The trade war between the United States and China has seen its ups and downs. Yesterday, another interesting chapter unfolded when the Chinese government instructed local officials not to use iPhones from the American company Apple and devices from other Western companies, and this is just the beginning. Apparently, this is not a coincidence, as the Chinese government’s announcement came at a very interesting time, a week before Apple launched the iPhone 15 at a glamorous event. As a result, Apple’s stock fell by 3.58%, losing about $110 billion in market value. When examining the essence of the message, there is a strong “hint” from the Chinese government to Apple that announced it would transfer some of its manufacturing operations from China to India.
Apple and the Human Capital in India Apple is betting heavily on India, as the company’s managers understand that the greatest business potential lies there. Already today, even before the major revolution in the country began, India is the world’s second-largest smartphone market, accounting for about 12% of the global market. Taking into account the population, economic growth, human capital, and knowledge, as well as economic and technological reforms promoted by the Indian government, India is becoming the next big thing. When looking at the bottom line, many Western companies understand that the Chinese government is becoming a very heavy weight. It is not surprising that India is becoming the next destination for leading global companies, apart from the business potential and relatively cheap labor compared to Western countries or China, India is a source of knowledge and technological power. Already today, Indian executives lead the world’s leading and largest companies, such as Microsoft CEO Satya Nadella, Google CEO Sundar Pichai, Novartis pharmaceutical giant CEO Vas Narasimhan, IBM CEO Arvind Krishna, Starbucks CEO Lakshman Narasimhan, and the list goes on.
The Demographic Difference and China’s Historical Mistake India’s population is currently estimated by the UNFPA at around 1.42 billion people, China’s population is around 1.428 billion people, so they are almost the same. But there is a significant difference in the population structure of India, with 65% of the country’s residents being under the age of 35. In China, the situation is completely different, the population is aging rapidly due to the “one-child” policy that created a demographic catastrophe for over three decades. China’s labor force was at its peak in 2016 with around 998.1 million workers, but looking long-term, the situation is expected to change dramatically in the coming decades. According to economic estimates, China’s workforce is expected to decline by about 50% by 2050. In contrast, India’s workforce is expected to grow significantly and account for about 40% of the global workforce by 2050.
If there is one thing India learned from China but can be said to implement it better, it is encouraging foreign investment in the country. India’s economy is growing at an incredible pace, with a growth rate of about 9.05% in 2021 and about 7% in 2022. These are impressive numbers for an economy of India’s size.
India and the Comparison to China’s Economic Miracle since 1978 Economists and historians make a variety of comparisons, some even comparing today’s India to China in 1978, the year of the economic revolution, when Deng Xiaoping, the leader of the Communist Party of China, began a variety of economic reforms and developed relationships with the West. Today we can say that the great revolution that began in China then made it the second-largest economy in the world. In the field of revolution, India is taking its first steps with a number of significant advantages over China in 1978. Firstly, English is one of the official languages of India, with about 30% of the country’s population speaking English proficiently. Secondly, India is considered the country with the largest number of engineers in the world – a paradise for technology giants. And another thing, the government of India is a federal democratic republic, advocating for human rights and supporting religious freedom and freedom of expression. In contrast, in China, the Communist Party controls the country and leads it through an ideology that has changed over time from the modern world. In other words, India is a more convenient and secure place for businesses, companies, and entrepreneurs. In conclusion, long-term investors, entrepreneurs, and savers should consider India as part of their long-term investment portfolio. The data indicates unequivocally that India is advancing and is on its way to becoming the largest and most significant economy in the world one day. The amazing thing about this whole story is that it all depends solely on India. The young and educated population in the country is likely to give impetus and promote generation after generation that will lead the local economy. The more the economy develops, as we saw in China at the beginning of the revolution, more and more residents will earn significant money that will be reflected in local consumption, significantly impacting basic consumption and subsequently cyclical consumption. India’s education system has undergone and will undergo major changes, training future people in technology, engineering, and other fields. India still has a long way to go to become the next superpower, such as social challenges, infrastructure, castes, and corruption that the government must significantly address. But in the world of investments, it is desirable to look long-term, time matters, and like a marathon, the winner is the one who managed to survive crises and stay focused until the finish line. India may end this economic race at the top of the podium.