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• Second, India's economy has already evolved far closer to a market economy than that of China. For instance, export targets and foreign exchange contracts, which have arguably helped create a pro-exports ethos in China, are neither desirable nor feasible in India. Similarly, private sector plays a far greater role in India than in China.

• Finally, India has already carried out many reforms that China is still contemplating. For example, in the area of exchange rate, China has a multiple exchange rate system and its exchange market is not organized along the lines of market economies. India has achieved virtual current account convertibility and its foreign exchange market is organized along modern lines.

What steps can we take to counter the Chinese Pricing Strategy?

China is world's largest consumer, so better partner it

China is more opportunity than threat. The best assurance of global growth and geopolitical stability is for increasing globalization and inter-dependence. This is the fundamental reason for favoring China's WTO entry on Dec. 11, 2001. China is far from a market economy, but they are making great progress, with more to come. With a market of around 1.2 billion people with decent purchasing parity, China can be ignored only at your own risk. So to reap the benefits of an economy, which is booming at an astounding rate of 10%, it makes sense to partner it.

Recognize the comparative advantage of China and to leverage it

Many companies will not be able to meet "the China price" and will have to restructure or exit the market, while others will benefit from opportunities in the Chinese market and from China outsourcing. The bottom-line is that companies should rethink their business model so as to develop and sustain a competitive advantage in a global environment where China is a major player.

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* Contributed by -
Syam Krishna V. K. ,
B.Tech. (Prod. Engg.), Kerala University,
MBA 2007, DOMS, IIT Madras.