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Introduction to China & India

Introduction to China & India. Population, Wealth, Distribution and is it ‘and’ or ‘or’?. Population Facts. Population Growth. In 1979, concerned about population growth, the Chinese Communist Party brought in a policy of ‘One child per family’; India has no equivalent

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Introduction to China & India

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  1. Introduction to China & India Population, Wealth, Distribution and is it ‘and’ or ‘or’?

  2. Population Facts

  3. Population Growth • In 1979, concerned about population growth, the Chinese Communist Party brought in a policy of ‘One child per family’; India has no equivalent • Broad population predictions: China India • 2009 1,330m 1,175m • 2030 1,465m 1,465m • 2050 1,400m 1,593m

  4. The China growth story

  5. Why is China growing so fast? • Huge investment levels (40%+ of GDP each yr for 20 yrs); Chinese investment in fixed assets is nearly 5 times higher than India’s • Spending on construction is nearly 8 times higher in China • Literacy level is much higher: 33% illiterate in India; 6% in China • … so the huge rural workforce can find jobs

  6. What changed in China in 1990/91? • A freeing up of market access and the private sector; a major policy change to welcome FDI (foreign direct investment, e.g. Volkswagen and KFC) • Govt. policy change to hugely increased capital spending, especially infrastructure • … probably influenced by the political pressure for change after 1989 Tienanmen Square protests (brutally suppressed)

  7. Economy basics (2009/10 figs) China India UK GDP per capita $3,735 $1,055 $35,000 GDP at PPP ($s) $6,700 $3,200 $34,200 Annual GDP growth 9-10% 7-8.5% 2-2.5% % of workforce on the land 39.5% 52% 1.4% % in service sector 33.2% 34% 80.4%

  8. China – world’s biggest car market

  9. Extraordinary growth potential

  10. Can China Outstrip America? Assumed growth: UK = 2.5%; US 3%; China 9%; India 7% (exc currency ch.)

  11. Secondary China, Tertiary India

  12. The Chindia problem (western perception) • Both have huge populations • Both are growing sustainedly rapidly • Both have extraordinarily low wage rates • Both have massive rural populations • Both seem scary from a Western viewpoint • … for jobs and for security • A two-horse carriage about to overtake the west

  13. But isn’t it China versus India? • Definitely that’s how India sees it … • … and China is starting to look beyond overtaking America • China and India are hugely different at the moment … • … and it seems likely to stay that way • While China dominates secondary, India may come to dominate tertiary

  14. From the UK perspective: • The business opportunities must be a core focus: • Chinese middle classes ($8,000-$25,000 income) were close to zero in 1995, 87 million in 2005 and estimated at 320 million in 2015! (Source: American Express) • Indian middle classes amounted to 5 million in 1995, 50 million in 2005 and an estimated 200 million in 2015 (Source: The Economist)

  15. Different consumers China, India and America

  16. Growth Potential in the East

  17. Potential & Environment

  18. Ease of Doing Business (2011)**World Bank: Doing Business, published November 2010

  19. Supermarket Opportunities At present, retailers such as Walmart, Tesco and Carrefour are opening Cash & Carry (wholesale) businesses in India; waiting for when the grocery market is liberalised/deregulated.

  20. China Potential for UK Fashion • In 2009 Mulberry repositioned itself as a maker of young, luxury (£600) leather bags • In 2009 and 2010 it saw that many of its customers in London & Tokyo were from China … so it opened its first Beijing store • … and plans 20 more by 2015 … • It has increased capacity by 30% at its Somerset factory but looks to open another • Burberry also there, but Primark? Topshop?

  21. And the environment? Tonnes of CO2 Total CO2 per cap. p.a. M tonnes India 1.25 1,400 China 4.75 6,300 UK 9.3 560 US 20.0 6,000 Russia 11.8 1,700 World 4.5 30,000 Source: Energy Information Administration 2009, see http://tonto.eia.doe.gov

  22. Conclusions • China is set fair for many more years of sustained growth at 8-11%p.a. • India will continue to grow rapidly, but more cyclically; it needs to invest in education and transport – but perhaps can’t afford it • China is the horse to win the race – Britain has missed out so far, but growth in food and fashion sales provide bright prospects.

  23. A-Z Exam Revision Sessions • For AQA and Edexcel • Covering all summer 2011 exam units • 90 minute sessions on improving grades • … each focused on just one unit • … can be accessed from school or home • £69 per session, flat rate for whole year group • To book, email marcouse@btopenworld.com

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