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What Sets India And China Apart In The Global Economic Race

What Sets India And China Apart In The Global Economic Race

Reporter ,  22-Oct-10


The recent rise of India and China in the global economic stage, especially when the rest of the world was reeling under possibly the worst recession ever, is nothing short of remarkable. The BRIC (Brazil, Russia, India, China) model recently revised by Goldman Sachs indicates that both these coutries would be reaching the top of the economic pyramid far sooner than earlier projected, with China already set to become the world’s second largest economy.

On the visibility front, it is Indians who are dominating the center stage with their rise to top positions in several large corporations the world over, and the rise of indian businesses globally. However, though the two countries have shown a similarity in growth over the last two decades, the countries by nature are far different from each other. A differnce in history, culture, demographics and economics will show up in the future in terms of how each country will progress.

 The presence of Indian and Chinese executives in the world’s multinationals was recently tabulated. Indians seem to outnumber the Chinese in their presence at the C-level in the world’s top 50 MNCs, if the Indian and Chinese companies like Arcelor Mittal and Sinopec are excluded from the list. The main reasons for the better showing of Indians appear to be English proficiency, where the chinese lag, since most business in China is conducted in Chinese. Contrastingly, Indian firms have grown rapidly in the West due to language proficiency. However, China is working hard to catch up, with companies making a business out of teaching English to the Chinese masses.

The second reason for India’s success is seen as its focus on management education. IIM Ahmedabad came up with Harvard collaboration in the 1960s, and IIM Kolkata had support from MIT’s Sloan School of Management from the 50s. As a result, professional management has been taught in India from the past 50 years, while it only started in China in the 1980s. Indians have even made it to the top of US B-schools - Nitin Nohria is the new Dean at Harvard Business School and Sushil Kumar was recently named to lead Chicago Booth – and a third, Dipak Jain, seems headed to lead INSEAD after several years as Dean of Kellogg Graduate School of Management at Northwestern University.

The third reason is India’s focus on a mixed economy that allowed private enterprise to grow right from the post-independence era. This is in marked contrast to china’s socialist structure and state-owned enterprises alone drove the economy until the 80s.

Cultural diversity in India as compared to China’s more monolithic cultural midset is also seen as a factor in India’s favor. Inida’s noisy democracy has fostered a tolerance for varied thoughts and sentiments leading to a diverse, tolerant society compared to the more rigid Chinese structure.

The final reason for the lack of Chinese management talent on the global level is demographics. Since the availability of English peaking Chinese is low, companies prefer to keep them in China where they can co-ordinate effectively with top management. India on the other hand has a much larger number of English speaking managers and these are often given foreign assignments as a result. This diverse experience contributes to their faster rise within the company heirarchy, leading to their larger presence in MNCs the world over.

It is important to remember, however, that the picture is changing, perhaps rapidly. If the ability to adapt globally is a key factor, Indians may surge ahead of the Chinese for quite some time until the latter evolve their mindset. China and India are both on successful economic trajectories. The data seem to suggest that as of last year, Indians may have had more success in navigating careers at leading global firms. It is possible that this is a pattern that might last for some more time. Yet, depending on the relative influence of specific factors that underlie this pattern, it may not take long for the Chinese to catch up.

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