The chart of the week is from Ryan Connelly, Senior Analyst for Global Economics:
“At a growth rate of 7%, the size of an economy doubles every 10 years. This kind of momentum creates all sorts of opportunities for B2C, B2B, and B2G companies, as existing local capacity will be nowhere near capable of keeping pace with the massive explosion in economic activity. In terms of market prioritization, it creates an obvious opportunity. Despite the difficulties operating in China for MNCs, the size of that market and its strong growth momentum over the past two decades made investment within China almost an imperative for most firms. With China slowing down and the risks of a trade war rising, MNCs are looking for the next big opportunity. That opportunity could be India, which we forecast growing at over 7% a year for most of the next decade. In per capita terms, India’s GDP per capita today is very similar to China’s in 2008, and is projected to follow a similar trajectory.
There are operational challenges to operating in India – in ease of doing business reports, China and India tend to rank similar, and below other economies like the ASEAN-5. But India is trying to make it easier. The recently passed Goods and Services Tax (GST) vastly simplifies the tax code and reduces logistics and shipping costs across the country. It remains a complex market to navigate, but the opportunity is there, and FSG’s research team has dedicated resources to helping MNCs overcome these challenges. Our most recent report on this theme, India Distributor Optimization, provides structured frameworks that help MNCs adopt a strategic approach to capturing this long-term opportunity.”
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