Comparative Investment Attractiveness: India and China (2018-2019)

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PERSPECTIVES ON GLOBALIZATION
2018-2019
To what extent do you think that India now represents a more attractive location
for investors than China?
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Contents
INTRODUCTION...........................................................................................................................3
DISCUSSION..................................................................................................................................4
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
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INTRODUCTION
Globalization is the catchword of the day which has emerged as the major subject for the
businesses in the last two decades. According to Hopkins (2011), this preferred term
encompasses the multiplicity and the supra-natural forces that have impacted the world. People
rather refer to globalization as the state of a business entity that is operating in different
demographics or nations. People have seen the transformation of the human society into the third
millennium where the expansion is carried out with top priority. Most of the aspects are
generally globalization deals with the quantitative changes and rise in stakes of their perspectives
for their businesses. Another definition says that Globalisation describes the process through
which national and international economies, societies, a network of trade, communication,
transportation, etc. (Financial Times, 2019).
In terms of developing countries, the role of the globalization has made a great impact on their
growth rate and helped to enhance the value of the businesses as well as the whole country.
There are several examples that show the best examples in globalization like India, China,
Malaysia, Singapore, UK, USA, etc. where the growth of the businesses has directly linked with
the rate globalization in the country. There may have different in between the globalization in
different countries while at the same time, the attraction power of the countries also helps in
enhancing the business number with the advancement in infrastructure, technology in the country
and skills of the local people. Comparing India and China in this context, multinational brands
are getting attracted by their new policies, culture, opportunities, government support, etc. As a
matter of fact, there are great opportunities of working in these two countries and both are trying
their best to attract the global brands in order to enhance the economy of the country and get
several other benefits like high employment rate, technological advancement, infrastructure
development, etc. So, this competition among these two countries in Asian markets has made a
confusing situation of the companies in markets as well as providing them several opportunities
to them. In order to get a deep insight into the globalization, this particular paper will highlight
the increasing benefits of working in more developing countries like India than any other
especially China.
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DISCUSSION
In the last few decades, the transactional correlation between the countries or nations for trade
has been intensified with the increasing globalization and the advent of effective technologies for
communication and network building for businesses (Michie, 2011). Each and every country is
trying its best to gain a strategic and competitive advantage over other by attracting the large
multinational organizations to operate in their demographics and hence create better results for
all like high employment, development of infrastructure and skills of people, etc. With these
interactions, the social scientist and politicians have to relate with their cross border interactions
that rather create better relations and work collaboration among them and this phenomenon is
termed as "globalization" (de Sousa Santos, 2006). According to Guttal (2007), the term
globalization described the economic, social, cultural and political changes adopted or
introduced within a demographic location and may have shaped the world in the past few years.
Emphasizing in a particular country, India the impact and influence of the globalization is quite
great in all the business sectors as well as in the general situations.
According to Sally (2007) the western image of India as a mystical civilization that somehow
helps in attracting the companies and people towards India. Now, India is shining and opening
up to the globalization to become an economic power of the world but it can be said that the
reality is more prosaic than hype on which the people, government, society and all are working
(De Vos, 2012). India has improved its economic position in economic as well as political
scenarios and prospects are bleated results of the market reforms. With the economic crisis of the
world in 1991, 2007-2008, 2013 the country has seen great challenges but with the capabilities
and core financial stocks, they got to overcome from these situations easily. Initially as compared
with its neighboring country; China, the growth and success ratio is slow and fitful but quite fast
from most of the countries of the world. In terms of Asian markets only, these two countries are
always seen as rivals of each other with no hard feelings but just to work for their people and
their welfare. Every country's government and people want to live in stable conditions and have a
good economic as well as the social environment which is possible through globalization.
Since, the past change in the government, the macroeconomic policy is on primary footing and
exchange rates and more unified that can attract others with liberalization. Trade liberalization is
extensively used and the tariffs to the manufacturers are closed with a cap of 10% that are
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helpful for them. India has removed most of the quantitative restrictions on foreign trading and
investments also that makes it beneficial for people to operate globally. In the same study by
Sally (2007) also depicted that the “licence raj” its panoply for the licensing controls in the
country has been dismantled now and with the reforms like GST, the import and export laws
became easier which might be costlier but significant to work legally in the country (Hopewell,
2015). Many of the items are cheaper than before while some things get a tremendous price hike
which gives more benefits to the government’s treasury. At the same time, another study by the
same author on China has depicted that China would shake the world if it awakened from its
centuries-long slumber.
China from years has been seen as the engine of Asia drove globalization today. Its exchange
rate and the ballooning currency reserves are increasing. Its voracious appetite for the
entrepreneurs and raw materials are driving up the global economy. Sometimes, it can be related
with the biggest source of global carbon emissions and more importantly, it can be said that it is
transforming the internal borders as well as their country (Rhee, 2016). A hermetically sealed
economy of the country is able to make great strides in the direction of global expansion. FDI
rules of both countries are very different but both attract the people from the globe to operate and
invest. China in 2007 is running its country with the growth rate of 10% which is huge for the
other countries but at the same time, the tremendous population of India even specifically the
middle-class people and youngsters are one of the most attractive forces within their
demographic location (Panagariya, 2013). Development and Globalisation (2019) has made a
article which defined the GDP growth rate of China and India and found that China has reached
a significant level on which the opportunities for global trade is lower than India because of the
increasing technological advancements, as a matter of fact, a simple example of this is the
introduction of Chinese mobile phone in India before their own country or at the same time.
Indians have the potential to make a firm most valuable and profitable because of the huge
opportunities available to them (IDEI, 2018).
Article by Business Today (2018) has cleared that China, India is 'backbone' of world's multi
polarisation, economic globalization according to Xi Jinping. A recent meet of the two
personalities of the countries has made it clear that they are not with war with each other, but
rather they are willing to work for the betterment of the people of their countries. The two largest
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developing countries are working collaboratively at several stages but somehow it can be said
that they want to become the leaders of Asia. Another article by Stokes (2016) has described that
unlike the west countries; India and China are embracing the globalization within them and
attracting people from throughout the world (Malone and Mukherjee, 2010). The International
Monetary Fund predicted that India’s economy is expected to be growing by 7.6% while that of
China it will be around 6.6% and both are more than the double that expected growth rates
(Stokes, 2016).
According to the report of Edelman trust barometer study, India has increased the engagement
with the world, whether it is about entering in the new overseas market or obtaining assets, trust
on Indian companies and public perception play a big role in the success of operations. India is
getting a strong position in the world stage as well as achieving certain advantages in the Asian
counterpart despite having the largest emerging economy of China. People have voted more for
Indian business as 44% public shown trust on Indian business potential growth whereas 36% has
shown for China according to the Edelman trust barometer 2018, which is a leading firm of
global communications marketing (BUSINESS TODAY, 2019). According to Ernst &
Young(EY), India overtakes China as the most attractive destination for investment as a sharp
reduction the rupee and starting or opening of new sectors for global layers in order to boost the
south Asian nation's attractions. Companies are more towards investing in India other than
Brazil, Canada, China, and united states according to the survey of 1600 senior executives of
about 70countries, according to them India had a top spot followed by China and Brazil.
According to a national leader and partner Amit Khandelwal, the investors are having a positive
outlook for the Indian economy. India has successfully attracted the overseas capital through its
efforts including foreign direct investment over various industries such as single brand retail, oil
and gas, and telecoms. The world economy has also helped in boosting confidence among the
deal-making and executive transactions (The economic times, 2015). Many Indian companies are
looking to relive their non-core businesses due to macro-economic pressure and large debt piles,
they are generating large foreign investor opportunity to attempt a greater role in the Indian
market. The highest level sectors who are anticipating the deal-making are technology,
automotive, firms and consumer products. China is the main competitors of India according to
the EY survey as it has ranked India on 3rd most attractive investment destination as it has found
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to be stable in politics and macroeconomics other than this FDI policy attractiveness has
increased and also the government has also made efforts for the business improvement in the
nation. India attracts more FDI than China (The economic times, 2015). To India very attractive
for the investor has some key factors such as labor cost, macroeconomic stability and domestic
market of India play the key role, as well as regulatory reforms, tax, transport infrastructure, and
regularity compliance cost, are improving yet. The secretary of the department of industrial
policy and promotion has said in a report that their first priority will be bringing constancy and
clarity in tax regime, policies and creating a world-class infrastructure with the help of good
rules and procedures. Well established investors are more attracted and confident in exploring
the Indian market than another country for opportunity.
The high pitch of made in India has impacted the several foreign and optimistic investor to
expand their business in India for manufacturing activities and manufacturing has recovered the
FDI share capital flow about 46%. 69% public is likely to invest in manufacturing and 55% of
investors are aware of the program “make in India” that is a good indication of huge investment.
The friendly moves of government and improved economic growth have led the positive outlook
of investor towards Indian market (The Hindu business line, 2019).
Indian economy is recovering and turning the corner and getting back to the road which is
showing a great time to invest in India as India is surpassed its neighbor China which now at the
3rd position. India is holding the position much ahead from the economy like Canada, Brazil,
united states as they are second fourth, fifth position according to the recent report. Foreign
investors are looking for good opportunities in the Indian market and leaders have faith in it.
India has come up as the rising star, by overcoming the negativity and jumped from pessimism
India gain the confidence in global economic growth and surpassing the UK and becoming 4th
most attractive investment destination according to the survey of PwC. THE WORLD
ECONOMIC FORUM (WEF) released at an annual meeting that China is falling from their
popularity in the globe as compared to India (Indian national congress, 2014).
It’s a great surprise that the Indians and Chinese; both are happy with their economies and their
increased rate of integration with the world has been enhanced to a tremendous level. The Indian
public's satisfaction has increased with 36% since 2013 which they think is the reason of this
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growth is the new government and its operations that have made the name of the country to
higher stages (Dobbs and Sankhe, 2010). At present, the country has a diverse population of
men, women, students, youngsters and other age groups which makes this as their strengths for
any company in serving them with a wide variety of products and services. this increasing rate
of globalisation in India can also be seen through the establishment of the manufacturing units of
companies like Mi, Tesco, Ikea, Ford, Toyota and many more under the make in India scheme
which gives the companies direct support from the government, financially as well as in other
resources (Dobbs and Sankhe, 2010). China’s economic growth rate is decreasing and only 22%
says that this will increase in the coming years. The public of the country is expecting that after
getting a better education in China, their children would be better companions financially as well
as non-monetarily because of the talent and skills of Chinese people. In contrast to this, research
dominates this perceptions of the people of China as the world leaders like Microsoft, Google,
Adobe, EA Sports, NASA, Reliance, Tata, etc. has Indian leaders who are taking the name of
their country to new heights and at the same time help in attracting people from the world to
invest in India.
CONCLUSION
It could be depicted from the aforementioned scenario that the advent of globalization has been
significant for the country in a diverse manner. It is evaluated that globalization results in several
opportunities for individuals, organizations, and societies. In addition to this, the scenario of
India and China has been assessed in terms of globalization which assists in gaining information
regarding their potential benefits due to globalization. China has been considered as one of the
most significant countries in terms of globalization as they have been carrying their businesses
with a wide number of countries. In addition to this, the trade relations of China with the
developed and developing countries have been potent which reflects the effectiveness of
globalization in their economy. In recent time, India has emerged as the most suitable choice for
investors to carry business operations and functions. Globalization has paved a substantial way
for India to emerge as a potent location for the giant investors. The economy of the country has
been growing rapidly against the most powerful countries in the world which reflect their
strength. In addition to this, the trade relations of India with the countries have been increasing
rapidly. There are large numbers of countries who have been focusing on building trade relations
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with India due to strategic and geographical benefits. Moreover, the trade focus of developing as
well as the developed countries with China has been declining in recent time due to the trade
barriers between the US and China. The other countries have been experiencing the rift of the US
and China on their businesses.
In this situation, the role of India has become significantly potent as they have a neutral
relationship with every country and they have strong economic status in the world. The GDP and
economy of India have been growing rapidly and globalization strengthens these aspects. The
international bodies such as IMF, World Bank, and Asian Development Bank also stated that
India would be a strong economic country by 2022 surpassing China. Therefore, it could be
stated that the influence of globalization has been potent for India against China. It is essential
for India that they enhance their globalization practices in order to carry effective operations and
functions. Overall, India is the most favorite choice of countries in terms of globalization of
business.
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