VikramS wrote:From the CPC point of view, Gucci/Prada provide the visibility and the bling.
Consultants like chola can point to those big names and say see how big China is and how it can not be ignored.
You and Theoji pointed out Gucci and Prada not I. I mentioned Yum!, GM, VW, Mercedes, BMW and Apple as examples. Gucci and Prada are cute and quaint names in the chini landscape. The real powers in the China trade are the world's behemoths -- GE, Caterpillar, Mitsubishi, etc.
Regardless of the criticism CPC gets here, you have to recognize one core aspect: They are utterly and completely focused on providing gainful employment to as many Chinese as possible. Gucci and Prada fit the puzzle pieces very well.
Gucci and Prada provides very little employment to the swarming chini masses. Those companies are successful because they studied and attacked the chini market.
What provides gainful employment are the manufacturing and infrastructure sectors. Because those sectors create jobs, the Guccis and Pradas of the world are able to sell their brands.
Wish the leaders in India learn from the CPC on how to alleviate the lifestyle of such a large population in such a short time.
I have listed them earlier in this thread.
2. Exchange rate control
3. Emphasis on manufacturing and other goods production over services
FDI is the seed money for a poor nation. If you cannot understand why then think of it this way: Anyone can print paper and say it is worth something. But if you are poor, then what you print remains paper until you build the infrastructure that can back up that paper with real goods. FDI allows you to build that infrastructure. FDI also provides the hard currency needed to back your own currency when you are growing. If you do not need FDI then you are not poor.
Exchange rate control allows you to stabilize your currency while you are growing. And, in China's case, it allows you to cheat when you are strong.
But most third world nations including India attempt to raise or keep their currency above market value because it helps with imports and to keep confidence in it up. The Russian and Asian financial crisis in 1997-98 shows you how quickly confidence can be lost in even seemingly strong currencies like South Korea. We are seeing the same dangerous trend in the rupee today which is why currency swaps like ones with Japan is important.
The nations involved in the Asian financial crisis really had one choice afterwards, it was to build up their FX reserves. China is one of the few third world nations that dampens and undervalues its currency instead of supporting it. It is only possible because of the monstrous FX reserves.
Manufacturing over services. It could be agriculture or resource extraction (though this is not sustainable.) But any industry that produces hard tangible goods will provide the underpinning for your local currency and provide jobs. Services can exist only if there is a surplus of core goods. It is far easier for Ghana to accept the Yuan and know they can exchange it for a something from Chinese factory than it is for Ghana to accept the rupee for exchange of services from Wipro.
These things are not Chinese communist party ideas. They are part of a well worn formula employed by Japan, Thailand, Taiwan and South Korea. In fact, the chicoms are the very least successful practitioners of the formula judging by per capita income levels. India should have learned this a long time ago. If the Nehru clan had any foresight and watched what was happening at the time in Japan, Singapore, Hong Kong and Taiwan, India would be at three times the GDP of China instead of the other way around.