Page 14 - CSA Speaker Bulletin September 2016 | CSA Celebrity Speakers
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ASIAN MARKETS
China + India = ?
Pankaj Ghemawat
Pankaj Ghemawat is a global relative to the 1990-2010 period, over 10 years that China did 10 years ago.
strategist, professor and author which it contributed 23% of global But achieving sustainable double-digit
and one of the new generation GDP growth. And China’s growth growth is quite challenging, to say
management gurus throwing new is now more focused on domestic the least. On the other hand, there
light on corporate behaviour. He markets, which, in many cases, have are some recent policy developments
is currently Professor of Global grown to be the largest in the world, that are encouraging. Prime Minister
Strategy as the IESE Business and less on export markets than it Modi’s “Make in India” policy is
School. used to be. Especially in this context, officially agnostic about whether the
it is interesting to look, as Thomas makers should be Indian firms or
Despite the recent downgrades, Hout and I have been doing for the foreign ones. And the generalized
emerging markets continue to better part of a decade now, at how sales tax reform is a milestone in
account for the bulk of forecast Chinese firms fare against advanced dealing with grumbling of the sort
growth for the world economy over country multinationals in those articulated by the former chairman
the next few decades. And the two sectors within China in which foreign of Suzuki: that the kind of trade
largest—China and India, which rank competition really is allowed. liberalization India needed the most
first and third globally in terms of was internal rather than external.
purchasing power parity measures Perhaps the headline from the most
of GDP, with the U.S. in between— recent batch of data, as elaborated In still-unpublished research--
continue, in a purely arithmetic sense, in our article in the March-April 2016 which I am happy to elaborate on in
to play particularly large roles going issue of Foreign Affairs, is how little private—I look at how Indian firms
forward. changed in leadership patterns over have been faring at home against the
a period in which Chinese domestic multinationals (i.e., do the patterns
To start with China, the most recent markets, on average, doubled in size. discerned in China hold?) and the
data confirm a slippage in its role Advanced country multinationals did lessons to be learned from Indian
persistently well in sectors where firms’ attempts to multinationalize
product differentiation possibilities themselves. n
(through marketing, R&D etc.) are
large, in line with standard academic
theories of the multinational
enterprise, with Chinese companies
dominating in the others.
Turning to India, rough calculations
suggest a 10:10:10 rule: if India can
grow at 10% or more, it will account
for the same share of world GDP in
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