Contents
Preface
,Acknowledgments
1 China and India—Four Stories Rolled into One
Back to the Future: The Reemergence of China and India
Four Stories Rolled into One
Challenges for Multinationals
The Task Ahead
2 Think China and India, Not China or India
China and India: Cousins, Not Twins
Growing Economic Integration Between China and India
Strategic Implication 1: Leverage the Scale of Both China and India
Strategic Implication 2: Leverage the Complementary Strengths of China and India
Strategic Implication 3: Transfer Learning from One Market to the Other
Strategic Implication 4: Leverage Dual Presence to Reduce Risks
Conclusion
3 Megamarkets and Microcustomers
Fighting for Local Market Dominance
Vast, Diverse, and Dynamic: Market Opportunities in China and India
Fighting for Local Market Dominance
Conclusion
4 Leveraging China and India for Global Advantage
A Look at the Opportunities
Realizing the Opportunities
Conclusion
,5 Competing with Dragons and Tigers on the Global Stage
Strategic Logic and the Emergence of Global Champions
The Rise of Dragons and Tigers
Strategic Implications for Established Multinationals
Conclusion
6 The War for Talent
Dealing with Scarcity in the Midst of Plenty
The War for Talent in China
The War for Talent in India
Winning the War for Talent
Conclusion
7 Global Enterprise 2020
Analytical Building Blocks
Rethinking Innovation
Rethinking Organization
Notes
The Authors
Index
1
CHINA AND INDIA–FOUR STORIES
ROLLED INTO ONE
, The debate about whether Asia will once again dominate the global economy—as it did for two
millennia before the industrial revolution in 18th-century Britain and the rise of the US—is over.
The 21st century will be the age of Asia's return to economic pre-eminence.1
—Victor Mallet, Financial Times, 2008
The first decade of the twenty-first century will go down as representing a strategic inflection point
in the global economic landscape. For the first time in almost two hundred years, it is in this decade
that, in terms of gross domestic product (GDP), the emerging economies will catch up with and
race ahead of the developed ones—a trend that is likely to get added impetus as a result of the
financial crisis presently engulfing many of the world's economies. China and India, the biggest
contributors to world economic growth, are the flag bearers of this transformation.
Starkly put, China and India are changing the rules of the global game. They are two of the world's
ten largest and the two fastest-growing economies. Thus, they account for the two biggest growth
opportunities for almost every product or service, be it candy, cars, or computers. They are two of
the world's poorest economies in terms of per capita income. Thus, they offer some of the lowest
wage rates for blue- and white-collar work—wage rates that can have a transformational effect on
competitive advantage. They are the world's two largest producers of science and engineering
graduates. Thus, they present an opportunity to radically expand a company's intellectual
capabilities without a proportionate increase in cost structure. And finally, they are the breeding
grounds for a new cohort of ambitious, aggressive, and fast-moving global champions. Thus, they
represent a competitive threat to established multinationals that is potentially far more severe than
was ever the case from Toyota, Sony, Samsung, or LG.
The central thesis of this book is that any Fortune 1000 company that is not busy figuring out how
to leverage the rise of China and India to transform the entire company runs a serious risk of not
being around as an independent entity within ten to fifteen years from now. If you doubt the
validity of this thesis, just look at how the structure of even the most basic and relatively low-tech
industries has changed over the past twenty years. In 1987, Mittal Steel was just a tiny steel
producer in Indonesia. Today, as ArcelorMittal, it is the world's steel behemoth, bigger than the
next three players combined. In 1987, Cemex was a midsized cement producer in Mexico. Today
it is one of the three largest building materials companies in the world. In 1987, South African
Breweries was a domestic beer company confined to its homeland due to the antiapartheid
sanctions imposed by the rest of the world. Today it is one of the world's three largest beer
companies. Look ahead now, and factor in the sheer size and growth rates of China and India, the
globalization of capital markets, and the rapid diffusion of technology. There can be little doubt
that, over the next ten years, the magnitude and pace of change in every industry will be bigger
and faster than over the past twenty.
As the history of most industries tells us, strategic inflection points are particularly dangerous
times for incumbent firms. Consider the survival rates of incumbents in the computing industry
after the shift from mainframes to minicomputers, from minicomputers to PCs, and from isolated
PCs to the Internet. Such turning points require nonlinear transformations in core beliefs and core
business models. A small number of established players—IBM under Lou Gerstner and Sam
Palmisano and Apple under Steve Jobs—are able to engineer the needed transformation and come
Preface
,Acknowledgments
1 China and India—Four Stories Rolled into One
Back to the Future: The Reemergence of China and India
Four Stories Rolled into One
Challenges for Multinationals
The Task Ahead
2 Think China and India, Not China or India
China and India: Cousins, Not Twins
Growing Economic Integration Between China and India
Strategic Implication 1: Leverage the Scale of Both China and India
Strategic Implication 2: Leverage the Complementary Strengths of China and India
Strategic Implication 3: Transfer Learning from One Market to the Other
Strategic Implication 4: Leverage Dual Presence to Reduce Risks
Conclusion
3 Megamarkets and Microcustomers
Fighting for Local Market Dominance
Vast, Diverse, and Dynamic: Market Opportunities in China and India
Fighting for Local Market Dominance
Conclusion
4 Leveraging China and India for Global Advantage
A Look at the Opportunities
Realizing the Opportunities
Conclusion
,5 Competing with Dragons and Tigers on the Global Stage
Strategic Logic and the Emergence of Global Champions
The Rise of Dragons and Tigers
Strategic Implications for Established Multinationals
Conclusion
6 The War for Talent
Dealing with Scarcity in the Midst of Plenty
The War for Talent in China
The War for Talent in India
Winning the War for Talent
Conclusion
7 Global Enterprise 2020
Analytical Building Blocks
Rethinking Innovation
Rethinking Organization
Notes
The Authors
Index
1
CHINA AND INDIA–FOUR STORIES
ROLLED INTO ONE
, The debate about whether Asia will once again dominate the global economy—as it did for two
millennia before the industrial revolution in 18th-century Britain and the rise of the US—is over.
The 21st century will be the age of Asia's return to economic pre-eminence.1
—Victor Mallet, Financial Times, 2008
The first decade of the twenty-first century will go down as representing a strategic inflection point
in the global economic landscape. For the first time in almost two hundred years, it is in this decade
that, in terms of gross domestic product (GDP), the emerging economies will catch up with and
race ahead of the developed ones—a trend that is likely to get added impetus as a result of the
financial crisis presently engulfing many of the world's economies. China and India, the biggest
contributors to world economic growth, are the flag bearers of this transformation.
Starkly put, China and India are changing the rules of the global game. They are two of the world's
ten largest and the two fastest-growing economies. Thus, they account for the two biggest growth
opportunities for almost every product or service, be it candy, cars, or computers. They are two of
the world's poorest economies in terms of per capita income. Thus, they offer some of the lowest
wage rates for blue- and white-collar work—wage rates that can have a transformational effect on
competitive advantage. They are the world's two largest producers of science and engineering
graduates. Thus, they present an opportunity to radically expand a company's intellectual
capabilities without a proportionate increase in cost structure. And finally, they are the breeding
grounds for a new cohort of ambitious, aggressive, and fast-moving global champions. Thus, they
represent a competitive threat to established multinationals that is potentially far more severe than
was ever the case from Toyota, Sony, Samsung, or LG.
The central thesis of this book is that any Fortune 1000 company that is not busy figuring out how
to leverage the rise of China and India to transform the entire company runs a serious risk of not
being around as an independent entity within ten to fifteen years from now. If you doubt the
validity of this thesis, just look at how the structure of even the most basic and relatively low-tech
industries has changed over the past twenty years. In 1987, Mittal Steel was just a tiny steel
producer in Indonesia. Today, as ArcelorMittal, it is the world's steel behemoth, bigger than the
next three players combined. In 1987, Cemex was a midsized cement producer in Mexico. Today
it is one of the three largest building materials companies in the world. In 1987, South African
Breweries was a domestic beer company confined to its homeland due to the antiapartheid
sanctions imposed by the rest of the world. Today it is one of the world's three largest beer
companies. Look ahead now, and factor in the sheer size and growth rates of China and India, the
globalization of capital markets, and the rapid diffusion of technology. There can be little doubt
that, over the next ten years, the magnitude and pace of change in every industry will be bigger
and faster than over the past twenty.
As the history of most industries tells us, strategic inflection points are particularly dangerous
times for incumbent firms. Consider the survival rates of incumbents in the computing industry
after the shift from mainframes to minicomputers, from minicomputers to PCs, and from isolated
PCs to the Internet. Such turning points require nonlinear transformations in core beliefs and core
business models. A small number of established players—IBM under Lou Gerstner and Sam
Palmisano and Apple under Steve Jobs—are able to engineer the needed transformation and come
