• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  6. 6
  7. 7
  8. 8
  9. 9
  10. 10
  11. 11
  12. 12
  13. 13
  14. 14
  15. 15
  16. 16
  17. 17

China or India? Many companies ask themselves this question. Due to saturated markets, increasing costs and low growth rates in the developed western countries, going to Asia might be the only possibility to sustain healthy growth rates

Extracts from this document...


Table of content: * Introduction * Business development and opportunities * Risks o Political and General Instability Risks o Ownership and Control Risks o Operations Risks o Legal risks o Economical risks o Cultural and social risks o Ethical risks * Conclusion * Bibliography Introduction: China or India? Many companies ask themselves this question. Due to saturated markets, increasing costs and low growth rates in the developed western countries, going to Asia might be the only possibility to sustain healthy growth rates. With more than one billion people living in India and China respectively, including a huge middle class and growth rates are more than double as in western countries there are huge opportunities for companies. The benefits of globalization made it possible to enter these markets. But these opportunities come also along with risks, therefore it is vital to have a closer look at these two countries to identify these risks and decide then which country fits to the company and where you think you can handle the intercultural differences best. Business development and opportunities: The key drivers that made the globalization possible were also in favor of the business development in China and India. The evolution to more democratic systems and open market systems enabled the opening up of the market and the falling barriers made it possible to enter these markets. Technological advances especially in the communication and transport sector made it profitable to ship products back and forward and outsource services. Western companies are actually forced to go abroad to make profits because of saturated markets in their home markets or in the western hemisphere. Often they invested a lot on R&D and only if they are global player the gain sufficient returns on investments. They also want to take advantage of the low cost resources and the expanding market demand in China and India. The worldwide demand is more homogeneous than ever before. ...read more.


McDonald is an example of a company that had difficulties. Because it did not have the right 'guanxi', it lost a case against the government and had to move out of a profitable location. China is a member of the WTO since December 11th 2001, but at the moment it does not enforce prosecution of infringements against intellectual property rights rigorous. That is the reason why piracy is very common in China. 'It is one of the worst offenders against IPR and has a piracy rate of 92%' (Hill, 2005, 55). India has because of its colonial past, a legal system that is based on the British common law. It is able to settle 'sophisticated and complex cases' (Hill 2005). But due to many cases there can be delays. India is member of the WTO since January 1st 1995 and Intellectual Property Rights are respected also enforceable at court. Its IPR are compatible to the TRIPS agreement. But for patens it is different, they are prohibited in areas that include the use of food, medicine and drugs. That allows western medicines and drugs to be reproduced. There are still laws that make it difficult for doing business in India; Hill (2005) shows an example of a law that makes it difficult for companies with over a 100 employees to fire people at all. Companies have to make sure that they understand the concept of law and enforcement in the country. Then they should adapt to these conditions and respect them. For western businesses it might be easier to rely on a fixed set of laws, which they are used to. India offers this environment. You can rely on this, without being worried how they might be affected by connections. It gives foreign investors security and they do not need to worry about their attitude towards corruption. A big advantage is as well that Intellectual Property Rights are respected. ...read more.


'India has created world class companies that can often compete with the best in the West, often on the cutting edge of software, pharmaceuticals and biotechnology' (Power2004) and these are the technologies of the future. That means India will be competitive in the future and the growth will be stable then. It shows that India is future orientated. Therefore is 'India better placed than China for further growth' (Power2004). 'If China will be the world's workshop, India will be its laboratory' (Bennhold 2004). Omen for success are also good bond markets and 'better institutions and corporate governance' (FAZ) The reduced risks: A major advantage for India is that is a democracy. There are no risks of revolutions and insurrections. That IPR are protected is also a good way to attract and ensure high tech investment in the future. An advantage is also that India is respecting the human rights. This is getting more and more important for multinational companies, because their image will be affected and consumers all over the world are getting more and more sensible for this topic. But that does not mean that companies should not be careful in entering the Indian market. There are many pitfalls. Companies should conduct a careful market research and be sensible to special circumstances in the market. They should not overestimate the opportunities and the potential market and respect the local tastes, social and cultural differences. To choose the right entry strategy is also a major factor of success. I would recommend if the company has enough resources to set up a wholly owned subsidiary. This will ensure that you will have control and no unwanted technology transfer. Quality standards will be ensured, tariffs and trouble with uncommitted partners avoided. Anyway it should be ensured that there are enough locals under acceptable conditions employed, also in the management level. This will help the company to respond to the specialties of the market and shows that it is aware of its social responsibilities. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Evaluate the impact of Nike's outsourcing strategy and factory location on the host nation

    Without Nikes operations it is possible these people may be unemployed. However it could be the case that low unemployment is due more to the development of other industries such as iron and coal, and chemicals. For example, In Thailand more people are employed in services (49%) than industry (40%).

  2. Free essay

    In this case study, I will be doing research on how is Chinas economy ...

    Although they can be found in nearly most of the provinces, almost all of them are located in the northern part of China. A lot of good quality coals like bituminous coal are mostly reserved in China, Anthracite coals also present in some areas but its quite rare overall, that's mostly found in Rocky Mountain.

  1. Report on Business Growth

    In 2008 rising gas prices resulted a 30% drop of sales of sport-utility vehicles which had been General Motors' most profitable product. Decreasing of sales of SUVs resulted in a cancelation of a 2 billion dollars worth investment program for a new SUV platform.

  2. Differences between the standards of living in Slovakia and The Hague

    living is higher quality since you are able to afford it and it increases the social life of individuals so their standard of living becomes higher quality. As you can see, there is a huge difference between these two. In the Netherlands, majority of people (95 percent)

  1. GDP and Growth

    However, the 'real' GDP in 2000 was �1,035,295, which means the same amount of output but using the price from 2003. In other words, when comparing the 'real' GDP from one year to another allows us to know the amount of outputs that the country has produced.

  2. Why did India launch a program of economic reforms in 1991? How successful these ...

    330 & Jagdish Bhagwati 1993, chapter 2, p. 67). Besides, both the central and state government took a number of decisions to achieve higher economic growth. Central government reduced subsidies which were known highly distortionary and poorly targeted for example subsidies on food and fertilizers and introduced rational user charges

  1. Chinese car market overview. Citroen case study

    SAIC is joint venture partners with both VW and GM.To the chagrin of global carmakers, competition in China's car industry will be ever more ruthless in the days to come. (DUNNE, 2002) D) GOVERNMENT POLICIES The Chinese government has encouraged the private ownership of cars in its most recent Five Year Plan.

  2. Exchange Rates and their Effect on Morocco Report.

    By which the US dollar was linked to gold at $1 to 35oz of gold bullion and in turn other countries agreed to fix their exchange rate to the US Dollar. (Times, 2008) In 1971, President Richard Nixon ended dollar convertibility to gold fearing a run on fort Knox which did not hold sufficient gold.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work