Analysis of the opportunities for a MNC to expand its international operations on Chinese and Indian markets

Extract

[...] The Chinese principle of equal access to education and social progress is rather well established, even if the growing gap between rich city and poor peasants is a problem. Concerning the religion, a lot of Chinese people are atheist but the major religion is Buddhism and there is a minority of Christians. In India Hinduism is largely the most important religion (around but there are also a lot of Muslims. The most important social and cultural aspect in China is the strong communist power which is difficult to imagine for a Western person (no individual or press freedom, collective spirit). [...]

[...] The solution for a company which wants to extend its international operations on new markets is to contact Export Assistance Centers such as the “Missions Economiques” which will be able to inform you about all the necessary points: Services to locate and evaluate overseas buyers and representatives International trade opportunities abroad Foreign markets for French products and services Foreign economic statistics Export documentation requirements U.S. export licensing and foreign nation import requirements Export trade financing options International trade exhibitions Export seminars and conferences Regarding the legal environment, the company has to take into consideration all the following points: The company must obtain an import license in order to import the goods on the Chinese or Indian Territory. [...]

[...] II Differences between China and India We saw before that India is a decade late compared to China in terms of economic growth, even if the Indian government made a lot of efforts to improve this situation. We also saw that the Foreign Direct Investments are largely important in China than in India, with a strong presence of all the main Western MNCs. As a location to expand business operations or a market to enter, the both countries offer different benefits and pose different risks. [...]

[...] In 2006, the Foreign Direct Investments reached $63 billion (composed by 80% from the manufacturing sector) and thanks to an attractive market for foreign investors and thanks to a large improvement of the quality of infrastructures. Exports represent 36% of the GDP which was about $2,630 billion in 2006. China gave a large priority to manufacturing which contributes 48% of the GDP today. Textile industry is the most important industry in China which is the most competitive country in the world thanks to its competitive advantage based on low labour costs, even if the World Trade Organization imposed in 2006 quotas on all the textile exportations from China. [...]

[...] The economical reforms allow India economy to have today one of the highest growth rate in the world The bureaucracy disappeared and has been replaced by a relative proactive situation The government made a lot of efforts to open more the Indian market to foreign investors The very quick growth of a powerful middle-class in this country leads to a very promising market The government realized huge investments for equipment and infrastructure in order to catch up other countries like China There are all over the country a lot of very active R&D centers which participated to the growth and the competitiveness of the Indian economy As we saw before, it is particularly interesting for any MNC to extend its international operations in India when it deals with services because the Indian government made specific efforts to develop this part of business thanks to the competitive advantage based on the quality of the workforce (contrary to China which insists on the quantity and the cost of its workforce). [...]