Business Commentary for Rational Individuals

China Takes on India on India's Home Turf

Dr. Bill Belew

Issue I - June 11, 2006

Introduction by Mr. Stolyarov: According to this article by Dr. Belew, it seems that China has a comparative advantage over India in textiles and can export textile raw material to India cheaper than India can produce it. The importing of Chinese textiles will redirect Indian labor toward more efficient tasks which Indians can perform at a comparative advantage over others. It will result in growth in the standards of living of Indians, Chinese, and everyone else.

According to this report, China is making inroads into India's domestic market.

Imagine that: China can produce textile raw material and export it to India cheaper than India can do it on its own.

The increase in imports to India from China is growing at a 33% a year rate.

The reasons:

1. India has lower-scale operations.

2. India cannot fulfill large-scale orders.

3. India cannot produce specialized fabrics.

Thus, India has to rely on imported fabrics.

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Dr. Bill Belew is a former Intelligence Officer for a Destroyer Squadron. He lived 20 years in Japan, where he started a language school for Japanese ECS. Dr. Belew teaches classes for a vocational school and online for a national university.

See Dr. Belew's blog, PanAsianBiz, for news and discussions about business and current events in Russia and Asia. See ZhongHuaRising for Dr. Belew's reports on business in China and RisingSunofNihon on business in Japan.

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