India and China are two countries that have historically experienced opposing political regimes. Both countries have extremely storied histories (political or not), and are two of the most prominent emerging countries out of the BRICS (Brazil, Russia, India, China, South Africa) economies. To determine which environment is the best in which to do business in, one must look at the historical contexts of both countries, both economically and politically. With that in mind, this essay will attempt to determine the advantages of doing business in an Indian political environment as opposed to a Chinese one.
On the one hand, China has been (historically speaking) a quite stable country, being governed by a centrally run state. Being a single party state, China has been controlled by the Chinese Communist Party (CCP) since 1927, when the 5th National Congress was held. India, on the other hand, has almost the exact opposite history. As of 1950 (when India became an independent sovereign nation, separated from the British Commonwealth), India is a democratic republic, with the President of India the elected head of state and the Prime Minister the elected head of government (CIA, 2015).
In terms of the environment in which both countries’ businesses operate in, much like their political history, they are radically different. The rules and regulations that govern China are described by many as restrictive. Regulation in China is central, resulting in particular industries not being able to foreign investors. This is due to the Chinese Communist Party wishing to restrict the level of external influences on its own population. This level of regulation also extends to restricting the level of communication between the Chinese and the outside world. The Chinese Internet filter (known colloquially as the Great Firewall of China, known internally as the Golden Shield Project) is a prime example of this. The Chinese Internet filter serves to “block potentially unfavourable incoming data from foreign countries”, and blocks websites such as Google and Facebook, as well as websites of potential use from a business perspective such as the NASDAQ website and LinkedIn (Norris, 2010). An estimated ninety one per cent of corporations listed on the Chinese stock exchange are partially or entirely state owned (Desai, 2013) and as such receive preferential treatment. As a result, any sort of level base of competition between a hypothetical firm (say, a manufacturing firm an outsider would attempt to bring into the market) and these state (i.e. government) owned firms is impossible. Regulations such as these are inherently damaging from the perspective of an individual attempting to do business in the country.