China and India: Opportunities and Challenges (attached)Part I: Evaluate the Evolving Balance of Economic Power Shift from the West to the East. (100 points). Part II: Summarize China and India case in a paragraph. (75 points)Read the case carefully. Following the directions below, answer the questions and summarize the case. Submit the case responses and summary in one document.Part I: Evaluate the Evolving Balance of Economic Power Shift from the West to the East. (100 points)Guidelines: You will divide your discussion in three paragraphs:Paragraph 1The first paragraph must discuss the shift of economy power that has been taking place over many years. Explain the rationale of this shift by supporting your ideas by some facts.  Compare India and China to the United States (identify the area in which USA is producing most of its educational outputs than China and India); and discuss the relevance of the educational outputs in the three countries; then explain how the US educational output is incompatible with the jobs creation. Discuss with facts if the shift will continue. Why or why not?Paragraph 2The second paragraph should discuss the belief of the younger generations of Chinese and Indians in reference to the economic power shift. Explain how the motivated generations will impact their economic growth and their respective countries will become the United States of a few decades ago. Analyze if these changes will test industrialized nations true commitment to global and open trade. Paragraph 3Finally, pinpoint the challenges that China and India are facing even with their educational success. Give some benchmarks to support your ideas.This assignment is a take home exam to allow students to demonstrate the analytical, integrative, critical thinking and problem-solving skills. Your work should reflect graduate work standing with smooth flow of ideas. Statements must always be supported by facts. Write to show what you have acquired in this marketing course and avoid misusing the personal pronoun “they” and the possessive pronoun “their” when referring to China or India. It will be preferable that you use “it” and “its”, respectively. Understand that deep analysis is required for these assignments.Do not just write what you want to write, but you must be able to answer specifically the question that is asked in well-organized manner following the guideline.Note: You are not limited to the ideas aforementioned but they must be shown in your discussions. I strongly recommend that all ideas borrowed must be cited to avoid to be charged with the plagiarism.Part II: Case Summary (75 Points)Summarize the China and India Case. The case summary is not a case review, so your view or opinion will not be necessary. Identify and summarize the main points of the author(s) in a paragraph or few words. Your case summary must be submitted as a single document along with your case responses in Part I.Grading RubricCriteriaPointsPART IAnalytical and Logical Thinking Demonstrate the ability to apply analytical and logical thinking to gathering and analyzing data using a logical and systematic process.30Critical Thinking It is the ability to think clearly and rationally. It includes the ability to engage in reflective and independent thinking. Critical thinking tenets are as follow:Understand the logical connections between ideasIdentify, construct and evaluate argumentsDetect inconsistencies and common mistakes in reasoningSolve problem systematicallyIdentify the relevance and importance of ideasReflect on the justification of one’s own beliefs and values30Integrative and Problem SolvingIntegrative: connecting skills and knowledge from multiple sources and experiences as related to your topic utilizing diverse and event contradictory viewpoints.Problem-solving- There are 4 basic steps:Defining the problemGenerating alternativeEvaluating and Selecting alternativesImplementing solution28Grammar and/or Spelling12PART IISummarize the Case75Total175RubricMBA630 Case ExamsMBA630 Case ExamsCriteriaRatingsPtsAnalytical and Logical ThinkingDemonstrate the ability to apply analytical and logical thinking to gathering and analyzing data using a logical and systematic process.30 ptsNo Marks0 pts30 ptsCritical ThinkingIt is the ability to think clearly and rationally. It includes the ability to engage in reflective and independent thinking. Critical thinking tenets are as follow: Understand the logical connections between ideas. Identify, construct and evaluate arguments. Detect inconsistencies and common mistakes in reasoning. Solve problem systematically. Identify the relevance and importance of ideas. Reflect on the justification of one’s own beliefs and values.30 ptsNo Marks0 pts30 ptsIntegrative and Problem SolvingIntegrative: connecting skills and knowledge from multiple sources and experiences as related to your topic utilizing diverse and event contradictory viewpoints. Problem-solving- There are 4 basic steps: 1. Defining the problem 2. Generating alternative 3. Evaluating and Selecting alternatives 4. Implementing solution28 ptsNo Marks0 pts28 ptsGrammar and/or SpellingFull Marks12 ptsNo Marks0 pts12 ptsSummarize the CaseFull Marks75 ptsNo Marks0 pts75 ptsTotal Points: 175china_and_india.docxChina and India: Opportunities and Challenges
It may not top the must-see list of many tourists. But to
appreciate Shanghai’s ambitious view of its future, there
is no better place than the Urban Planning Exhibition
Hall, a glass-and-metal structure across from People’s
Square. The highlight is a scale model bigger than a
basketball court of the entire metropolis — every
skyscraper, house, lane, factory, dock, and patch of green
space — in the year 2020.
There are white plastic showpiece towers designed by
architects such as I.M. Pei and Sir Norman Foster. There
are immense new industrial parks for autos and
petrochemicals, along with new subway lines, airport
runways, ribbons of expressway, and an elaborate
riverfront development, site of the 2010 World Expo.
Nine futuristic planned communities for 800,000
residents each, with generous parks, retail districts, manmade lakes, and nearby college campuses, rise in the
suburbs. The message is clear. Shanghai already is
looking well past its industrial age to its expected
emergence as a global mecca of knowledge workers. “In
an information economy, it is very important to have
urban space with a better natural and social
environment,” explains Architectural Society of Shanghai
President Zheng Shiling, a key city adviser.
It is easy to dismiss such dreams as bubble-economy
hubris — until you take into account the audacious goals
Shanghai already has achieved. Since 1990, when the city
still seemed caught in a socialist time warp, Shanghai has
erected enough high-rises to fill Manhattan. The once-
rundown Pudong district boasts a space-age skyline,
some of the world’s biggest industrial zones, dozens of
research centers, and a bullet train. This is the story of
China, where an extraordinary ability to mobilize workers
and capital has tripled per capita income in a generation,
and has eased 300 million out of poverty. Leaders now
are frenetically laying the groundwork for decades of new
Now hop a plane to India. It is hard to tell this is the
world’s other emerging superpower. Jolting sights of
extreme poverty abound even in the business capitals. A
lack of subways and a dearth of expressways result in
nightmarish traffic.
But visit the office towers and research and development
centers sprouting everywhere, and you see the miracle.
Here, Indians are playing invaluable roles in the global
innovation chain. Motorola, (MOT) Hewlett-Packard
(HPQ), Cisco Systems (CSCO), and other tech giants now
rely on their Indian teams to devise software platforms
and dazzling multimedia features for next-generation
devices. Google (GOOG) principal scientist Krishna
Bharat is setting up a Bangalore lab complete with
colorful furniture, exercise balls, and a Yamaha organ -like Google’s Mountain View (Calif.) headquarters — to
work on core search-engine technology. Indian
engineering houses use 3-D computer simulations to
tweak designs of everything from car engines and
forklifts to aircraft wings for such clients as General
Motors Corp. (GM) and Boeing Co (BA). Financial and
market-research experts at outfits like B2K, OfficeTiger,
and Iris crunch the latest disclosures of blue-chip
companies for Wall Street. By 2010 such outsourcing
work is expected to quadruple, to $56 billion a year.
Even more exhilarating is the pace of innovation, as tech
hubs like Bangalore spawn companies producing their
own chip designs, software, and pharmaceuticals. “I find
Bangalore to be one of the most exciting places in the
world,” says Dan Scheinman, Cisco Systems Inc.’s senior
vice-president for corporate development. “It is Silicon
Valley in 1999.” Beyond Bangalore, Indian companies are
showing a flair for producing high-quality goods and
services at ridiculously low prices, from $50 air flights
and crystal-clear 2 cents-a-minute cell-phone service to
$2,200 cars and cardiac operations by top surgeons at a
fraction of U.S. costs. Some analysts see the beginnings of
hypercompetitive multinationals. “Once they learn to sell
at Indian prices with world quality, they can compete
anywhere,” predicts University of Michigan management
guru C.K. Prahalad. Adds A. T. Kearney high-tech
consultant John Ciacchella: “I don’t think U.S. companies
realize India is building next-generation service
China and India. Rarely has the economic ascent of two
still relatively poor nations been watched with such a
mixture of awe, opportunism, and trepidation. The
postwar era witnessed economic miracles in Japan and
South Korea. But neither was populous enough to power
worldwide growth or change the game in a complete
spectrum of industries. China and India, by contrast,
possess the weight and dynamism to transform the 21stcentury global economy. The closest parallel to their
emergence is the saga of 19th-century America, a huge
continental economy with a young, driven workforce that
grabbed the lead in agriculture, apparel, and the high
technologies of the era, such as steam engines, the
telegraph, and electric lights.
But in a way, even America’s rise falls short in
comparison to what’s happening now. Never has the
world seen the simultaneous, sustained takeoffs of two
nations that together account for one-third of the planet’s
population. For the past two decades, China has been
growing at an astounding 9.5% a year, and India by 6%.
Given their young populations, high savings, and the
sheer amount of catching up they still have to do, most
economists figure China and India possess the
fundamentals to keep growing in the 7%-to-8% range for
Barring cataclysm, within three decades India should
have vaulted over Germany as the world’s third-biggest
economy. By mid-century, China should have overtaken
the U.S. as No. 1. By then, China and India could account
for half of global output. Indeed, the troika of China,
India, and the U.S. — the only industrialized nation with
significant population growth — by most projections will
dwarf every other economy.
What makes the two giants especially powerful is that
they complement each other’s strengths. An accelerating
trend is that technical and managerial skills in both
China and India are becoming more important than
cheap assembly labor. China will stay dominant in mass
manufacturing, and is one of the few nations building
multibillion-dollar electronics and heavy industrial
plants. India is a rising power in software, design,
services, and precision industry. This raises a provocative
question: What if the two nations merge into one giant
“Chindia?” Rival political and economic ambitions make
that unlikely. But if their industries truly collaborate,
“they would take over the world tech industry,” predicts
Forrester Research Inc (FORR). analyst Navi Radjou.
In a practical sense, the yin and yang of these immense
workforces already are converging. True, annual trade
between the two economies is just $14 billion. But thanks
to the Internet and plunging telecom costs,
multinationals are having their goods built in China with
software and circuitry designed in India. As interactive
design technology makes it easier to perfect virtual 3-D
prototypes of everything from telecom routers to turbine
generators on PCs, the distance between India’s low-cost
laboratories and China’s low-cost factories shrinks by the
month. Managers in the vanguard of globalization’s new
wave say the impact will be nothing less than explosive.
“In a few years you’ll see most companies unleashing this
massive productivity surge,” predicts Infosys
Technologies (INFY) CEO Nandan M. Nilekani.
To globalization’s skeptics, however, what’s good for
Corporate America translates into layoffs and lower pay
for workers. Little wonder the West is suffering from
future shock. Each new Chinese corporate takeover bid or
revelation of a major Indian outsourcing deal elicits
howls of protest by U.S. politicians. Washington think
tanks are publishing thick white papers charting China’s
rapid progress in microelectronics, nanotech, and
aerospace — and painting dark scenarios about what it
means for America’s global leadership.
Such alarmism is understandable. But the U.S. and other
established powers will have to learn to make room for
China and India. For in almost every dimension — as
consumer markets, investors, producers, and users of
energy and commodities — they will be 21st-century
heavyweights. The growing economic might will carry
into geopolitics as well. China and India are more
assertively pressing their interests in the Middle East and
Africa, and China’s military will likely challenge U.S.
dominance in the Pacific.
One implication is that the balance of power in many
technologies will likely move from West to East. An
obvious reason is that China and India graduate a
combined half a million engineers and scientists a year,
vs. 60,000 in the U.S. In life sciences, projects the
McKinsey Global Institute, the total number of young
researchers in both nations will rise by 35%, to 1.6
million by 2008. The U.S. supply will drop by 11%, to
760,000. As most Western scientists will tell you, China
and India already are making important contributions in
medicine and materials that will help everyone. Because
these nations can throw more brains at technical
problems at a fraction of the cost, their contributions to
innovation will grow.
American business isn’t just shifting research work
because Indian and Chinese brains are young, cheap, and
plentiful. In many cases, these engineers combine skills -mastery of the latest software tools, a knack for complex
mathematical algorithms, and fluency in new multimedia
technologies — that often surpass those of their American
counterparts. As Cisco’s Scheinman puts it: “We came to
India for the costs, we stayed for the quality, and we’re
now investing for the innovation.”
A rising consumer class also will drive innovation. This
year, China’s passenger car market is expected to reach 3
million, No. 3 in the world. China already has the world’s
biggest base of cell-phone subscribers — 350 million -and that is expected to near 600 million by 2009. In two
years, China should overtake the U.S. in homes
connected to broadband. Less noticed is that India’s
consumer market is on the same explosive trajectory as
China five years ago. Since 2000, the number of cellular
subscribers has rocketed from 5.6 million to 55 million.
What’s more, Chinese and Indian consumers and
companies now demand the latest technologies and
features. Studies show the attitudes and aspirations of
today’s young Chinese and Indians resemble those of
Americans a few decades ago. Surveys of thousands of
young adults in both nations by marketing firm Grey
Global Group found they are overwhelmingly optimistic
about the future, believe success is in their hands, and
view products as status symbols. In China, it’s
fashionable for the upwardly mobile to switch high-end
cell phones every three months, says Josh Li, managing
director of Grey’s Beijing office, because an old model
suggests “you are not getting ahead and updated.” That
means these nations will be huge proving grounds for
next-generation multimedia gizmos, networking
equipment, and wireless Web services, and will play a
greater role in setting global standards. In consumer
electronics, “we will see China in a few years going from
being a follower to a leader in defining consumerelectronics trends,” predicts Philips Semiconductors
(PHG) Executive Vice-President Leon Husson.
For all the huge advantages they now enjoy, India and
China cannot assume their role as new superpowers is
assured. Today, China and India account for a mere 6%
of global gross domestic product — half that of Japan.
They must keep growing rapidly just to provide jobs for
tens of millions entering the workforce annually, and to
keep many millions more from crashing back into
poverty. Both nations must confront ecological
degradation that’s as obvious as the smog shrouding
Shanghai and Bombay, and face real risks of social strife,
war, and financial crisis.
Increasingly, such problems will be the world’s problems.
Also, with wages rising fast, especially in many skilled
areas, the cheap labor edge won’t last forever. Both
nations will go through many boom and harrowing bust
cycles. And neither country is yet producing companies
like Samsung, Nokia (NOK), or Toyota (TM) that put it
all together, developing, making, and marketing worldbeating products.
Both countries, however, have survived earlier crises and
possess immense untapped potential. In China, serious
development only now is reaching the 800 million people
in rural areas, where per capita annual income is just
$354. In areas outside major cities, wages are as little as
45 cents an hour. “This is why China can have another 20
years of high-speed growth,” contends Beijing University
economist Hai Wen.
Very impressive. But India’s long-term potential may be
even higher. Due to its one-child policy, China’s workingage population will peak at 1 billion in 2015 and then
shrink steadily. China then will have to provide for a
graying population that has limited retirement benefits.
India has nearly 500 million people under age 19 and
higher fertility rates. By mid-century, India is expected to
have 1.6 billion people — and 220 million more workers
than China. That could be a source for instability, but a
great advantage for growth if the government can provide
education and opportunity for India’s masses. New Delhi
just now is pushing to open its power, telecom,
commercial real estate and retail sectors to foreigners.
These industries could lure big capital inflows. “The pace
of institutional changes and industries being liberalized
is phenomenal,” says Chief Economist William T. Wilson
of consultancy Keystone Business Intelligence India. “I
believe India has a better model than China, and over
time will surpass it in growth.”
For its part, China has yet to prove it can go beyond
forced-march industrialization. China directs massive
investment into public works and factories, a wildly
successful formula for rapid growth and job creation. But
considering its massive manufacturing output, China is
surprisingly weak in innovation. A full 57% of exports are
from foreign-invested factories, and China underachieves
in software, even with 35 software colleges and plans to
graduate 200,000 software engineers a year. It’s not for
lack of genius. Microsoft Corp.’s (MSFT) 180-engineer
R&D lab in Beijing, for example, is one of the world’s
most productive sources of innovation in computer
graphics and language simulation.
While China’s big state-run R&D institutes are close to
the cutting edge at the theoretical level, they have yet to
yield many commercial breakthroughs. “China has a lot
of capability,” says Microsoft Chief Technology Officer
Craig Mundie. “But when you look under the covers,
there is not a lot of collaboration with industry.” The lack
of intellectual property protection, and Beijing’s heavy
role in building up its own tech companies, make many
other multinationals leery of doing serious R&D in China.
China also is hugely wasteful. Its 9.5% growth rate in
2004 is less impressive when you consider that $850
billion — half of GDP — was plowed into already-glutted
sectors like crude steel, vehicles, and office buildings. Its
factories burn fuel five times less efficiently than in the
West, and more than 20% of bank loans are bad. Twothirds of China’s 1,300 listed companies don’t earn back
their true cost of capital, estimates Beijing National
Accounting Institute President Chen Xiaoyue. “We build
the roads and industrial parks, but we sacrifice a lot,”
Chen says.
India, by contrast, has had to develop with scarcity. It
gets scant foreign investment, and has no room to waste
fuel and materials like China. India also has Western
legal institutions, a modern stock market, and private
banks and corporations. As a result, it is far more capitalefficient. A BusinessWeek analysis of Standard & Poor’s
(MHP) Compustat data on 346 top listed companies in
both nations shows Indian corporations have achieved
higher returns on equity and invested capital in the past
five years in industries from autos to food products. The
average Indian company posted a 16.7% return on capital
in 2004, vs. 12.8% in China.
The burning question is whether India can replicate
China’s mass manufacturing achievement. India’s infotech services industry, successful as it is, employs fewer
than 1 million people. But 200 million Indians subsist on
$1 a day or less. Export manufacturing is one of India’s
best hopes of generating millions of new jobs.
India has sophisticated manufacturing knowhow. Tata
Steel is among the world’s most-efficient producers. The
country boasts several top precision auto parts
companies, such as Bharat Forge Ltd. The world’s biggest
supplier of chassis parts to major auto makers, it employs
1,200 engineers at its heavily automated Pune plant.
India’s forte is small-batch production of high-value
goods requiring lots of engineering, such as power
generators for Cummins Inc. (CMI) and core components
for General Electric Co. (GE) CAT scanners.
What holds India back are bureaucratic red tape, rigid
labor laws, and its inability to build infrastructure fast
enough. There are hopeful signs. Nokia Corp. is building
a major campus to make cell phones in Madras, and
South Korea’s Pohang Iron & Steel Co. plans a $12 billion
complex by 2016 in Orissa state. But it will take India
many years to build the highways, power plants, and
airports needed to rival China in mass manufacturing.
With Beijing now pushing software and pledging
intellectual property rights protection, some Indians fret
design work will shift to China to be closer to factories.
“The question is whether China can move from
manufacturing to services faster than we can solve our
infrastructure bottlenecks,” says President Aravind
Melligeri of Bangalore-based QuEST, whose 700
engineers design gas turbines, aircraft engines, and
medical gear for GE and other clients.
However the race plays out, Corporate America has little
choice but to be engaged — heavily. Motorola illustrates
the value of leveraging both nations to lower costs and
speed up development. Most of its hardware is assembled
and partly designed in China. Its R&D center in
Bangalore devises about 40% of the software in its new
phones. The Bangalore team developed the multimedia
software and user interfaces in the hot Razr cell phone.
Now, they are working on phones that display and send
live video, stream movies from the Web, or route
incoming calls to voicemail when you are shifting gears in
a car. “This is a very, very critical, state-of-the-art
resource for Motorola,” says Motorola South Asia
President Amit Sharma.
Companies like Motorola realize they must succeed in
China and India at many levels simultaneously to stay
competitive. That requires strategies for winning
consumers, recruiting and managing R&D and
professional talent, and skillfully sourcing from factories.
“Over the next few years, you will see a dramatic gap
opening between companies,” predicts Jim Hemerling,
who runs Boston Consulting Group’s Shanghai practice.
“It will be between those who get it and are fully
mobilized in China and India, and those that are still
In the coming decades, China and India will disrupt
workforces, industries, companies, and markets in ways
that we can barely begin to imagine. The upheaval will
test America’s commitment to the global trade system,
and shake its confidence. In the 19th century, Europe
went through a similar trauma when it realized a new
giant — the U.S. — had arrived. “It is up to America to
manage its own expectation of China and India as either
a threat or opportunity,” says corporate strategist Kenichi
Ohmae. “America should be as open-minded as Europe
was 100 years ago.” How these Asian giants integrate
with the rest of the world will largely shape the 21stcentury global economy.

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