Emerging Economies: Operational Issues in China and India

This article addresses the current state of the infrastructure and other factors within China and India to consider in making operation expansion decisions. We compare the logistics, telecommunication, and energy infrastructure of these two nations followed by a discussion of their labor productivity, economic growth, and political and cultural stability. We find that China is ahead of India in terms of transportation and telecommunications infrastructure, but India leads in terms of skilled labor for supporting information technology (IT) and complex manufacturing-based operations. While it will be difficult for India to catch up with China's manufacturing base, there is a strong opportunity for India to become the back office of the world. We then outline the opportunities and challenges that MNCs may face by investing in these countries and close with advice for managers in making expansion decisions.