Monday, November 21, 2005

CISCO -India vrs China

Businessweek has carried out an interesting story on CISCO's future plans for expansion in India,and why India was given a preference over China. Here’s a brief from the article.

On Nov. 9, in a conference call, Chambers made a striking prediction: "It would not surprise me to see India actually challenge China, in terms of our business revenue, [in] three to four years.” Chambers' statement certainly goes against conventional wisdom.

After all, China boasts a $1.6 trillion economy that's growing at a 9% annual clip, and it's the world's largest market for many products. India, with the same 1 billion-plus population, has a $700 billion economy that's growing at 7%.And Cisco itself has been a major beneficiary of China's buildout.

From the late 1990s through 2003, China's massive state-controlled phone companies built nationwide networks that connected more than 30 million homes, and Cisco profited greatly. Many Western companies, meanwhile, are banking on China remaining their single biggest source of new growth. Says Meichun Hsu, a Hewlett-Packard Co. (HPQ ) executive who will run a new research and development lab in Beijing: "China's potential is greater than India's for the next decade, even though India could be the bigger economy in the next 25 years." Others are even more skeptical about India matching China. "Maybe in 50 years," says Toshiba Corp. CEO Atsutoshi Nishida (TOSBF ).

What is Cisco thinking? The company is betting that India's growth rate is going to pick up smartly -- in part because deregulation of its telecom industry is leading to vast investments in new Internet infrastructure. "We are witnessing the advanced stages of an enormous evolution of the Indian market as the government rolls back state control and as the economy becomes liberalized," says Cisco Senior Vice-President Daniel Scheinman.

That creates a huge new market for Cisco with big phone companies, including state-owned BSNL as well as private players such as Bharti and Tata Group, which are rolling out state-of-the-art broadband networks. That in turn is leading to demand from consumers and companies.

To read the complete article click here

No comments: