the likely impact of the growing economic power of China and India on individuals, national or multinational firms in the 21st century

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BRIC countries

Brazil - Russia - India - China

Their economies will surpass all the worlds nations economies combined

Mexico - Indonesia - Nigeria - Turkey

The MINT economies  = next rising economies + supposed to be in the top 100 economies by 2015

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India + China Similarities

High population


Emerging from poverty


High growth rates


Becoming increasingly powerful


Privatizing their state owned enterprises


Trying to reduce variations in avg incomes

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Population Size

India

  • in next 2 decades will surpass chinas population
  • in future population will be younger than Chinas so will be more able to fill job vacancies
  • only will work if education is improved

China

  • 1 in 5 people live in china
  • By 2030 population will drop
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Economic Growth + Predicted Economic Power

India

  • will be close to USA's GDP by 2030
  • growth slowed in 2012
  • 367 milliom lifted out of poverty by 2015
  • avg GDP growth from 2004 to 2011 was 8.4%

China

  • will we worlds largest economy by 2020
  • growth slowed in 2012
  • several hundred mill ion people have been lifted out of poverty
  • avg GDP growth from 1989 to 2011 was 9.3%
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India + Chinas economy

India

  • 55.3% service
  • 28.6% manufacture
  • 16.1% agriculture

China

  • 43.6% service
  • 46.8% manufacture
  • 9.6% agriculture
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How India and China developed

India

  • less FDI encouragement + regulations discourage business start ups
  • lots of IT + engineer graduates
  • citizens still working in agriculture, as india diversifies this will decrease

China

  • china wanted to open economy
  • opportunities for businesses to outsoure manufacture to china
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India and China's Imports + Exports

India

  • more imports than exports
  • manufacturing = behind china (china was first to offer the benefits of offshoring)

China

  • more exports than imports
  • exchange rate kept low so chinese exports stay competitive => creating more and more jobs for the poor population
  • surplus = used fo FDI/lending to governments
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India and China's Purchasing Power + Foreign Inves

India

  • increading the amount spent on FDI
  • 21st investor in FDI
  • poweful enough to acquire worl leading companies

China

  • wants to secure future supply of raw materials - uses FDI to do it
  • australia = china's main FDI destination (in minerals + energy)
  • 5th investor in FDI
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Barriers to market entry in India and China

India

  • culture, society and language differences = difficult entry
  • 122nd easiest place to do business
  • joint venture = best way to enter
  • corruption + bureaucracy still issues

China

  • culture, society and language differences = difficult entry
  • 83rd easiest place to do business
  • hard to compete with state owned companies
  • joint venture = best way to enter
  • corruption + bureaucracy still issues
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Impact of China + Indias growth

Impact on Individuals:

lower prices, more choice + more job opportunities when incomes rise

competition from imports = job losses and offshoring/outsourcing = job losses

Impact on Businesses:

access to new markets, access to new skills e.g. Indias IT graduates, offshoring to china may reduce costs and may get FDI 

competition from low cost producers, chinas low exchange rate = difficult to compete with and high competition = reduce market power

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Trade opportunities with India and China

India

  • investing £600 billion in infastructure. UK has world class companies in roads, railways etc
  • expanding manufacture. Opportunity for British high end engineering technology firms
  • healthcare expanding. UK pharmaceutical companies should thrive
  • Entertainment + media sector = worth £15 billion. New opportunities for UK's tech and content businesses

China

  • needs raw materials + energy. Prices for these = increasing so any involved businesses can profit and expand 
  • china's growth = increasingly wealthy customers. Branded luxury goods are in demand
  • consumers are quick to adopt unfamiliar products. New frowth areas for foreign businesses.
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Opportunities and Threats of UK business going to

India

businesses can outsource + save costs, relationship built with india = UK has access to indian middle class consumer and india was part of british colony = understands uk culture.

HOWEVER laws change quickly and are more strict = difficult for business to operate and indias educated may take UK jobs = increased UK unemployment

China

China's relationships with other countries = UK can also build relationships with the countries and businesses can outsource + save costs

HOWEVER chinese manufacturing threatens UK manufacturing, Chinese students may take UK education and jobs and

opyright isnot enforced properly in china = stolen innovation

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Effect of UK business on India and China

Positive

  • more jobs
  • new skills
  • improved infrastructure
  • new technology

Negative

  • safety concerns of offshoring
  • local businesses have competition
  • weakened traditional culture
  • business lacks commitment and may just leave
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