Fact 6:

The “ChIndia” myth.

In recent years the media have been putting India and China in the “same basket” and creating sort of a “ChIndia myth”. This myth is frequently based on the following facts: both countries are among the fastest growing economies in the world thus having the biggest potential for growth; together they have about 1/3 of the global population (making it the biggest markets). Additionally, often is highlighted that China and India are rather complimentary in their economic strengths; India being an IT and service powerhouse whereas China is seen as the “global” manufacturing hub.

The focus on those observations makes us commonly believe that China and India are very similar when it comes to “sell your products” in those countries. In fact, they are totally different markets, making this definition “ChIndia” an intellectual imposture.

To begin with, China and India have two different cultures with diverse histories. For instance, India has never had any hard worked “national reforms” like in China (initiated in 1978 by Deng Xiaoping). China’s single party authoritarian state (compared to India’s democracy with hundreds of political parties) has helped China to achieve a faster growth and a higher reduction of poverty.

Second, Chinese citizens (male or female) have now in general more opportunities to access education, find a job and live a “comfortable” life than in India. Approximately 90 % of Indian’s still live in poverty, only 10 % (about 100 million) have benefited from the recent economic growth (in 2004 China had 10 % of its population living under the poverty line).

Third, while India depends highly on foreign direct investments (mostly due to its significant trade and account deficits), China has trade surpluses which supports the domestic demand and the growth of imports.

Now that China is catching up on IT and services, India running after manufacturing; it will be interesting to see how long will it take India to catch up on China. India is just starting its industrialization process and will soon become a strong competitor but how, will it be faster, slower ? more efficient ? cheaper ?

In any case, the future development of those two countries will do much to determine the world’s outlook in this century.

Finally, from our experiences and for now, it is just much more difficult to simply “get things done” in India than it is in China.