international marketing research , china imr ng

8/7/2019 International Marketing Research , China Imr Ng

http://slidepdf.com/reader/full/international-marketing-research-china-imr-ng 1/35

LOVE THY NEIGHBOUR

(India &China

)



INTRODUCTION

China & India:emerging globaleconomic players

� High economic growthrates

� Rapidly rising share inworld exports

�

Large inflow of foreigninvestments

� Engines of demandgrowth in commodities



� Both ancient civilizations with proud traditions

� Together comprise for nearly 37% of worlds

population and 6.4% of worlds output� Both restructured their economic systems

� Both trying to attract more and more FDI by

reducing trade tarrifs



AT AGLANCE

CHINA

� 3rd largest country

� Most populous country

� GDP real growth rate 11.1%

� GDP per capita $7800

� Exports $ 974 billion

� R&D exp 2.5% of GDP� Focused sectors:

agriculture,textiles,chemicals,

oil,toys,automobiles

INDIA

� 7th largest country

� 2nd most populous country in

world� GDP growth rate 9.4%

� GDP per capita $ 3800

� Exports $112 billion

�R&D exp 1.5% of GDP

� Focused sectors:

agriculture,IT,textiles,gems &

jewelry,steel,engineering



Facts about India & ChinaParameters China India

Area 3rd largest in the world 7th largest in the world

Population Most populous country in the

world

Second most populous country

in the world.

Location North East of Asian continent South East of Asian continent

Geographic

structures

The great wall of china The Himalayas in the north

Resources Rich in natural resources Rich in natural resources

Political scenario Essentially communist country Democratic country

Civilization Yellow river civilization Indus Valley civilization

Main areas of

commerce & trade

Canton, Zhenzhen, Beijing,

Shanghai and Xiamen

Mumbai, Chennai, Delhi &

Bangalore

Focused sectors Agro, textiles, chemicals, oil,

steel, ceramics, toys, plastics,

automobiles & healthcare

Agro, IT, automobiles, textiles,

gems & jewelry, healthcare,

steel, cement & engineering.



China - strengths

� Very high economic growth,large market

� Very high savings & investment rate

� 2nd largest receiver of FDI

� Excellent tapping into global knowledge throughChinese diaspora

� Becoming worlds manufacturing base

� Large supply of labour

� Efficient export trade logistics� Government with strong sense of national

purpose



India-strengths

� Has jumped from 2-3% growth in past decades to6-8%

� Strong scientific & engineering capabilities

centred in chemical and software areas� Becoming worlds favoured destination for

software development & offshore outsourcing

� Has large critical mass of english speaking

educated & skilled workers� Strengthening export orientation and seeking

strategic alliances



Comparison of trade patterns

� Chinas manufacturing sector accounts for morethan 41% of gross domestic product(GDP). In2005 manufactured goods constituted 93% of exports or almost a quarter of the gross value of industrial output. China is a significant importerand exporter in manufacturing, with marketshares of 6.2% and 7.7%, respectively, in 2006.

� Indias trade in manufacturing has not been

remarkable to date(0.9% ), and the sectoraccounts for a far smaller share of GDP lessthan 16% .



Comparison of % share in world

exportsWorld exports 1980s 1990s 2006

CHINA INDIA CHINA INDIA CHINA INDIA

Manufacturing 0.8 0.5 1.9 0.5 8.3 0.9

Iron & steel 0.3 0.1 1.2 0.2 5.2 1.6

Chemicals 0.8 0.3 1.3 0.4 2.7 0.7

Office machines &

telecommunication

equipment

0.1 -- 1.0 0.8 15.2 0.6

Auto parts -- -- 0.1 0.1 0.7 0.1

Textiles 4.6 2.4 6.9 2.1 17.2 4.0

Commercial

services

-- -- -- -- 2.9 1.9



Bilateral trade

� Rajiv Gandhis visit in 1988 regarded as the ice-breaker.

� Trade resumed in July92

� In 94 India & China signed a trade agreement providing

for Most Favored Nation treatment.

� In 95 agreement to avoid double taxation

� Presently, Iron ore constitutes about 53% of India's total

exports to China.

� Value added items dominate Chinese exports to India,

especially machinery, including electrical machinery,

which together constitute about 36% of exports from

that country.



� Recently Chinese premier Wen

Jiabao visited India, where he

said that India and China must

take their trade to $30 billionlevel by 2010.

� India & China have also agreed

to work together in energy

security and at the multilateral

level at the WTO to support an"open, fair, equitable and

transparent rule-based

multilateral trade system", the

joint statement signed by Prime

Minister Manmohan Singh and

Wen said.



Bilateral trade(contd.)



Bilateral trade(contd.)

Year Chinas exports to India Indias exports to China

2000 1560.75 1353.482001 1896.27 1699.97

2002 2617.73 2274.18

2003 3343.59 4251.59

2004 5926.67 7677.43



Investments and joint ventures

� The first China-India joint venturebetween Indias Mideast

Integrated Steel Limited and China Metallurgical Import Export

Corporationwas commissioned in Orissa way back in January

1993

� Even today,there are sectors where China and India have

entered into joint ventures having joint stakes like in Kazakh

oil firms and Sudans oilfields.

� Indian companies could enter the $615 billion Chinese

domestic market by using it as a production base.



Scope for mutual collaboration

� R&D

� INTRA- INDUSTRY

�MANUFACTURING/MARKETING JOINTVENTURES

� JOINT COMPARATIVE ADVANTAGE

�

MUTUAL FDI



China exploring joint ventures in India

� Chinese textile machinery manufacturing

companies are considering joint ventures to

start manufacturing in India.

� Eyeing stronger links with the Indian software

industry, China is looking at joint ventures

with India in the area of information

technology.



India exploring joint ventures in China

� Indian investments in China currently include interestsin IT, pharmaceuticals, auto components and tyremanufacturing.

� Larsen and Toubro, India's largest engineering andconstruction organisation, has set up a low voltageswitchgear manufacturing facility in China.

�Tata Sons, the holding company of the salt-to-softwareTata Group has set up a liaison office in china to scoutfor opportunities in hotels, auto manufacturing,software services, steel and chemicals.



� State Bank of India (SBI), the country's largest

bank, this year started operations in China.The aim of the overseas branch is to facilitate

the growth of Indian investment in China and

to provide a window in china for investment

possibilities back in India.

� Ranbaxy was among the earliest Indian

pharmaceutical companies to enter the

Chinese market through a joint venture Ranbaxy Guangzhou China Ltd (RGCL), started

in 1993.



� There are some aspects on which India cant

be better than china, like in interest rates,

import duties, indirect taxes, power cost and

many other factors.

� So the only way to progress is to become their

business partner.



� Business in these countries

� More regular flights to China

�Encourage travel and tourism

� Offer them special packages for their trips

� Promote Chinese language

� Try to understand each other diverse culture



� Exchange their technologies as china is good

with MANUFACTURING and as we are in IT.

� Chinese company Huawei is already operating

in Bangalore and is employing 1200 Indian

Engineers. Company is saying to invest US$

150 million in India over the next three years.



Chinese Premier Visit in 2002

� Indias Strength-Software

Chinas strength-Hardware

�Signatories of WTO

� Current scenario

Setting of Indian companies in China

IT Sector(Eg.)



Current Scenario

� Banks

� Pharmaceutical Companies

�Other Indian groups and businesses

� Growing proximity b/w 2 countries

� Shanghai as a commercial hub

� MNCs



WHY CHINA???

� The general feeling in China, both among officials andbusiness leaders, is that there is a lot in commonbetween the two countries

�

Ensure a perfect synergy between the two mostpopulous nations.

� What is encouraging is the new-found interest amongbusiness communities of both the countries to forgehands and discover growth opportunities.

� This is just the beginning. We can expect more jointventures between companies of both the nations.



� According to N R Narayanamurthy, non-executivechairman and chief mentor, Infosys, China holdsa lot of potential for the IT sector. It is slowly

opening up. Being there first always helps. Wehave already set up a Chinese subsidiary, InfosysTechnologies (Shanghai) Co Ltd, in Shanghai.

� Says Kris Gopalakrishnan, ceo, Infosys: China is

the fastest growing market for technology andservices, especially for the financial services andtelecom markets. Its natural for us to be there.



Economic Similarities

� Both experiencing growth & major social

change.

�

Both restructuring their industries &welcoming FDI.

� Reducing trade tariffs.

�

Finding out their inefficiencies.



Dissimilarities� Chinese products cheaper because:-

� The Labour Factor

China India

Real Interest 4.9% 7.8%

Average import duties 11% 25%

Indirect Taxes (% of retail) 14% 25-30%

Lead time for import/export 2-30 weeks 6-12weeks

Power cost(in $ per unit) 5 cents 10 cents

Industry China India

Tv assembly- per operator

per day

9.3 8.4

Fan assembly- per operator

per day

53 35

Footwear per worker per

day

11 3



Continued

� China ahead in infrastructure i.e ports, roads.

� China has half a dozen SEZ making

manufacturing centre for MNCs.� Language is the major barrier.



Economic Issues

� China has twice per capita income of India

growing by 8-9%.

�

India has net growth of 4%. China double in 18yrs.

� China enjoys support of 50 million strong

Chinese community overseas(reason to lead

India in FDI).



Storming the Great wall

� Following reasons give insight

� Appliance co. imports 20% of its components

from China as they are 50% cheaper.� JK tires tied up with Chinese manufacturing

co. bcoz it is 20% cheaper.

� Picture tube manufacturers also from China

(annual production capacity=40 million)

cheaper by 4-5%.



The Chinese Opportunity

� The domestic demand in China needs to beexploited by Indian Companies.

� Trade between China & India is now growing

at a rate of 34%.

� Tarrifs being reduced.

� New areas of growth are pharmaceuticals,

cotton yarn, steel and sea food.� Communication, information & locating right

business partner is the big problem.



The Future� India in good position to take advantage of

changes in Chinas economy.

� Chinese threat to India for dumping goods.

� Direct Flights linked.

� India leads in 57 areas and china in 72.

� There is a need to focus synergies and achievegrowth.

� Including steel & automobiles, software, tourism� Analysts feel this is the right time for both

countries.



Selective areas of joint ventures in

China and its success

� M & M is planning to pick up majority equity in a JV with Chinas

Yancheng Tractor.

�

In 2009, Tata Tea plans to

enter the Chinese with its rangeof

greentea, with a 70:30 JV with Chinese tea major, Zhejiang Tea.

� The Tanti group, promoters of Suzlon Energy Ltd, jointly with

Bahrain-based Arcapita Bank, acquired Honiton Energy Holdings.

� Dr Reddys started its operations in China through a joint

venture, Kunshan Rotam Reddy Pharmaceutical Company.



Method and means to encourage flow

of people in both countries for

business promotions

� Create online sites for traders to find the right businesspartner.

� Create enquiry counters in the business cities of boththe countries.

� Language learning centers should be in both countries.

� Have interpreters/ translators in the business cities tomake it more easier.

� Fairs and Exhibitions to promote products in bothcountries.

� Remove trade barriers low/ free trade.



Thank You So Much!!!

international marketing research , china imr ng

Documents