CASE ANALYSIS

Prepared by:
BSA-2A

Almontero, John Kristofer S.

Añonuevo, John Paul Ivan C.
Arcenal, Gabriel Andre T.
Peralta, Warren L.
Viterbo, Miles
Alababa, Leigh Rence P.
Alcantara, Reanyl S.
Comandante, Jahziel B.
Dorado, Sherlyn M.
Payad, Janela P.
Villacorta, Jamie Honieuelle B.

July 1, 2020
I. Case Summary
India and China are among the world’s fastest-growing
economies, contributing nearly 30 percent to global economic
growth and both of them are actually "re-emerging" economies.
Both India and China are in fierce competition with each other
as well as in their quest to catch up with the major economies
in the developed world with their particular strengths and
competitive advantages. China’s growth has been mainly
investment and export driven, focusing on low-cost
manufacturing, with domestic consumption as low as 36 percent
of gross domestic product (GDP). On the other hand, India’s
growth has been derived mostly from a strong services sector
and buoyant domestic consumption and relies on external trade
for about 20 percent of its GDP versus 56 percent for China. By
2011, China is the world’s second largest economy in the world
behind the United States. China is the first country in the
world to have met poverty-reduction by lifting 400 million
people out of poverty, Unlike India, with 456 million people
below the poverty line. India has emerged as the fourth-largest
market in the world when its GDP is measured on the scale of
purchasing power parity. Both economies are increasing their
share of world GDP, India using the "grow first, build later"
approach and China with "top-down, supply driven" strategy. The
Chinese economy historically outpaces India’s by just about
every measure. China’s fast-acting government implements new
policies with blinding speed, making India’s fractured
political system appear sluggish and chaotic. One of the
examples is Beijing’s shiny new airport and wide freeways are
models of modern development, contrasting sharply with the
sagging infrastructure of New Delhi and Mumbai. India is
enjoying the sort of bulge in manpower which brought sustained
booms elsewhere in Asia because it has the advantage of
democracy. India’s domestic economy provides greater cushion
from external shocks than China’s. Private domestic consumption
accounts for 57 percent of GDP in India compared with only 35
percent in China. China’s ongoing economic transformation has
had a profound impact not only on China but on the world. The
market-oriented reforms China has implemented over the past two
decades have unleashed individual initiative and
entrepreneurship. China used to be the third-largest economy in
the world but has overtaken Japan to become the second-largest
in August 2010. It has sustained average economic growth of
over 9.5 percent for the past 26 years. In 2009 its $4.814
trillion economy was about one-third the size of the United
States economy. India’s economic liberalization in 1991 opened
gates to businesses worldwide. In the mid to late 1980s, Rajiv
Gandhi’s government eased restrictions on capacity expansion,
removed price controls, and reduced corporate taxes. While his
government viewed liberalizing the economy as a positive step,
political pressures slowed the implementation of policies. The
early reforms increased the rate of growth but also led to high
fiscal deficits and a worsening current account. India’s major
trading partner then, the Soviet Union, collapsed. In addition,
the first Gulf War in 1991 caused oil prices to increase, which
in turn led to a major balance-of-payments crisis for India. To
be able to cope with these problems, the newly elected Prime
Minister Narasimha Rao along with Finance Minister Manmohan
Singh initiated a widespread economic liberalization in 1991
that is widely credited with what has led to the Indian
economic engine of today. Focusing on the barriers for private
sector investment and growth, the reforms enabled faster
approvals. Its economic progress has been accompanied by
increases in life expectancy, literacy rates, and food
security. Goldman Sachs predicts that India’s GDP in current
prices will overtake France and Italy by 2020; Germany, the
United Kingdom, and Russia by 2025; and Japan by 2035 to become
the third-largest economy of the world after the United States
and China. India was cruising at 9.4 percent growth rate until
the financial crisis of 2008–9, which affected countries the
world over.

Both India and China have several strengths and weaknesses

that contribute to the competitive battleground between them.
They both have 5 strengths in China their strengths are; first
strong government control it helps them to experience economic
progress, second is the World Trade Organization (WTO) and
Foreign Direct Investment (FDI) it is important factor in the
country’s successful growth third is cheap, abundant labor,
China’s huge population offers large pools of skilled and
unskilled workers, with fewer labor regulations than in India,
fourth is they make sure to prioritized the development of
infrastructure, fifth is the effectiveness of two-pronged
financial system which is a well-run directed-credit system
that channels funds from bank and postal deposits to policy-
determined public uses and a profit-oriented and competitive
system. While India’s strengths are; first quality manpower
because India is the global leader in the business process
outsourcing (BPO) and call-center services industries they
prioritize the development of its technology and outsourcing
sectors, second is open democracy which is built in its social
and cultural fabric but sometimes is not quite good for
political process, third is entrepreneurship, India has an
additional advantage over China in terms of entrepreneurship-
oriented bodies, such as the TiE network (The Indus
Entrepreneurs) or the Wadhwani Foundation, which seek to
promote entrepreneurship by, among other things, facilitating
investments, fourth is reverse brain drain it is good for their
country because unlike in the past decades young graduates move
to another country but instead they still stay in their country
to pursue dynamic domestic opportunities, fifth is Indian
domestic-market growth, according to the Trade and Development
Report 2010, for sustainable growth, policies “should be based
on establishing a balanced mix of domestic and overseas
demand.” India has a good mix of both international and
domestic markets.

China and India have a lot of differences like India has

barely paid attention to its urban transformation, China has
developed a set of internally consistent practices across every
element of the urbanization operating model: funding,
governance, planning, sectoral policies, and shape.

It is said that in India, by 2025, the largest markets will

be transportation and communication, food, and health care
followed by housing and utilities, recreation, and education.
In China’s cities today, the fastest-growing categories are
likely to be transportation and communication, housing and
utilities, personal products, health care, and recreation and
education. Both India and China have unique strengths as well
as many similarities, it’s clear that both countries will
continue to grow in the coming decades offering global
businesses exciting new domestic markets.
II. Case Problem

China and India's continuous economic development will soon

offer global exciting new domestic markets. Strengths and
foreseeable advantages for each country made impacts to one
another thus engaging and maintaining stakeholders stability is a
competition. With the advancement they have, who will boost and
ultimately improve even in times of austerity and economic
distress?

III. Case Facts

● India and China are among the world’s fastest-growing

economies.
● China’s growth has been mainly investment and export driven,
focusing on low-cost manufacturing.
● India’s growth has been derived mostly from a strong
services sector and buoyant domestic consumption.
● The Chinese economy has doubled every eight years for the
last three decades.
● China is the world’s second largest economy in the world.
● China is also the first country in the world to have met the
poverty-reduction target.
● As recently as the early 1990s, India was as rich, in terms
of national income per head.
● India’s domestic economy provides greater cushion from
external shocks than China’s.
● China’s economic growth and reform have dramatically
improved the lives of hundreds of millions of Chinese.
● China used to be the third-largest economy in the world but
has overtaken Japan to become the second-largest.
● India’s economic liberalization in 1991 opened gates to
businesses worldwide.
● Rajiv Gandhi’s government eased restrictions on capacity
expansion, removed price controls, and reduced corporate
taxes.
● China’s leadership has a development-oriented ideology, the
ability to promote capable individuals, and a system of
collaborative policy review.
● China’s entry into the World Trade Organization (WTO) and
its foreign direct investment (FDI) in other global markets
 has been an important factor in the country’s successful
growth.
● China’s huge population offers large pools of skilled and
unskilled workers, with fewer labor regulations than in
India.
● The government has prioritized the development of the
country’s infrastructure including roads and highways,
ports, airports, telecommunications networks, education,
public health, law and order, mass transportation, and water
and sewer treatment facilities.
● India has a technologically competent, English-speaking
workforce.
● India is the global leader in the business process
outsourcing (BPO) and call-center services industries.
● India’s democratic traditions are ingrained in its social
and cultural fabric.
● India's entrepreneurial culture has led to global leaders,
such as the Infosys co founder, Narayana Murthy.

IV. Alternative Course of Action

1. Poverty is one of the factors why one nation cannot

achieve their economic growth. In terms of population in
India, the government should use and improve their manpower
in business for they will contribute knowledge and skill for
its success. Every mankind should have a part in the
business world.

2. One of the country's assets is their infrastructure.

India should upgrade and improve their infrastructures to
attract more businesses. Some managers are looking for those
markets that offer best opportunities for their product and
services. A better and high-tech infrastructure is the key
for those businesses but India should think of some
strategies and budgeting in improving their infrastructure
without having a chance of decreasing their country's
capital.

3. India should focus on urban development and help its

cities and people by investing. Urbanization is such a big
factor that it affects all sizes of settlements from small
 villages to cities of India, which can lead to growth of
more established and funded mega-cities.

4. For China to achieve their high nationality income per

head, they should collaborate with other countries. They
need to know other countries' recent political, economic and
social history in order to build business effectively in
those countries. Also, they need to improve their manpower
to easily achieve success in business.

5. To increase economic growth, one country should rely on

other countries' perspectives about political and socio-
economic problems. They have to adopt other countries'
strategies in coping with those problems by simply having an
interaction with them.

V. Solution and Recommendation

China and India are both countries which show a huge

leap of development in World Economies; China overpowering
Japan for the second place in the ranking after 26 years and
India showing how their stable performance may pass other
strong economies and be next to China in the ranking,
throwing out Japan. It is still a great mystery to which of
the two will have the ultimate improvement especially in the
midst of economic distress. But the sure thing is that both
shall keep enhancing their said strengths and working out on
where they're lacking such as:
1. China's priority of quality of work rather than its
cost.
2. India penetrating economies and putting up
investments which they think they'll benefit may it be long
or short run.
3. China and their relationship from other strong
developing nations they can benefit from and to look at it
as an opportunity rather than a threat.
4. India to improve their financial system by being
able to produce or gather funds effectively and efficiently.
Seeing India's predicted improvement until 2035 is so
ideal in a way that it is possible. Being able to achieve so
 much in such a slow and long span of time is a big worth for
a nation that small which they should consider continuously
doing. The same goes with China's fast-paced development,
seeing how they can still adapt in this kind of rapid
changes sets them as a heavy competitor but a nice
companion. All they need to do is to choose to whom they
should work with. Slow or fast-paced development doesn't
matter as long as they're able to sustain their places or
keep going upward in the ranking. "Every flower blooms at
its own pace" -Suzy Kassem

VI. Conclusion