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Huge market opportunity for Indian firms in China: CII
China's economic development and its recent entry into the World Trade Organisation has made the country a huge potential market for Indian companies, said a survey report on Monday.An companies must move forward more aggressively as changing regulations and economics open the window of opportunity (in China)," said the Confederation of Indian Industry (CII) survey.
"Indian companies should enter China's market as soon as possible to best take advantage of China's exponential economic growth."
The survey, which comes ahead of Indian Prime Minister Atal Bihari Vajpayee's six-day visit to China starting June 22, said China offers a huge potential for Indian knowledge-based industries such as IT, biotech and pharmaceuticals.
According to the CII survey, Indian software firms must start to "look east" to take advantage of incentives for investment including significant reduction in national and local taxes and land rentals.
"The clearance processes of government departments such as customs are streamlined and generally efficient," it said.
"Further, the small and medium enterprise (SMEs) sector has immense potential. SMEs account for 30 percent of the total IT market in China, with IT products and application consumption expected to touch $12 billion in 2003."
The report said China was expected to emerge as the fifth largest pharmaceutical market in the world by 2010, with revenues of over $24 billion, more than triple its current size.
"Such growth would catapult China's market, which currently ranks seventh behind the markets of Italy and Britain, to a position right behind the drug markets of France and Germany."
The market for ethical drugs in China, valued at $5.8 billion in 2000, will climb to approximately $19 billion by 2010.
"Best positioned to fill these needs are Indian Multinationals with superior research and development capabilities as well as scale and experience in marketing, distribution, and sales," said the report.
In the biotechnology sector, the CII survey said the market demand for biotech reagents required by Chinese institutes engaged in life-science research provide a good example of development opportunities.
"The government's devotion to developing life-science research guarantees a long-term, growing demand for reagents," it added.
The three main strategies for Indian biotech companies to enter China's marketplace can be exporting, licensing, and setting up a wholly foreign-owned enterprise or joint venture.
"The bottom line is that China is a highly complex but profitable economy for companies operating in knowledge-based sectors, and the best time to enter China is now," it said.
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