Imagine a boxing ring with no rules. Fighters keep swinging until only the strongest remain. That is China's business environment today. Market share is the primary scorecard, returns can wait. And unlike most rings, the government is in your corner - offering long-term direction, cheap land, expedited approvals and loans that often function like equity. If interest is paid, principal repayment can be deferred indefinitely.
China has made a deliberate shift from being supplier of low-cost, low-quality goods to the world to one that is low-cost, high-quality and high-speed. How did this happen?
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Made in China Launched in 2015, the plan targets 10 priority sectors, including EVs, robotics, aerospace, IT and biopharmaceuticals, with self-sufficiency as its objective. It identifies China's weaknesses and sets out targeted measures. Results have been impressive in several sectors, underscoring how even imperfect execution at China's scale can yield formidable outcomes.
'You owe it to the motherland' A deep sense of national purpose is woven into the culture of work. Citizens and companies align with national priorities.
Intra-gov competition While Beijing sets the goal, provincial and local governments compete to attract industries, offering near-free land, subsidised loans and fast-track approvals. This competition amplifies China's industrial agenda in ways central planning alone cannot.
Proximity is power China has gone from creating individual champions to building entire industrial ecosystems. In Hangzhou, a single industrial district, Qiantang hosts 5 focus sectors, 14 university partnerships, plug-and-play infrastructure, and a policy setup geared towards clearing permits within half a day. Shenzhen's '1-hour innovation circle' enables startups to source components, print PCBs, and assemble and test prototypes without leaving the city.
People power 'Thousand Talents Plan' brought back elite Chinese professionals from priority sectors across the world. China produces millions of STEM graduates annually. The 9-9-6 work culture - 9 a.m. to 9 p.m., 6 days a week - is real.
R&D, a strategic weapon India spends 0.7% of GDP on R&D. China spends 2.7%, and the figure is rising. Leading companies dedicate 4-5% of revenue and 15-25% of their workforce to R&D, far above levels seen in Indian Inc.
China's rise is admirable. But the forces that powered its ascent may yet constrain its future, as long-term structural risks come home to roost.
Cheap capital, costly distortions Debt-fuelled infra investment has often outpaced demand, leaving assets underutilised and excess capacity weighing on prices. China's debt burden now exceeds 300% of GDP. Much of the strain is obscured by an opaque financial system. Household savings provide cheap funding, bad loans are rolled over, losses are concealed, and zombie firms survive long after market forces would have forced their exit.
Demographic time bomb One-child policy's legacy is irreversible. With a fertility rate of 1.0 and per-capita incomes still well below developed-country levels, China's population is projected to halve by end of the century, raising existential questions about how its superpower ambitions will play out over the 21st c.
Lack of soft power Unlike Japan and South Korea, China's culture, cinema and music have not travelled far beyond its cultural sphere. Young fighters from Shenzhen and Shanghai are still not as welcome in European and American boxing rings.
India is high on ambition. But it lacks the execution architecture to get there. So, what should it do?
Sharpen vision, set targets Viksit Bharat 2047 is an inspiring goal. But India needs a quantified vision of what the destination looks like.
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Reimagine administrative OS Reform the civil services by linking career progression to quantified goals around growth, investment, innovation and ease of living. Fix tenure lengths in critical departments to ensure continuity of execution. Empower local governments with operating autonomy and fiscal resources to drive hyperlocal investment promotion and facilitation, and foster inter-municipal competition for investment and talent attraction.
Build dense ecosystems Industrial parks must evolve from real estate plays into co-located value chains. Anchor investors should have mandatory supplier-development obligations. Higher education and research institutions must integrate with industry clusters to supply skilled talent, respond to fast-changing needs and jointly drive innovation in products and processes.
R&D as survival Indian businesses must multiply R&D spending, even if it compresses short-term margins. We need meaningful industry-academia partnerships, open innovation frameworks with clear IP-sharing rules, and a corporate culture that celebrates engineers, not managers.
Engage with China The instinct to treat China as purely a threat misses opportunities. L'Oreal moved 4,000 digital engineers to China to create social media content for the world. Legacy automakers such as Stellantis, VW and Toyota are partnering with Chinese EV-makers to learn from their rapid product-development cycles and innovative features. India must engage where we can, and compete where we must.
Industry should move beyond sourcing raw materials to deploy Chinese automation, pursue tech partnerships with safeguards, and integrate into the supply chains of Chinese champions as they expand globally.
The world is concluding that the next China is China. Yet, India has strengths that China cannot replicate: democratic legitimacy, English-language advantage, services depth and, if we choose to deploy it, entrepreneurial energy. The window to act is open, but not for long. The time to decide is now.
The writer is vice-chairman, RPG Group.
