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China vs. India

Ram Badrinathan 03/26/2008

I am often asked to contrast and share my perspective on two of the most exciting markets in the world - China and India.

So whenever there is an event that occurs which highlights the variance, it brings a wry smile.

Last week, The State Administration of Radio, Film and Television (SARFT) which regulates all content and media in China banned 25 video sharing website for "irregular content" and gave a stern warning to the market leadar Tudou ( the youtube of China). Now in the country with the largest broadband users in the world ( as per latest stats) that is a paradox. Media, content needs to be regulated..

In India on the other hand there are 85 channels ( 80% private) and another 300 coming the works ( all private)..

As someone who tracks both countries very closely at a philosophical and travel industry level. It highlights where each country is strong and weak..

China - High broadband penetration - Low med deregulations

India - Low broadband penetration High media deregulation

So in soft industries ( banking, entertainment, Software services) India scores and hard industries ( manufacturing, capital goods) China is way ahead.

The same logic can also be applied to the travel industry. Indian travel services market is privatized, deregulated and entrepreneurial. China travel services market ( GDS, Airline regulation, travel retail) is highly regulated. So whereever there is information processing India scores

But Chinese airports are quantum leap better than India and for Boeing and Airbus, China is much bigger but for a GDS India is more addressable..

Ofcourse the trends will converge over time..India is getting its infrastructure act to together and the winds of change are slow sweeping through travel services in China

comments

On 26 March, 2008, Joe Buhler wrote:
The business environments in these two countries are clearly influenced by the political systems within which they find themselves. India a democracy with by now at least a decade old history of deregulation and China a centrally controlled one-party state. We can only hope that the Chinese leadership can continue to manage the increasing wealth gap opening between urban and rural areas which is a walk on a tightrope that no other communist regime has been able to perform successfully. Despite all the evidence of prosperity and progress in major cities, the challenges they face remain formidable.

On 01 April, 2008, Vicky Brock wrote:
Interesting post Ram and I hope you are well. I know I usually write from a b2b perspective, but I have actually been seriously mulling China or India (or more specifically Olympics or Commonwealth Games) from a tourist perspective and while as a potential consumer I hadn’t thought about it in the terms you define, the two different market functions have nevertheless played a role in my decision and my anxieties. (The end decision is the Commonwealth Games, with an India Australia test match for good measure, by the way. All I need is a PhoCusWright conference to boot!) The “privatized, deregulated and entrepreneurial” travel market you describe means I do not doubt my ability to get the elements we are looking for, combined into some form of customised, competitive package. I do not doubt India’s ability to deliver me an authentic, open and personal tourist experience. I am also reassured the free market means I can buy cricket tickets from the UK, as opposed to having turning up to queue on the day. Yes, I’m pretty anxious about the transport logistics and the infrastructure aspect. I worry I’ll have to fly in a terrifying deregulated plane and land in a terrifying rickety airport (do I worry rightly or wrongly – as a tourist I do not know). But ultimately, India has engaged my heart – probably in no small measure due to the Incredible India campaign. The high level of control and regulation makes me fear that in China I would not really get such an authentic experience and that I wouldn’t be truly free to relax. So despite the better airports, and the Olympic wow factor, emotional engagement has triumphed over cold logic and the Commonwealth Games it is!

On 20 May, 2008, Don Munro wrote:
It strikes me that the Indian mindset, at least in terms of business philosophy, mirrors that of the U.S. When given a free hand, businesses innovate, cater to customers and, if they manage it all right, grow and prosper. But when the heavy hand of government is involved, business is stifled and competition and innovation compromised. Long-term, India's model will produce sustainable economic growth. On the other hand, the Chinese government will have to develop more of a laissez-faire business attitude for its economy to become truly innovative and powerful.

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