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According to research house IDC, $9.4 billion will be spent on technology services alone in 2006, up from $3.74 billion in 2002. Indian companies are hoping to use their Chinese operations to gain a domestic foothold. But Indian companies need to be aware of the following: -
China isn't cheap. While entry-level Chinese programmers ($145 a month, inclusive of social security) are paid around the same as in India ($135 a month), project managers and senior staff are at least 10-12 per cent more expensive. Experienced engineers are hard to find and can be up to 25 per cent more expensive than in India. Bilingual professionals command a premium.
Attrition rates are high. Chinese software professionals often turn entrepreneurs after a couple of years, stealing valuable clients.
Chinese domestic companies are used to getting software services bundled with hardware. They do not spend separately for these services.
Companies could get bogged down by a complicated legal structure, problems of repatriation, varied laws in different provinces, and opaque infrastructure pricing.
Many software companies are still wary of China's track record of intellectual property rights protection.
All these factors could adversely affect the pricing policies of the Indian companies hoping to enter into the Chinese market.
3. Commodities Sector
India accounts for only 2 percent of world copper demand compared with 22 percent by China. China accounts for 8 percent of crude compared with 3 percent by India.
Oil, metals, cotton, rubber, sugar, grains, wool - all are sought by China in large quantities and the slightest change in its demand for such products can have a major influence on price direction.
Indian spices are likely to face a serious threat from competitors. Indian garlic is facing competition from Chinese garlic. At the local wholesale market at Koyambedu in Chennai, a trader said that garlic from China, arriving by the container loads at the Chennai port, had destroyed his business. Other spices such as ginger, cardamom, pepper, cloves and cinnamon face similar perils.
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* Contributed by -
Syam Krishna V. K. ,
B.Tech. (Prod. Engg.), Kerala University,
MBA 2007, DOMS, IIT Madras.
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