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CEIBS, CII Host Forum on "Opportunities for Cooperation between Chinese and Indian Business,” Sponsored by Tata

December 11, 2009

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December 11, 2009. Shanghai campus -- The mutually beneficial lessons that China and India (the two fastest-growing large economies in the midst of the global financial crisis) can learn from each other, provided meaty discussion during today’s forum on "Opportunities for Cooperation between Chinese and Indian Business”.

The full-day event, jointly organized by CEIBS and the Confederation of Indian Industry -- India Business Forum in China (CII) and exclusively sponsored by Tata Sons Limited Beijing Office, featured an impressive list of experts culled from the diplomatic corps and the business world.

Throughout the day, participants shared their expertise during four sessions which examined:
- Political and Economic Relations between China and India;
- Cooperation Opportunities in the Engineering & Infrastructure Sector;
- Opportunities in the Information Technology & Information Technology Enabled Services Sectors; and
- Opportunities in the Pharmaceutical & Healthcare Sectors.

CEIBS Executive President Zhu Xiaoming, in officially welcoming participants, spoke of the increasing number of Indian students enrolled in CEIBS MBA programme (12 are in the MBA 2009 class) as an indicator of the potential for even closer collaboration and ties between China and India in the future. The day’s forum, he said, provided a platform on which to share ideas on a valuable topic. Prof. Zhu also expressed a desire to see Indian service outsourcing firms participate in an international industry forum to be co-organised by CEIBS in Shanghai in 2010.

CEIBS Executive President Zhu Xiaoming

Laying the framework

Session One laid the groundwork for the rest of the day’s discussions, with presentations by H. E. Ambassador Hua Junduo, the former Ambassador of the People’s Republic of China in India who also serves as Commissioner General of the Shanghai 2010 World Expo; H. E. Mrs Riva Ganguly Das, Consul General of India in Shanghai; and Mr J. J. Shrikhande, Chairman, CII India Business Forum, China.

Session 1: Overview of Political and Economic Relations between China and India

China surpassed the United States as India’s largest trading partner in 2007, and bilateral trade between the countries reached US$51.8 billion in 2008, representing nearly 11 percent of India’s foreign trade. Within this figure, Chinese exports to India represented US$31.5 billion and Indian exports to China US$20.3 billion, resulting in a trade surplus of US$11.2 billion in favour of China. The recent trend in bilateral trade between the two countries shows growth rates of 34 percent, 54 percent and 34 percent respectively in 2006, 2007 and 2008.

H. E. Ambassador Hua Junduo, the former Ambassador of the People’s Republic of China in India who also serves as Commissioner General of the Shanghai 2010 World Expo

In her address, H. E. Mrs Das told the audience that the 21st Century is being defined by re-emergence of India and China. “It is widely believed that India and China will reshape the world in the coming decades as the focus of the global economy shifts towards Asia,” she added. “Economists point out that the rise of China and India is a 'game changing phenomenon’.  In other words China and India are changing the rules of the global game.”

H.E. Mrs Riva Ganguly Das, Consul General of India in Shanghai

Her Excellency also touched on issues including bilateral trade, and investment between the two countries, explaining that India is “very keen to diversify our export basket to China and add more value added products” as it has done in other markets like North America and Europe. She emphasised the need for cooperation between India and China, especially in the current economic climate, telling the audience: “It goes without saying that a global crisis of this magnitude requires global solutions and this is one of the compelling reasons why we must get together and find solutions to deal with issues facing us.  In this time of global financial crisis and economic difficulties the need for closer cooperation and coordination between India and China has never been greater.  As President Hu Jintao has noted, every crisis brings along an opportunity. This crisis, we feel, must be turned into an opportunity by tackling it with the key commodity of confidence.”

Mr JJ Shrikhande, Chairman, CII India Business Forum (China) and Country Head, China Larsen & Toubro

Chairman of IBF China, Mr J. J. Shrikhande made a similar point in his speech, telling the audience that “with the crisis staring at us, we have no alternative except to search for alignment the ‘Asian way’, i.e. within ourselves, our own culture and intellectual heritage, recognising that we live in an interdependent world in which western technology has changed the whole ball game.” Today’s forum, he said, was an opportunity to help both India and China recognise the significant potential that exists for mutual benefit.

The conference attracted nearly 100 guests and media

Engineering & Infrastructure Sector

Despite their shared impressive growth, the economic models of China and India are distinctively different. China is bigger both in terms of GDP and GDP per capita. India’s economy is less reliant on foreign trade than China’s, less reliant on manufacturing, and less reliant on investment. India seeks to emulate China’s success in manufacturing to provide employment to its huge and growing workforce. China seeks to emulate India’s success in knowledge sectors such as the IT and pharmaceutical industries.

Session 2: Cooperation Opportunities in the Infrastructure & Engineering Sector

Session Moderator CEIBS Professor Thomas Callarman

These differences in growth models and strengths offer interesting complementarities, and areas from which the two countries can learn from each other. One such area is the engineering and infrastructure sector, the topic explored in Session Two. The speakers were Mr. J. J. Shrikhande, in his capacity as Country Head, China Larsen & Toubro Ltd, Mr. Davis Yang, Vice President Global Technical Service, Huawei Technologies and Mr. Ashish Vaishnav, General Manager of Thermax China.

Mr Davis Yang, Vice President Global Technical Service, Huawei Technologies

Mr. Vaishnav outlined, during his speech, some perceived barriers for China and India within the engineering and infrastructure sector:
- lack of recognition of technology expertise -- from both sides. This, he explained was a mind set issue
- competitive stances taken instead of collaborative ones
- non-tariff barriers (e.g. localisation clauses, bidding policies, etc)
- no major collaborative contacts to look at resolution of common problems (especially in energy conservation and alternate energy solutions like bio mass, solar etc.)  to address unique problems for these two major economies.

Mr Pan Song, Regiomal Manager, Power Generation Group Shanghai Electric (CEIBS EMBA)

Mr Ashish Vaishnav, General Manager, Thermax China

Up to the end of 2008, Chinese companies had won contracts worth a total US$12.9 billion in the infrastructure sector in India (roads and bridges, power plants and telecommunications equipment), with US$4.3 billion corresponding to revenues in 2008.

Tech Talk

The day’s penultimate session, which focused on technology, saw presentations by:
• Mr. Johnson Lam, Vice President and CEO, Tata Consultancy Services, China
• Mr. Jeff Wu, Executive Vice President and Chief Globalization Officer, VanceInfo Technologies
• Mr. Prakash Menon, President (China), NIIT
• Mr. Rangarajan Vellamore, CEO, Infosys Technologies (China).

Session 3: Opportunities in the Information Technology & IT-Enabled Services Sectors

Panel Moderator CEIBS Professor Ramakrishna Velamuri

A fresh perspective on IT outsourcing was provided by Tata’s Mr Johnson Lam, who spoke about the company’s current situation, where it is headed and the lessons learned from China. He shared with the audience, for example, Indian IT companies’ strategy for weathering the global economic crisis saying: “We had to improve our relationships, adapt our approach. We had to invest in our customers and build relationships with them.”

Telling the audience that the India-China relationship has been a hot topic across the globe in 2009, VanceInfo Technologies’ Mr. Wu turned his attention to exploring the relationship from the perspective of “enablers and drivers”.  He began with an overview of the industry landscape; followed by a historical perspective of the development of IT services; the view from the marketplace -- including global industry trends, China’s rise in the IT industry; and closed with advice when exploring opportunities for collaboration. He said, “The three areas of partnership to outline in the early stages are:
• Business Relationship
- What will your business structure be?
- What will the initial contribution of each partner be?
•  Authority
- How will disputes be settled?
- How will the profits and losses be shared?
- What will each partners pay and/or compensation be?
• Termination
- What will happen if a partner goes out of business or dies?
- What provisions are in place to make changes to the partnership, or to dissolve it altogether?
- If you decide to dissolve the partnership, how will the assets be distributed?”

Mr Prakash Menon, President (China), NIIT

Meanwhile, in his speech, NIIT’s Mr. Prakash Menon spoke about the re-emergence of India and China and India and what it means to the layman. He used four ‘headlines’ to get his message across:

1. Organizations without a strategy for India and China will not exist beyond 2020.
2. “When someone gets India and China right, it will be a big story…”
3. In the Century of the Mind, Let us “Gang Up.”
4. Three words help you succeed in India and China: Commitment, Commitment, Commitment.

Mr Jeff Wu, Executive Vice President & Chief Globalization Officer, VanceInfo Technologies

Mr Johnson Lam, Vice President & CEO, Tata Consultancy Services, China

In exploring what he described as “A 2020 dream of China India IT collaboration” Mr. Vellamore from Infosys Technologies gave a snapshot of global IT market, India’s outsourcing industry, and China’s rapid emergence as an outsourcing destination. “India is the first choice for IT off-shoring; China is the next best choice,” he said. “China and India are becoming a formidable force in the global ITO and BPO marketplace. Other offshore locations still need to catch-up with India and China in terms of scale, maturity and economic advantage to be a true contender for global sourcing.”

Mr Rangarajan Vellamore, COO, Infosys Technologies (China)

Lively Q&A during the IT panel discussion

Pharma and health care

The panel of experts who discussed the pharmaceutical and health care sector during the day’s last session were:
• Dr. Lily Han, International Investment Director, Shanghai Fosun Pharmaceutical Group
• Mr. Sridhar Subramaniam, Country Head, Ranbaxy Labs (Guangzhou)
• Mr. Narayan Rao CV, Vice President and Chief Representative, Dr Reddys Laboratories
• Mr. Allan Hing, Independent Consultant for the Pharmaceutical Industry

Session 4: Opportunities in the Pharmaceutical & Healthcare Sectors

Health Care Session moderator Professor Zhang Wei

Fosun’s Dr. Han shared with the audience an overview of the company before touching on the important issue of support needed from policymakers. “Capital cannot move easily across borders and this limits FosunPharma’s access to global resources and its ability of global business integration,” she said. “FosunPharma is attracting global talents. A safe and predictable living environment and an efficient business environment are a country’s competitive advantages in global human resources competition.” 

Dr Lily Han, International Investment Director, Shanghai Fosun Pharmaceutical Group

The key topics explored by Mr. Subramaniam of Ranbaxy Labs, who was expressing his personal views, were: the evolution of Health System in India and China; health indicators; the policy environment; challenges and opportunities faced; the pharma industry in both countries; and the Ranbaxy experience in China. He summarised by noting:
• China is not ONE market
• China is not a low cost operation
• Long term vision is needed
• A Champion at corporate is very important
• Knowing market nuances is critical
• It is a mistake to underestimate the power of guanxi
• And Western logic doesn’t work.

Mr Sridhar Subramaniam, Country Head, Ranbaxy Labs (Guangzhou)

During his time at the podium, one of the issues explored by Mr. Narayan Rao from Dr Reddys Laboratories was the evolution and globalization of the Indian pharmaceutical industry. He noted that while the $8 billion industry has experienced 12 to 14 % growth, it is highly fragmented with more than 20,000 registered units. He added: “The leading 250 pharmaceutical companies control 70% of the market and there is severe price competition and government price control.”

Mr Narayan Rao CV, Vice President and Chief Representative, Dr Reddy's Laboratories

He noted, however, that India’s pharma industry is technologically strong, totally self-reliant and has low production costs, low R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade. “There is a rich scientific talent and research capability, supported by an Intellectual Property Protection regime and it is well set to take on the international market,” he said. He also examined global pharmaceutical business trends, Dr. Reddy’s (DRL) journey towards becoming a top 20 global pharmaceutical company by 2020, and the company’s China experience.

Mr Allan Hong, Independent Consultant for the Pharmaceutical Industry

The last speaker for the final session of the day was Allan Hong, an independent industry consultant who focused on the China perspective. He spoke about the generic pharma landscape, the brand pharma landscape, China pharma challenges, and opportunities for India-China cooperation.  The challenges facing China pharma, he noted, include an aging pharma portfolio, a cGMP “Inspection” mentality vs. cGMP culture and the fact that technical language is typically in English. There were opportunities, he said, for India & China pharma cooperation in areas such as:
- China’s pharma could be an intermediate supply to India
- India pharma talents providing assistance to China
- India pharma using China expertise to expand China business
- Chinese being trained by India pharma
- The countries work together to tackle the worldwide CMO market.

The forum concluded with final remarks by CEIBS Dean and Vice President Rolf D. Cremer.

CEIBS MBA students pose a question