Geography Lessons

World Economic Forum

The white paper “Be Prepared,” released by Deloitte&'s Technology, Media and Telecommunications (TMT) practice, suggests that U.S. executives are too quick to lump China and India together in terms of development expectations. While China was last year often mentioned in the same breath as India in terms of the threat to U.S.-based IT services companies, the two countries offer very different investment paths. And it may take decades to realize their potential. In other words, proceed with caution.

Tony Kern, managing partner of Deloitte TMT, advises U.S. companies to assess both countries along three different metrics: as potential suppliers, as potential competitors and as potential consumers of technologies.

Along the lines of supplier (and competitor for that matter), India, for example, will continue to provide a growing array of services, while technology companies should look to China for its manufacturing capabilities, Kern said.

Today, Deloitte TMT reports, there are only two Chinese and three Indian companies ranked among the world&'s largest multi-national businesses. But the mark of in-country niche businesses is beginning to be felt outside the Indian and Chinese borders, Deloitte TMT reports. For India, these players include Shanda Networking (for online games), Tata Consulting Services (for IT services capabilities) and Videsh Sanchar Nigam Ltd. (for bandwidth). Companies emerging from China include Lenovo, TCL and China Netcom.

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Deloitte TMT suggest companies from both countries are increasingly likely to be seeking partnerships, although government regulations in China make such alliances complex.

As consumers, Deloitte TMT writes that China&'s middle class could grow to 100 million by 2010, which is larger than the population of the largest European country. India, meanwhile, also is home to a middle class of roughly 62 million people. One thing that both countries will have in common: a prediliction for mobile technology.

But you really can&'t understand either market until you invest time in studying these very foreign cultures. “You have to spend time there,” Kern said.

You can find the complete report here. Are your thoughts straying offshore? Share your thoughts via email at [email protected].