15.225 | Spring 2008 | Graduate
Economy and Business in Modern China and India

Lecture Notes

This section contains the introductory lecture, and a set of discussion questions for each class session.

Part I: An overview
1 Introduction to the course (PDF)

1. How do you assess the business environments in these two countries?

2. As an investor, which business environment do you feel more comfortable with? Why?

2 The macro perspective: China and India

1. Is India on the move? What is that move?

2. How would you describe India’s approach to reform and grow its economy?

3. Why did China choose the reform path that it did? What are the main characteristics of that reform path?

4. Is it feasible and/or desirable for other countries to follow that path? What accounted for China’s fast growth in the last 20 years?

5. Compare China’s reforms with those in India. Which country has a better business environment now?

3 Financing environment

1. What was the banking landscape in India in the 1980s and 1990s?

2. What type of bank is ICICI? Why was it able to grow? What was its relationship with the government?

3. Do China’s financial institutions support or fail to support its private sector?

4. How would you compare China’s banking landscape with India’s banking landscape?

4 Business environment

1. Which country has the worse form of corruption? Is there a way to tell?

2. How do you characterize corruption in China and India? Do these two countries face similar types of corruption or very different types?

Part II: Entrepreneurial dynamics
5 Legend (Lenovo)

1. Compare and contrast the developmental trajectories of Legend with those of Infosys.

2. Compare their founders.

3. How did Legend grow in China’s business environment of the 1980s and early 1990s?

4. What was its rationale for its Hong Kong operations?

6 Infosys

1. What is your assessment of Infosys’s performance to date? How did the changes in the business and regulatory environment affect Infosys?

2. How does Infosys differ from other companies in India? Did these differences help or hinder Infosys?

7 Venture capital and private equity

1. Compare and contrast the environments for private equity capital in the two countries.

2. Compare the domestic and foreign activities in this sector.

3. What are the complications and promising opportunities?

8 Diaspora in China and India

1. Is entrepreneurship in emerging markets different from entrepreneurship in mature markets?

2. Zhang Xin was a part of wave of returnees. Pan Shiyi was not. Was this combination vital to Soho’s success?

3. Compare them to Murthy and Rao. What are the similarities and what are the differences?

4. Evaluate the economic and political importance of the Diaspora phenomenon.

Part III: Foreign direct investment (FDI) controversies
9 FDI opening

1. What explains China’s attractiveness to foreign investors? Compare China’s FDI attractiveness to Japan’s FDI unattractiveness.

2. What are the benefits associated with FDI for China? What are the benefits associated with labor-intensive and technologically-simple investment projects?

3. Can other countries replicate China’s experience? Is it desirable to replicate China’s experience?

a. Was the Maharashtra government justified in canceling the Enron deal?

b. Could Enron have avoided the problem it is in now?

c. What should Enron do now?

10 Intellectual property rights (IPR) and pharmaceutical industry in India

1. What is piracy? Did Indian firms pirate the intellectual property rights of Western pharmaceutical firms after 1970? Why were Indian firms successful in this business space?

2. Should a country protect its own pharmaceutical industry? How do you measure the successes and the failures of such protection? What are the conditions that may make such protection more successful?

3. Should India now move away from its 1970 IPR regime? What are the pros and cons?

4. Does the experience of India’s pharmaceutical industry offer valuable lessons for China?

5. What are the lessons for multinational corporations (MNCs)?

11 Multinational corporations (MNCs) and local competition

1. Why was Shanghai Volkswagen so successful? What did Shanghai Automotive Industrial Corporation get from Volkswagen?

2. Volkswagen and GM did not seem to focus on the bottom of the pyramid and yet they did well. Why?

3. Is the current relationship between Shanghai Automotive Industrial Corporation and Volkswagen viable in the future? How does the entry of GM affect this dynamic?

4. Assess the future of Shanghai GM.

12 Bottom of the pyramid dynamics in India

1. Can businesses profitably serve the bottom-of-the-pyramid market? Can they beat the local firms in this market segment?

2. What was Unilever’s approach? Can Unilever be more successful in this market than a firm like Nirma?

3. What about the role of local businesses?

13 Debating development models

1. Which country would you put your bet on? As a foreign investor? As a local entrepreneur?

2. A philosopher-king in a very poor country asks for your advice, “Which country, India or China, should we follow?” What do you say?

3. Can the two countries learn from each other? If yes, what?

Course Info
As Taught In
Spring 2008
Learning Resource Types
notes Lecture Notes
assignment Written Assignments