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India vs China: Which is best for business?

India vs China: Which is best for business?

Friday, September 24, 2010 | Posted by: Fiona Cullinan
Categories: China , India | Tags: business, India, competition, corruption, trade, outsourcing, IT, Kapil Sibal, rivalry, FDI, Mandarin

Forbes’ latest list, ‘Best Countries for Business’, has ranked India over China, fuelling the sense of rivalry between two of the fastest growing economies in the world.

The Forbes report assessed economies on factors such as red tape, trade and monetary freedom, tax burden, corruption, property rights, investor protection, technology and innovation. For the full list, visit www.forbes.com/bestbizcountries.

India’s business blogging community received the news of India “surpassing” China with a certain amount of glee, noting India’s position in 77th place “while China sulks at number 90”.

Meanwhile, Arun Prabhudesai of Trak.In highlighted another win for India - its hold on Top Outsourcing Destination for the US (60% market share) – ahead of China’s 27% (Source: Capgemini survey, Sept 2010):

“The important thing is that China is far behind India when it comes to outsourcing market share in the biggest market. Although, in Asia Pacific, India seems to have lost the edge, Western countries still prefer India as their outsourcing destination.”

India’s large, English-speaking, IT-friendly workforce is indeed a major attraction for many Western economies.

However, while India has received a boost from the Forbes listing, China retains a significant lead overall in terms of investment.

It currently attracts much greater levels of Foreign Direct Investment (FDI) – $456.3 billion to India’s $157.9 billion (Source: CIA World Factbook, 31 December 2009 est.)

And China continues to lead the way for investment prospects in 2010, outranking India in Grant Thornton’s International Business Report 2010 with a score of 454 (to India’s 222) in the Grant Thornton emerging markets opportunity index, which ranks the level of opportunity for investors in 27 emerging economies across the globe.

Alex MacBeath, Global leader – markets, Grant Thornton International, said:

“The top five economies this year remain the same as in the 2008 emerging markets opportunity index. China leads the way thanks to its huge consumer market, increasingly open economy and staggering trade growth, followed by the other developing Asian powerhouse, India.”

China’s dominance in the global marketplace means that, despite the rivalries and some diplomatic tensions, India is making efforts to improve trade relations and oil industry’s wheels.

Last week, for example, India’s Minister of Human Resource Development Kapil Sibal, in Beijing for talks, announced a controversial move to put Mandarin on the Indian secondary school curriculum. He said: