Rise of China: Indian Perspectives
It will also lead to enormous global infrastructure projects, mostly involving roads, telecom, power, airports, water, health care, and educational institutions. It will drive the rise of powerful, capital-rich companies in China and India, many with official and unofficial state backing and year time frames. It will create worlds of disparity with distinct groups of haves and have-nots, where the rich work and live side-by-side with the poor.
There will be massive income growth in China, in contrast with very modest growth in the United States and the West. India, too, is at an inflection point. The cronyism and corruption that tarnish its democracy, and the gaping disparity among its social classes, need to give way to fundamental change, to fully ethical and accountable government leadership, collaboration, and investment across all sectors. Prodigious new consumption in China and India will also lead to increased environmental hazards, urban sprawl, and massive boom-or-bust industrial projects.
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In both countries, there will be ongoing battles between harmony and stability, greed and fear. There is a second-order consequence of all this growth. We call it the boomerang effect because of all the ways in which rising demand in China and India for everything from food and water to housing, luxury goods, transport, and education will boomerang back to Western nations—leading to price volatility, inflation in supply-constrained commodities, scarcity of resources, and hypercompetition.
The boomerang effect will mean chasing new consumers around the world, learning new lessons, meeting competition in all its forms, and playing on a field where the winner takes the globe. Some companies and people will lose—the slow-to-move and the uneducated will fall victim. There will be tragedies of corporate indecision: failed investments, conflicting priorities, the wrong products, the wrong distribution chains, leadership sacrificed, and fortunes lost.
Winning a slice of the prize will take considerable courage and perseverance—on the part of CEOs and politicians alike. In order to achieve an 8 percent average growth rate over the next few years, both China and India will need to overcome bureaucracy, bribery, and corruption. Corruption takes many forms, from outright bribes to red tape and bureaucratic obstacles. The two countries must also invest heavily in education. China and India will enjoy stronger fundamental growth and advantage if they dramatically increase investment in their schools and universities.
China needs to develop more elite graduate programs, recruit world-class faculty, and use its wealth to create curricula to rival such great research universities in the West as Massachusetts Institute of Technology, Harvard University, and California Institute of Technology. India desperately needs to invest in both primary and higher education to break the cycle of poverty for the poorest third of its population—and create incentives for the best and brightest to stay in India.
For that matter, the United States needs to raise graduation rates, spur the growth of entry-level jobs, and divert resources to math and science in order to remain competitive. Winning will also require a tolerance for extreme volatility, which is a fact of life in emerging markets. Much of the demand by middle-class consumers for a better life takes the form of demand for capital goods. Housing, cars, appliances, dependable utilities, hospitals, and schools all require long planning horizons to allow for increased production. By the time producers have added capacity to meet demand, softness in exports or job markets can shrink that demand.
The market for capital goods is inherently boom or bust. Nevertheless, as we ponder the next decade, we believe that the ambition, energy, and relentlessly optimistic mindset of the billion newly affluent Chinese and Indians will prevail. Our book, and the series of Perspectives based on the book, offers a manifesto for growth and wealth creation.
They will become increasingly intolerant of corruption and pollution. They will use their newfound political power and wealth to enforce the rule of law. They will buy brand-name goods and increase their own investment in their family, home, health, and education. They will use the power of the purse to carve out a world that meets their hopes and dreams.
We urge you to begin to segment the various markets by income, region, and ethnicity. We urge you to bring deep and original thinking to your marketing. We urge you to build a paisa vasool approach—the perfect mix of features and benefits at an affordable price—into all your product development.
We think that this approach will become the standard in Chinese, Indian, and Western markets. And we believe that it can end in a triple win overall—with China, India, and the West all prospering. Over the next few years, China and India will deliver the largest-ever unfolding of consumer markets in history. But there will be volatility, risks, and obstacles—and determined, well-funded local competitors.
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We believe that there is no choice but to meet them in the marketplace. The extraordinary opportunity in China and India will be seized by the bold, the wise, and the courageous. Michael Silverstein. Abheek Singhi. Carol Liao. David Michael.
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Parallels with the Early U. We believe that the case for momentous growth is persuasive on the basis of four fundamental growth drivers: A Booming Middle Class. China and India will see the rise of million middle-class households with vitality, confidence, and eagerness to spend. There will also be a remarkable surge in so-called PhDs—the poor, hungry, and driven—with those between the ages of 20 and 30 outnumbering American youth by ten to one. These young people have boundless optimism and potential.
Multiple Market Segments. The new consumers of China and India include high-income individuals and a vast middle class—but also an enormous number of people living below the poverty line who may soon leap forward into the middle class, a group we refer to as the next-but-one billion. There is also a trilateral dialogue with Japan and talk of upgrading it to ministerial level and including Japan on a more regular basis in India-U. S maritime exercises.
In a departure from its predecessor, his government has shown a willingness to express its support for freedom of navigation in the South China Sea in joint statements with Vietnam and the U. In an op-ed, the prime minister also stated that the India-U.
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But they should also continue to engage with Beijing—this can benefit all three countries and demonstrate the advantages of cooperation. The need to balance the imperatives of signaling Beijing, while not provoking it might mean that publicly India and the U. This dialogue should be consistent and not contingent on Chinese behavior during a given quarter.
It should perhaps include contingency planning. It might also be worth expanding or upgrading this dialogue beyond the foreign policy bureaucracies. In addition, there should be consideration of bringing in other like-minded countries, like Australia and Japan. Furthermore, the two countries can also consult on the sidelines of—or prior to—regional summits. But while nudging and, to some extent participating in, the development of these ties, Washington should let them take shape organically.
Relationships driven by—and seen as driven by—Delhi and Tokyo or Delhi and Canberra will be far more sustainable over the long term rather than partnerships perceived as driven by the U. When it comes to China, however, India and the U. And the U. Finally, it is important for policymakers and analysts in both countries to keep in mind that an India-U. Related Books. Choices By Shivshankar Menon. Related Topics India.
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