Table of Content:

Executive Summary

Introduction

Methodology

Criteria

Analysis
Executive Summary:
The two largest nation China and India both have a rapidly growing market. This is an immense
opportunity for multinational companies. The two countries rising economy invite debate over
which offers the better climate for investment. China lies in second with India standing at ninth
in terms of FDI. Except for some socio economic factors like ageing population, growth of
middle class family, number of working class people, etc. China surpass India in almost all other
categories. Communism can be a problem for foreign investors trying to invest in China but the
trade and investment policies in both the countries are made to attract FDI. China is developing
very fast and it is best at manufacturing whereas India has a flexible legal environment. Indians
are expert at technological services.

Introduction:
China and India both are emerging market place. An emerging market is a term that is used to
describe the state of a nation where there is rapid economic growth and has potential market
to flourish. In order to expand the market reach it is important to first find a suitable emerging
market place.

China has embraced free market principals like never before giving rise to all sorts of new
ventures. Another factor is the huge population, this means more labor source and cheaper
production cost which makes it attractive to for foreign investors.

On the other hand, India’s economy is equally booming but due to the poor infrastructure the
development is not in scale with china.

India and China is the world’s two largest emerging market. They focus on the middle class as
there lies the bigger population group so in return they can cater to the larger portion of the
population and produce different market product to raise the economy.

METHODOLOGY:
Most of the information has been gathered via desktop research. Various websites are used to
collect the facts and figures. There has been significant amount of comparison between the
factors that influence the investment between the two big nations.

China & India

China has the world’s second largest economy at present. It has been established as the world’s
manufacturing hub because the secondary sector (industry and construction) represent the
largest share of GDP.

India has a very diverse economy, it is the sixth-largest by nominal GDP and third largest by
purchasing power parity.

Political
India and china are countries with two totally different economies. While India is a total
capitalist country, China exercise communism.

The Chinese government is very strict in its regulations and tries to keep its confidentiality. This
can be considered as major political risk for any foreign investors in china.

Whereas the Government system in India is very much focused on private investments. The
political stability and the ease of establishment make a great point of attraction for new
businesses.

Economic growth
Both China and India are emerging markets with high economic growth rate. The GDP of China
is about USD 11.2 trillion and India has about USD 2.45 trillion.

India has been significantly showing continuous economic growth. In the year 2009, the country
registered GDP of USD 3.965 trillion with 6% growth rate. India’s GDP growth rate for June 2017
was 5.7% whereas China has growth rate of 6.9% for the same time. As for now China stands
ahead of India in terms of GDP.
China is ahead of India in terms of technological advancement. So many manufacturing
companies move to china considering the technological advancement.

Population growth

China and India are the two most populated nations. In 2014, China had the population of
about 1.39 billion and India with the population of 1.27 billion.

Tax
Tax system is the major factor to effect in any business especially for foreign investors.
Basically, the investors invest where they have low tax rate to pay so that they can maximize
profit. The corporate tax for local company in India is 30% and 40% for foreign investors and in
China, the company have to pay 25% for both foreign and domestic investors.

GDP:

In 2010 China reported the GDP of US$5.89 trillion which represents a significant opportunity in
real estate investment like economic growth, liberalization and privatization as well as FDI.
[ CITATION DAV17 \l 1033 ]

Similarly, looking at India in second year, economy growth remained below 5%. From 1951, the
average annual growth rate was 6.12 % whereas in the first quarter it was 11.40% which shows
the weakest growth rate in 2014 this is due to the slowdown in consumer spending and
expanding.[CITATION Placeholder1 \l 1033 ]
FDI:
In the above figure, the FDI of China reached RMB 781.35B (USD 126.27 billion), up by 6.4 %
year on year whereas in 2014, the FDI reached USD 119.56b up by 1.7% year on year. [ CITATION
Min17 \l 1033 ]

Similarly, in 2014 the FDI increased by 26% to estimated 34 billion. The FDI commitment for
India in 2014 is 34.70

Analysis:
India is developing better than China. But China has more appealing market to foreign investors
because it is moving along a path of economic development, liberalization and privatization
which gives opportunities to both primary and secondary markets. So as per my research if I
was to invest between India and China I would invest in China.

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