China fact of the day

…the annual expansion in China’s trade has been larger than India’s total annual trade during last several years.

Here is more, interesting points throughout.  And here is the upshot:

The most important factor that still holds back large [Indian] firms from
entering these products is a set of draconian labour laws in India.
Under these laws, it is virtually impossible for a firm with 100 or
more employees to fire the workers even in the face of bankruptcy. It
is equally difficult for the firms to reassign the workers from one
task to another. These provisions impose very low worker productivity
or a high real cost of labour. Large-scale capital-intensive sectors
such as automobiles, where labour costs are a tiny proportion of the
total costs, can profitably operate in such an environment. But the
same is not true of large-scale labour-intensive sectors labour. Few
foreign manufacturers are willing to enter India outside of a small
subset of capital- and skilled-labour intensive sectors.

Comments

Many people didn't know, but India was communist until about 20 years ago. 20 years ago, if you wanted a ceiling fan, you need a permit to get one (for free IINM). China was considerably less communist and more socialist than India.

That is utter bs, Chewxy. Two of the 25 Indian states were communist - West Bengal and Kerala. The rest of the country was never in any way communist.

From where did you pull the factoid about the fan? I lived in India 20 years ago, and there were never any such rules.

As for the point about transportation infrastructure: yes, Indian infrastructure is currently poor, and this will represent a great investment opportunity over the next decade, as India will spend a tremendous amount of money on upgrading its infrastructure. Companies that are positioned to help them build that infrastructure will benefit greatly.

20 years ago, if you wanted a ceiling fan, you need a permit to get one (for free IINM).

I needed to get a permit to change a bathroom vanity here in the US.

IINM, it means "if I'm not mistaken"

If it means If I'm not mistaken why is the for free included in the comment.

"for free if I'm not mistaken" does not make sense to me.

I'm an old man, what am I missing?

India is a democracy. China can implement free-market reform, and it doesn't matter if it is unpopular. India can not implement fast free-market reform, because most voters (of any country) are socialist.

That "separate firms of less than 100 employees each" idea would not solve the problem because those workers are still not easily adaptable, although it may make it easier to scale the workforce a little.

Imagine, for hundreds of years emperors and socialist dictators kept the people of China living in misery for nothing.

Not really.
China had been the richest country for hundreds of years. It lost its position in 1800s or maybe earlier. That's one reason China had to fight the opium war. So, the fact is, it's the evil emperors and socialist dictators tried to protect people away from opium and the honorable Britain got wealth by selling drugs.

thank you for this excelent article

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