Table of contents

1. Executive Summary
2. Introduction to Emerging Market
3. Methodology
4. Business environment of China
5. Business environment of India
6. Factors influencing investment (INDIA vs CHINA)
6.1 Political factor
6.2 Economic growth rate
6.3 State of technology
6.4 Population growth rate
6.5 Unemployment
6.6 Taxation system
7. Conclusion
EMERGING MARKET
1.EXECUTIVE SUMMARY: -
China and India are two big countries with largest economy. Both are the emerging markets
with big potential. The research is focused to find out the factors that have been influencing
any business managers to invest over there. There are many factors which favours for
foreign investment like economic growth rate, labour charges, political factor etc. Some
desktop research is carried out to compare the influencing factors for foreign investment. As
per research, China is more favourable for foreign investment.

2.INTRODUCTION: -
An emerging market is a term that is used to describe the state of a nation where there is
rapid economic growth and has potential market to flourish and describes about the
country’s economy to become more advanced than before.
One way would be to describe emerging markets as simply "all those countries not
considered developed". Developed here meaning essentially the major European countries
plus USA, Canada, Japan, Australia and New Zealand.[ CITATION PEA \l 2057 ]

3.METHODOLOGY: -
Desktop research is used to collect the information. Various websites are used to gather
information and figures. There has been comparison of investment influencing factors
among China and India.

4.BUSINESS ENVIRONMENT OF CHINA

China is world’s second largest economy country presently with a nominal GDP of USD 11.2
trillion (2016). China has been world’s manufacturing hub because the secondary sector
(industry and construction) represent the largest share of GDP. China is an emerging
economy that offers a lots of market opportunities for foreign investment. A large access to
local markets and international markets has increases the potentiality of the foreign
investment.

5.BUSINESS ENVIRONMENT OF INDIA

India is a mixed economic country which is the sixth-largest economy by nominal GDP and
third largest by purchasing power parity. Both private and public investment are practiced in
India. Generally, the firms have to face low income level of people as an economic
parameter. Capital deficiency is one of the important features of Indian market because of
the weakness of inducement to invest.

6.FACTORS THAT INFLUENCES INVESTMENT

6.1 Political factor
6.2 Economic growth rate
6.3 State of technology
6.4 Population growth rate
6.5 Unemployment
6.6 Taxation system

CHINA VS INDIA

6.1 Political factor: -

India and china are countries with two totally different economies. The fundamental
political system of China is The people’s congress system. The government is exercised
through Communist party. While India is a total capitalist country.
The Chinese government forms and apply the rules and regulations, they actually favour
the state owned entities and finally targeting the foreign investment in China. The
possibility of nationalisation of industries must be considered because it had already
happened in china. This can be considered as major political risk in china. There is the
battle between the central government and provincial government which makes
companies difficult to know the exact rules.
Government system in India is focused with the private investment and encourages the
private investors in the country. There is political stability in India which helps any
business to understand the rules and regulations of the country because it does not
change frequently.

6.2 Economic growth rate: -

China and India both are emerging markets with high economic growth rate. The
economic factors like licensing, franchise etc. in the country determines the investment
rate going on the country. The GDP of China is about USD 11.2 trillion and India has
about USD 2.45 trillion.
 [ CITATION zer171 \l
2057 ]
India has been significantly showing continuous economic growth. In the year 2009, the
country register GDP of USD 3.965 trillion with 6% growth rate[ CITATION UKe \l 2057 ].
India’s GDP growth rate for June 2017 was 5.7% whereas China has growth rate of 6.9%
for the same time[ CITATION zee17 \l 2057 ]. So basically, China has more GDP growth
rate than India currently.

6.3 State of technology: -

Every country is investing a lots of funds in Research and development for the progress
of their nation. Technology has played one of the vital role on Foreign investment. The
countries where technologies are well developed, the foreign investors will to invest
over there because it makes their task easier and effective.
China and India both are significantly growing their technological field. Various
technological advancement over their countries leads foreign investors to invest in China
and India. China is superior in front of India in terms of technological advancement. So
many manufacturing companies move to china to settle up their business for their east
task. Investors seek to invest in china rather than in India due to technological
advancement.
6.4 Population growth rate: -

China and India are the two most populated country. In 2014, China has the population
of about approx. 1.39 billion whereas India is second most populated country with 1.27
billion people[ CITATION sta14 \l 2057 ]. More the people more will be the available of
workforce required for the companies.

The foreign investors will go to the place where there is easy available of the manpower
required for their work that maybe unskilled, semi-skilled or skilled manpower. More
the population more will be the number of youngsters which helps for the efficiency of
the task. China has adopted two child policy from one child due to less number of young
manpower available in the country for work.

6.5 Unemployment: -
Unemployment has been a serious issue in the present world. But the firm who seeks for
international level has benefit from unemployment. It helps the firm to get the
manpower in low cost i.e. cheap labour because of competition and so on.
In the third quarter of 2017, China has the unemployment rate of 3.95% and India with
3.46% [ CITATION Tra17 \l 2057 ]. So, basically firms seek to go China due to higher
unemployment rate to get the cheap labour.

6.6 Taxation system: -

Tax system is the major factor to effect in any business especially for foreign investors.
Basically, the investors invest where they have low tax rate to pay so that they can
maximize profit. The corporate tax for local company in India is 30% and 40% for foreign
and In China, the company have to pay 25% for both foreign and domestic investors.
[ CITATION SCR10 \l 2057 ]. People will choose China rather than India due to tax
system.
 Analysis table

China India
1. Political factor 0 1
2. Economic growth 1 0
rate
3. Technology 1 0
development
4. Population growth 0 1
rate
5. Unemployment 1 0
6. Taxation system 1 0
7. Total 4 2
Note: 1 and 0 are indicators where 1 represents better than 0.
From the above analysis and table, China is more favourable for any foreign investment. The
Business managers who are seeking for foreign investment will prefer China more than
India.

7.CONCLUSION: -

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Available at: http://www.pearsoned.co.uk/bookshop/article.asp?item=361