From rivals to partners

When talking about the two greatest growth stories in the world today, the question is not whether one should invest in China or India. Instead, the answer is that one should invest in both. No, this is not the recommendation of a two-handed economist. Rather, the likely profitability of this strategy is documented in an illuminating China-India book by an India-China husband and wife team, Anil K. Gupta and Haiyan Wang.

There is not much to argue with this well-written book, Getting China and India Right. There is a modicum of statistics, but the sprinkling is very informative. For example, a table on the evolution of China-India trade shows that it is doubling every two years and in 2007 was at $36 billion, up from only $3 billion just seven years ago. Their projection, that within the next decade this bilateral relationship is likely to be among the top five trading relationships, is not likely to be off the mark.

As many Indian corporations have led the way (with some reverse flow as well), the other emerging strong link between the two countries is one of investment. Lenovo in PCs, and Infosys in IT; Haier in home appliances and Suzlon in wind turbines. And so on. This a strong message—investors, and policymakers can ignore this important Asian reality at their peril. The authors correctly note that what gives this bilateral partnership urgency, meaning and importance is something as straightforward as size. The dynamic changing world order is underlined by the following simple statistic: just seven years ago, China and India jointly accounted for 17 per cent of the US GDP; today, they account for more than double that amount. 

The book is not so much about portfolio investment as it is about direct investment. It has management stories about corporations and how they can benefit from the complementary advantages of investing in each country.

The book is not so much about portfolio investment as it is about direct investment. It has management stories about corporations and how they can benefit from the complementary advantages of investing in each country. So, besides pointing out the big picture, the authors are careful to emphasise the ground realities as well. The book is among the first on the important joint China-India story, and will be a ready reference for scholars attempting to discern the future.

And this is where there is a drawback to the book, with the reader wanting more. The book was published right in the middle of the greatest economic crisis the world has seen. (The Great Depression did not affect the developing world as much as this crisis.) China is an important aspect of this crisis, India much less so. Some commentary by the authors on the different development models of the two countries would have been useful. China has a consumption-to-GDP ratio of 38 per cent, India upwards of 60 per cent. A commentary on global imbalances, and the contribution of China’s trade surplus to the crisis through its accumulation of dollar reserves, and its deep undervaluation of the currency is part of both the big picture, and the future of the new emerging world order. This is missed in the book, but then a book, even as fine as this one, cannot serve all readers.

Bookmarks Made in China by Winter Nie & Katherine Xin with Lily Zhang John Wiley Pages: 210 Price: Rs 1,250 The book is an insider’s approach to understanding the huge success of China’s Privately Owned Enterprises (POEs). Comprising interviews with 20 POE founders, the authors analyse the business models and market strategies that have made these firms successful. China Entrepreneur by Juan Antonio Fernandez & Laurie Underwood John Wiley Pages: 336 Price: Rs 1,250 Based on in-depth interviews with 40 successful expatriate entrepreneurs in China, this book aims to share ‘real’ stories and offer key advice to budding entrepreneurs. The authors cover critical issues, from how to win government approvals to how to negotiate with suppliers.