The Hindu Business Line : India's drawbacks

THERE have been copious writings comparing India and China and discussing why one or the other is more or less attractive as an investment destination in the eyes of foreign observers. Such theories often hinge on an analysis of macro-economic parameters, and rarely take into account down-to-earth factors putting off investors.

A message from one Frank Hui of China TechSource to IBM Partners, doing the rounds in the Internet, is a refreshing departure from this approach. It draws attention to aspects that at first sight may look like having only a nuisance value, but which, in Mr Hui's view, cumulatively have the effect of driving more and more US companies to set up Offshore Development Centers (ODC) in China instead of India, and in some cases, even move their existing India outfits to China.

The reasons cited by him are matter-of-fact: While the operating costs in India have been shooting up 20 per cent a year over the past five years, the cost of running similar enterprises in China have remained flat during the same period. The rate of turnover of personnel in India exceeds 60 per cent a year, whereas it is well below 10 per cent in China. As a result, it is becoming impossible to recruit and maintain stable teams of high professional quality in India for more than six months. By contrast, most professionals working in firms in China can be relied upon to stay with their teams for many years.

As against the bad roads, dirty water, bad phone connection, frequent power outages and so on in India which make working and living conditions intolerable, Mr Hui finds everything looking nicer wherever one goes in China. Further, the flight time to China from the US is less by eight hours than in the case of India and because of the convenient time-zone differences between the US and China, "In the afternoon hours of US time, while staffs at India sites are still sound asleep, the staffs at China sites are already in the middle of routine conference calls with their US counterparts".

Of course, nothing can be done about flight time and time zones, but even so, India's officialdom and business associations need to keep their ears to the ground to anticipate and remedy the many little things that mar India's reputation.

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