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China is on top of AT Kearney's FDI Confidence Index chart. Why so? China has toppled the United States in FDI Confidence, according to AT Kearney's FDI Confidence Index 2004. To many, this comes as a surprise ('you mean, the US was ahead of China all this while?'). It should not. Ever since FDI idea has been tomtommed as a good thing for globalisation and everyone's well being, it is actually the US that has been the largest recipient---though China's megabillions have always made the headlines. Now, it seems, China is actually ahead in the perception race. It is the world's most preferred FDI destination. Some observers might want to call this a blip, a result of the sluggish US economy (though it wasn't sluggish at all in 2004, the year the flipover took place). But by and large, economic observers do not think China would cede its top position to the US anytime soon. Why so? The near-double-digit annual economic growth rate is the obvious attraction. The rest of the world worries about lower speed limits; China worries about an upper safety limit. That in itself sets the economy apart. Then there are dozens of studies on how the country's low-cost labour combines with modern infrastructure to create an enormously competitive base for the manufacture of just about anything that requires these two. The AT Kearney survey has other factors too, many of which actually work in favour of India more than China. Rule of law, for example. Also, management talent and workforce education. There's consumer sophistication too on the list, as also political stability and tax regime. On almost all those, China does only a little better, if at all, than India. So what accounts for all the excitement China generates? Simple. Market size. On this count, it wallops India roundly (and any other country for that matter). The sheer quantities of products that China is buying staggers the mind. To take just a single example. Just a decade ago, China's market for cars was barely a fourth of India's. Today, while India huffs and pants past the 1-million-unit mark, China is already selling four cars for every one sold here. The market is projected to zip past America's 20-million-unit market in just over a decade. Americans have sat up. Europeans have sat up. Asians have sat up. If that's not a story of emergence, nothing is. In fact, the world has not seen anything like this before. Millions and millions of people----much larger numbers of people acquiring the good things of material comfort much faster than ever witnessed. It's spectacular. What's the big secret? No big secret, really. It's well known. China's market pyramid is much flatter than India's. So as the country emerges upwards-entering one consumption category after another---it generates huge demand for goods and services. Any marketer can tell you that (Chinese fashion shows, by the way, are a revelation), though economists prefer to talk only in terms of overall indicators. China is a major market because it involves a much larger proportion of its population. And a larger market spells larger business, more money, bigger budgets and, eventually, more power.
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