Professor Anil Gupta’s New Book Helps Business Leaders Get China and India Right

Many global companies have entered China and India, but only a few have gotten it right. Frequently they miss growth opportunities while focusing on offshoring and cost reduction. They tap the wealthy urban market but don’t know how to profit from the masses in second and third tier cities. And few have a clear plan for addressing competition from players from within China and India such as Lenovo, Chery Automobile, Haier, Infosys and Tata.

In his upcoming book to be released later this month, “Getting China and India Right: Strategies for Leveraging the World’s Fastest Growing Economies For Global Advantage,” Smith School Ralph J. Tyser Professor of Strategy & Organization Anil K. Gupta tells the stories of the global companies that have gotten it right, and in doing so, outlines a strategy for success.

Within the book, Gupta and co-author Haiyan Wang MBA ’95, interviewed managers from more than 100 companies to outline an approach that includes:

• Winning the local war for talent
• Developing innovations locally
• Creating a multi-segment market strategy
• Developing the right partnerships
• Leveraging the complementary strengths of both China and India

Business leaders are invited to learn more about the book and strategies for winning global dominance at a presentation Gupta will deliver at the Ronald Reagan Building on February 27. In excerpts from a recent Q&A, the authors shared some of their insight:

Q: What is the most common mistake that multinationals are making with their China and India strategies?

The most common mistake is to view China and India from the narrow lens of just off-shoring and cost reduction. Instead, we argue that both China and India represent four game-changing realities: mega-markets for almost every product or service, platforms for global cost reduction, platforms to boost a company’s intellectual capital, and springboards for the emergence of a new breed of extremely capable and highly ambitious competitors. For a multinational, developing robust China and India strategies requires addressing all four of these realities head-on rather than just one or two of them.

Q: What sets your book apart from other books on China and India?

Getting China and India Right is the first “strategy” book to focus on both China and India and to bring an integrated perspective towards these two economies. Aimed squarely at the CEO and his or her senior colleagues, our book argues that just because a company is present in China and/or India does not necessarily mean that its leaders understand these countries well or that they have robust strategies for them.

Q: Where does a company’s China/India strategy fit into its global strategy?

Notwithstanding their growing heft, one should not forget that China and India are not the only major economies in the world. This statement will be true even fifty years from now. Thus, a company’s China/India strategy should be looked at as one part, albeit an increasingly important part, of its global strategy. We are willing to bet that any Fortune 1000 company that does not develop and pursue a robust China/India strategy over the next five years will run a serious risk of being annihilated or acquired by 2020.

Q: How should companies be structuring themselves differently to succeed?

Over the next ten years, historical notions of corporate headquarters will have to undergo a radical transformation. Today, the U.S. accounts for only 25 percent of the world’s GDP, only 10 percent of growth in world GDP, and only 5 percent of the world’s population. With each passing year, all three numbers are going down. Thus, for any company that wants to emerge or stay as one of its industry’s global leaders ten years from now, it is imperative that the center of gravity of its marketing and sales efforts, its manufacturing operations, and even its R&D activities must shift sharply from the U.S. to other countries.

Q: Will the current economic problems in the U.S. market be good or bad news for China and India? How will they be impacted?

In an increasingly integrated global economy, ups and downs in the U.S. economy affect every other economy, including China and India. More specifically, the impact of the current problems on China and India will be partly negative and partly positive. First, the negatives. The current turmoil in the U.S. economy is hurting exports of manufactured goods from China and IT services from India. As a result, during the next two years, China’s GDP is expected to grow at about 8.5-9 percent annually, down from about 11-11.5 percent over the last four years. Similarly, India’s GDP is expected to grow at about 7.5 percent annually, down from about 9-9.5 percent over the last four years. While these will still be very robust growth rates, they will be lower than in the recent past. On the positive side, any weakness in the U.S. economy implies a slowdown in the demand for oil and other commodities. Since both China and India are net importers of oil and most other raw materials, a weaker U.S. economy means lower inflation, a welcome relief for the common man on the street. Also, as the weakness in the U.S. economy depresses the stock prices of U.S. companies, it is likely to accelerate the pace of U.S.-based acquisitions by companies from India and China. Aggregating all of these trends, we predict that the current economic turmoil will very likely accelerate the ongoing shift in the world’s economic center of gravity from the U.S. and Europe to Asia.

Q: What's the first step a company should take to start getting China and India right?

The most important first step for getting China and India right is to look ahead at 2020 and ask: What will be the nature of the market and competitive reality in China and India then? What position do we want our company to occupy in these markets in 2020? What happens if we don’t? In answering these questions, do your best to try and interpret the world not just from American (or Japanese or German) eyes but also from Chinese and Indian eyes.

Anil K. Gupta is the Ralph J. Tyser Professor of Strategy and Organization. He has written for The Wall Street Journal and The Financial Times and is the author of The Quest for Global Dominance, Smart Globalization, and Global Strategy and Organization. Gupta has been recognized by BusinessWeek as an Outstanding Faculty, by Management International Review as one of the “Top 20 North American Superstars”, and was inducted into the Academy of Management Journals’ Hall of Fame. Haiyan Wang is Managing Partner of China India Institute, co-author of The Quest for Global Dominance, and has written for The Wall Street Journal.