MBA 437Marketing

China vs IndiaCase study on market Viability

Group Members : Zeenath Ram Adrian Ram

Jitendra DayalTevita TuragataniNavindra Pillay

Facilitated by : Dr Gurmeet Singh

Introduction

Table Of Contents• Approaches• Strengths for China• Strengths for India• Weaknesses for China• Weaknesses for India• Opportunities for China• Opportunities for India• Threats for China• Threats for India• Trends Shaping the Business landscape• Applications for Indo-China Market• Basis Of Assumptions• Market Potential• Recommendations

Approaches

• Task Environment1. Companies2. Suppliers3. Distributers4. Dealers5. Target Customers

Approaches cont

• Broad Environment1. Demographic environment2. Economic environment3. Socio-cultural environment4. Natural environment5. Technological environment6. Political –Legal environment

Strengths for China• World’s biggest industrial zone ( dozens of research

centers and transport-bullet train)• Extraordinary ability to mobilize workers and capital• Per capita income has tripled in single generation• Population growth is very high ( future workforce)• Dominance in mass manufacturing• Projected to remain manufacturing giant in the

future• Leading in multibillion dollar electronics and heavy

plants• Producing half a million engineers and scientists a

year.

Strengths for China cont• More brains at technical problems at a fraction of the

cost.• No 3 in the world for passenger car market.• Biggest base of cell phone subscribers ( 3.5 m) and

expected to rise.• Untapped potential• Cheap labour(Another 20 years of high speed growth

due to availability of cheap labour)• Lax labour laws• Vast domestic savings keeps economy solvent.• Plenty of foreign reserves.• Nuclear capabilities ( source of energy)

Strengths for India• Software and design(Devise software platform with

multimedia features)• Ideas, innovations and research (Global innovation chain

(Motorola, Hewlett Packard, Cisco systems and other technology)

• Outsourcing work(2010- Outsourcing work is expected to quadruple to 56 billion a year)

• Pharmaceuticals(exports as well)• Low labor costs (More brains at technical problems at a

fraction of the cost)• Low medical Costs• Improved technology and services • High business profitability • High banking profitability and accountability

Strengths for India cont• Improving precision industry • Good cost/quality ratio(Indian Companies are

showing a flair for producing high quality goods and services at ridiculously low price)

• Mostly local corporations • Highly energy efficient• Western legal institutions• Modern stock market • Private banks, better management• Higher returns on investment• Rigid labor laws

Weaknesses For China• Poor in technological support services• Getting only 6% of Global domestic production.• Less opportunity to grow due to less young

population.• Weak in innovation (57% of exports are from

foreign invested factories.• Under achieve in software• Lack of intellectual property protection• 20% of bank loans are bad(Financial

Mismanagement)• Hugely wasteful, fuel, energy• Poor environmental laws

Weaknesses For China cont• High current population • Communist party harshly represses dissent. • One child policy ( hobbling their future labour

supply)• Not earning back true cost of capital (Low

financial control)• Dependent on foreign investment• Rich / Poor gap• Lax labour laws• Lethargic health system• Nuclear capabilities/risks of radiation

Weaknesses for India• High poverty • Low transport infrastructure• Low GDP• Increasing population• Ecological degradation• Bureaucratic red tape• Low manufacturing infrastructure(Not a manufacturing

giant)• Rich / poor Gap • Rampant Corruption • Poor Public financial control• Lethargic health system

Opportunities For China• Expected emergence as a global mecca of

knowledgeable workers• Technical and managerial skills being upgraded.• Contribution to innovation will grow.• Demand for latest technology and material goods• Ability to transform from follower to a leader in defining

consumer electronic trends• Microelectronics, Nanotech and Aerospace research field

is promising• Military presence in the Pacific is increasing plus

improving relations with the region• Middle-East and African influence is increasing• Material Products are seen as status symbols

Opportunities For India• Low medical Costs• Large workforce (220 million more workers than China)• Increasing population • Projected GDP growth • Middle-East and African influence • Engineers and Scientist(Google principal scientist Krishna

Bharat has set up a Bangalore lab complete with replicating Core search engine technology and Rising power in software, design, service and precision industry.

• Cars, cell phones Internet sales(Demand latest tech and features)

• Products as status symbols

Opportunities For India cont• Increasing pop/future workforce• Modern stock market• National market model (Better model and will

surpass China in growth)• Small batch production of high value goods• Export manufacturing is one of India’s best hopes

of generating millions of jobs.• Sophisticated manufacturing know how, Tata steel

is among world’s most efficient producers ( can be used as a base for manufacturing competencies)

• Nuclear capabilities

Threats For China• Cannot assume their role of a super power is

assured• Rising wage rates may reduce labour supply• More graying population• Growing health problems• Scarcity of water• Danger that financial market liberalization will

go wrong leading to a crash• Financial crashes in global market• Inadequate medical care for a rapidly aging

population

Threats For China cont• Environmental Problems• Communist country – Not a free market• International pressure on Tibet issue• Inadequate pension and retirement benefits• Risk of infectious diseases• Risk of war with Taiwan(Trade partners Japan

and USA will be affected thus impacting on economy)

Threats for India

• Ecological degradation• Small batch production of high value goods• Rigid labor laws• Financial crashes• Environmental problems• Risk of Communal violence• Risk of infectious diseases• Political reforms

Threats for India cont

• Risk of War with Pakistan• Nuclear capabilities/risks• Beijing now pushing software and pledging

intellectual property right protection.• Design work might shift China to be closer to

the factories.• Most of hardware is assessable and partly

designed in China.• Long term cost of health problem

Trends Shaping the Business landscape• Macroeconomic trends

– Shifting centers of economic activity– Public sector services required for aging population– Consumer landscape of increasing numbers and increasing

buying powers• Social and Environmental trends

– Shift in behavior through technology– Emergence of knowledge intensive industries– Increasing corporate responsibility and accountability– Increasing demand for natural resources/strain on the

environment• Business and Industry trends

– Emerging global industry structures– Scientific management with informed decision making– Increased transparency in information sharing/community driven

Basis of Assumptions

Demographic environment• Population growth levels off in China as opposed to

continuous growth in India• Increase in Indian population is expected to go hand

in hand with increase in buying power while in china, the 6 pocket theory will be inverted

• Private and cheaper health care for senior citizens in India while in China, the state will have to cater to an increasing number of elderly people with increase in earner/dependent ratio

Basis of Assumptions cont

Economic environment• Earning power is increasing in both countries

this customers are becoming more discerning and selective in their demands

• Open markets in India while state regulations are common in China.

• Risk of war with Pakistan for India and Taiwan for China will have serious repercussions with the trading partners USA and Japan.

Basis of Assumptions cont

Socio-cultural environment• High poverty in India with the state

controlling resources and living standards in China

• Rich poor gap in Both countries• High corruption rate in India while financial

mismanagement is highlighted for China

Basis of Assumptions cont

Natural environment• India is more efficient in resource usage

compared to China• Both countries have scarcity of Water and

Space.• Both countries have high pollution rates with

its related health complications

Basis of Assumptions cont

Technological environment• Manufacturing base in China while Software

and Design base in India• Highly energy efficient production lines in

India as opposed to inefficient production houses in China.

• More efficient transport infrastructure in China while India still has steam trains

Basis of Assumptions cont

Political –Legal environment• Democracy vs Communism• Open market in India vs controlled market in China• State run financial institution in china as opposed

to corporate governance in India• Modern stock market will see more foreign players

in the Indian economy in the near future• Beijing now pushing software and pledging

intellectual property right protection

Market Potential

• Demographic environmentGreater potential for India

• Economic environmentPerformance based rewards in the Indian market

• Socio-cultural environmentBoth countries have their share of problems

• Natural environmentIndia has the edge in resource use efficiency

• Technological environmentHigher manufacturing infrastructure in China while India has got a better design

and software base

• Political –Legal environmentIndian democracy encourages free trade and greater investor confidence

Recommendations

• 66% of the factors according to the information provided in the extract point towards India having a better future to enter as a potential market and an investor and a supplier of goods.

References

• Burton S, keller and Kotler, “Marketing Management,” Person education Australia PTY Ltd, Pages 13,75.

• Engardio Peter, “ Crouching Tigers, Hidden Dragons,” Businessweek, August 22/29, 2005, 52-61.