Prof Anil Gupta spoke on China-India economic relationship in a recent interview with The Diplomat.
In terms of business practices and consumer preferences, what is China looking for when entering the Indian marketplace and vice versa?
Even though China-made toys are ubiquitous in Indian markets, the vast bulk of Chinese exports to India consist of capital goods rather than consumer goods. Think of companies such as Shanghai Electric exporting power plant equipment to Indian utilities and others such as Huawei and ZTE selling network equipment to Indian telecom operators. On the consumer side, the only big players are Lenovo in PCs (and more recently tablets and smartphones) and Haier in home appliances. Others such as Xiaomi in smartphones are just entering the Indian market.
In general, Chinese companies find the Indian market to be extremely price sensitive, certainly more so than in China. Often, this results in difficult negotiations and increases the risk that, in order to win the contract, the Chinese exporter may cut corners somewhere. It is a widespread – albeit not universal – belief among Indian business people that Chinese products are much lower in quality than those from Japan, the U.S. or Europe. A major reason behind this perception is the fact that Indian importers often go for the lowest price and thus unwittingly end up buying the low-end products. That said, as the economic ties between both countries become deeper, people on both sides are learning rapidly. Huawei, Lenovo and Haier have made direct investments in India. Many Huawei executives have spent years living and working in India and have even adopted Indian first names. They are getting savvier about the Indian market.
On the other side, Indian buyers are learning that, as in other large economies, Chinese companies come in all shapes and sizes – from suppliers of the world’s best-quality products to [suppliers of] the worst-quality ones. Thus, the quality of the product that one gets depends not just the supplier but also on whether the buyer is discriminating enough and what he/she is willing to pay.
Dr. Anil K. Gupta
Anil K. Gupta is widely recognized as one of the world’s leading experts on strategy and globalization. He is a regular columnist for BusinessWeek and co-author of “Getting China and India Right: Strategies for Leveraging the World’s Fastest-Growing Economies for Global Advantage.” Dr. Gupta has advised a wide range of multinational enterprises, including IBM, ABB, Black & Decker, Lockheed Martin, Marriott, Monsanto and National Semiconductor.
Dr. Gupta outlines how companies can leverage the market and the resource opportunities presented by the China and India phenomenon to achieve global dominance within their particular industries. He also talks about the key questions that business leaders must address in order to develop winning strategies to go global and to transform global presence into global advantage. He offers conceptual frameworks that business leaders can use to answer these questions.