Transcript Factbook-outline-by-Group-6-Samantha-and

Factbook Outline
Automotive Industry in China and India
Foreign Investment Analysts
India - Samantha Pinto
China - Jiaxiao Zhang
WHY PICK US?
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Samantha Pinto
Bachelors Degree in Human
Resources & International
Business
USP: Indian work experience
Languages: Hindi, Konkani,
English
Allen Zhang
• Bachelors Degree in
International Business
• USP: Smart guy from China
• Languages: Mandarin &
English
Introduction
- Purpose: to discuss the automobile industries in China and
India and the related business implications based on the
various dimensions discussed in class and provide
recommendations for foreign investors and auto companies.
- Brief overview of the automotive industries in both China and
India
Comparative analysis - India
Culture
• High Power Distance, Masculinity, Long-term orientation
• Low Individualism and medium to low Uncertainty avoidance
Corporate governance System
• The corporate governance model in India is moving towards the Anglo American
model whereby shareholder interests are emphasized.
• The Securities and Exchanges Board of India (SEBI), has made a significant
progress in providing a rigorous regulatory regime that helps ensure transparency
and fair practice.
• A majority of the country’s Small and Medium-Sized Enterprises (SMEs) still rely
on relationship-based, informal control and governance mechanisms that limit
financing and keep the cost of capital higher than perhaps necessary.
National Innovation Systems
• central government is taking charge of science and technology development plans
and policies, huge support for R&D and technology transfer
• infrastructure is weak and a barrier to manufacturing
Comparative analysis - India
Still NIS
• High percentage of financial expenses on education as a percentage of GDP in
India
• India's IT Industry
• Innovation performance subsystem shows that the economic development of India
has better potential in the knowledge intensive service-oriented economy
Comparative Political Systems
• India is a democratic country in terms of politics
• India's lower house, the Lok Sabha, is modelled on the British House of
Commons, but its federal system of government borrows from the experience of
the United States, Canada and Australia.
• India’s political environment has been moderately stable which has contributed to
the booming economy in India. This is an attractive characteristic for the foreign
competitors
Comparative analysis - India
Different IR systems
• The Industrial Relations Division of the Union Ministry of Labour and
Employment
• Industrial Relations paradigm in India had dramatically changed following the
adaptation of free market policy in the early nineties.
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A sound and positive industrial relations climate.
o statistical figures of Union Government’s Labour Bureau, exhibits drastic
decline of industrial disputes from 1,825 in 1990 to 421 in 2008, and India
being the third most preferred global investment destination.
o Foreign direct investment inflows to India went up to $32 billion in 2011,
which was a 33 percent increase over the previous year
Comparative Business Ethics
• India scores 36 out of 100 on a scale from 0 (highly corrupt) to 100 (very clean)
on Transparency International’s CPI.
• This high level of corruption in India is very important to note for foreign
investors entering the Indian market to conduct business.
Comparative analysis - China
Culture
• High Power Distance, Masculinity, Long-term orientation
• Low Individualism, Uncertainty avoidance
Corporate governance System
• stakeholder approach: the major stakeholders are the government officials who are
choosing and directing the firm managers.
• mainly State-Owned Enterprises (SOEs): Government officials are in charge of the
firms and firm managers answer to the officials.
• Advantages & Disadvantages
• build good personal relationships with the government officials
National Innovation Systems
• moving toward to a market-based open innovation system
• adopted various important policy instruments to encourage innovation activities
and to promote transfer and commercialization of R&D results
• encouraged and promoted foreign corporate R&D in China
• mostly focused on incremental innovation with little radical innovation
• automotive industry: innovate by commercialization; architectural innovation
Comparative analysis - China
Comparative Political Systems
• Closest to be a Totalitarian system but not that extreme
• Politically ruled by one single party which is the Chinese Communist Party (CCP)
but Capitalism and private businesses also allowed and even supported by the CCP
in many parts of the economy
• Automotive industry: SOEs dominant; Mostly Joint ventures for foreign
companies
Different IR systems
• Weak and inefficient union system
• Relatively new labour market
• High income disparity
Comparative Business Ethics
• Moderate to high level of corruption
• Foreign investors should be aware of the corruptive culture in China
• Recent anti-corruption campaign is causing declining sales for premium auto
brands due to the increased cautiousness of the government and military officials
Conclusion and Recommendation
• Brief recap of the analysis
• Provide suggestions on entering China or India based on
different circumstances
o Investment Goals (Returns; R&D, Manufacturing, Sales)
o Scale of investment
o Core competency
o Modes of Entrance
Thank you