5. Discuss the future competitive threats of China and India for industries in developed countries.
The emergence of China as the mass manufacturing pioneer in the world has lead to the concern that China will soon be competing with the industries in the developed nations. India, at the same time, is emerging as the centre of IT enabled services including software development, and poses significant threat to the developed countries in high-skill goods and services. Today, the main competitive threat that China and India pose to the developed nations is their cheap labour. They are able to produce basically anything at a much lower price compare to those in the western developed nations. Therefore, they signify threats to these countries. However, on the future prospects, China and India would acquire competitive threat that is different from what they were before. For instance, the education rate in China and India are both increasing, and they produce about half a million of scientists and engineers a year comparing to mere 60,000 in the US. Therefore, these skilled labours will take over the current low skilled labours in these two countries and further exploit the opportunities that they have, and compete better in the high skill sectors. In addition, many companies from the developed nations have shifted their R&D centre to the China and India, therefore, China and India are able to learn and gain experience through these foreign R&D centre and excel in innovations in the future. This makes the developed nations to lose their competitive advantage, and signifies competitive threat from China and India.
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