. Why Are They Relevant?
China and India are two of the world’s fastest growing economies
China has the largest and India is emerging as the second largest
The US has seen a surge in trade with both of them in the past thirty years
It is great indication of the shifting of the world’s top economic powerhouses. Bilateral Trade
China is the leading importer of Indian goods
India is the 7th largest importer of Chinese goods
The average annual international trade growth rate is 15%
The annual trade growth rate between China and India is 50% Projections
The two countries have continually beat targets set by their Prime Ministers
Goals set in 2005 of $20B in 2008 and $30B in 2010 were met in 2006
Goal set in 2006 of $40B in 2010 was met in early 2008
The current goal of $60B should be met by year’s end Goods Traded
China and India both trade a diverse line of goods
The top 15 exports from India to China are Ores/Slag, Cotton/Yarn/Fabric, Organic Chemicals, Copper, Precious Stones and Metals, Iron and Steel, Plastic, Machinery, Salt, Sulfur, Earth/Stone, Inorganic Chemicals, Electrical Machinery, Hides and Skins, Artificial Flowers/Feathers, Tanning/Dye/Paint/Putty, and Fish/Seafood.
The top 15 exports from China to India are Electrical Machinery, Machinery, Organic Chemicals, Iron and Steel, Iron/Steel Products, Fertilizers, Plastic, Impregnated Text Fabrics, Silk/Silk Yarn, Non Railway Vehicles, Inorganic Chemicals, Manmade Filament, Optics/Medical Instruments, Mineral Fuel, and Aluminum. What Does This Mean?
76% of India’s exports are low end goods
47% of India’s imports consist of electronic products, electrical products, and machinery
This illustrates that China is significantly more developed than India and that India is still going through stages of economic development The Future
They are two of the largest markets in the Eastern hemisphere
If trends continue The Confederation of Indian Industry expects India and China will be the world’s two leading economies by 2050 In Conclusion...
Economists in the U.S. are discussing what roles India and China will play in changing the balance of world power
China and India are competing with each other and with the rest of the world
However, size and growth have made them LARGE consumers – both of each other and other countries
Growth, wealth and power are on track to displace the United States as the top world power.
Historically, China has always been superior to India when you compare the two economies.
India may have a leg up on China now as their private domestic consumption accounts for 57% of India’s GDP, with China’s only accounting for 35%.
The World Bank predicts that India’s economy will surge 8% in 2010, not far behind the 9% rate predicted for China.
Obviously these two countries are doing far better than the U.S. economy, as many economists say that the U.S. economy will grow by 2% each year for the next decade.
The United States realizes that China has the largest economy in the world and India is not far behind. With this in mind, we are trying to strengthen economic ties between both countries.
The U.S. has a goal in mind with India to reach an Economic and Financial Partnership, which is designed to promote greater trade and investment.
The relationship between China and the United States has been unstable.
Imports from China cost us $296 billion, while our exports to China was only $70 billion last year.