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MARCH11,2002
INTERNATIONAL--ASIANBUSINESS
IndiasChinaChallenge
Companiesarelearningtocompete
Foryears,Dr.ReddysLaboratoriesLtd.,aleadingIndianpharmaceuticalcompany,
madefatprofitsmanufacturingnorfloxacin,abasicingredientinantibiotics,forthe
domesticmarket.Butinthelate1990s,rivalsfromChinabegansellingnorfloxacinin
IndiaforhalfthepricecommandedbyDr.Reddys.ExecutivesattheHyderabad-based
companyrealizedtheycouldntkeepupandsoonabandonedthenorfloxacinbusiness.
Chinaovertookus,recallsSatishReddy,Dr.Reddysmanagingdirector.Inmass
production,wecantcompetewithChina.
ThesamechorusisbeingsunginboardroomsthroughoutIndia.Inrecentyears,Chinese
companieshavebeenfloodingthenationwithcheaptelevisions,toys,andotherproducts,
puttingpressureonthousandsofIndianmanufacturers.Ifthatwerentbadenough,the
ChinesearenowtargetingtheoneindustrywhereIndiastillenjoysaleadoveritsgiant
neighbor:software.
ButDr.ReddysisshowinghowIndianscanrespondtotheChinachallenge.Tocut
costs,thedrugcompanyisbuyingrawmaterialsfromChina.Ithassetupajointventure
inShanghai,where100employeesaredevelopingdrugsfortheChinesemarketaswell
asconductingtrialsondrugsforsaleworldwide.LikeDr.Reddys,Indiancompanies
specializingineverythingfromsoftwaretohomeappliancesaredevelopingChina
strategiestogainsalesinthemainland,enhancetheirpositionsbackhome,andbecome
morecompetitiveplayersworldwide.
AsCorporateIndiamobilizestocountertheChinathreat,thegovernmentisstartingto
wakeup,too.Aftermorethanadecadeofhalfheartedeconomicreforms,NewDelhiis
gettingseriousaboutprivatizingstatecompanies,openingupsuchkeysectorsastelecom
andagriculturetomorecompetition,andbuildingnewhighways,ports,andairfields.
AwarethatChinahasmoreinvestor-friendlylaborregulatio
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