Spotlight for Recruiting and Employment Professionals, March 2, 2011
The pace and magnitude with which China and India are growing in the global marketplace should signal to U.S. companies that competing internationally will require a new mindset and different business practices. China and India account for 10 percent of the world’s gross domestic product. By 2025, that percentage will double, says Haiyan Wang, a managing partner of the China India Institute, a Washington, D.C.-based research and consulting organization.
“In addition,” Wang says, “these two countries combine for 40 percent of the world’s population. This is especially important because, with the sheer size of China and India’s economies and populations, we could say that by 2025, China and India could account for 20 to 30 percent of the world’s demand for products and services. If companies are looking to grow, China and India should be in their sights.”
Because the marketplaces in China and India will grow roughly three or four times faster than that of the United States, the “knowledge of today can be obsolete by tomorrow” in the global marketplace requiring a knowledge base that is broader and updated and adapted more quickly than ever. Part of the reluctance by U.S. companies to keep pace is because of the way markets in Japan and South Korea rose and fell flat.
“China and India are not the same story,” Wang says. “Japan and South Korea didn’t challenge U.S. economic power. The United States remained as the world’s dominant economic power. But China and India’s markets aren’t transitional; they’re transformational.”
Wang says this is because China and India are the only two countries in the world where the confluence of several key forces—“game-changing realities,” she calls them—are driving growth. Wang points out that both China and India have:
- Mega-markets for almost every product and service.
- Platforms to dramatically reduce a company's global cost structure.
- Other platforms to significantly boost a company's global technology and innovation base.
- Springboards for the emergence of new fearsome global competitors.
“Each of these by itself is very powerful, but combine them, and they become transformational,” she points out.
No longer can these countries be viewed merely as places for cheap manufacturing. They are known as the emerging dragon (China) and tiger (India), in part, because they are armed with innovative products that are good at addressing the mass market in developing economies.
“Western companies seeking to grow in the global market must go to China and India, where the manufacturing and talent are both low cost. Western companies should look at those in China and India as targets for partnerships or acquisitions.”
Organizations hoping to flourish in this marketplace must have a global mindset, which includes an openness and deep knowledge of cultures and markets; an appreciation for and the ability to grasp diverse markets and the changes that are happening; and the ability to integrate and synthesize across these diverse markets. They also must have nerve centers as close to their markets as possible so they can respond to market needs with speed. Despite nerve centers in various locations, the company must build a “one company” culture that unites it, perhaps by rethinking an organizational structure centered on a corporate headquarters.
“Companies need to be market driven, not product driven, and be willing to reinnovate their business models,” Wang says. “If western companies don’t have a global mindset and the strategies in place to learn, adapt, and move quickly, they risk being acquired by current or emerging competitors. Their very existence will be threatened.”
Haiyan Wang will be the keynote speaker during the 2011 Global Campus Recruitment Symposium which will be held May 30 and 31 in Dallas, Texas