China is growing with such speed that it creates some world record every other week. With 1.4 billion people it uses more mobile phones than any other country. It has more high speed rail links. It has more internet users and it has now overtaken US as the biggest energy consumer. Although china admitted that fact with lot of reluctance but apparently every energy report showed that for last many months. It's worlds largest importer of minerals. Last year it dislodged Germany from the pole position of highest exporter.
This week, China surpassed japan and came right behind US as the second largest economy. It was hardly a surprise as everyone expected that to happen. Chinese media didn't covered the news as a front page item. In fact China emphasized on areas of improvement and continued commitment to make further economic breakthroughs. Even in japan, media didn't give much coverage to this. But it would be interesting to talk about what would be the implications of the rise of dragon- On the world and on India specifically.
China has shown a remarkable progress and it's rise can be an inspiration and a strong blow to those capitalist who say that communism cannot deliver. It's definitely an important milestone. F or almost 43 years japan remained the 2nd largest economy. Now many economist are predicting that the dragon may soon fly above US, maybe within a decade. China's rise may prove to be a huge benefit for Africa, Latin america , Russia and ofcourse Asia. China has significant stakes in africa and latin america. These areas have long been the places for conflict and have not seen much economic and social development.
The rise will have effect on chinese people as well. As trade is growing, chinese people are interacting more with outside world and are appreciating the democratic governance system which provides much more freedom and security. It would be tough for Chinese Communist Party to handle this new situation. But I think chinese people also acknowledge the fact that communism worked wonders for their country. The west is yet to acknowledge china as a responsible super power, especially with it's policies to support renegade governments and initiating nuclear and weapons proliferation. Some might say that western approbation is not required. But you cannot expect china to rise on it's own.
This week as china moved to number two position on world's top economies list, one of india's biggest business delegation was concluding a visit to shanghai. This delegation's main objective was to persuade chinese government to lift non-tariff barriers to trade and create an environment more conducive to the expansion of indian enterprises in china. Dragon's rise will have significant effects in india. And the course of these effects will be decided by the very nature and perception of indian and chinese people about each other. Most of the people in both the countries are suspicious about the indo-china relations. But it's time that we shed the negativity and try to explore the opportunities we might have in a big consumer market like china. China has build itself as a strong export based economy. But now it has started to look inwards , to accommodate and satisfy domestic needs . Chinese people have comparatively high purchasing power and it could hardly be better timing. Labour costs, power and maintenance costs are almost one-third of the costs in india. You can be granted funds on as low as 6% annual interest rate. That is just not possible in india. In India the funds are scarce and the interest rates are relatively higher and don't forget about huge power and maintenance bills. Chinese people are making money and that money is going to create new markets and strengthen emerging markets. China is gradually opening it's shores for outside business houses and entrepreneurs. China would definitely be a difficult market so an early entry can provide good opportunity to understand and market the products and services in china. Trust me, the timing is just fine. We as indians can shed the negativity and can think of china as a huge potential market. Remember , improved and deeper trade ties will also effect the geo-political truce between these two nations.
Let's talk about few opportunities here:
- China is the workshop of the world and it has started to acknowledge the side effects of that. The zealous and unidirectional focus on manufacturing sector has created huge environmental problems. It has polluted its rivers, denuded forests and caused severe air pollution. By 2020, china is expected to generate 400 million tonnes of waste, which is surprisingly close to the total amount of waste generated by the planet in 1997. There's ample opportunity for waste management programs and re-cycling industry. And as you can think that the cost would be delightfully low.
- I's tourism and hospitality industry is opening up and there' s huge opportunity for indian companies to help them provide superior and quality tourism service.
- Service sector is the best sector which can make deeper holes in China. Indian industry is a customer centric, service oriented industry. Out service maturity level is much higher than chinese. Setting up an IT and services base will enable companies to target far east and tougher markets like Japan and Korea.
- Education and skill Development is another industry which can make inroads in china. Chinese education system have been unchanged for a very long time and it's far from being a global education system. India can help it to devise, administer and manage a truly global education system.
- There are others fields like Finance, Biotechnology, R&D which are looking promising and needs to be explored.
China has well established manufacturing sector and has a very pro-active supply chain system feeding it. Indian companies need to plug into this supply chain and reap the benefit. And the first thing india can do is to push for lowering non tariff barriers. Entrepreneurs can study detailed and comprehensive reports about chinese business environment through trade organizations like CII and FICCI .In any case, it is impossible for india to bypass china. Indian entrepreneurs will have to come up with new ideas and techniques to reap the benefits of this potential market. No doubt it would be difficult, but it's also an opportunity.