Comparison of industrialization between China and India

On September 30, the day before the 70th anniversary of the founding of the People’s Republic of China, a delegation of Chinese entrepreneurs signed a memorandum in India with the government of Gujarat in India. Chinese home appliance, furniture and electric vehicle brands provide venues and services. This is part of the local Tulaila Smart New District. On the left side of the China Industrial Park, there will be many Indian small and medium-sized enterprises settled by the government. The local executive head said that he hoped that enterprises from China could impart advanced experience in this park and help local enterprises develop together. Behind this win-win cooperation is a brave attempt by Chinese companies to try to lead the Indian manufacturing trend.

1.India’s fastest growing foreign capital
In 1987, China’s reform and opening up had been going on for nearly 10 years. The land of Divine Land, especially the southeast coastal area that was the first to open up, is almost a large construction site, and the reform of the system is also continuously promoted. Those foreign capitals that were hesitant at the beginning of the reforms have begun to regret not investing as early as possible in this growing country that is visible to the naked eye.

Shanghai was a very small city from 1984 to 1988. Pudong was still full of farmland, not to mention the Yangtze River Delta urban agglomeration.

Shanghai from 2013 to 2017 has undergone earth-shaking changes, and the true scope and definition of Shanghai have also changed.

Comparison of industrialization between China and India

However, because the foundation of the past few decades is too thin, China’s development level should not be overestimated at this time. With a population of 200 million more than India (1.084 billion in China and 817 million in India), China’s nominal GDP is not much different from India. At this time, Chinese companies are learning the advanced experience of European, American, Japanese, and Korean companies like sponges, and it is not yet time for them to export.
However, this year was also a turning point for the economies of the two countries. After entering the 1990s, China’s huge economic potential was released in an orderly manner, and its economic strength and international influence with India began to widen the gap significantly. The nominal GDP was twice that of India in 1995 and three times that of India in 2002, and it is now more than four times that of India. If calculated in purchasing power parity (ppp), it is more than twice that of India. It has already surpassed India’s 4 times in 2017.

Comparison of industrialization between China and India
In the past, it was able to maintain a high growth rate of more than 10% each year. After the shift, it also maintained a growth rate of about 7%. It is the best indicator of the rapid gap between China and India. Reasons for the reversal to begin. This embarrassed the Indian government, which believed that “India is either a world power or nothing.” However, limited by India’s inefficient federal system and budget system, it is very difficult to catch up with China in a short period of time.
From 1985 to 2016, India’s GDP growth rate was red and China’s green. Although after Modi came to power, relying on high-profile economic reforms and industrial support, India has had an explosive period and has become one of the highest economic growth countries in the world for several years. But economic growth driven by debt and credit also leaves hidden dangers.
Due to the lack of technology accumulation and high-quality industrial workers in the manufacturing industry that India wants to develop at this stage, there is actually no good investment target, and the investment of a large number of financial institutions has finally turned into bad debts. Coupled with the delicate export relationship with the United States and the obstacles to structural reforms, this growth finally came to light in 2018.
The problems exposed in India in the past few years have also affected foreign investment interest. In the past few years, companies in the United States, Britain, Germany and other countries that have invested the most in India have shown unstable investment in India in recent years. This is undoubtedly bad news for India, which desperately needs foreign capital and technology.
However, no one can think of it. Chinese companies that have completed the original accumulation have been leaping all the way in India. In recent years, they have become India’s fastest growing source of foreign direct investment. According to Invest India statistics from government agencies, there are currently 700 Chinese companies doing business and investing in India, with a total investment of US $ 12 billion, which is the fastest growing source of foreign investment in India in recent years and will create a lot of work post.

2. In India, fight for the future

Comparison of industrialization between China and India
It is undeniable that India remains the most promising emerging economy in the world today. This country has a huge population that is not lost to China, it also has an industrial foundation inherited from the Nehru era, and it has a more advanced information technology industry and a pool of scientific and technological talent. Whoever can take the lead in this market and help develop its economic potential will be able to take the initiative in the next era. Tidel Park in Chennai, India was established in 2000 and was the largest IT park in Asia at the time.
The problems in India are also obvious. At present, India ’s industrial output value accounts for only 23% of China ’s output value (China ’s 40%). Poor infrastructure and industrial services often make investment in India ’s investment basket. High government relations costs and strong conservative forces Affect the presence of foreign companies.
However, a series of basic investments made by the Modi government during the previous term are showing results, and they have just won the middle of the year and they have the next term to maintain the continuity of their policies.
For example, the power supply that is essential for industrial development. India has been out of power for the past few decades due to poor power facilities, but in 2019, the Indian government announced that the nation ’s power supply would cover all demand with a slight savings. Abundant electricity and cheap labor have attracted a large number of electronics manufacturing companies. India is also a big country that is heavily dependent on imports of oil, and various types of energy are also on the battlefield to minimize its dependence on imports.
Chinese mobile phone company Xiaomi is the beneficiary of India’s change. Since it announced the production of mobile phones in India in 2015, Xiaomi has successively opened 7 manufacturing plants in India with its partners. In 2018, Xiaomi’s strategy in India was the most radical. It opened three factories in one go, mainly because the Indian government announced in that year that it would increase tariffs on mobile phones and parts. In the same year, Shenzhen-based vivo also announced the construction of a second factory in India. The factories owned by these two brands alone can produce 100 million mobile phones each year, quickly covering the Indian smartphone market and providing tens of thousands of jobs.
Similarly, the home appliance industry, which has been the benchmark for China’s manufacturing industry in the past few decades, has also achieved a lot in India. Originally, the mid- to high-end home appliances in the Indian market were mainly Chinese brands. Now through mergers and acquisitions and establishment of factories in India, Chinese home appliance companies will have to compete with India’s local home appliance industry to compete for greater market share. The expansion of TCL in India is very representative. This Chinese company entered the Indian market relatively late, but progressed very quickly. Last year’s business in India increased by 120%, and the process of manufacturing localization is also gradually accelerating. At the end of last year, TCL broke ground in India to start a smart manufacturing industrial park, and transplanted the entire industry chain capabilities from screens to complete machines to India. Both Haier and Midea have been operating in India for many years and have their own industrial parks, producing refrigerators, washing machines, air conditioners and other products.
These companies value the market potential of India’s billions of people. Most households in these populations have not yet popularized home appliances and smartphones. Once developed, it will be a huge market no less than China’s after the reform and opening up. Driving manufacturing through manufacturing and cultivating a new generation of consumers with employment has become a new way for these Chinese companies to maintain growth and gain a future.

3. Who will implement Made in India?
In fact, in addition to manufacturing mobile phones and home appliances as a benchmark, another key industry for Chinese companies to enter India is the automobile. This may be beyond expectation for many people. The domestic auto industry, which has been considered to be uncompetitive in the international market, is also using the original accumulation of the golden period of China ’s car ownership surge in previous years to siege in India.
At present, the investment proportion of China’s automobile industry in India accounts for 40% of the total investment, and it is a well-deserved leading industry. However, it is still more difficult for Chinese auto industry investment to enter India than for mobile phones. After all, the trust of Chinese cars in the country is not enough, and it is even more difficult to impress foreign consumers. In order to make the brand more persuasive, Chinese car companies have adopted a curve-entry strategy, often expanding their business territory by acquiring developed country brands.
For example, SAIC Group (21.650, 0.32, 1.50%) in India mainly promotes the acquired British brand MG, and has established a manufacturing plant in India. This is also regarded as SAIC’s internationalized traditional art ability. When it entered Southeast Asian markets such as Thailand and Indonesia, it also promoted the MG and emphasized the brand’s long history in the UK sports car industry, weakening its Chinese background.
This move has achieved good results in India. The new SUV HECTOR has received more than 10,000 orders in India, which can be regarded as stunning in the less developed Indian market. In fact, the prototype of this car is the domestic Baojun 530, but the effect of changing the British LOGO will be much better.
Geely is also adopting the same strategy, and its catch is the factory of the old Swedish brand Volvo in India. By promoting Volvo’s Nordic descent, Geely also gained a foothold in the Indian market and took the first step for future development.
In other unseen areas, there are also some Chinese companies that have found their own investment paths in India. The largest mobile payment platform in India is called Paytm. It was started in 2010 and started late. However, this company is growing very fast. It currently has more than 100 million Indian users and has even more downloads than the US giant Amazon, which has long entered the Indian market. Behind the scenes of this payment platform is Alibaba. Ali chose to inject capital into the company in 2015, and Ant Financial subsequently took part of the shares of Paytm’s parent company One97. In other words, India ’s largest mobile payment platform now has a broken capital relationship with China ’s largest mobile payment platform. Similarly, MakeMyTrip, India’s largest self-service travel platform, is now controlled by its Chinese counterpart Ctrip.

4. China’s ability to innovate the Internet model is achieving self-replication in India.
Chinese companies have overweighted the Indian market in various fields, and cannot help but attract the attention of Indians. However, unlike the direct export of goods in the past, under India’s high tariff pressure, these companies have adapted to Indian policies through investment and localized production, and are actually improving India’s industrialization level. The “Made in India” strategy promised by the Modi government is to increase India’s industrial output value from 23% to 25%, which also depends on the help of these Chinese leaders who have cultivated in giant emerging markets for many years. As the economic relations between the two sides become closer, it will become increasingly unrealistic to cut off these links.

Competition between China and India in Asia will never end, but it is clear that China today has taken the lead through cooperation.

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