Glos warns of business hurdles in China, India

9th March 2006, Comments 0 comments

9 March 2006, BERLIN - Economics and Technology Minister Michael Glos called Thursday on German companies not to miss out on the rush into China and India but warned of the problems they could face in the two new national powerhouse economies.

9 March 2006

BERLIN - Economics and Technology Minister Michael Glos called Thursday on German companies not to miss out on the rush into China and India but warned of the problems they could face in the two new national powerhouse economies.

"We must use the chances that are offered to us in both countries," Glos told a conference in Berlin organised by Germany's Chamber of Trade and Industry (DIHK).

But he also joined other speakers at the conference in setting out the range of difficulties faced by companies in forging business ties in both India and China.

In particular, Glos expressed concern about the protection of property rights in China and the red tape as well as lengthy legal procedures in India.

"Time is important" when developing business operations in China, Hans Michael Jebsen, the chief of Jebsen & Co Ltd a Hong Kong-based marketing and distribution company, told the conference.

Given his concerns about business practices in China, Glos also went on to argue that the European Union should not be in any great rush to support China being given status as a market economy.

Thursday's conference came amid signs of moves towards deepening the economic and business relations between Germany and India as well as China.

Chancellor Angela Merkel is to make her first visit to China as German leader in May and India is to take centre stage at next month's industry trade fair in Hanover. In addition, Glos is to travel to India in August.

Germany's push for a bigger business role in India and China also comes against the backdrop of rapid-fire economic growth in the two Asian states.

While India is looking forward to an economic growth rate this year of seven plus, China's expansion rate is tipped to come in closer to 10 per cent.

Glos told the conference that up until now the strong flow of investment and exports to other parts of the European Union by Germany's small-to-medium sized companies (the Mittelstand) had been appropriate and very successful.

"But looking towards the medium term this is probably not enough," said Glos highlighting the need in both India and China for infrastructure development as well as investment in specific sectors such as in engineering and environmental technology.

But Glos and the conference's other speakers also warned German companies not to fall behind in the race to forge new business empires in India and China.

Faced with intense global competition, DIHK president Ludwig Georg Braun told the conference that corporate Germany needed to be careful that it did lose its position at the top of international investors in research and development in China and India.

"Both the Asian economic giants are also making big advances in research and development, which was once the domain of western industrial nations," Braun said.

With this in mind, Braun went on to point to the large number of graduates entering the job market in both India and China, while the output of IT graduates in Germany continues to stagnate.

But despite the growing number of skilled workers joining India's labour force, Clas Neumann, senior vice president of German computer giant SAP's operations in Bangalore, said demand for graduates in India still outpaced the supply.

As a consequence this has led growing wage pressures with overall salaries for IT graduates in India growing at 17 per cent since 2002.

Bangalore, which is now one of the world's key IT centres also has one of the largest pools of English-speaking software specialists in the world, Neumann told the conference.

As a measure of Bangalore's importance to the global IT sector, Neumann said that SAP had since it launched its operations in the Indian city about six years ago boosted it workforce from about 200 to around 2,000.

"India is complex," Neumann told the conference. He went on to advise those considering investing in India to first set up a pilot project and then to build up an investment in the nation.

DPA

Subject: German news

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