Upon entering China, Shanghai in particular, you feel the hum of people working, hope growing and a nation moving forward at an incredible pace. Upon entering New Delhi, you hear a different buzz. You hear chaos- cars honking, people yelling, everyone in a bustle to get things done and keep up with and supervise the pace of India’s growth. Both have inspiring tales of growth and both offer valuable lessons for fueling and maintaining growth.
Background on China’s Growth
China is the largest exporter, a top manufacturer, the second largest importer of goods and the world’s fasted growing economy. However, these are all recent successes as China’s influence in the world economy was minimal until the late 1980s. At that time, economic reforms initiated after 1978 began to generate significant and steady growth in investment, consumption and standards of living. Since the wide-ranging 1980s reforms to the communist system, China has managed its growth through a gradualist and controlled approach. China’s growth comes both from huge state investment in infrastructure, education, healthcare and heavy industry and from private sector expansion. China has emphasized raising the GDP per capita and shifts the society from a saving society to a consumption driven society. The government has also focused on foreign trade as a major vehicle for growth.
Background on India’s Economic Growth
The Indian economy has recently recording some of the highest growth rates in the world. But India’s economy has followed a completely new path to development. The economic liberalization in 1997 spawned a whole new breed of self-made entrepreneurs who have been the drivers of growth, unlike China’s top down approach. As Gurcharan Das, author and former CEO of Procter & Gamble India, put it:
“The Indian growth path is unique. That is really scary because we are not following a proven model.”
More than half of India’s GDP comes from the services sector but only employs about one-third of its labor force. The growth in services in India was a reaction to the opening up its economy when demand for services was growing.
“The emphasis on services was the result of serendipity,” says Dr. Sabir Gokarn, executive director and chief economist with CRISI. “There was no planned growth strategy to increase the share of services.” Agriculture still employs over half of the nation, as India veers from an export-led growth strategy, as most other nations in Asia have done. India’s effort at rapid economic growth with a coalition democratic government is without parallel anywhere in the world and highlights why India is still plagued by many inefficiencies and infrastructure issues.
Lessons For Growth
Both of these incredible growth stories highlight different ways of managing and sustaining rapid growth. On the one hand, China uses its central plan to fuel its progress. India, on the other hand, has reacted to the opportunity of meeting the needs of its 1.2 billion-person population through organic growth via the service sector. Both of these countries’ paths to prosperity offer three valuable lessons for business and growth.
1. Have a clearly articulated vision that all the key stakeholders buy into. This lesson may seem like a given, but it cannot be stressed enough, as it is the main driver of sustainable and consistent growth in China. Yes, it is a communist society with strict government control, but the government has an incredible marketing talent, which has contributed to the hundreds of millions of Chinese that share in the dream for a better, richer and more powerful China. More importantly, this shared vision has allowed China to meet key milestones in record time, delivering on the promises they make each year about its growth.
2. Develop an easy to implement strategy and focus on executing one part of that strategy to reach sustainable growth. Again China offers a valuable lesson through its planned growth. China does not try to address everything at once. The government develops ten year plans focused on one or two key areas, whether it is infrastructure, healthcare, education, the banking system or growing the private sector. Once the country has focused its attention and resources on the current plan, the Chinese mobilize, each knowing their role and how they are contributing, to execute on the plan until it is perfected. The Beijing Olympics were executed in exactly this way.
3. Keep your eyes open and be opportunistic. Although slightly contradictory to China’s lesson on vision and planning, India’s lesson is focused on not getting so bogged down by strategy and plans to miss the opportunities that exist at every turn. India is the best place to experience this lesson because there is no plan there. Its growth has been organic – fueled by the local entrepreneur and flexible corporations. At every street corner you see people leaping at the opportunity to sell you something, start a new business or get the chance to give you a ride in the Tuk Tuk (motorized rickshaw). This opportunism and aggressive desire to their quality of life and tap the new sources of growth has contributed to the upward mobility of many Indians and the country in general.
Each country, incredible and unique in their growth stories, has interesting insights and lessons to share as they carve new paths and strategies to manage and sustain their growth.
Sources: Historical GDP of the People’s Republic of China, Culture, Civilization and Leadership Blog 2011, “Why India’s Growth Strategy is Different?”
