Why Doing Business in India Is Better Than in China for South Korea

Assessing Korea's Chances in India and China

India is now emerging as a global economic power, but it was only about six or seven years ago that shopping malls began to replace mom-and-pop stores in New Delhi, the capital. Ansal Plaza Mall, a four-story mall in New Delhi that houses about 200 shops, is generally believed to have kick started India's retailing revolution. In recent days, modern malls are going up one after the next in Gurgaon, a new city built outside New Delhi. But you'll be disappointed if you expect malls like the ones in New York or Shanghai. Most Indian malls are more like those in small Korean cities.

India's market value and potential are widely recognized, but they are still short of our own standards. In terms of automobiles, India first began developing compact cars, unlike China which began with full-sized cars. It's easy to get the impression that development is slow going in India if you just drive on Indian roads. Some people in the West harshly criticize pro-Indian research institutes and media outlets for overestimating India in order to hold China in check.

What kind of window should we look through to properly understand India? At this point, we need at least a few carefully constructed windows to understand the country well.

One such window might be an insider analysis compiled recently by McKinsey & Company, one of the world's top management consulting firms. McKinsey's report distinguishes India's characteristics from China. With its central government wielding enormous power, China promised global enterprises wide access to its market if they brought in new technologies during the early years of its opening up, the report says.

Many companies believed the promise, but 20 years later a considerable number have been effectively marginalized. With the foreigners pushed aside, Chinese businesses currently dominate 70 percent of the domestic market. The Chinese government has supported Chinese companies with its centralized power, helping them emerge at breakneck pace.

India is much different. India has a relatively weak central government and is the world's biggest democracy with a population of 1.1 billion. As such, India has achieved less success in inviting foreign businesses. But for the same reason, once a company gets started in India at the lower levels, it cannot be so easily dislodged. Because it is harder for the Indian government to openly interfere with foreign businesses, the study says, success there is up to you -- it's based on your own ability and potential.

India's situation is compatible with the "post-2008" strategies of global enterprises. The China-centered system has led the global economy for more than 10 years. But with the 2008 Olympic Games in Beijing as momentum, it will be inevitable to seek some changes in this structure.

How about adding our own "Indian window" to understanding the country?

India has recently exceeded the mark of 45 million people who earn more than US$4,000 per year. Because of low prices, just W100 (US$1=W915) in India has 4.4 times as much purchasing power than in advanced countries. If we adjust their income by purchasing power, it's like India has an upper class with $18,000 annual income that is equal in numbers to total population of South Korea.

Meanwhile South Korean enterprises are enjoying considerable success in India, dominating the markets of major products such as TVs, refrigerators, air conditioners, washing machines and automobiles. In home appliances, South Korean businesses including LG Electronics and Samsung Electronics have a nearly 50 percent market share. These figures are unprecedented for such a sizable market.

While it's having a hard time in China, Hyundai Motor is on a roll in India, with one out of every five cars on Indian streets (18 percent) a Hyundai. If this trend continues for five more years, it will give an enormous boost to the entire South Korean economy.

In light of this, we can no longer afford to idly discuss whether we are "well-matched" with India or not. We can already feel South Korean enterprises challenged on all fronts by rivals from Japan, the U.S. and the EU.

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Ya, Infact today in Hindustan Times there was an article relating same. I am reading same everywhere that India is really on boom. Anyways, you know what, even China is investing in India but way round ie. indirectly. I just keep eye on such things :)

Add to more, this article is not confined to Korea itself but it goes for whole world. You may see that foreign bank are willing to buy stakes in Indian financial market, Google is going to buy stake in Reliance communication and lists go on.. they know its right time and right move.

I find the work eithic in India to be quite respectable. I work with many Indian companies working in the telesales industry to bring them dialing leads. I look forward to coming to India to meet with some associates and meet more.

I see calling centers as a great asset to the future business community in India and am excited to see the future unfold!

Regards,

Tom Ryan
866-507-9089
www.professional-lists.com