Chindia Rising-book review

INTRODUCTION
As the world emerges gingerly from the recession, the structure of the global economy is changing. It will be powered by China and India over the next couple of decades. Chindia Rising is a visionary book by Dr. Jagdish N. Sheth, encompassing multiplicity of dimensions of the unprecedented impact and influence of the two great nations, India and China, on the world's industrial, business and also political futures for the next few centuries. Chindia was a term coined by Jairam Ramesh, Minister of State for Commerce (Government of India, 2006-09). The essence of the term was not only to highlight the growth of China and India as economic powers in the world, but also to convey the idea to the world of looking at both China and India; not China or India. The rise of Chindia is not only inevitable but promises to be beneficial to advanced economies as well as emerging economies. The rise of China in the early part of the twenty-first century is distinctive and has more in common with the rise of the United States in the twentieth century than with the advance of its Asian neighbours; the repercussions of its climb are equally monumental. And India too is in a position to rise quickly.

Chindia Rising-book review

Chindia Multinationals Making Waves:

In the beginning, the author talks about various cases of global acquisitions by companies from China and India. He compared the present situation of China and India with that of Japan and Korea a few decades ago. The rise of Japan and Korea was export driven, and those exports were largely directed to the advanced markets in the west. But the emerging Chindian multinationals will be investment driven. Among the large emerging economies such as Brazil, Russia, Nigeria and Indonesia, it is the rise of China and India (Chindia) which will have (and already has) enormous business implications during the first half of this Century, mostly beneficial to the world. Some of the signs of the Chindias rising can be seen by the multinationals move to acquire various foreign firms. These deals are significant beyond the dollar signs they reveal the strategy by which Chinas and Indias corporations are rapidly transforming themselves into serious competitors on the global stage. These new multinationals are building worldwide businesses through mergers and acquisitions, targeting both high-end as well as low-end markets. China and India strengthen their multinationals by their inherent low cost advantage in the production of various commodities. Chinas manufacturing and Indias IT industry have created a powerful launching pad for global initiatives. In 2006, a summit which took place between Chinas top officials and leaders from 48 African nations clearly signalled a new level of economic and political corporation between China and Africa. At the same time Indias Prime Minister and Trade Minister were attending a trade summit in Helsinki with the purpose to start negotiations for a free trade agreement between their European Union and India. In late 2006 and early 2007, India and China have agreed to work together in energy exploration, production, storage and stock piling, R&D, and conservation.

For their growth, both nations will require enormous natural resources, not only because they are manufacturing and service centres of the world, but because of their own rapidly expanding domestic consumer markets. And this demand for natural and industrial resources such as oil, gas, and coal, copper, bauxite, aluminum, iron and steel will last for many years. It is expected that China will very soon outsource manufacturing to other nations, especially in Africa and other resource rich nations. The rapid aging of the Chinese population attributed its one child policy implemented over two generations will impact its domestic economic growth. The global integration of China and India will be radically different. Indias economy and enterprises will be globally integrated, especially with their advanced countries (Europe, US, Canada, UK, Australia, Singapore, Japan, South Korea) through large scale acquisitions of well established and well respected foreign companies with technology, branding and manufacturing assets. The journey has already begun with Mittal Steels acquisition of Arcelor, Tata Steels acquisition of Corus Steel, and Hindalos acquisition of Novelis.
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The Chinese and Indian companies fully understand that domestic markets were for yesterday and global markets are for tomorrow. No government policy will be discouraging theme companies from doing business worldwide. Even in China, where many businesses are still state-owned, global aspirations are endorsed and encouraged. The grand economics dreams of China and India will not be realized by producing technologically inferior products for domestic consumption. They will be realized by dominating their own markets but also by going head-to-head, and brand to-brand, against the worlds best and biggest. The new Chindian multinationals will not be export-driven niche players. They will be finance driven, acquisition minded, full line generalists. They will be full-fledged members of the global economy-equal partners in the R&D that will drive innovation and create whole new industries, while also being strong competitors in the global consumer marketplace.

The quest for Global Resources:

Author also talks about the quest for global resources by these two countries. With the looming demand for raw materials and natural resources, the two countries have been scouting the world for securing the sources for their future needs. The author has given a note of caution to the two nations--environmental issues can seriously hamper the growth story. As a quest for natural resources, China made alliances with African countries. They promised to improve the infrastructure of Africa as a return for the resources taken from them. Like China, India also offered funds to African countries with the pledge for more development. The Chindian quest for natural resources will defer markedly from historical precedent. The traditional model for resource acquisition- whether gold and silver, five centuries ago, or oil, iron ore, and minerals in the more recent history-was colonial. But Chindias essence is not power politics but economic partnership, not exploitation but corporation. Foreign investment was understood as the key to bringing technology to China. China succeeded spectacularly by persuading foreign multinationals to establish R&D labs in China. China improved its quality of education. Chinas aggressive commitment to upgrade its higher education facility can be seen from the fact that China produced five times more engineers than U.S. In an effort bolster its human resources, China is working hard to lure home the thousands of bright young Chinese who immigrated to U.S. to seek better education. Like China, India has succeeded in luring foreign investment- and with it, brainpower and technological know- how- particularly in the knowledge industries. As the Chindian industry continues to expand, they look for a surge in the kind of merger and joint venture activity that provides secure access to raw materials. For example, in 2006, Tata Steels takeover of the Anglo-Dutch steel giant was Indias biggest ever acquisition of a foreign company. Across the global economy, competition will continue to force mergers, acquisitions, investments and consolidation as company seek vertical integration, access to worldwide markets, and increasingly, a stable supply of raw materials. Another favourable condition for Chindian industries is the rise in price and profit due to scramble for raw materials.
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The Energy sector and natural resources-petroleum especially are very important to Indias and Chinas continued evolution to economic super powers. China has now surpassed Japan as the second largest consumer of oil after the U.S. They are entering into joint venture with other countries to explore and develop oil refineries. It is predicted that by 2025, oil demand will double and natural gas demand will triple in India. Indias search for energy security is complicated by the fact that it often finds itself in competition with China. The only show stopper to the economic rise of China and India will be the environment, not geopolitics. Both nations, and the rest of the world, will realize that to carry out their economic journey will require understanding the impact of their economic growth in the environment and proactively protecting it. According to the World Bank, 16 of the 20 most polluted cities in the world are in China. The 11th five year plan calls for a compulsory 10% reduction in major pollutants across the board .By enforcing such laws China aims at low energy consumption, high utilization and low emission of pollutants. The situation is similar in India too. The effort on behalf of environmental regulation appears less focused.

The new innovation imperative:

Dr. Sheth has advocated the need for new innovations to these two countries because they are faced with certain daunting challenges which the developed world has not faced--massive poverty and growing income disparity, substandard education among the rural poor, public health issues and environment degradation. He has cited examples of innovation from some of the successful Chindia companies and he has advocated the need for smart consumption, smart production and smart policy. Chindia is facing stiff competition in manufacturing and IT services industry. To survive this competition, Chindia is now slowly shifting its attention from low-cost phenomenon to the knowledge phenomenon. Chindia is relying on technology fusion for technological advancement. Both the countries are coming up with innovative ideas spawned by affordability. As Chindia seeks to secure continued growth and prosperity, the threat of scarcity will be a mighty spur to innovation. But scientists and engineers are responding to this problem by finding alternative renewable resources. Chindia should lead the whole world towards the goal of sustainable development. They will have to join with the West in a broad program for environment protection that includes positive actions in areas of consumption, production and policy enforcement.

China and India launched their economic take-off as low-cost producers of service products and manufactured goods. The launch proved to be phenomenally successful and propelled the kind of growth that made the rest of the word sit up and take a notice. The evolution is underway, and Chindia is steadily advancing towards its place as Asias bulwark.

Chindia Rising-book review

Chindian Hegemony: Economic power, geopolitical clout and cultural diffusion

Economic hegemony: As said that the rise china and India in not only due to scientists, engineers, other entrepreneurs, government and business leaders. The advancement of Chindia is also cultural which includes leaders in art and entertainment, in food and fashion, in religion and philosophy. China and India (Chindia), the developing nations, are the worlds fastest growing economies and these countries have the largest domestic consumer markets which are attracting the globe. International trade and business: There is a huge scope to International trade and business because the western corporations and anxious to grow their businesses in Chindia. Multinational corporations such as Starbucks, IBM, Wal-Mart and few examples given .These corporations targets the largest domestic consumers markets in Chindia. Starbucks have 200 stores in mainland and 430 stores in greater china. IBM which is a successful company in America came to India in 1992 because of its huge market though there are huge players like Wipro, TCS .IBM India is the second largest operational area after America. The words What you have seen in the past five years is nothing compared to what you will see in the next five or 10, said by Mats Agervi, vice president for global delivery at IBM Global services portrays the growth opportunities in India for them. Wal-Mart doesnt want to let the opportunities in china slip from its grasp. Similarly there are 1.6 million cell phone subscribers which is 59 percent of the global market. Nokia entered India with $150 million manufacturing plant in Chennai. There is huge global growth form Chindia consumers because the purchasing power of millions of Chindians continuing to rise, so there will be demands for more and more products. China and inundating advanced markets with their low cost manufacturing and services products. China is running a global trade surplus which is making western economies nervous. Both India and china are independent of each other and are negotiating trade deals with European Union and also with ASEAN. There are no ideological hurdles in the game of markets for resources. Today China & India
needs oil, iron ore, natural gas the lifeblood of their surging economies. China is eying the rich oil reserves of Venezuela and Africa. The two nations India and china are in a positioning state.

Since china and India is in huge need for resources they allow the nations to do their businesses only when they bring the resources required. One of the ideological slants given here is you are welcome to come in. Just bring an oil lease with you. Geopolitical muscle: The rise of china and India is like an earth quake reconfiguring the geopolitical landscape. The giants of Asia China, Russia and India worked for a trilateral alliance promoting international peace, prosperity and parity. This alliance is necessary response to
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western hegemony. The western countries are refusing to acknowledge the equality of these countries. This alliance would become the biggest geopolitical factor in Asia. Over all the rise of china and India is beneficiary for the global economy just like America in the last century It is important for the G8 to include china and India to become G10 since these are the emerging economies .It is true that they are in a position to say no to any geopolitical embrace from the west. Cultural fusion: There is fusion in different basics like material culture, arts and entertainment and also in religion and philosophy. The fast moving and media centred culture of the west seemed at odds with the traditional cultures of the developing world. In 20th century people around the world adopted cultural products of west but in the 21st century it is wrong, this century will assist the era of Easternization. This is also true now. There is a clash of cultures. Now the western countries like Britain, France etc are adopting the eastern cultures especially Indian and Chinese cultures. Indian food is the second favourite takeout food in Britain; surprisingly the first place was not Britains local fish or chips but the Chinese. French restaurants are encouraged to us soya sauce and chilli paste to attract Chinese. Not only material fusion there is fusion in art and entertainment also.th cultural products are exported as surely as manufactured goods from Bombay, Bangalore and Beijing to the western countries .the price of Indian art has been surging drastically. Not only art but in entertainment field our films directors, producers and actors are emerging in the west. It is said that in the long term the west will be the importers and the east will be thee exporters of culture which may be true in future. Spirituality, conduct and ecological balance are deeply penetrating into west which speaks about non violence relativism and rejection of possessions. Now the west is ready to embrace these values which are true. These spiritualities are from Buddhism and Jainism. The west is learning how to balance the ecology in day to day living from the east. In this context the author says that whatever we do will affect vast web of life. The ecological view is holistic. Many spiritual leaders of India who have disciples of west from musicians to film directors who learns to balance ecology in day to day life. It is true that as Easternization continues the appreciation of ecology by the west will continue.

Chindia Rising-book review

Will the rising tide lift all the boats?

The author in this chapter briefs about the rise of Chindia and how the other developed and developing countries should react to it. He continues to say that the ascent of Chindia in no way threatens the advanced nations, nor it cast an intimidating shadow over the less developed nations. The attitude of the developed country is the main challenge. The developed nations should not develop the xenophobic attitude towards Chindia instead should consider the enlightened view of the competition. The author says it should be win win situation. The point which author says is: corporations in advanced economies dont need to fear competition from Chindia. They need face it. And they can. On the contrary, Chindia should offer a healthy and invigorating challenge to the advanced economies, at the same time serve the as a beacon of hope to the rest of the world. The vast consumer market of Chindia will offer advanced nations a much needed arena for growth, and provide poorer nations an opportunity to develop their export driven economies. As the natural resources are diminishing and the environmental deterioration is taking place the author says there is need for innovation. The developed countries are on the crest of innovation. Chindia will narrow the gap as it should but its gradual ascent into the knowledge economy should not be constructed as a threat to the developed world. On the contrary, it can only help promote the global prosperity desired by the East as well as the West. The author says we should put in the technology and proprietary knowledge to commercial advantages and create opportunities and make way for new and different types of industries. The growth of the Chindia should reinvigorate the economies of the advanced nations, where markets are mature and growth has slowed. The growth of Chindia promises is better for the emerging nations where the markets are still untapped and engines of growth are still to be ignited. Today Chindia is the growth engine of the global economy. The author says, today the worlds eye are riveted upon these two nations. But tomorrow their mighty engines will begin to sputter, and they will take their turn as aging, affluent nations whose economies have matured. This is as it should be, since, at the point, the fast emerging nations in Africa, South America, Eastern Europe and south East Asia will be eager to take their turn. Before the 21st century is half gone, china will lose manufacturing jobs to Africa and IT engineers in Bangladesh will be offering their services for one-third the growing rate in Bangalore. The author has given some tips to the companies in the developed world on how to benefit from the rise of Chindia. At the same time, he has laid out various opportunities to the emerging nations in Africa, Latin America and Central Asia for reaping the benefit from the Chindia story.

Chindia Rising-book review

The End of the Journey: Economic and Political reform

The free market depends upon the existence of two great institutions, capitalism and democracy, and neither of these institutions is in perfect health in either India or China. China and India must strike the balance between capitalism and democracy that will suit the unique needs of these to ancient but newly vibrant nations. The embrace of capitalism and the reform of government in both nations must be a careful and deliberate process. In todays globally interconnected world, economics tends to trump politics. Indian Capitalism: It comprises of all the essential ingredients of an economic system in which the means of production are mostly privately and state owned and operated for profit, in which capital is invested by the private and public sector and distribution, production, and pricing of goods and services are determined in a largely free market. It provides room for symbiotic and peaceful co-existence of Crony capitalism features, characterized by favoritism in the distribution of legal permits, government grants, special tax breaks, which plays a supplemental role in generation of unaccounted GDP income i.e. black money, which is of a significant magnitude and runs parallel to GDP. Indian Democracy: It faces serious challenges that must be overcome if the nation is to continue its upward journey. Improving education is the first step to improving Indias democracy. Indias democracy has evolved from one party trying to do too much to too many parties capable of doing too little. Decentralization of power is another problem with Indian democracy. R. A. Mashelkar, the retd. DG of Indias CSIR, explains it, India has three Ds democracy, demographics and diversity. But for these to fulfill their potential, India must embrace the fourth D discipline.

Chinese Capitalism: Putting Profits Before Human Lives Chinas communists have long since given up on true communism. In the interests of profit and wealth, property is respected more than human life and workers are exploited more than in any other country. Chinas capitalists must proactively embrace the dual interest model, making sure to serve society at large as well as the interests of the corporation. Individual entrepreneurs can do a great deal to rebrand capitalism as a force for social good. Chinese Democracy: The only way to fight corruption is to have transparency in government activities and democracy. China needs more bottom-up government. In contrast
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to India, where there are too many parties, too much decentralization, and too little power at the top, Chinas single party rules in a state of insularity which cannot be sustainable forever. Even more than its workers, chinas fast-growing middle class will increasingly demand representation in government, just as the Party will also feel mounting pressure to allow an independent judiciary and an independent media. Lu de has rightly mentioned that with economic progress there must be political progress.

Chindia Rising-book review

CONCLUSION
While the 20th Century was driven by governments and advanced nations, the 21st Century will be driven by markets and emerging nations. Aging of affluent nations, economic pragmatism, collapse of communism, and flattening of the world are responsible for this mega shift. This will lead to the rise of China and India as the next super economic powers in the first half of this Century. Rise of Chindia (China and India) will have worldwide impact on markets, resources and geopolitical influence. Demand for world resources will create strange bedfellows among nations, as well as resource driven global expansion of enterprises.

China and India will emerge as geopolitical leaders. They will be integrated into world political and economic forums and institutions. Affordability, scarcity and fusion of existing technologies will be drivers of innovation globally. Innovation which provides scale advantage and focuses on development will be more successful. Chindia will shift its education culture from teaching to research and funded by non-government initiatives. This will result in greater competition for global talent, rise in alternative and on-line education. It will also lead to more NGO funded research and industry focused institutes. Response by advanced nations to Chindia challenge will be to focus on blue ocean strategy, increased R&D spending, search for global talent, actively recruit students for science, encourage public-private partnerships and proactively exit sunset knowledge.

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