Digico - Expansion to India or China: Choice between expansion to China or India for a company producing computer projectors and specialist display screens

Essay by freakyfrogUniversity, Bachelor's October 2006

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My personal choice for a market to expand to would be India.

At the first glance China might seem to be the obvious choice. Representing a gross domestic product of 1266 billion US Dollars compared to 502 billions in India. For both countries this amount is mainly centred around a few very strong areas like Shanghai in china while the rural areas consist of the very poor. Furthermore India is handicapped by its either badly maintained or completely overloaded infrastructure as well as its blooming corruption along with bureaucratic hindrances which will be hard to overcome.

Since our company targets only a small niche-market India might probably be the better choice since its service sector, which includes our customers, makes up around 50 percent of India's gross domestic product while the Chinese economy is characterised by its industrial production and our products will not be of any use on the production floor.

Communication with Indian companies should be easier since the upper strata of the Indian society are able to speak fluent English and are in general better educated than their Chinese counterparts.

Should we decide to move our production overseas even the wage levels are an argument against China. If we compare the minimum wages around Shenzen in China (the area where most of the sweatshops are located) we get an hourly minimum wage of 0.58 USD whereas the official minimum wage in India in the area around Bangalore lies around 0.4 USD.

Another advantage of India is its more stable juridical system. Although China has laws against the theft of intellectual property it is nearly impossible to see any action taken against the perpetrators.

Both countries offer great possibilities along with many unique problems. According to my analysis India comes out slightly...