China versus India: Market Comparison

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China versus India: Market Comparison India The globalisation of a company goes always along with a great amount of opportunities but also with many risks. India and China are both very interesting countries to move into. India became democratic after gaining independence from Britain in 1947. From then, up to the early 1990s India has had a mixed economy, which was identified by a lot of state-owned businesses, centralized planning, and subsidies. This lead to a dramatic constriction of the private sector. During this time it was really hard for the private sector to expand because they needed a permission of the government to do so. Sometimes the companies had to wait for month to get the allowance for normal business activities such as expanding production or hiring a new director. Additional there where high import tariffs, production quotas, very strict labour laws, highly restricted foreign investment and price setting by the government, instead of by the market, which made impossible for the private sector to get stronger and almost very hard and unattractive for foreign investors to go into the Indian market. In 1991, the government recognized that it could not go on like this and created a high-flying economic reform programme. The industrial licensing system got removed and areas which where reserved for the stated-owned companies got opened up to the private sector. Also foreign investors where welcome now. Foreign ownership of 100 per cent was still only allowed under certain circumstances but foreign equity stakes, up to 51 per cent, got permission without any problems. In addition, raw material and a lot of industrial goods could be imported for free and the maximum tariff for imported goods was cut down from... ... middle of paper ... ...ould prefer to move into the Indian market and for manufacturing and electrical businesses the Chinese market would probably be preferable. But considering all the risks and opportunities facing a company moving into either China or India, I would properly prefer to move into India. I think India's economical and political situation is much more stable than the one of China and the risks which come with a communist state like China, as I mentioned before, are very high. Additionally India offers the high skilled labour to low cost prices and among the middle classes, English is the working language therefore language barriers are avoid. This is especially true in the IT sector as this would make it much easier for a company to enter the market. Up to now there is no clear winner between the two countries and in the moment it will be a risk to invest in ether of them.

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