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Amy Chua (professor at Yale University) investigated how countries become so called ‘hyper powers’ and than fall. She investigated the rise and fall of the Roman empire, Persian empire, Tang empire in China, Mongolian empire, Dutch empire and the English empire. The main finding of her is that tolerance towards people with other believes and culture is one of the main preconditions to become a hyperpower. One of the reasons the United States was/is a hyperpower is their tolerance towards its inhabitants and importing well educated foreigners to boost its capabilities to innovate.

She points out that the lack of tolerance within China for non-Chinese will be a reason why China cannot become a hyperpower like the U.S. The Chinese are too nationalistic to exceed the U.S. in terms of innovation, dynamics, creativity and technology. And these characteristics are required to dominate from an economic or military perspective.

After staying in India for a year I can say that Indians are a very proud people, but that I never felt left out or being looked down on. On the contrary, the typical Indian is open minded and wants to learn as much as possible from Western countries. The ‘disadvantage’ India has over China is its very complex and slow democratic system which limits the speed the infrastructure, government and education system is changed.

So what does this mean for offshore outsourcing and setting up a captive? In the near term there are no effects as the main reasons to outsource to China is the low cost of labour. But low cost is not a sustainable competitive advantage as other countries are or will be cheaper as China develops itself further. Retaining the position of an attractive outsource and captive destination requires them thus to innovate and that requires a dynamic and open economy. The question is thus whether the strong national sentiments will be replaced for a more open and tolerant society enabling them to become at par at Western societies.

From the perspective described above am I a bit more positive on the outlook for India even though it still uses the cast system to suppress large numbers of fellow Indians and its nationalism. It is however much more tolerant towards other religions (Buddhism, Jainism, Sikhism, Christianity, Zoroastrianism, Judaism and Islam) than China. I believe that this tolerance is one of the pro’s India has over China. Question is how important this factor turns out to be in their race to become a dominant global BPO player.

Views: 44

Tags: China, India, outsourcing

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Comment by Rajat Verma on January 13, 2010 at 12:16am
Agreed with "that certain parts (e.g. government) cannot keep up with the speed. " most of the reports keep saying that China is years ahead of us that sometimes worries us.. Anyways, a great Post !
Comment by Francois Zielemans on January 12, 2010 at 8:20pm
Dear Rakesh,
Your point is indeed very relevant, but I believe that in the end the people will not accept current corruption practices anymore as more Indians get better education. You democratic system and quick development should take care of that. But India is now developing so fast that certain parts (e.g. government) cannot keep up with the speed. Very frustrating, but don’t forget that also in Western countries like Italy speeding up procedures through bribing is also still common practice. But I believe that in the long run end the benefit of a tolerant people is bigger than its disadvantages.
Comment by Francois Zielemans on January 12, 2010 at 8:00pm
Dear Pooja,
I do indeed not believe that tolerance towards religion in itself matters when deciding whether or not to go to India, but a tolerant society (of which religion is one form) provides a good ‘underground’ for a creative and innovative economy. That innovation and efficiency are currently negatively affected in India by corruption and red tape is definitely true. Both China and India are struggling with corruption and red tape, but I believe that these are in the end easier to tackle than having an over-nationalistic culture. In that sense has India a long term strategic advantage over China. The effect of this advantage will become clearer when both India and China start break away from providing a better price through labor arbitrage towards competing with the western countries on more innovative products (e.g. Tata building better cars that BMW of Audi).
Comment by Rakesh Patel on January 12, 2010 at 5:12pm
You have yourself specified the reason : "The ‘disadvantage’ India has over China is its very complex and slow democratic system which limits the speed the infrastructure, government and education system is changed"...... Religious tolerance play a very limited or negligible role... however the tolerance towards corruption, or tolerance towards below par efficiency matters a lot....
Comment by Pooja Sharma on January 12, 2010 at 3:31pm
Hi Francois,
Interesting blog ! I don't think that religious tolerance will play any role in deciding which country would be a better player in the BPO sector in the days to come, rather i think it would be organization's capability, easy corporate laws and less of red tape , which would be the more crucial factors... what do you say?

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