January 22, 2020
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Does The Elephant Fear The Dragon?

Does The Elephant Fear The Dragon?
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Threat 1 Software/BPO

China can compete with India

  • Attempts by China to increase its English-speaking population
  • Lower salaries in China, even as India’s rising by 15-25% every year
  • Higher productivity among Chinese workers, willing to work longer hours
  • 40% of Indian software exports will be from bases in China
Threat 2 Manufacturing

China’s dominant global share in many areas

  • China has scale; India has to opt for niche, but value-added products
  • Cheap inputs like manpower, energy in China give it a cost edge
  • China operates at several price points, from the lowest to the highest
Threat 3 Bilateral Trade

China has a surplus balance

  • India’s exports basket is small; 5 commodities comprise 81.5%
  • China’s exports basket consists of technology-based items
  • These include more value-added electrical/electronic products
  • FTA between the two will favour China more than India
Threat 4 Energy

China’s more intent on gobbling overseas fields

  • China’s state firms much bigger than ONGC Videsh in terms of financial resources
  • China has a first-mover advantage globally; it also uses its diplomatic clout in many deals
  • China’s more aggressive in the bidding process; it links its cash deal with defence supplies
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