Ranked #1 in the World
Loading ...
Multinational companies in China and India will emerge as economic dragons and tigers as the two countries learn to work together, a faculty panel said Feb. 17 at Thunderbird School of Global Management.
“When you see China and India working together, you have a powerhouse,” Thunderbird Professor Mary Teagarden, Ph.D., said during the roundtable discussion with prospective Thunderbird Executive MBA students in Glendale, Ariz. “China is fantastic at the tangible, and India is fantastic at the intangible. When you bring those two together, you have the opportunity to produce extraordinary results.”
Thunderbird professors Kishore Dash, Ph.D., and Sundaresan Ram, Ph.D., joined Teagarden in the discussion, titled “The Rise of Chinese and Indian Multinationals: 21st Century Dragons and Tigers.”
>> To learn more on this topic, enroll in Thunderbird’s online certificate programs, “Doing Business in China” or “Doing Business in India.”
“There is so much talent in both India and China, that we can’t ignore it,” Teagarden said. “Their talent pool is simply deeper and broader than our pool here, and it’s deeper and broader than the pool in Europe.”
Together, two countries claim about one-third of the world’s population. They are geographically close, but each country has its own challenges and opportunities.
The India advantage
Ram and Dash both grew up in India but cannot speak to each other in their native languages.
“Every 500 miles, we change language in India,” Ram said. “If I speak to him, I cannot speak Oriya and he cannot speak Tamil. So we speak in English.”
Ram said the use of English as a common language in India gives the country a competitive advantage among Asian markets. “This is the only thing we sort of thank the British for,” he said with a laugh.
Dash listed several other advantages that distinguish India from other emerging markets. These include:
– Rapid economic growth leading up to the global recession.
– A fair legal system.
– Active participation in global initiatives, such as the World Trade Organization.
– Cost competitiveness.
– A young, productive workforce that is growing (while China’s young workforce declines).
– A rising middle class with disposable income.
He said India also has a long history of developing its own multinational organizations rather than relying on foreign direct investment.
“India has been practicing a domestic entrepreneurship model, while China’s development story is foreign direct investment,” said Dash, who came to the United States in 1991 as a Fulbright Scholar. “The debate is inconclusive as to which model of development is preferable. We’ll have to wait and see.”
Indian challenges
Dash said companies doing business in India also face certain challenges.
The democratic country has a five-year election cycle, which creates turnover and a certain degree of uncertainty before and after each election. “You won’t get a lot of support from the bureaucracy and the politicians at these times,” he said.
Lagging infrastructure, corruption and loose protection of intellectual property also create challenges. “Indians think copyright means right to copy,” he said.
India also is embroiled in regional conflicts with neighbors such as Pakistan. “India is surrounded by a cluster of failed or failing states,” Dash said.
One size doesn’t fit all
Ram, who teaches global marketing at Thunderbird, said companies doing business in India also need to understand the country’s sharp diversity.
“If you’re going to market in India, one size does not fit all,” he said. “The Rolls Royce is going down the same road as the rickshaws and cows.”
He calls the consumers at the top of the pyramid the “movers.” About 2 to 5 percent of the population falls into this group, which includes multibillionaires. Next on the pyramid is the “shakers,” which make up about 10 to 20 percent of the population.
“But 20 percent of a billion people, that’s 200 million people,” Ram said. “That’s 30 Switzerlands. And these guys can buy anything they want.”
Closer to the base of the pyramid are the “dreamers,” who make up 30 to 40 percent of the population. Ram said people in this group are hungry for knowledge and highly competitive.
He said his own mother made huge sacrifices to send him and his brothers to school, and he started learning English at age 4. “Family comes first in India, then knowledge and then everything else,” he said. “Because all the wealth you have can be destroyed, but not knowledge.”
That’s leaves 400 million people at the base of the pyramid. These people are scattered across 500,000 villages. Ram asked prospective students in the audience to imagine getting $2 from each of these 400 million people … everyday.
“The way you market to this half of the pyramid is completely different,” Ram said. “But the opportunities are immense.”
China connection
Teagarden has consulted companies in both China and India and said the potential for cooperation is becoming increasingly clear. As the two economies emerge together, she said the result will be a more level playing field worldwide.
“Chinese and Indian multinationals are growing in power, size, impact and global reach,” she said. “There’s no putting the genie back in the bottle.”
She closed her presentation by asking the prospective students to consider two questions: “What would be missing in the United States if China and India went away? On the other side, what would be missing in China and India if the U.S. went away?”
Leave a Reply