How should the U.S. respond to China’s and India’s growing clout? Reviewed by Robin Tatu

IT and the East:
How China and India Are Altering the Future of Technology and Innovation
by James M. Popkin and Partha
Iyengar, Gartner Inc., Harvard
Business School Press 2007, 226 pps.

The current popularity of the term “Chindia”—a portmanteau fusing “China” and “India”—reveals not only a growing fascination with but also concern over these rising stars of the global marketplace. Both China and India are now producing great numbers of engineering graduates; engineering schools, information technology centers and research hubs are springing up throughout India; and China’s manufacturing capability far exceeds those of other nations. Were they to join forces, the two countries could form a daunting economic bloc. Yet both are also crippled by red tape, inefficiency and corruption—not to mention troubling intellectual property lapses. India struggles with serious infrastructure limitations, while China’s human rights violations continue to hamper its business potential.

What is the reality of Chindia—promise, threat or hype? This question lies at the core of a new book by James M. Popkin and Partha Iyengar, two analysts at Gartner Inc., an information technology research and advisory firm. The authors of “IT and the East” argue that while uncertainties plague both countries’ futures, “the growing impact of China and India in the IT industry is clear to anyone following the money of global trade.” They offer their study as a tool for tracking future developments and crafting appropriate business strategies in response. Though geared for the corporate world, this book is compelling reading for anyone seeking to understand the emerging international scene.

Divided into three sections, IT and the East focuses in turn upon China, India and the projected Chindia alliance. The opening chapters of the country sections analyze the myriad factors influencing each location’s IT landscape. Popkin and Iyengar acknowledge state control of business in China, for example, but point out that the Communist Party is not the unified presence that many Westerners believe it to be. Instead, city governments tend to operate in fierce competition with other city governments—not infrequently skirting official Party strictures. Equally complex dynamics exist in India, where 28 states and seven territories vie for investments, and languages and political ideologies vary widely from region to region. The authors also deflate the hype about vast numbers of Asian engineers, arguing that many do not meet international standards. Although the elite Indian Institutes of Technology (IIT) train skilled professionals, these graduates represent only a small percentage of the total. Thus, India now faces a shortage of qualified manpower, not a surplus.

Yet governments and businesses in both India and China are racing to surmount these problems and exert greater influence on the marketplace. Their success or failure depends on a number of factors, which are examined in the ensuing chapters. Popkin and Iyengar project three probable scenarios for each country—ranging from stagnation to global prominence—then target identifiable milestones of progress or retrenchment. China could retreat from its liberalizing policies, but the authors give this scenario scant probability. More likely is what they term “China Inc.”—increased private sector innovation and investment. The 2008 Summer Olympic Games in Beijing mark the first important milestone, they believe, and strategists would do well to study the Games’ economic and political dimensions for clues to the future. They similarly identify India’s 2009 general elections as a crucial indicator of future developments.

The book’s final section explores the probable rise of a Chindia alliance, despite past strains, and outlines steps for U.S. business to take in order to survive such a powerhouse union. Suggestions in the chapter “Priorities Today for a Chindia Future” range from pursuing opportunities in the countries’ rural development to establishing local research and development capabilities. Two appendices provide summations of “scenario milestones and signposts” for China and India, respectively.

While several recent books discuss the Chindia phenomena, “IT and the East” stands out in offering clear analysis of both countries’ strengths and weaknesses, accompanied by concrete strategies. The authors make a convincing case for addressing the Chindia challenge early on, arguing that “the national economies of China and India—and of a nascent Chindia—are stirring unprecedented threats and opportunities.”

Robin Tatu is a freelance writer based in Washington, D.C.

TOPˆ