China is what Japan was about 40years ago. Japan slowly moved from imitation of goods to real R&D back in the 1960's. Korea followed the same trend during the 60's. China followed throurgh Deng's initiatives in the late 1970's. So India is what China was 20 years ago. Observe Shanghai is reaching the heights of economic glory. So that would take some time for India to present herself as a manufacturing giant as well in indigenous R&D.

Reason, i think chinese knows little english, economical labour force,manufacturing hardwares by multinationls,while india knows english, hence BPO and software.Chinese joins the hardware pieces, which they knows by practice, into viable new products.

Yes Ravi, i agree on that if you've been to China you may easily observe very little use of english, even in public transportation systems. consider the opposing trend in India. China also leverages huge cost arbitrage advantage on labour and wage. the cost of input and raw materials are comparatively low there than that of India. Besides, there is a technology gap and they are moving into specialized heavy engineering sector, i.e., defense engineering, automotive industry, and high end technology, particularly in telecommunication and mobile device instrumentation.

India is still at the receiving end when compared to $1.2trillion dollar Chinese exports. However, their GDP is projected to tripple to $20-25 trillion by 2025. that' s far greater in proportion if you consider our GDP to double at $6trillion by 2015. See NBER projection report on gdp growth by " Could China's GDP Reach $123 trillion by 2040?", according to

The Nobel prize winning economist Robert Fogel who believes the answer is yes.

this link:

http://robekulick.wordpress.com/2011/09/17/could-chinas-gdp-reach-123-trillion-by-2040/

In similar sense, India's GDP is expected to grow to $85 trillion by 2040, only if such growth is sustained through by inclusive agendas. These paradigms i have discussed in brief in an article ., India will be in a formidable position to unleash such potentialities. Outsourcing is not the only answer to growth as Pari has mentioned above in the topic head, export oriented manufacturing hub with EEZ's for heavy engineering and hardware is some definte answer.

the link to my article:

http://www.theindiaeconomyreview.org/Article.aspx?aid=91&mid=5

May i know why quality wise, their(china) product compatibility is not fair enough especially in electronics.Space probably technical help from friendly neighbors,political ideologies.

Availability of designs of the product is relevant !

May be component sourcing from poor quality manufacturers, for viable competitive cheap pricing.

This must be a "trick" question.

The queror has possibly lived in a cave, a ghetto, deeply forested area or Afganistan.

The Chinese have devoted legendary time and effort to espionage: political, defense economic and industrial.

This has been exacerbated by Internet theft. Chinese hacking is a major headache for computer security firms.

A real elementary GOOGLE can fill you in on the details.

I find two reasons for it:

1. Chinese expertise in technology is their competitive advantage.

2. China has better infrastructure for production which supports better manufacturing facilities.

It may be helpful to step briefly out of academia and understand international patent law. Until somewhere in the early part of the last decade, India had a national law essentially exempting Indian companies from international patent law. The objective was so that Indian pharma could "clone" expensive medications at minimum cost, without paying patent or marketing royalties. The sovereign argument justifying the law, which is understandable, was that the national right to the (in this case) health benefit of inexpensive latest-generation medications outweighed the right of foreign corporations to collect royalties. As a result, the worlds largest generic pharma manufacturer was born. Cipla. Cipla was founded by an Indian national Phd. who had worked for years in American Pharma, and reverse engineered an entire catalog of patented medications. Cipla essentially "forced" American pharma to sell AIDs medications to Africa at a minimum cost after CIPLA, to it's credit, offered to suppy the NGOs with $15,000 (for the U.S. version) of AIDs medication for approximately $150 per year. Please don't quote me on these figures, as I've not remained current since the event occurred. Sometime in the early 2000s, India agreed to adhere to a long-standing international agreement regarding patent law, at least outside it's borders. In other words, for domestic consumption, the greater good prevailed. India gained legitimacy internationally, and CIPLA and others were then able to sell generic medication with expired patents to international markets. CIPLA also took a larger payment to not sell certain high-value generic medications, such as genetically-engineered Human Growth Hormone, in the U.S. (so the U.S. citizen's "greater good", the ability to use low cost Indian meds, was sacrificed).

In terms of China, the issue is, as in many things, appearance vs. reality. The Chinese government understands that "winning" internationally is now done with partnering, owning, cloning, "creative accounting" (hence the better-than-reality government reports re: the status of there domestic economy), and by appearing to co-operate internationally while pursuing a merchantilist policy vis-a-vis international trade. China adheres to international patent law, on paper. But pity the poor foreign company that seeks redress through Chinese courts for patnent infringement. Apple is most likely, the next great "victim" of the implicit Chinese "get the manufacturing here, then do as we please once the skillsets, infrastructure, and capabilities are in place. Foxcomm's 1.4 million employees could easily produce (and someday very well may) any Apple product in China and sell it anywhere outside the U.S. Apple computers and phones are popular the world over, and all but a few governments could care less if Apple was suddenly a victim of a clone product with actual patent infringement underlying the product's viability. China is the largest counterfeiter of many of the products made there for U.S. companies. An obvious and well-known examplle is golf equipment. Japan has high-quality golf equipment that Japanese prefer, if not buying U.S. brands. China has no such comparable brands. U.S. golf equipment is what is sought by the Chinese, and it is what they buy, though what is offered within China is almost entirely countereit U.S. brands. U.S. golf equipment companies must employ full time private investigators at great expense to even make a dent in the counterfeit-equipment industry in China. The counterfeit components are made in the same foundries that produce the "real" product for shipment to the U.S. But in Guandong, it is virtually impossible to buy non-counterfeit golfing equipment in a retail store. Extend this example to any high-value product made in China, except, perhaps, so far, Apple's product line. But for how long? With Foxconn's industrial tech-producing infrastructure in place and large enough to compete in any country, against any brand name, maybe even selling unlicensed version of the 40% of worldwide flat-panel TV's they produce for brands based elsewhere.

It is important that economists understand that all the established, 20th century theories regarding balance of trade and exchange rates have been rendered essentially obsolete in the 21st century. There are only a dozen countries, perhaps fewer, in the world where there is English-based "law in equity" or something predictibly close to it. Every one of those has bond markets just a fraction of the size of that which trades U.S. Treasury securities. Switzerland is simply not capable of filling it's role as the ultimate "safe haven" in a world economy as large as that of the 21st century. Combine that with virtually no other sovereign bond market able to absorb safety-seeking dollars at even a fraction of the U.S. bond market's capacity, and that is how one arrives at a 1.6% ten-year Treasury while the U.S. continues with a huge balance of trade deficit and simultaneous unprecendented Goverment deficit spending. These latter two factors, under conventional economic "wisdom", should have produced 15% inflation rather than the 0-2% U.S. reality (ex-speculative commodities) and a Euro costing $1.90, rather than $1.26. These current interest rates and exchange rates simply cannot be reconciled with accepted 20th century economic theories of trade, exchange rates, monetarism, and capital markets. The value of the U.S. currency is no longer in the governments taxing authority, supported by the larger economy, the sovereign value of the U.S. currency and it's sovereign debt is due to the predictability and consistency of the country's tort legal system. Regardless of any U.S. citizen's view of the legal system, the country's balance-of-payments issue, or it's long-term deficit spending, the U.S. is still the only country where the legal environment and depth of the bond market reduces the Knightian uncertainty for investment, and ownership of property of all kinds to a level where the entire world is seeking it's safety.

China's ability to produce any given product that other countries cannot produce profitably is not a function of "comparitive advantage" but rather of a) Chinese willingness to forgo mitigating the social cost (pollution, labor exploitation, lack of meaningful social security system, etc) and b) the absolute Chinese unwillingness to price their currency at fair market value.

Pari, did you see my follow-up to your question on Researchgate?. Please excuse any typos. Best regards, FDT

The comments about language are interesting, but I want to turn the proposition on its head. I have many Chinese and Indian academic friends. I have noticed, and have read articles that concur, the Chinese put a high premium on social unity and conformity. This characteristic would be the cause of their not being anxious to accept a foreign language. Now for how much of the Indian character comes from their entanglement with the British I do not know, you'd have to ask someone Indian, but they are less conformist. This leads them to value using their own ideas over cloning someone else's. Their idea may be better or worse, my comment is not to say one culture is better or worse. Each has strengths and weaknesses. Now I'm real curious what response if any this will get and I hope I have not been terribly politically incorrect!