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
