Indian companies have been faced with the challenge of the Chinese dragon after the liberalization of Indian economy, reduction of tariffs and thawing of Indo Chinese relations.

Indian markets are flooded with Chinese products at highly competitive prices, electronics, light engineering and even consumer products. Indian companies are also faced with competition in export markets from their Chinese counter parts in a wide variety of products from things toys and textiles, to sophisticated electronic products commodities and even for major global contracts. Looming large is the threat of competition in the software arena too.

In the first stage of liberalization in 1991 when Indian companies were faced with the threat of the MNC invasion they cried foul and began to lobby for a level playing field. Soon thereafter realizing that there was no escape they have risen to the challenge of improving quality and competitiveness to a variety of measures such as optimizing finance costs, entering into alliances with MNC’s, getting better technology in and improving productivity and have been able to take on the MNC challenge.

Likewise Indian companies after crying-hoarse about the Chinese threat are suddenly realizing that the name of the game to take the battle into the enemy terrain. Indian companies are setting up their projects in China where they are leveraging the competitive advantages of

China in the form of government support, low cost of land, good infrastructure, cheap capital and highly productive labor and are beginning to produce competitive products at times even in collaboration with Chinese competitors.

They are thus able to export their products into their own markets of Europe, North America and even South East Asia.

The Center for Monitoring the Indian Economy in its recent report has indicated that the investment abroad of Indian companies in 2003 were of the order over a billion Dollars and that there were over 75 mergers and acquisitions by Indian companies, an increase of over a100% from 2002.

More Indian companies need to learn this strategy as the slow ‘Indian Elephant’ moves to take on the might of the ‘Chinese Dragon’ in the global business arena.

The author Dr. Hiru Bijlani is the Managing Director of Zenith Global Consultants Ltd., and the author of ‘Globalization -an Overview’, ‘A Guide to Global Joint Venture and Alliances’, both published by Heinemann Asia Singapore and ‘Tip and Tales for travellers’ and ‘Succeed in Business India’, by Times Publishing Singapore. The last book having been translated to Chinese and published in China recently.

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