MBA 437 Marketing China vs India Case study on market Viability

Group Members : Zeenath Ram Adrian Ram Jitendra Dayal Tevita Turagatani Navindra Pillay Dr Gurmeet Singh

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Introduction

Table Of Contents Approaches

Strengths for China Strengths for India Weaknesses for China Weaknesses for India Opportunities for China Opportunities for India Threats for China Threats for India Trends Shaping the Business landscape Applications for Indo-China Market Basis Of Assumptions Market Potential Recommendations

Approaches
Task Environment 1. Companies 2. Suppliers 3. Distributers 4. Dealers 5. Target Customers

Approaches cont
Broad Environment 1. Demographic environment 2. Economic environment 3. Socio-cultural environment 4. Natural environment 5. Technological environment 6. Political Legal environment

 World s biggest industrial zone ( dozens of research centers and transport-bullet train) Extraordinary ability to mobilize workers and capital Per capita income has tripled in single generation Population growth is very high ( future workforce) Dominance in mass manufacturing Projected to remain manufacturing giant in the future Leading in multibillion dollar electronics and heavy plants Producing half a million engineers and scientists a year.

Strengths for China

Strengths for China cont

More brains at technical problems at a fraction of the cost. No 3 in the world for passenger car market. Biggest base of cell phone subscribers ( 3.5 m) and expected to rise. Untapped potential Cheap labour(Another 20 years of high speed growth due to availability of cheap labour) Lax labour laws Vast domestic savings keeps economy solvent. Plenty of foreign reserves. Nuclear capabilities ( source of energy)

Strengths for India

Software and design(Devise software platform with multimedia features) Ideas, innovations and research (Global innovation chain (Motorola, Hewlett Packard, Cisco systems and other technology) Outsourcing work(2010- Outsourcing work is expected to quadruple to 56 billion a year) Pharmaceuticals(exports as well) Low labor costs (More brains at technical problems at a fraction of the cost) Low medical Costs Improved technology and services High business profitability High banking profitability and accountability

Strengths for India cont

Improving precision industry Good cost/quality ratio(Indian Companies are showing a flair for producing high quality goods and services at ridiculously low price) Mostly local corporations Highly energy efficient Western legal institutions Modern stock market Private banks, better management Higher returns on investment Rigid labor laws

Weaknesses For China

Poor in technological support services Getting only 6% of Global domestic production. Less opportunity to grow due to less young population. Weak in innovation (57% of exports are from foreign invested factories. Under achieve in software Lack of intellectual property protection 20% of bank loans are bad(Financial Mismanagement) Hugely wasteful, fuel, energy Poor environmental laws

Weaknesses For China cont

High current population Communist party harshly represses dissent. One child policy ( hobbling their future labour supply) Not earning back true cost of capital (Low financial control) Dependent on foreign investment Rich / Poor gap Lax labour laws Lethargic health system Nuclear capabilities/risks of radiation

Weaknesses for India

High poverty Low transport infrastructure Low GDP Increasing population Ecological degradation Bureaucratic red tape Low manufacturing infrastructure(Not a manufacturing giant) Rich / poor Gap Rampant Corruption Poor Public financial control Lethargic health system

Opportunities For China

Expected emergence as a global mecca of knowledgeable workers Technical and managerial skills being upgraded. Contribution to innovation will grow. Demand for latest technology and material goods Ability to transform from follower to a leader in defining consumer electronic trends Microelectronics, Nanotech and Aerospace research field is promising Military presence in the Pacific is increasing plus improving relations with the region Middle-East and African influence is increasing Material Products are seen as status symbols

Opportunities For India

Low medical Costs Large workforce (220 million more workers than China) Increasing population Projected GDP growth Middle-East and African influence Engineers and Scientist(Google principal scientist Krishna Bharat has set up a Bangalore lab complete with replicating Core search engine technology and Rising power in software, design, service and precision industry. Cars, cell phones Internet sales(Demand latest tech and features) Products as status symbols

Opportunities For India cont

Increasing pop/future workforce Modern stock market National market model (Better model and will surpass China in growth) Small batch production of high value goods Export manufacturing is one of India s best hopes of generating millions of jobs. Sophisticated manufacturing know how, Tata steel is among world s most efficient producers ( can be used as a base for manufacturing competencies) Nuclear capabilities

Threats For China

Cannot assume their role of a super power is assured Rising wage rates may reduce labour supply More graying population Growing health problems Scarcity of water Danger that financial market liberalization will go wrong leading to a crash Financial crashes in global market Inadequate medical care for a rapidly aging population

Threats For China cont

Environmental Problems Communist country Not a free market International pressure on Tibet issue Inadequate pension and retirement benefits Risk of infectious diseases Risk of war with Taiwan(Trade partners Japan and USA will be affected thus impacting on economy)

Threats for India

Ecological degradation Small batch production of high value goods Rigid labor laws Financial crashes Environmental problems Risk of Communal violence Risk of infectious diseases Political reforms

Threats for India cont

Risk of War with Pakistan Nuclear capabilities/risks Beijing now pushing software and pledging intellectual property right protection. Design work might shift China to be closer to the factories. Most of hardware is assessable and partly designed in China. Long term cost of health problem

Trends Shaping the Business landscape

Macroeconomic trends
Shifting centers of economic activity Public sector services required for aging population Consumer landscape of increasing numbers and increasing buying powers

Social and Environmental trends

Shift in behavior through technology Emergence of knowledge intensive industries Increasing corporate responsibility and accountability Increasing demand for natural resources/strain on the environment

Business and Industry trends

Emerging global industry structures Scientific management with informed decision making Increased transparency in information sharing/community driven

Basis of Assumptions
Demographic environment Population growth levels off in China as opposed to continuous growth in India Increase in Indian population is expected to go hand in hand with increase in buying power while in china, the 6 pocket theory will be inverted Private and cheaper health care for senior citizens in India while in China, the state will have to cater to an increasing number of elderly people with increase in earner/dependent ratio

Basis of Assumptions cont

Economic environment Earning power is increasing in both countries this customers are becoming more discerning and selective in their demands Open markets in India while state regulations are common in China. Risk of war with Pakistan for India and Taiwan for China will have serious repercussions with the trading partners USA and Japan.

Basis of Assumptions cont

Socio-cultural environment High poverty in India with the state controlling resources and living standards in China Rich poor gap in Both countries High corruption rate in India while financial mismanagement is highlighted for China

Basis of Assumptions cont

Natural environment India is more efficient in resource usage compared to China Both countries have scarcity of Water and Space. Both countries have high pollution rates with its related health complications

Basis of Assumptions cont

Technological environment Manufacturing base in China while Software and Design base in India Highly energy efficient production lines in India as opposed to inefficient production houses in China. More efficient transport infrastructure in China while India still has steam trains

Basis of Assumptions cont

Political Legal environment Democracy vs Communism Open market in India vs controlled market in China State run financial institution in china as opposed to corporate governance in India Modern stock market will see more foreign players in the Indian economy in the near future Beijing now pushing software and pledging intellectual property right protection

Market Potential
Demographic environment
Greater potential for India

Economic environment
Performance based rewards in the Indian market

Socio-cultural environment
Both countries have their share of problems

Natural environment
India has the edge in resource use efficiency

Technological environment
Higher manufacturing infrastructure in China while India has got a better design and software base

Political Legal environment

Indian democracy encourages free trade and greater investor confidence

Recommendations
66% of the factors according to the information provided in the extract point towards India having a better future to enter as a potential market and an investor and a supplier of goods.

References
Burton S, keller and Kotler, Marketing Management, Person education Australia PTY Ltd, Pages 13,75. Engardio Peter, Crouching Tigers, Hidden Dragons, Businessweek, August 22/29, 2005, 52-61.