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India Innovates, China Makes, America Buys

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India Innovates, China Makes, America Buys


Friday, June 18
Wall Street Journal
By Devita Saraf


Anyone whose daily commute includes the clogged roads of Mumbai would be temporarily enthralled by the butter-smooth roads and highways of China. Having recently spent yet another week in Shenzhen visiting potential suppliers, it is not hard to marvel at the infrastructure built by the Chinese to boost their economy and support their factories. I even saw a field of cranes. Not the bird, but the container-lifting ones.

Yet, having visited the country often enough, I am wary of the pomp and show of the Chinese economy. Sure, it had the world’s biggest importer and global retailers wrapped around its fingers. But there is a piece missing – a piece that presents an opportunity for India.

The biggest advantage of Chinese factories is their quick turnaround time from prototype to sample. In today’s ever-changing business scenario, it is important that importers are able to reduce their time-to-store. Zara, the successful Spanish fashion retailer, has a turnaround time of just three weeks from design to stock in store.

The Chinese are the best at looking at a product and creating the exact same thing, whether for a client or counterfeit. I saw many iPad knock-offs at the trade shows in China not long after the launch.

This is not to say that their success has been built on blatant copying. The Chinese have been able to adapt the foreign customer’s requirements and innovate the best they can to produce a product closest to the brief. This in itself requires great innovation skills. They have also hired the best minds from Europe and the U.S. for their own architectural design. Beijing’s modern day marvels built for the Olympics have been joint efforts by the Chinese government and European firms such as OMA.

The other benefit that Chinese factories have is that they are able to get a fresh stream of product designs from America and Europe. They learn to make the latest designs in the latest materials and then sell these products to emerging economies such as India. Interestingly, the buying rates for an American customer are lower for customers from the Middle East or India.


So what it shows is that China is hungry for good product design that it can copy, manufacture and ship. Countries like India have stronger intellectual property protection and can patent good product design and sell it.

Spotted the missing link yet?

India designs it, China manufactures it and America buys it. In an ideal world.

India has much better skills in original thinking and our brands have much more potential to go global. A Tata Nano or Mahindra tractor can do much better than the Geely or Byd Chinese cars because they have been designed and built exclusively for an emerging market like India. They are not watered-down versions of Japanese cars.

In most industries, we have great products and great branding and, matched with capital, it can go global. Unfortunately, even the oldest industrial houses are moving manufacturing out of India because China offers more.

It will be a while before Indian manufacturing bounces back. To begin with, we can’t prototype. Our small-scale industries of fabricators and contractors are a pitiable lot to work with on most days. You would think they want business but if you want to get a TV bracket made, you are at the mercy of the maker’s timetable. And it is difficult to get a small-scale Indian manufacturer to ramp up. He will never have the ambition to grow like a Chinese small-scale manufacturer with big dreams. It is much easier for my team to coordinate with a team in Taiwan or China to get the basic work done.

But what we can do is design what we want. A good sense of the customer’s needs, materials, budgets and beyond allows us to be the supplier of China’s hunger for global product design. In the future, I see a stronger partnership between Indian companies designing their own products and getting them manufactured in China rather than picking up what an American company made a few seasons ago that has washed up at a China trade fair.

It’s a great opportunity for India, to get paid for what we do best – innovate.
 
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If we are to become a developed nation, we need to start making, instead of just innovating like the article suggests.
 
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BUSINESS LINE, April 10, 2010 Historically, economic development of nations has occurred in stages - from mechanising agriculture to industrialising factories and developing post-industrial enterprises. Experts describe development as evolutionary in which economies progress from simple to intricate activities. Factor-driven economy is at the low-end, processing natural resources; investment-driven in the middle, focussed on high-volume manufacturing, and innovation-driven at the high-end, offering value-added products. As nations upgrade from factor processing to innovation, their economy is deemed to emerge sophisticated and prosperous.

Can development be non-linear? Non-linear development Post-war, Japan developed linearly. And so did South Korea and Taiwan. However, not all development has been linear. Australia and Canada have stayed largely factor-driven. Singapore too has not moved from the factor stage. But, Italy moved directly from factor to innovation stage. These exceptions suggest that linear progression is not a must in development; leapfrogging stages seems equally effective.

Economist Mr Michael Porter of Harvard University explains these anomalies by saying that development is unique to each nation, conditioned by resource endowments, societal norms, and skill level of people. In his view, development is better approached by organising resources around activities in which a nation has relative strengths. This promotes ancillary businesses, propelling new industries to form, and rapid development to occur.

India versus China India and China are newcomers to the development scene. China has moved to the investment-driven stage, but India is yet factor-driven. India's manufacturing base is relatively less capital-intensive, but its knowledge sector shows vibrancy. Calls are being made to accelerate India's development by pushing the economy into the investment-driven stage. Like China, India too it is suggested should aggressively automate its manufacturing with foreign direct investment, giving it a low-cost advantage in exports and setting the stage for higher-order development to occur.

The above suggestion is less than sanguine, at least for now, for two reasons: its benefits are likely to be stymied by India's inefficient port and road infrastructure. At present levels, they are inadequate to handle the high-volume traffic an investment- driven economy would generate; and secondly it could thrust India into a destructive battle with China for international markets in low cost goods. With China's lead advantage in this area, India could lose. Put mildly, India is still not ready for this battle.

Innovation-driven A more salient approach is to leapfrog to the innovation-driven stage. This view is congruent with the Global Competitiveness Report which recognises India's innovation capabilities. India's world-class engineering and business schools offer opportunities to export higher knowledge in specialised fields. Large pool of skilled workforce in science and technology makes the country attractive to new ventures in product engineering, pharmaceutical research, and healthcare. In essence, India must exploit its investments in human capital by positioning itself as an innovation-driven economy focussed on knowledge-based industries. Following are examples of such industries.

Contract product development: Contract product developers are engineering consultants who develop products from clients' patents. Providing services only or jointly developing products are common. Nasscom estimates engineering services outsourcing alone to total $50 billion by 2020. If joint product development is added, the revenue potential could be immense.

Contract drug development: Escalating drug development costs are pressuring pharmaceutical firms to offshore R&D. Contract drug developers perform pre-clinical evaluation, data collection, and analysis. Business Insights predicts this industry to earn $35 billion by 2013. The country's share today in this industry is $100 million. Joint drug development opportunities, while driving revenues higher, would thrust India's pharmaceutical industry into the international scene.

Corporate joint venture hospitals: India has become known internationally for good quality, low-cost, surgical services. Hospitals with foreign participation are emerging in India but they are relatively small. Development of this industry could strengthen hospital supplies businesses and promote medical/surgical innovations besides export revenues. To get an idea about the size of this market, the US hospital industry earned $600 billion in 2008.

Health and Wellness: India's wealth of knowledge in traditional cure (ayurveda) and wellness (yoga) are gaining currency in the West. Wellness resorts can be developed in key locations and their services exported. This would significantly strengthen India's tourism industry.

Proprietary software: Indian software firms are largely service- oriented, not product-oriented. Service exports presently total $50 billion but product-related revenues are just $1 billion. India has the ability to develop proprietary software and it should rapidly do so since future service revenues could stall due to intensifying competition. Nasscom estimates world demand for proprietary software to be $537 billion by 2015.

Higher education: India's IIT and IIM are world-class and well- recognised by multinationals. In 2008, three million students studied abroad, spending $75 billion. Presently, India's share in educational export is meagre but the quality of its universities offers immense opportunities. Developing this sector would enhance revenues and strengthen research emerging from universities, a pre- requisite for an innovation-driven economy to take roots.

Virtual learning: E-learning businesses offer online education. Potential customers are students seeking tutoring, professionals seeking expert information, and businesses seeking training instructors. Global industry analysts estimate the e-learning market at $70 billion by 2013.

In 2008, India's e-learning exports totalled $350 million. India has significant strengths in knowledge-based resources. By exploiting them, India can move its economy to the innovation-driven stage and reap a higher rate of growth.
 
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Two questions,
One is what India can innovate for China?
The other is when talking about per capita GDP, India is only nearly$1000 compared to China nearly $4000 , i think whether india should raise level of industrialization and increase employment?
 
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Two questions,
One is what India can innovate for China?
The other is when talking about per capita GDP, India is only nearly$1000 compared to China nearly $4000 , i think whether india should raise level of industrialization and increase employment?

In terms of innovation, well India can innovate anything what China wants, give the environment of business and our feasibility. (IT, Education, Engineering etc..)
The per capita is low because we have just started to develop, lets last two decades. (But i think you should check ur number for China).
We are already starting to raise the level of industrialization but we are post-independence, young counrty in compare to the first world and matter of fact China.
They have a communist govt, where things are done with in seconds and minutes while we have democracy(strikes+ lockouts+raj thackrey+mamta banerjee+ maos and wt all)

Bottom line, we can be there, if both this country play good and not use proxies.
 
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In terms of innovation, well India can innovate anything what China wants, give the environment of business and our feasibility. (IT, Education, Engineering etc..)
The per capita is low because we have just started to develop, lets last two decades. (But i think you should check ur number for China).
We are already starting to raise the level of industrialization but we are post-independence, young counrty in compare to the first world and matter of fact China.
They have a communist govt, where things are done with in seconds and minutes while we have democracy(strikes+ lockouts+raj thackrey+mamta banerjee+ maos and wt all)

Bottom line, we can be there, if both this country play good and not use proxies.

Politely remind, maybe you are talking about the future, but I just have to see india import industrial products such as telecom equipment from China(China's own design and manufacturing) and export of raw materials to China.
 
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Politely remind, maybe you are talking about the future, but I just have to see india import manufacturing industrial products such as telecom equipment from China(China's own design and manufacturing) and export of raw materials to China.

Now this telecom Equipment is starting to become the benchmark of Sino-Indian relations. Why so much brawl about it. There are lots of other things which we can focus on. But as you have mentioned, there is something Protectionism and Security in business. Even U.S did the same when Huwaei was about to acquire 3comm.(Stopped it). India do import stuffs from China.

Imports from China rising fast: FICCI

India's export:

Indian exports to China up 75 pc in Q1 this year-Foreign Trade-Economy-News-The Economic Times
 
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Give me a break after reading the heading I immideatielly looked at the name of the narrator and wallah! I knew it was a cheap marketing stunt by probably a American born Indian.

Overall only a Indian thinks he is innovative in the real world if u ask any man on the planet in Africa or southamerica even the most illiterate men and on remote places on this planet know who is the real innovator in tech and new idea’s all of them will say it aloud one name surely that is JAPAN and in literate parts of the world they will add GERMANY with JAPAN as the ones most innovative on this planet,Americans run mostly on their ideas or their brains America produces hi-quality costly products based on ideas derived from these two,and china is the worlds biggest photocopy machine no body can match chinas production capability as of now.

India is just a consumer face the facts,not even a leader in agricultural export where aussies take the lead,quite wishfull thinking of Indians for being innovative wakey! Wakey! the world can see who is innovative and who is not stop living in the dream world u can’t even make a copy of leopard provided the blue prints innovative huh!.

And don’t think abt lashing it out on Pakistan we know our capabilities and thus we don’t make false claims like Indians,we don’t live in illusions like Indians do.
 
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indian's R&D expenditure is only 1/7 of china's, their PCT patents is 1/10 of china's. except for big mouth, i dont see any innovation in indian
 
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"India designs it, China manufactures it and America buys it. In an ideal world."

there that quote says it all, this is a dream of some indian which is very far from reality(actually the china and usa part iis quite true)
 
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