赛琳娜百度云:Why the rise of Chindia will be beneficial to the world

Why the rise of Chindia will be beneficial to the world
8 Jan 2008, 0146 hrs IST,Jagdish N Sheth
 Print  EMail  Discuss New  Bookmark/Share  Save  Write to Editor While the 20th century was driven by political ideology of advanced countries, the 21st century will be driven by markets of emerging nations.

No matter what ideology one follows to uplift growth of emerging economies, whether Communism, foreign aid, or access to markets, it is not sustainable due to several reasons. First, all advanced countries are aging and aging fast. They have low to no domestic growth as exemplified by Japan, Germany and France. Thus market access in exchange for geopolitical alignment is also not sustainable. Outsourcing of work such as manufacturing or services will increasingly result in domestic political turmoil.

Second, political leaders of all advanced nations have realized that what matters most to people in elections across national and cultural boundaries, is hardcore realities of economic growth as manifested in jobs and wealth creation for the masses. Recent election in South Korea is good evidence of this reality. Also, the 2008 elections in the US will be won or lost more one economic issues and less on Iraq War and faith based politics.

A third factor for the rise of market forces is the dramatic and sudden collapse of Communism as an ideological counterbalance to capitalism. Economic bankruptcy of Communist nations forced them to embrace capitalism. Despite all its ills, Communism created two key resource-based advantages for the nation. First, they made primary and secondary education mandatory and further invested in post secondary technical and vocational education to produce skilled workers for the factories and the military. Second, they made gender a non-issue. It did not matter whether you were a man or a woman; both had to go to school or work for the state. This resulted in an enormously large pool of talented and skilled people, both men and women, even in small countries, let alone China and Russia. If, in addition, the nation also has natural resources—especially industrial raw materials like coal, oil, gas and copper—it will provide additional resource advantages to these ex-Communist or ex-socialist countries. The final reason for the growth of emerging economies is easier access to global capital and technology.

The global impact

Among the large emerging economies such as Brazil, Russia, Nigeria and Indonesia, it is the rise of China and India (Chindia) which will have enormous business and public policy implications during the first half of this century. First, both nations will require enormous natural resources because not only are they manufacturing and service centres of the world, but also because of their own rapidly expanding domestic consumer markets. And this demand for natural and industrial resources will be for many years. The rapid aging of Chinese population attributed to its one child policy implemented over two generations will impact its domestic economic growth. On the other hand, India will experience accelerated growth in less than 10 years through better infrastructure, political reforms and financial transparency.

Also, India will refocus on manufacturing both for global supply as well as for its domestic demand. Unlike China, however, I believe India's manufacturing will be selective and largely concentrated on high-end aerospace, military, space and industrial raw materials. Also, it will continue to expand its service sector especially through organized retailing and financial services. It will begin to catch up with China and some experts even believe that its growth rate will surpass that of China.

In any case, both nations with more than a billion people each, will have enormous need for industrial, agricultural, other natural resources and raw materials. Since a vast majority of these untapped resources are in other emerging economies in Africa, Caribbean, Latin America, Central Asia and Russia, the rise of Chindia will create an economic boom for them which otherwise did not happen for nearly 200 years of colonial rule.

Second, the global integration of China and India will be radically different. India's economy and enterprises will be globally integrated especially with other 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. Take Mittal Steel's acquisition of Arcelor and Tata Steel's acquisition of Corus and Hindalco's acquisition of Novelis. India will contribute to global growth as much, if not more, through revitalizing and reinvesting in Western assets as it would through growth of its domestic consumer markets.

China's growth will be proportionately more domestic and only selectively through global acquisitions. This is due to several reasons. First, China has begun to focus on domestic demand especially in consumer markets such as consumer electronics, appliances, automobiles and financial services. It has the physical infrastructure as well as large-scale domestic state-owned enterprises such as Haier, Lenovo, China Mobil, Petro China and China Development Bank to capitalize on domestic demand. Second, the advanced world seems less willing to sell their assets to China (especially technology assets) due to myopic misperceptions about the peaceful rise of China (in contrast to rise of India). For example, Chinese oil company, CNOOC's attempt to buy Unocal as well as Haier's (the largest Chinese appliance company) attempt to buy Maytag Company in the US, met with political resistance. The obvious exception is IBM's sale of its personal computer business to Lenovo.

Consequently, Chinese enterprises that have the scale and incumbency advantage to dominate the domestic Chinese markets will expand globally by first going to other emerging economies, both through trade as well as FDI. In addition, despite history and the current uneasiness of China's rise, it is inevitable that both Japan and South Korea will quickly integrate their economies with China, just like Hong Kong and Taiwan. This will result in rapid growth in bilateral trade as well as reciprocal FDI between China and Japan and China and South Korea. Consequently, the largest trading bloc will be Asia especially with free trade with India. This will require formation of a new currency similar to the Euro which will become the dominant currency of the world. While the global integration paths taken by China and India will be different, their impact on businesses worldwide will be beneficial and enormous. The future survival of most admired enterprises from advanced economies will depend on how quickly they participate in the ensuing rise of China and India even if they have to distance from their own government's politics and public opinion. This includes companies like General Electric, HSBC, Siemens and Alcatel.

A geopolitical and cultural hegemony

As China and India become the largest economies of the world, their geopolitical and cultural hegemony will expand. I believe that the G-8 Forum will have to invite China and India and become the G-10 Forum—for its own relevance and survival. Similarly, most world forums (from Davos to climate change) and world agencies like the World Bank and IMF, must encourage significant involvement of China and India. Overall, I believe the rise of Chindia will be beneficial to the world economy, just as the rise of America has been in the last century. It will be, of course, beneficial to businesses and entrepreneurs, but also to the masses at the bottom of the pyramid. It will generate unprecedented innovation by making existing technologies more affordable and accessible and by inventing or discovering ways to replicate natural resources.

The author is is the Charles H Kellstadt Chair of Marketing in the Goizueta Business School at Emory University