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Local CEOs sniff around China for opportunities
Indian industry is eyeing opportunities thrown up by the economic dynamo in the neighbourhood. Coinciding with the prime minister's proposed visit to China, India Inc is taking a CEOs' delegation to the country to look into possible market opportunities which have been unlocked due to the large scale shift in manufacturing operations from the western hemisphere. In particular, knowledge-based industries like IT, biotech and drugs and pharmaceuticals have been identified for Indian companies to exploit as a supporting structure to the exponential economic growth in China.
According to industry survey report prepared by CII, in the IT sector, Indian entities can look forward to education software, which accounts for 10-15% of total software sales in the country and nearly half of all software sales in the major urban centres such as Beijing and Guangzhou. In addition, some of the other areas which hold potential include integrated circuit manufacturing and research in embedded software, enterprise resource planning software.
The SMEs accounting for 30% of the total IT market in China is another potential area with IT products and application consumption in SMEs expected to touch $12bn in '03 (up 23% from '01) and expected to touch $27bn by '06. In the drugs & pharma sector, ethical or prescription drugs and differentiated over-the-counter (OTC) products have been identified by CII as key for Indian companies in China which is expected to triple its revenues from the industry in the next seven years.
Innovative drugs will fare particularly well, commanding 30% of revenues and, more important, about 70% of the profit generated in the ethical category. The OTC market, practically non-existent today as the locals rely on traditional forms of medicine is estimated to grow at a compound annual rate of 19% from about $1bn in '00 to about $5.7bn in '10. In the area of biotechnology, the CII survey suggests the market demand for biotech reagents required by Chinese institutes engaged in lifescience research as a major opportunity. Some of the specific segments which holds promise in the reagent industry include immuno-blotting, sanger sequencing, in situ hybridisation, chromosome mapping, and bacteriophage plaque.
Currently, China is said to be incapable of producing the high-quality reagents necessary for the level of research its government demands as its life science research industry is very new.
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