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What are we doing about "Chindia"?

Jamie Popkin and Partha Iyengar, Information Age

17/04/2007 14:57:02

There is no hotter topic in the high-tech industry than the impact of China and India on the industry and the world at large. If you are a strategist or a decision maker in almost any enterprise, anywhere in the world, you see the impact of India and China in new waves of technology products and services in events, decisions and strategies featured on corporate web sites and in international news coverage.

As industry analysts we have been fortunate to travel extensively in China, India and virtually everywhere else in the world where the impact of these two rising economic giants is felt. Wherever we have gone over the past three years, we have been consumed with answering our clients' questions about China and India.

These experiences inspired our thinking about what lies ahead for each country, as well as to seriously examine the idea of "Chindia" - China and India combining strengths in several industries to compete globally - as a subject for research and analysis.

Chindia

The bilateral economy of China and India is in its infancy. Yet new momentum suggests a powerful relationship is building.

"Chindian" enterprises will have access to complementary skills and resources and, in turn, will have the potential to lead many global markets.

New joint ventures between Indian ICT service firms and their Chinese counterparts are early illustrations of how a formidable Chindia economy could develop. Indian firms bring to the table world-class software expertise and leadership in global markets. Chinese partners have legions of capable, low-cost employees and greater know-how with clients in Japan, Korea and other Asian countries where English is less prevalent.

Modest steps recently under way provide only a hint of what India and China collectively could bring to the global economy and global balance of power in coming decades. Patterns of a widening bilateral commercial partnership are visible in increasing high-level official visits and pronouncements, conference participation, cultural exchanges and, most of all, forecasts of accelerating goods, services and investment flows across the Himalayas.

Much of the West's attention on China and India thus far has focused on the West's outsourcing of manufacturing and low-end service jobs. Optimistic observers believe the current flow of jobs across the Pacific is immaterial in the long run because innovation remains strong in Western countries, and innovation produces new jobs and economic growth.

This view is absolutely correct on the surface, but it hides the underlying truth of what is happening in India and China today: both countries are getting better at driving technological innovation. Today China and India are producing some of the world's best-trained computer science and electrical engineering graduates.

Far from being simply a source of cheap labour, both countries soon will be able to compete favourably for global business - as India's ICT services firms have done - not on price, but on competence and capability.

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