Tim Baden
David Borghaerts
Marco Koghee
Bert Rijke

2

3

In the emerging RIC countries is, in comparison to the developed western economies, a substantial growth in GDP and several markets expected. The RIC countries are all liberalizing and opening up their markets, this development creates multiple unignorable business opportunities for foreign investors.
However those business opportunities aren’t without risks, those risks mainly consist of corruption, poverty, pollution, competition, bureaucracy, governmental law and protectionism.
In order to see where the sustainable chances are for IBM, we take a better look at the RIC countries and separately judge them based on facts and conclusions of our research.
Russia
Russia counts over 141 million people, with a majority of these people living in poverty. Russia is experiencing economical growth over the last few years, this growth is generated for 50% by the oil and gas industry. This non-sustainable dependency on the oil and gas industry forces the Russian government to focus on renewable energy and different markets, such as the IT-sector.
The IT-sector shows a large growth over the last few years and the Russian government is taking measurements to stimulate the growth, for example by eliminating taxes on software.
Russia has a high poverty level, but has a well educated workforce and is well known for its excellent and cheap computer programmers, making it an attractive (IT)outsourcing market.
The banking sector is still growing and, despite the economic crisis, lending money. These signs could indicate that the banking sector will continue to grow and investments in the near future will be made.
We recommend IBM to focus on the energy and banking sectors as well as keeping an eye out for chances in the automotive industry and taking the IT outsourcing possibilities into account.
India
India has over 1 billion residents and is still growing strong. In fact India is the fastest growing country with an average age of 25 and more than 700 million people under the age of 35, as a result India may face serious problems on social, environmental and economic levels.
India invested in education, each year 80.000 IT professionals graduate from IT related studies and most of them speak English. This well educated, English speaking, cheap workforce, could deliver opportunities for IBM in IT services and the improvement/development/maintenance of software programs.
The government of India sees the potential of the IT sector as well and is stimulating the sector by investing in projects such as the creation of so called Software Technology parks.
China
China has over 1.3 billion residents and has the second largest economy in the world. With 812.7 million people China has the biggest workforc e of the world and because of the one child policy it’s also the fastest aging country. As China grows economically, the demand for energy continues to grow as well.
IBM could play an important role in the development of sustainable ways of gaining or managing energy.
The Chinese government stimulates by investing in projects to develop the IT sector, China’s share in the global software and IT market is 8.7%(2007 est.) and it is expected to grow 30% the following next few years. With its economical growth the wages are starting to become less attractive, China has to develop new ways to differentiate and could be starting to use software such customer relationship management systems. Eventhough China is still a good labouring country, it’s becoming a better target market for the products and services of IBM. The banking sector is growing but many investors fear that a bubble is being created. We see some potential in the banking system market for IBM’s products and services, but also the risks of a bursting bubble. The automotive market is rapidly growing is much more stable and offers opportunities for IBM, in producing auto parts and the integration of electronics.
We suggest IBM to focus on the IT sector, with its educated labour and government stimulation, the automotive market, in the process of producing auto parts and electronics, the pension market and to be wary on the banking sector.
4

First of all we would like to thank the “Hogeschool van Amsterdam” in co-operation with IBM for giving us the oppor tunity to work on this project. For us students it’s amazingly interesting to learn and do research on one of the actual hot-topic s, the emerging markets, and to think about succeedable chances these emerging markets create for a major company as IBM.
Secondly we would like to thank the teachers for helping us on such a short notice to complete this project, as well as the interview participants and of course the wonderful team players of team 6, where everyone showed a good sense of what teamwork is about and the dedication to make this project a success.
Also we would like to ask the staff of IBM if there’s a possibility to continue and expand our research by getting a little more freedom in the form of time and perhaps the possibility to invest money in certain scientific research(methods) which we’ll illustrate further on in the report .
Team 6
5

In the 4 th year of the study Commercial Economics we get several assignments, in which we have to write a report based on research, executed by a team of four students within a time span of a month.
Team 6 consists of the following students:
- Tim Baden
- David Borghaerts
- Marco Koghee
- Bert Rijke
In this case we have to do research on the ICT markets of the emerging countries Russia, India and
China.
The research consists of:
- analyzing DESTEP factors
- market competitiveness analysis
- SWOT analysis (Strengths, Weaknesses, Opportunities and Threats)
- MaBa analysis (Market attractiveness, Business attractiveness)
This is followed by an advice, based on the conclusions of these analysis, for IBM on how to improve their strategic position in these emerging countries.
IBM is an international operating ICT company originating in the US with over 380,000 employees worldwide, spread out over business units in 160 countries.
IBM offers a wide array of products , which can be categorized in five core businesses:
- Software 2007 revenue: US$19.9B
- Systems & Technology 2007 revenue: US$ 21.3B
- Global Services 2007 revenue: US$ 54.1B
- Research
- Financing 2007 revenue: US$2.5B
With a total revenue of $98.8 Billion in 2007
Pre Tax Earnings $14.5 Billion in 2007
Invest $6.1Billion in Research and Development per year.
1
An emerging market is defined as an economy with low to middle per capita income. Such countries constitute approximately 80% of the global population, and represent about 20% of the world’s economies.
The BRIC Countries, Brazil, Russia, India and China, are currently known as emerging markets in which exceptional growth is expected, but because of their unstable characteristics this is not without risks.
1 http://www.investopedia.com/articles/03/073003.asp
6

The DESTEP analysis method is a part of the external analysis, it gives a good overview on the macro environmental factors and is a useful tool in markets.
Population:
Russia has a population of over 141 million people. The population peaked in 1991 with more than 148 million people. The median age of a Russian citizen is 38.4 years.
Language:
The main language is Russian, with many minority languages.
Religion:
A small majority of 15-20% is Russian Orthodox. The second largest religion in Russia is the Islam. (10-
15%). Third is Christian with only 2%. These are estimations of people who practice their religion and are active believers. Many people in Russia are either non-believers or non-practising believers.
Urbanization:
73% of the Russian citizens live in urban areas. A slight change is occurring with an annual change rate of
-0.5,. In contrary to India and China which countries are experiencing large movements from people towards the cities.
Ethnic groups:
The largest group is Russian (almost 80%), 3.8% are Tatar, 2% Ukrainian and the rest divides themselves in many other ethnicities.
2
2 https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html
7

Introduction:
The Russian economy has experienced some major changes since the collapse of the Soviet Union. The economy that was controlled by the government is now a more liberalized open-market economy than ever before. Russia is the 9 th largest economy in the world. Because of privatization of many companies, a small group of Russians became very rich in a short amount of time. The majority of the Russians live in poverty. Almost 16% live below the poverty line. For the long term, Russia will face the challenges of a high corruption level and a poor infrastructure.
GDP (Gross Domestic Product) Purchasing Power Parity:
$2.103 trillion
$2.298 trillion
$2.176 trillion
(2009 est.)
(2008 est.)
(2007 est.)
GDP growth rate:
-8.5%
5.6%
8.1%
GDP per capita:
(2009 est.)
(2008 est.)
(2007 est.)
$15,200
$16,300
(2009 est.)
(2008 est.)
$15,400 (2007 est.)
Unemployed:
Unemployment rate: 8.9%.
IT-sector:
The value of the Russian IT-sector in 2007 was estimated at 13.1 billion USD. Forecasts from the Russian ministry of communications say that the Russian IT-sector in 2012 will have a value over 31.3 billion USD.
The main reason why the IT-sector in Russia is experiencing a large growth is because of the developments in software products. The Russian government has recently taken two measures to stimulate the growth in the Russian IT-sector. The first is a new law that secures a better protection for intellectual property which protects the author. The second measure taken is the elimination of taxes on software licenses.
Outsourcing:
Russia is also an attractive market for outsourcing. It is well-known for its excellent and cheap computer programmers. Even though the Russian IT-sector is growing fast and has great opportunities for outsourcing, they are still a smaller player compared to countries like India or China. 3456
3 http://www.country-data.com/cgi-bin/query/r-11460.html
4 https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html
5 http://www.russoft.org/docs/?doc=1441
6 http://www.outsourcing-russia.com/
8

Throughout its history Russia has a very communal spirit that is still seen in Russian business today. Due to the severe winter climate, companies were forced to cooperate rather than to compete. This was necessary for survival. This togetherness goes back many years to the peasant farmers who lived in agricultural villages. In business, deals are seen as deals which equally benefit both parties. When building a successful relationship, Russians tend to be very loyal.
Structure and hierarchy in Russian companies:
- The decision makers higher up have authority over their employees. Even though the collective background encourages a flexible and in some manner a democratic work ethic.
- Recognizing seniority and the hierarchical structure is important for maintaining a long time business relation.
Working relationship
- Informal contact is a pro in doing business
- Physical contact
- Personal approach in conflicts
Business etiquette
- Shake hands when greeting and leaving. Make direct eye contact
- Small talk
- Gifts with emotional company value
- Show emotion
- Listen to each other
- Don’t praise or reward people in public. This goes back to the collective rules as the individual is less important than the organization.
7
Science and technology play an important role in the Russian society. The Russians are faced with the challenge to create certain scientific products that are usable in the commercial sector, and give extra value to the companies and to the society.
To achieve these goals, the RAS (Russian Academy of Science) is cooperating with several foreign countries, such as: Germany(AG), the United Kingdom(AEA Technology plc) and the Netherlands(TNO).
These countries have helped the RAS commercialize science and technology.
About 50 years ago Russia and America where the most technologically advanced countries. Nowadays the Russians are a more mediocre scientific country. Only 2.6 percent of the scientific articles are Russian made(2009). In comparison, the Netherlands produced 2.5 percent of the articles(2009).
In the early ‘90s when the communist government fell, about 80,000 scientists fled the country. In the new political system there wasn’t that much attention for technological progress. The large governmental financial cuts made the technological demise possible. There is also a lot of aging in this sector.
Youngsters don’t want a scientific job but want to work in the petroleum business or in politics.
89
7 http://www.communicaid.com/cross-cultural-training/culture-for-business-and-management/doingbusiness-in/Russian-business-and-social-culture.php
8 http://researchanalytics.thomsonreuters.com/m/pdfs/grr-russia-jan10.pdf
9 http://www.tno.nl/content.cfm?context=markten&content=case&laag1=280&item_id=307
9

Russian resources 10
Saudi Arabia and Russia are the two “energy superpowers” of the world. This is because they have the richest natural energy resources. Russia has the largest natural gas-, and the second largest coal reserve.
They also have the 8 th largest oil reserve.
Russia is largely underdeveloped in renewable energy, even though there is a large potential, for example
Geothermal energy. The oil and gas industry are responsible for more than 50% of the economic growth.
The downside of the economical growth is that the resources will be depleted in the coming decades. That is why the Russians must invest in renewable energy and other markets
For example: the IT-sector.
IT-sector
In ITO (IT-Outsourcing) is India clearly the leading country. Still, Russia is a fast growing runner up. It uses its natural strengths: a highly educated workforce and - compared to other (Western) countries - low wages. Russia is often seen as a primary location for developing engineered products and high-end software. Each year the Russian IT export is growing rapidly. It has a Compound Annual Growth Rate
(CAGR) of 30% in the last 5 years (2007). It is the 3 rd largest ITO country in volume, just behind India and
China.
Russia has realized that the oil industry doesn’t have the bright perspectives of the domestic IT industry.
They have already taken measures to enable its growth. The Russian initiatives in law, tax and promotion of local companies in foreign countries are fruitful for all parties and will obtain tangible results in the near future. A forecast from RNCOS states that the share of the Russian software exports will reach 10% of the global ITO-market by the end of 2010.
Banking sector
Despite the crisis, the Russian banking sector has witnessed growth in the past few years and has continued this trend. This sector has continued to record double digit growth in 2008 and 2009. This shows great potential for growth and investment. There are forecast made of a CAGR of nearly +22% during 2008-2013. the federal bank is already taking measures to support and maintain the liquidity in the domestic economy.
A research report made by the RNCOS shows that despite the economical conditions in the world the banks continue to lend money to households and companies. The total credit supplied by banks to households and non financial organizations was increased by 34.5% in 2008. This shows that banks are still lending money and thus have faith in their economy.
11 121314
The automotive industry is growing very fast and is one of the most competitive and dynamic industries at world level. The passenger car industry is growing the fastest. That is very attractive for foreign investors.
The Russian automotive industry shows a few trends:
- The passenger car industry reach a level of 5,9 million units around 2012.
- The car penetration in Russia per 1000 inhabitants is around 300 units and is still growing.
- The Russian government is attracting foreign investors to the automotive industry, with a lot of advances.
- The spare part industry and dealership network in Russia are also growing. The worldwide crisis has had a major impact on the automotive market. Never the less, these forecasts are still standing. 15
10 Appendix IV: Russia’s share of world publications is selected main fields covered by Thomson Reuters
11 http://www.geopoliticsnorth.org/index.php?option=com_content&view=article&id=92:russias-energystrategy-up-to-2030&catid=1:latest-news
12 http://zeenews.com
13 http://epam-systems.blogspot.com/2008/01/russian-software-exports-to-see-7.html
14 http://www.rncos.com/Report/IM238.htm
15 http://www.rncos.com/Report/IM036.htm
10

Russia is, together with China and India, the most polluted country in the world. For example, during the cold war, chemical weapons were made in the city of Dzerzhinsk (300 000 inhabitants) for a time span of circa 50 years. According to the Blacksmith report 300 000 tons of waste were dumped in the soil water.
Not only the lakes are poisoned. Part of the chemical waste has reached the soil, in the shape of toxic lakes in the city. Some toxic concentrations are so high that they exceed international regulations millions of times. The average age in this city is barely 38 years. The Russian government shows no interest in these matters.
16
In 1917, after the revolution, Russia became communist. Before this coup Russia was a monarchy of tsars for hundreds of years. After the Berlin wall fell in 1989 Eastern Europe and Russia liberated themselves from the communist grasp it had upon them for 70 years. In 1993 the communist regime in Russia fell and the new constitution was established, providing the president with substantial power over all branches in the state. Due to the poverty in this country there is a lot of corruption.
The most used company forms are:
- Limited liability company (LLC)
- Private joint stock company (PJSC)
- Representative office (RO)
- Branch
International issues
Russia’s relations with their neighbouring countries, who were always in some way submissive, have become more and more difficult. After the invasion in the two Georgian provinces the relations with the other countries (especially the Western countries) cooled down. Political relations with the USA have improved somewhat since Obama came to office. In 2008 Moscow finally reached an agreement with
Beijing on the entire length of the border between the countries. This has been a problem for years.
17 1819
Opportunities
- Growing IT(O) sector
- Large natural resource reserves
- Improving economy
- Low wages/high education
- Fast growing automotive market
- Benefits for foreign investors
- (Solving pollution problems)
16 http://www.mo.be/index.php?id=61&tx_uwnews_pi2%5Bart_id%5D=16681
17 http://www.lowtax.net/lowtax/html/offon/russia/ruscos.html
18 http://www.waytorussia.net/business/startingup.html
19 http://rps.hva.nl:2189/Portal/Magazines/Topic.aspx
11

Threats
- Oil- and gas dependent industry
- Corruption and bureaucratic mentality
- Unpopularity of science
- Competition
- Corruption
- (Poverty)
20
Market attractiveness Weight Score
Market size and growth 30
Competition intensity 15
Product differentiation
Phase in life cycle on
ICT products
25
20
0,7
0,6
0,7
0,6
Grade of homogeneity 10
Total 100
Strength of competition
Weight
0,3
Score
Budget of enterprise
Product capacity
Product possibilities
USP’s
Product quality
Sales force
Total
30
15
10
20
10
10
100
0,7
0,6
0,5
0,7
0,35
0,25
Total
21
9
17,5
12
3
62,5
Total
21
9,6
5
14
3,5
2,5
55,6
20 See the model in Appendix VI
12

Population:
1.156.897.766 (July 2009 est.)
Area
Capital
Official language
Form of Government
Important Major Cities
Currency
Religions
3,287,263 sq km
New Delhi
Hindi
Federal Republic
New Delhi, Calcutta, Mumbai, Chennai
Indian Rupee
Hindu, Muslim
India has a total population of more than a billion inhabitants, last estimated in July 2009.The median age in India is 25 years. There are approximately 700 million people under the age of 35. Every year 27 million people are born in India.
India has four major cities with a population of more than a million people each: the capital of India, New
Delhi, Mumbai (formerly known as Bombay), Calcutta and Chennai.
The number of people living in these major cities will keep increasing because of the urbanisation of
India.
21
21 https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
13

The liberalization of the Indian economy began in the early 1990’s. The Indian government made the economy more open. This has brought the country accelerating growth. India’s main source of income comes from agriculture. T his accounts more than half of India’s total income. India has also invested in education. There is a large number of well-educated people, whom are skilled in the English language.
These people are placing India in a position where it has become a major exporter of software services and software workers. The long term challenges for India include: infrastructure, education and limited employment opportunities. However, the biggest problem India will face in the long run will be the immense growth of the population. This is going to be the cause of social, economic and environmental problems. 22
GDP (Gross Domestic Product) Purchasing Power Parity:
$3.458 trillion (2009 est.)
$3.344 trillion
$3.113 trillion
(2008 est.)
(2007 est.)
Compared to the rest of the world, India is at 5 th place, preceded by the EU, US, China and Japan.
GDP growth rate:
6.1% (2009 est.)
7.4%
9%
(2008 est.)
(2007 est.)
Compared to the rest of the world, India is at 13 th place.
GDP per capita (PPP)
$3.100
$2.900
(2009 est.)
(2008 est.)
$2.800 (2007 est.)
Compared to the rest of the world, India is at 165 th place.
Employment issues:
As mentioned in the Demographic chapter, the population of India is growing immensely. At this moment the Indian economy cannot keep up with the growth of the population. Two major problems in this country are the high unemployment rate and people working in unorganized sectors. India counts 300 million unemployed people and 320 million people working in the unorganized sector, with only 19 million people working in the organized sector (public sector). At this point, the number of jobs that needs to be created to fulfil the aspirations are 10 million new jobs each yea, leading to one of the next major economic issues: poverty.
23
Poverty:
Acc ording to The World Bank’s definition of poverty there are, at the moment, approximately 300 million
Indians who live below the poverty line. Poverty is the main cause of urbanisation in India. People move from their villages to the major cities to earn a better living, m ainly because there isn’t any work in the villages. The urbanisation is causing social difficulties in the major cities, and an increasing number of ghetto’s and slums, which will be explained in the next paragraph.
24
22 http://www.internationaalondernemen.nl/zoeken/showbouwsteen_dtb.asp?bstnum=80000&location=/dtb
/dtb_ina.asp
23 http://www.wakeupcall.org/administration_in_india/poverty_line.php
24 http://india.mapsofindia.com/indian-economy/india-social-sector.html
14

Ethnic groups:
72% Indo-Aryan, 25% Dravidian, 3% other.
Religions:
Hindu 80,5%, Muslim 13,4%.
Languages:
Hindi 41%, 59% other.
Education breakthrough :
In December 1993 India hosted the “Education for all Summit”, which was attended by 9 high-populated-countries. The Prime Minister Mr. P.V. Narasimha Rao announced at the summit that India would spend 6 percent of the GNP on education before the end of the century.
The Panchayat:
Panchayat , also known as village councils or elders, is a form of democracy that has existed in India for a long time, even during the feudal era. The Panchayat Raj (rule) consists as a mechanism in the constitutional law during elections and has a minimum amount of women representatives.
25
Business culture India:
When forming a business association with Indians it is custom to know their business ethics. Some of the most important business ethics are::
The ‘namaste’ forms an important part of the Indian etiquette. It is used when greeting a person or saying goodbye. The gesture is formed by pressing the palms of both hands together with the fingers up. The folded hands are placed below the chin and are accompanied with a bow. Keep in mind that well educated Indians who are used to Western customs prefer to shake hands. Also to mark respect to the person you are addressing you can suffix ‘ji’ to the name of the person.
In India it is custom to treat your guests with utmost respect and courtesy. Also Indians have difficulties saying ‘no’. This can be a stumbling block whilst negotiating with an Indian.
Punctuality
Do not be surprised if meetings are rescheduled, postponed or cancelled. This has to do with the mindset and ingrained Indian culture.
Be patient when doing any business transactions with India. Bureaucracy and a laidback approach often result in a delay of the process.
Hierarchy
Indian companies follow the hierarchical system and decisions are almost always taken from the top to bottom. As a foreign company it is custom to show respect to this.
26
Developments in IT- sector: 27
The Indian IT-sector is experiencing a large growth. In the year 2008-2009 the total income in the ITsector was approximately 72 billion US dollars. Almost 60 billion US dollars gained from software and software services. Over 47 billion US dollars were gained by the export of IT-products/services. India is known of its low cost, well educated, English speaking, IT-professionals. Every year India educates an extra 80.000 IT-experts.
Investments:
25 https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
26 http://www.tradechakra.com/business-culture-india.html
27 www.nasscom.in
15

In the year 2008-2009 foreign investments in the IT-sector amounts 1.7 billion US dollar. The investments in the IT-sector are good for a 10% of total foreign investments.
Government programs and projects: 282930
STPs (software technology parks) ascend throughout the entire country. These STPs provides permits, licences, communication lines, broadband connections, and export procedures. 60% of Indian software exports run throughout these STPs. The costs of telecommunications have decreased in the past few years, also the quality of broadband has increased.
Banking Sector India
The banking industry in India is a fast growing market. The future overview is shown by some relevant trends for the Indian banking sector.
The trends are:
- The Indian bankable households have a Compound Annual Growth Rate of 28,1% during 2007-
2011.
- The Credit en Debit Card business is still growing
- The middle class in India is making more money and invests in their own pension funds.
- The pension fund industry in India has a compound annual growth rate of 112,4% during 1999-
2009.
- The number of millionaires in India has increased the past few years.
- The banking sector invest a lot in IT the last past years.
Automotive Industry India
The auto industry in India is also a major business. The year production has increased from 1,3 million units in 2001 till 2,8 million units in 2009. The attraction from the Indian auto market for foreign investors is because of the big growing middle-class in India.
The Indian auto industry shows some important trends:
- The passenger car production increased 3 million units until 2014-2015.
- The motorcycle production increased to 10 million units by 2012-2013.
- The auto parts industry of India will rise to 50 billion US$ in 2014-2015.
3132
The massive growth of population, the urbanization and the industrialization results in an environmental demise. Major environmental issues in India are: forest and agricultural land degradation, public health, loss of natures resources, loss of biodiversity and loss of resilience in ecosystems. Also al lot of animals are driven to extinction because of pollution and deforesting. 3334
The political framework in India is formed after the British Westminster System. This is because India was a British colony. The Prime Minister is the head of the government, while the President has mostly ceremonial duties. Most of the political power lies not within the states but in the central government, this in contrary to, for example, the United States.
35
28 http://mit.gov.in
29 www.stpi.in
30 www.mait.com
31 http://www.rncos.com/Report/IM200.htm
32 http://www.rncos.com/Report/IM200.htm
33 http://www.all-about-india.com/Environmental-issues-in-India.html
34 http://www.indiatogether.org/environment/
35 http://en.wikipedia.org/wiki/Politics_of_India
16

Corruption: 36
Corruption has become an aspect in the Indian politics. Indian politicians often use the promotion of economic developments to use public resources for private benefits. The Indian government has a low level of transparency which makes it easier to corrupt.
Opportunities
- Population (1 billion)
- IT sector
- Outsourcing in India
- Banking sector
- Automotive industry
- Educated work force
- IT-education market (high quality)
Threats
- Complex economy
- Bureaucracy
- Economic crisis
- Poverty
- Corruption
- Higher wages because of economical growth
37
Market attractiveness Weight Score Total
17,5
5
17,5
24
Market size and growth 25
Competition intensity 10
Product differentiation
Phase in life cycle on
ICT products
25
30
0,7
0,5
0,7
0,8
Grade of homogeneity 10
Total 100
Strength of competition
Weight
0,2
Score
Budget of enterprise
Product capacity
Product possibilities
USP’s
Product quality
Sales force
Total
35
10
15
15
15
10
100
0,7
0,7
0,7
0,6
0,4
0,3
2
66
Total
24,5
7
10,5
9
6
3
60
36 http://www.indianchild.com/corruption_in_india.htm
37 See the model in Appendix VI
17

Population
Area
Capital
Official Language:
Form of Government:
Important Major Cities:
Currency:
Religions:
Climate:
1.338.612.968 (July 2009 estimate)
9,596,961 sq km
Beijing
Mandarin (Standard Chinese)
National Republic
Beijing, Shanghai, Tianjin, Guangzhou
Chinese Renminbi
Taoïsm, Buddhism, Christianity (3-4%) Muslim (1-2%)
China has a diversity climates, e.g. tropical in the South and arctic in the
North.
China’s economy has changed during 30 years from a centrally planned economy to a more marketoriented economy. The market has become more open for foreign investors. In 2008 foreign companies invested nearly 108 billion dollar in China. Nowadays China has the second largest economy in the world and has grown 8.4% in the last year. The country is only exceeded economically by the USA. Never the less, the per capita income is much lower compared to other (Western) countries ($6500,- per year). The largest economical growth can be found in the coastal provinces. In the inland provinces are more agricultural an therefore show less growth.
Due to the “one child policy” China is one of the fastest aging countries in the world.
China is also being troubled by al lot of pollution.
18

GDP
2009: $8.767 trillion
2008: $8.088 trillion
2007: $7.42 trillion
GDP Growth rate
2009: 8,4%
2008: 9%
2007: 13%
GDP per capita
$6,500
$6,100
$5,600
GDP-share by sector in 2009
Agriculture: 10.9%
Industry: 48.6% services: 40.5%
Labour force
812.7 million people. China has the largest able working force in the world.
Unemployment rate
4,3%
This is the official figure for urban areas only. There are estimates of 9% unemployment overall.
Population below poverty
2.8% 38
The Chinese culture is one of the oldest cultures in the world, going back more than 5000 years.
Confucianism and Taoism have had a major influence on the Chinese culture and their presence is still noticeable today. One of the main pillars is respect, respect for elders and for each other. In business there is a high level of hierarchy. China is an ethnically and culturally diverse country. The spoken language varies from region to region.
China has numerous universities. Due to the economic growth the Chinese are getting better education and more universities are being opened. This results in a better educated work force 3940
In the last few decades China was known for making cheaper copies of Western products. For example: cars, electronics, clothes etcetera. Because of the economic growth and the better education China is starting to create more and more new Chinese made products. Investments and technological progress leading to being the innovator rather than being the duplicator.
38 http://www.chinasupertrends.com/starting-a-business-in-china-things-foreigners-need-to-know/
39 http://resources.alibaba.com/article/157/Business_Culture_throughout_China.htm
40 http://chineseculture.about.com/library/china/blscollege.htm
19

More area’s in China are developing and are becoming more interesting for investors. For instance, the province Jiangsu harbours a large IT-cluster. In this province there are over 1,900 ICT companies, both foreign and Chinese. The total turnover in software and information services in 2007 was $8 billion.
41
The Chinese government is playing an important role in the development of the Chinese software- and IT sector. At this moment China is the fourth world largest software developer.
The share that China has in the global software and IT-market is 8,7% (2007 est.). During the next few years this share is expected to grow by 30%.
42
At the moment there are a few trends in the Chinese software and IT sector:
- There are more companies entering the Chinese market.
- Fast growing internet market in China, broad band is mostly used.
- North-East- and East China will become the main key players in the Chinese software and IT outsourcing market in the next few years, The South of China has a smaller share in that content.
On the other hand there is more potential in software development.
- The software market for Enterprise Resource (ERP), Supply chain management (SCM),
Enterprise asset management (EAM), customer relationship management (CRM) and financial software are still relatively small markets in China.
43
Banking-sector:
The credit card market in China will witness a compound annual growth rate of circa 26% during 2010-
2013. China issued over more than 142 million credit cards at the end of 2008, that is 58% higher than the year before. The factors that influence these numbers are a growing middle class and low penetration rate of credit cards.
44
An important sector is the Chinese Banking Industry. There are a few trends relevant for IBM:
- Pension Funds, the Chinese government stimulates financial institutes by supplying them with licenses to start a pension fund.
- The Chinese government supports the credit card en debit card industry.
- The Compound Annual Growth Rate of the Chinese e-commerce sector during 2006-2010 is
+17,45%
- The compound annual growth rate of the Chinese Bankable Household is going to increase by
29,23% during the period 2007-2011.
Investors are worried about the Chinese banks. They say that the Chinese banks are lending too much money. This extra money stimulates spending and causes a better economy, but if it’s taken too far it could burst like a bubble. The banks are lending too much which gives them a poor balance sheet. Also the risk of not getting their money back is a concern. In 2009 $1300 billion was extra lend to companies and civilians.
4546
41 http://www.evd.nl/home/landen/landenpagina/land.asp?bstnum=245889&land=chn&location=&highlight
42 http://www.rncos.com/Blog/2008/08/China-Software-Industry-Emerged-as-Fourth-Largest.html
43 http://www.rncos.com/Report/IM087.htm
44 http://www.rncos.com/Report/IM002.htm
45 http://www.fd.nl/artikel/13695981/zorgen-chinese-banken-nemen-toe
46 http://www.rncos.com/Report/IM563.htm
20

Also, the Chinese government supports lending. In 2010 the lending in the Chinese banking sector has increased up to 20- to 22% in 2010. The global credit crisis also has a big influence on the loans done by the Chinese government. The government loans more money to stimulate more spending and growth.
47
Automotive Industry China
The automotive industry has shown a fantastic growth during the past few years and is still growing. China is the second largest automotive market and the third largest automotive producing market in the world.
44% of production is being sold in China, the rest goes to other countries. The growth of the Chinese automotive market is related to the consumer behaviour that is skyrocketing in China at the moment.
China’s automotive market shows a few trends:
- The global annual growth rate of the car consumption in China has increased by 54,42% during
2005-2009.
- The motor vehicle production and sales increased by 27,32% during 2005-2009
- The car penetration in China per 1000 inhabitants is around 11 units. This is much lower than in most other countries. But because China has the largest population in the world, it’s still one of the largest.
48
Because of the extensive and numerous factories and the wasteful Chinese culture, the environment is getting tremendously polluted. Last year the government accepted a law which states that companies must to do their best to decrease pollution while doing their business.
There is a lot of water pollution being done by large factory’s. Waste is dumped in rivers and lakes, where the water is very much needed for the growing population. Another issue is air pollution. Over 65% of the
Chinese cities is being troubled by this.
Because of the pollution people are getting sick faster and die at a younger age. Nature and agriculture are both suffering as well, killing animals used in agriculture and driving certain species to extinction
(tigers, elephants etc.).
China is a communist country since 1949. In the beginning, the country was fully communist. Nowadays the country has allowed several free market principles. Still, the government is in its essence communist.
This makes it difficult to trade or to settle, especially for foreign companies, mainly because of the protectionism regulated by the Chinese government.
When a foreign company wants to settle in China, the company has to take several laws into account.
These laws depend on what kind of business the company is in and on what scale they operate. The most used company forms are the: Representative Office, The Wholly Owned Foreign Enterprise and the Joint
Venture. What makes it more difficult is that every region has its own laws and customs. In China a company cannot register a foreign name. The company name must be in Chinese characters.
There is a lot of criticism on the Chinese government because of the:
- Under-appreciation of the Renminbi.
- Violation of the international environmental laws.
- Child labour.
- China is responsible for the rising prices of raw materials.
- Extreme usage of raw materials due to the growth of the major cities and the economy.
49
47 http://www.rncos.com/Blog/2009/11/China-Economy-to-Accelerate-On-Increased-Bank-Lending.html
48 http://www.rncos.com/Report/IM050.htm
49 http://www.fd.nl/artikel/7363100/protectionisme
21

Opportunities
- Biggest Population in the world (1.3 billion).
- IT market
- Automotive market
- Banking market
- Need for new technologies
Threats
- Corruption
- Chinese law
- Collapse of the banking market
- More companies enter the Chinese markets
- Wealth gap
50
Market attractiveness Weight Score
Market size and growth 30 0,7
Competition intensity
Product differentiation
20
25
0,5
0,8
Phase in life cycle on
ICT products
15 0,4
Grade of homogeneity 10
Total 100
Strength of Weight
0,25
Score competition
Budget of enterprise
Product capacity
Product possibilities
USP’s
Product quality
Sales force
Total
35
15
15
15
10
10
100
0,8
0,7
0,8
0,3
0,5
0,4
Total
21
10
20
6
2,50
59,50
Total
28
10,5
12
4,5
5
4
64
50 See the model in Appendix VI
22

The technology markets in the emerging countries are growing fast and competition is tough overall. The competition consists of nationally and internationally operating ICT-companies, where both of these types of companies have different advantages. For example, the big international operating brands usually have a lot of cash and expertise , where the national companies have a better understanding of the market they’re in and how the systems work.
The growth in these markets are expected to be very high, the Indian and Chinese governments stimulate the technology markets by spending billions of dollars, creating wireless cities, data servers, software
(regulation) etc.
The national companies tend to have an advantage over the international operating companies because of their knowledge of the markets and knowledge of the way the systems work. When Microsoft entered the emerging markets they made the mistake to approach these markets the same way they approached
Western markets, with disappointing results. Microsoft then changed their strategy and started offering their products for rock bottom prices, with success.
51
Playing the emerging markets demand a different approach in comparison to the western markets. For example, competitors like Dell, Acer and Asus offer cheap stripped down products such as mini notebooks with low processing power which solely can be used to go online with and/or run some light software programs. Dell has the ambition to sell their products over 15.000 stores in China alone.
52
This high supply/low price strategy seems to be successful, Dell saw its market share in China jump 81 percent in Q4 2009.
53
The competition in the technology market in China is tough and foreign multinational corporations like
Microsoft, IBM, Oracle, Sybase & CISCO have a market share of 65% in the software market. Well funded domestic Chinese competition is entering the market, companies like Haier in electrical home appliances,
Lenovo in PCs and Neusoft in IT service.
Most of these companies target at the middle and high-end market of China. To be competitive they have to compete on different factors like price points, distribution channels and after sales support.
54
The Indian IT market is becoming more and more open for foreign competition, especially US players are committed to the Indian information technology sector, making considerable investments in India over the next years. The time difference between India and the US is approximately 12 hours which is very beneficial for American multinationals to outsource work 55
51 http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100134488/
52 http://www.reuters.com/article/idUKTRE61I10I20100219?type=companyNews
53 http://www.reuters.com/article/idUKTRE61I10I20100219?type=companyNews
54 http://www.nzte.govt.nz/explore-export-markets/market-research-by-industry/Information-andcommunication-technologies/Documents/ICT-market-in-China-April-2009.pdf
55 http://www.nzte.govt.nz/explore-export-markets/market-research-by-industry/Information-andcommunication-technologies/Documents/Payments-IT-market-in-Southeast-Asia.pdf
23

The Russian ICT market is growing due to the need to transform the outdated telecommunications infrastructure throughout Russia. Expected is that the ICT market, despite the crisis, will grow 32.8 % The growth of the software sector attracts many foreign investors because of its growth potential and immaturity. Google, HP and IBM are opening research and development centres in the country. Intel,
Motorola, Dell and Siemens already have R&D facilities 56
Even though the GDP has shrunk between 2008 and 2009 there still has been a lot of growth in Russia’s main sectors. The main reason of the decline is the worldly economical crisis. The crisis slowed the progress in salary of the Russian inhabitants but didn’t slow down the growth in the main sectors.
At the moment the energy sector is responsible for 50% of its national economical growth. Russia has a lot of natural resources such as coal, oil and gas. This is helping the economy now but in a few decades the resources will be depleted.
Russia is one of the leading countries in IT outsourcing in the world. This is mainly because of the educated workforce and the - compared to other countries – low wages. The ITO business in Russia has had a CAGR of 30% in the last few years and continues to grow. This means that the whole potential hasn’t fully been exploited, and leaves room for more growth in the nearby future.
The banking sector shows no signs of decreasing in the duration of the crisis. On the contrary, the banks are lending more and more to companies and households. This shows that the banks still have faith in the economy. Forecasts are made of a CAGR of nearly +22% between 2008 and 2013. Even though there is growth, the Russian government is making an effort maintaining and supporting the liquidity in the economy to maintain and improve its international position.
The automotive industry is an interesting market for foreign investors, also because of the governmental allowances. Not only is the production of cars increasing, the car part sector is also very attractive at the moment.
Although the crisis struck the car business worldwide, there still is a lot of faith in the Russian car market in years to come.
The most interesting business in India is the IT business. Many companies from abroad outsource their IT business and development centres in India. This is also the fastest and most rewarding business at the moment. The reason this is so interesting for foreign companies is because of the workforce. They speak
English well, work hard, are highly educated and work for low wages. This is noticeable by the investments done by foreign companies. In 2008-2009,1.7 billion dollars were invested in this sector.
The government has also seen the potential this market has for the Indian economy and tries to stimulate it as much as it can. For example the Software Technology parks mentioned in the Technology chapter.
The banking sector is also one of rapid acceleration. There are few trends relevant:
- Increase of bankable households.
- A growing credit and debit business.
56 http://www.russoft.org/downloads/RUSSOFT_Survey_5_en.pdf
http://www.nzte.govt.nz/explore-exportmarkets/Europe/Doing-business-in-Russia/Documents/Russia-complete-country-brief-August-2009.pdf
24

- A growing number of pension funds for the middle class, which has increased by 112% in 10 years .
- Investments in this sector.
The third business is the automotive business. This year the production has increased from 1.3 million units till 2.8 million units in 2009. The attractiveness for investors is because of the growing middle class in
India.
First, China was one of the most communist countries in the world. Today, China blends communist principles with the principles of the Western free market. This has worked so well that China now is the second largest economy in the world. In future they’ll even be world’s largest. China has the largest population in the world which causes a lot of trouble, but brings good things as well. China is known for copying foreign products and making a cheaper similar versions. The Chinese are changing and becoming the ones who create products rather that copying them.
In the Chinese IT business large IT clusters are being created in several areas around the country. Both foreign and national companies as well as the Chinese government are investing a lot of money in these
IT clusters. At the moment China is the 4 th largest software developer. The Chinese IT sector is just at its beginning and there is expected a lot of growth in this sector
The second market which is looked into is the banking market. There is a lot of concern about the banking business. This sector shows an enormous growth. In 2009 there was more than $1300 billion dollars lent by banks. This supports the large economical growth but it can also blow up like a bubble, according to analysts. This is caused by bad balances and not being paid back by clients.
The third business is the Automotive business. It is showing an enormous increase of sales in the last few years and will continue to rise in the years to come. The car penetration rate is relatively low in China, only
11 per a 1000 inhabitants. Still, it’s the second largest automotive market in the world. Because of this increased number of automobiles in China a lot of fuel is also needed. This causes the oil prices to rise enormously.
We recommend IBM to focus in Russia on the Energy- and banking sector.
Energy sector
Since Russia has one of the most natural resources in the world, and is also one of the major exporting countries in this matter, it is recommendable for IBM to improve it’s position in this market. Unfortunatly for
Russia the large resources aren’t going to last forever. Therefore Russia is investing in new natural resources. Such as solar-, wind- and water power. The technology needed to make wind and water mills and building solar cells is one of IBM’s strengths.
The banking sector
In this sector there is still a lot of tangible growth. Despite the crisis banks are still lending money and are still growing. This means for IBM that more and better computers and computersystems are needed to maintain the liquidity. This is one of the strengths of IBM. The government is also investing in this sector.
This means there is a lot of faith in the banks which gives a bright perspective for the near future.
25

We recommend for IBM to strengthen their position in the Indian IT sector. This is the IT sector with the most potential and the most opportunities compared to other countries. Each year 80,000 IT proffessionals are graduating from IT related studies. Recommendable for IBM is to invest in this market. IBM could be responsible for the next generation networks and for providing systems. Also a lot of software could be developed to help India in the IT service business. For example programs used in call centers.
APPENDIX 3
Overall US players are committed to the Indian technology sector. IBM signed a 10 year contract with Idea
Cellular to transform and integrate critical business processes including fraud management, e-billing payment and customer care. This contract was worth $600-800 million dollar. This example shows that
IBM is investing in India. More contracts like this one should be chased in order to gain and maintain a leading position in India.
57
China is the 2 nd largest economy in the world. This provides IBM with major opportunities. First of all the energy demand is only getting bigger, the need for communication is increasing and the need for better products are increasing.
The recommendations in this report for China are in the IT and the Automotive market. The banking sector is not recommended because of the reports being made about the banking sector blowing up. The pension market is still recomme nded, there aren’t any concerns about this market. Still the two markets that are most recommended are the automotive market and the IT market.
China has the most extended automotive market in the world. 44% of the production goes to the Chinese people, 56% goes abroad. The Chinese have a relative small penetration rate in cars. Although this market is growing rapidly and creates a lot of opportunities for IBM to produce several auto parts and electronics.
The C hinese IT business isn’t as big as the Indian one but still is a good follow up. The government is investing in large IT clusters. China is also the biggest foreign IT investor in the world. This brings more and more expertise to China. China is the 4 th largest software developer in the world. Partnerships with this country makes sure that IBM stays and maintains first place in the IT development/service/parts.
58
57 http://www.nzte.govt.nz/explore-export-markets/market-research-by-industry/Information-andcommunication-technologies/Documents/Payments-IT-market-in-Southeast-Asia.pdf
58 http://www.oppapers.com/essays/China-Swot-Analysis/180931
26

APPENDIX _
Interview met Dhr. J.Chou-Wang. Manager bij Hitachi-LG.
Functieomschrijving:
Dhr. J.Chou-Wang werkt als International Development Manager bij Hitachi-LG, gevestigd in regio
Schiphol. Zijn belangrijkste taken binnen het bedrijf is om te rapporteren naar het hoofdkantoor in Tokio
(Japan) en contacten onderhouden en informatie uitwisselen met het Research en Development
Corporation in China.
Werkervaring:
Dhr. J.Chou-Wang, van oorsprong Chinees, werkte voorheen bij het RDC (research en development corporation) in China. Dhr. J.Chou-Wang heeft 3 jaar in Nederland gestudeerd, en is hier geplaatst door
Hitachi om de kwaliteit van de Hitachi producten in Europa te waarborgen. De kapotte Hitachi dvd-drives en Cd-drives worden vanuit Europa gestuurd naar de vestiging bij Schiphol en daar worden ze uit elkaar gehaald, onderzocht en eventueel gemaakt.
Waar moet je rekening mee houden als je zaken gaat doen in China?
Chinezen zijn heel erg netjes en erg respectvol. Dat zit in onze cultuur. Ik heb vroeger wel eens gehad dat er een groep Britse zakenlui naar ons kantoor kwamen om een eventuele samenwerking te bespreken.
Het begin ging het erg goed en wij keken uit naar een eventuele samenwerking. Ze brachten bijvoorbeeld een geschenk wat altijd erg op prijs wordt gesteld. Maar ’s avonds na de bespreking, toen wij een zakendiner met hun hadden ging de rijstwijn er wel erg snel doorheen. Uiteindelijk is hierdoor de samenwerking niet doorgegaan. Niet alleen omdat de samenwerking voor ons te weinig voordelen bracht, maar ook omdat wij vonden dat er niet met respect werd omgegaan met onze waarden. Belangrijk is dat je als buitenlands bedrijf je inleeft in de Chinese cultuur en etiquette
Wat is volgens u het grootste verschil tussen zaken in Nederland en zaken in China?
In Nederland is er veel meer ruimte voor overleg. Wij komen wekelijks bijeen in het managementteam om te bespreken hoe we er voor staan en wat er gaat veranderen. En dat wordt vervolgens weer doorgespeeld naar het uitvoerende personeel. Die het er daar vervolgens niet altijd mee eens is. In China wordt je verteld wat je moet doen. Ben je het daar niet mee eens, of wil je dat niet doen, dan wordt je vervangen. Daarom zijn Chinezen ook altijd stipt op tijd en erg ijverig en gedisciplineerd in wat wij doen.
Wat zijn bedreigingen voor bedrijven zich willen vestigen in China?
Als nieuw bedrijf moet je op de hoogte zijn van de wetten en procedures die je moet volgens om je te vestigen in China. Ook moet je erg uitkijken met je contacten en de bedrijven waarmee je samenwerkt.
Het is handig om eerst wat vooronderzoek te doen naar eventuele partners in verband met corruptie.
Corruptie is een van de normaalste zaken in China, en ook één van de grootste problemen. Als buitenlands bedrijf wil je hier niet mee geassocieerd worden.
27

Interview met Dhr. H. Rijke. Ondernemer
Interview met dhr Rijke
Wat is uw beroep?
Ik ben zelfstandig ondernemer, groot aandeelhouder in drie BVs – Alpha7/Diamond NL, Extra Light.
Wat voor type ondernemingen zijn dit?
Alpha7/Diamond NL is een grafische groothandel georiënteerd op de BENELUX/Duitsland (diamond NL), wij importeren exclusief een digitale offsetpers van Presstek, wij verkopen grafische printers (voor drukkerijen – visitekaarten, enveloppen) en zijn exclusief dealer van the second film factory.
CTP offsetplaten (computer to plate), dunne stukken plano aluminium waarbij het aluminium een gepresensibiliseerde toplaag bevat (lichtgevoelige laag, bedoeld voor het overzetten van beeld)
Daarnaast leveren wij vele ge- en verbruiksartikelen voor offsetdrukkerijen, verlenen service en sluiten onderhoudscontracten voor onze producten met onze afnemers.
Extra Light is een groothandel met een relatief klein productportfolio. Voornamelijk georiënteerd op de outdoorbedrijven (bootaccessoires/caravandealers/tankstations/luchtvaartmaatschappijen/sportzaken etc) veel van onze producten worden vanuit Europa en China geïmporteerd.
Waarom bent u zaken gaan doen met China?
Jaren geleden (6-7 jaar geleden) domineerde Kodak Fuiji en Agfa de markt van grafische offsetplaten
(CTP). Omdat de prijsstelling redelijk hoog was ben ik gaan kijken naar mogelijkheden in China om een
CTP plaat te importen die in kwaliteit kon wedijveren met ‘The Big Three’. Wetende dat China een goedkoop productieland is.
Waarin verschilt het zakendoen met China zich van Westerse landen?
Je ziet dat China een paar jaar geleden achterliep qua technische know how, organisatorisch anders is gestructureerd dan bijvoorbeeld in Europa (waar in Europa zoveel mogelijk wordt geautomatiseerd gericht op efficiency, zo min mogelijk arbeidskracht) in China zie je meer handenarbeid.
Je ziet nog veel onprofessionaliteit op verschillende vlakken.
Op welke vlakken precies?
Wij hebben bij aanvang met onze relatie ondervonden dat zij drie klanten interessanter vonden dan twee en dat ze na lieten om naar de potentie per klant te kijken. De afgelopen jaren hebben ze geleerd dat de potentie wel belangrijker is.
Opmerkelijk is ook dat het management als het al tweetalig is dat ze dan Chinees en Japans spreekt maar dat het Topmanagement geen Engels spreekt.
Financiële voordelen in verhouding tot het product rechtvaardigden om met het bedrijf verder door te gaan, maar veel hebben we moeten aangeven wat ook werd aangenomen. Waarbij je als Europeaan vreselijk moet opletten dat elke wijziging doe je wilt doorvoeren, feitelijk zo gebracht dient te worden dat het leek alsof het hun idee was. We dienden ze dus een inzicht te verstrekken in de processen maar het moest hun idee zijn, gezichtsverlies is nog steeds een doodzonde en zou de relatie echt helemaal kunnen verknallen.
Wat zijn de meest opmerkelijke cultuurverschillen?
Het meest opmerkelijke cultuurverschil is dat de beslissingen uitsluitend door de president van de organisatie wordt uitgevoerd. Zeer straffe hiërarchie, managers niet beslissingsbevoegd.
Een voorbeeld: Chinezen nodigen je uit om s’ avonds te dineren met de president waar een tolk bij zit om te vertalen, waarbij ze er een groot genoegen in scheppen om je onder tafel te proberen te drinken.
Daarnaast overhandigen ze je een (flut) presentje bv een waaier, flesje drank.
Ze drinken de hele dag door thee, in restaurants wordt je kop thee automatisch bijgevuld.
Je wordt opgehaald door een chauffeur en de exportmanager (in een Amerikaanse Dodge inclusief communistisch vlaggetje op spatbord!)
28

Wat zijn de voordelen van het zakendoen met China en hoe verwacht je naar de toekomst toe dat dit zal ontwikkelen?
Prijs/kwaliteit verhouding is nog steeds in voldoende mate aantrekkelijk. De combinatie van onze kleine organisatie, zonder dikke managementlagen, en de goedkope arbeidskrachten van het staatsbedrijf in
China. Mochten de voordelen van het zakendoen door haar eigen succes worden ingehaald dan dienen wij ruimschoots van te voren nieuwe leveranciers in opkomende markten te vinden die een gelijkwaardige kwaliteit of beter aanbieden. Zo kijken we al naar mogelijkheden in India, Taiwan en Vietnam.
Dhr A. Stenenberg werknemer bij KLM
Achtergrond:
Dhr A. Stenenberg werkt bij de KLM en heeft regelmatig contacten met Indiase luchthavens. Stenenberg houdt zich bezig met het doorgeven van vluchttijden, vertragingen, en houdt het contact met verschillende luchthavens over aankomsttijden en vertrektijden.
In hoeverre heb jij contact met India?
Eigenlijk alleen telefonisch en via het net. Aangezien de meeste vluchten gewoon goed gaan is kort telefonisch contact het enige contact dat ik heb met de mensen uit India.
Wat merk je aan het contact dat je hebt met India?
Ik merk dat als ik iemand uit India aan de telefoon heb dat deze vrijwel altijd vloeiend Engels spreken. Mijn
Indiase collega’s komen vaak heel beleefd over. Ik ben zelf ooit in India geweest, niet voor zaken, maar vakantie.
Leuk, hoe heb je dat ervaren?
Ja super. De mensen daar zijn echt heel gastvrij. Ik reis best veel en India komt toch echt wel in mijn top 3 van bestemmingen. Ze behandelen je daar echt als een koning, als je natuurlijk een goede fooi geeft.
India is ook erg groot, ik ben zelf in Mumbai geweest. Er waren daar echt heel veel mensen, het deed me denken aan Caïro (Egypte). Er is helaas ook veel armoede in India, de sloppenwijken zijn echt vreselijk om te zien. Als je aankomt op de vluchthaven zie je de sloppenwijken al onder je.
Mevr. J. de Vries Software ontwikkelaar voor DPS-offshoring.
Achtergrond:
DPS-offshor ing houdt zich bezig met het creëren van kwalitatief hoogstaande oplossingen voor software ontwikkel vraagstukken. En maken daarbij gebruik van offshoring en nearshoring naar lageloonlanden.
Mevr. De Vries houdt zich bezig met het ontwikkelen van software en stuurt projecten in India aan vanuit
Nederland.
Wat is het grootste verschil tussen zaken in India en Zaken in Nederland?
De cultuur. De Nederlandse zakencultuur verschilt heel erg van de Indiase. In India zal er niemand zijn die het direct met jou oneens is. Er wordt altijd ja geknikt. Terwijl in Nederlands je van iedereen meteen een mening krijgt. Dat vind ik ook wel het mooie van Nederland, dat je een beetje tegenwicht krijgt, ook al kan dit soms best vermoeiend zijn. In India knikken ze overigens wel ja, maar doen ze vaak nee. Ik weet niet of dit komt doordat je elkaar niet altijd even goed begrijpt, of dat ze toch wel hun eigen gang gaan wat je ook zegt. Dit is in veel gevallen nog vermoeiender dan iemand die direct nee zegt.
Klinkt alsof de projecten die jij aanstuurt vanuit Nederland maar moeizaam verlopen?
Meestal gaat het wel goed hoor, maar soms wel ja, goede communicatie is uiterst belangrijk. Vooral als jij iets van een ander wilt, dan wil je zeker weten dat diegene jou goed begrijpt. Ik heb mij daarom ook verdiept in de Indiase cultuur voordat ik intensief met ze ging samenwerken.
En hoe heb je dat gedaan?
Allereerst ben ik zoveel mogelijk gaan lezen over India. Over de mensen, bedrijfsculturen, bedrijfsetiquette. Daarnaast heb ik net als jullie, mensen geïnterviewd die zaken doen in India. Wat hun is opgevallen. De do’s en de dont’s. Daar heb ik erg veel van geleerd. En heeft er ook voor gezorgd dat ik zekerder in mijn schoenen stond toen ik voor het eerst daarheen ging.
29

Do’s en Dont’s vertel er maar een paar….
Respecteer de Indiase cultuur. Zorg ervoor dat de communicatie goed is en dubbelcheck alles. Zorg ervoor dat je genoeg contacten in India hebt waar je op kan bouwen. Verdiep je in de wetten en regelgeving.
Interview met Milos Vasic oud werknemer bij Gazprom (in Rusland)
Achtergrond:
Milos Vasic, van oorsprong Rus, woont nu 7 jaar in Amsterdam. Heeft in Rusland gewerkt bij Gazprom,
één van de grootste energieleveranciers van Rusland. Hij is verhuisd naar Nederland vanwege de liefde.
Zijn vrouw, toen al werkende bij Shell, was op zakenreis in Rusland om een samenwerking te bespreken met Gazprom.
Wat doet u op dit moment?
Ik ben sinds kort een onderneming gestart. Ik wil typische Russische artikelen in Nederland verkopen. Het moet nog wel van de grond komen, maar ik heb er alle vertrouwen in.
Hoe ervaart u Nederland?
Ik vind Nederland fantastisch. Niet alleen omdat ik hier de vrouw van mijn dromen heb, maar ook de
Nederlandse mensen. Het regent hier altijd, maar toch is iedereen vrolijk. In Rusland zijn er veel mensen somber, dat komt ook door ons verleden. Rusland heeft veel oorlogen meegemaakt, en de overheid is hard. Dit speelt heel erg bij de mensen. Nederland is ook veel meer gericht op het individu. In Rusland ben je één collectief, in een bedrijf, op straat, overal. Dat zorgt ervoor dat wij sterk staan en erg nationalistisch zijn, wat zijn goede kanten en mindere kanten heeft.
Wat vind u ervan dat er de laatste tijd veel arbeid vanuit de EU naar het Oosten wordt verplaatst?
Dat is iets goeds. Misschien dat Rusland ook wat meer invloeden van buitenaf toelaat. Zal goed zijn voor het land en de mensen.
30

What Does Compound Annual Growth Rate - CAGR Mean?
The year-over-year growth rate of an investment over a specified period of time.
The compound annual growth rate is calculated by taking the nth root of the total percentage growth rate, where n is the number of years in the period being considered.
This can be written as follows:
Investopedia explains Compound Annual Growth Rate - CAGR
CAGR isn't the actual return in reality. It's an imaginary number that describes the rate at which an investment would have grown if it grew at a steady rate. You can think of CAGR as a way to smooth out the returns.
Don't worry if this concept is still fuzzy to you - CAGR is one of those terms best defined by example.
Suppose you invested $10,000 in a portfolio on Jan 1, 2005. Let's say by Jan 1, 2006, your portfolio had grown to $13,000, then $14,000 by 2007, and finally ended up at $19,500 by 2008.
Your CAGR would be the ratio of your ending value to beginning value ($19,500 / $10,000 = 1.95) raised to the power of 1/3 (since 1/# of years = 1/3), then subtracting 1 from the resulting number:
1.95 raised to 1/3 power = 1.2493. (This could be written as 1.95^0.3333).
1.2493 - 1 = 0.2493
Another way of writing 0.2493 is 24.93%.
Thus, your CAGR for your three-year investment is equal to 24.93%, representing the smoothed annualized gain you earned over your investment time horizon.
59
59 http://www.investopedia.com/terms/c/cagr.asp
31

Strengths Weaknesses
 Highly skilled human resource
 Low wage structure
 Quality of work
 Initiatives taken by the Government (setting
• Absence of practical knowledge
• Dearth of suitable candidates
• Less Research and Development up Hi-Tech Parks and implementation of egovernance projects)
• Contribution of IT sector to India 's GDP is still rather small.
 Many global players have set-up operations in
India like Microsoft, Oracle, Adobe, etc.
• Employee salaries in IT sector are increasing tremendously. Low wages benefit will soon come to an end.
 Following Quality Standards such as ISO 9000,
SEI CMM etc.
 English-speaking professionals
 Cost competitiveness
 Quality telecommunications infrastructure
 Indian time zone (24 x 7 services to the global customers). Time difference between India and America is approximately 12 hours, which is beneficial for outsourcing of work.
Opportunities
 High quality IT education market
 Increasing number of working age people
 India 's well developed soft infrastructure
 Upcoming International Players in the market
Threats
 Lack of data security systems
 Countries like China and Philippines with qualified workforce making efforts to overcome the English language barrier
 IT development concentrated in a few cities only
32

33

If you decide to start a business in Russia you will face a number of challenges, which are shown below. The first is the number of steps you need to go through to launch your business. The second is the average time that takes. And last the cost in percentage of the GNI (gross national income) per capita.
60
Indicator
Procedures (number)
Time (days)
Russian Federation
9
30
Cost (% of income per capita) 2.7
Next thing you will face is the procedures, time and costs it takes to get construction permits.
61
Indicator Russian Federation
Procedures (number)
Time (days)
54
704
Cost (% of income per capita) 2,104.7
Now when you have set up your business, you will need employees. The difficulties that you will face when hiring and firing workers are shown below. Each index is valued with numbers between 0-100, with higher values representing more regulations
62
Russian Federation Indicator
Difficulty of hiring (0-100) 33
Difficulty of firing (0-100)
Firing costs (weeks of salary)
40
17
Next phase is to secure your property. What time it costs, how many procedures and how much money it costs in percentage of the property value
60 http://www.doingbusiness.org/ExploreTopics/StartingBusiness/Details.aspx?economyid=159
61 http://www.doingbusiness.org/ExploreTopics/DealingLicenses/Details.aspx?economyid=159
62 http://www.doingbusiness.org/ExploreTopics/EmployingWorkers/Details.aspx?economyid=159
34

63
Indicator
Procedures (number)
Time (days)
Costs (% of property value)
Russian Federation
6
43
0,1%
If you decide to start a business in India you will face a number of challenges, which are shown below. The first is the number of steps you need to go through to launch your business. The second is the average time that takes. And last the cost in percentage of the GNI (gross national income) per capita.
64
Indicator
Procedures (number)
Indian
13
Time (days)
Cost (% of income per capita)
30
66.1
Next thing you will face is the procedures, time and costs it takes to get construction permits.
65
Indicator
Procedures (number)
India
37
Time (days)
Cost (% of income per capita)
195
2,394.9
Now when you have set up your business, you will need employees. The difficulties that you will face when hiring and firing workers are shown below. Each index is valued with numbers between 0-100, with higher values representing more regulations
66
Indicator India
Difficulty of hiring (0-100)
Difficulty of firing (0-100)
Firing costs (weeks of salary)
0
70
56
63 http://www.doingbusiness.org/ExploreTopics/RegisteringProperty/Details.aspx?economyid=159
64 http://www.doingbusiness.org/ExploreTopics/StartingBusiness/Details.aspx?economyid=89
65 http://www.doingbusiness.org/ExploreTopics/DealingLicenses/Details.aspx?economyid=89
66 http://www.doingbusiness.org/ExploreTopics/EmployingWorkers/Details.aspx?economyid=89
35

Next phase is to secure your property. What time it costs, how many procedures and how much money it costs in percentage of the property value
67
India Indicator
Procedures (number)
Time (days)
5
44
Costs (% of property value) 7,4%
If you decide to start a business in China you will face a number of challenges, which are shown below. The first is the number of steps you need to go through to launch your business. The second is the average time that takes. And last the cost in percentage of the GNI (gross national income) per capita.
68
China Indicator
Procedures (number) 14
Time (days)
Cost (% of income per capita)
37
4,9
Next thing you will face is the procedures, time and costs it takes to get construction permits.
69
Indicator
Procedures (number)
China
37
Time (days)
Cost (% of income per capita)
336
579.2
Now when you have set up your business, you will need employees. The difficulties that you will face when hiring and firing workers are shown below. Each index is valued with numbers between 0-100, with higher values representing more regulations
67 http://www.doingbusiness.org/ExploreTopics/RegisteringProperty/Details.aspx?economyid=89
68 http://www.doingbusiness.org/ExploreTopics/StartingBusiness/Details.aspx?economyid=42
69 http://www.doingbusiness.org/ExploreTopics/DealingLicenses/Details.aspx?economyid=42
36

70
Indicator China
Difficulty of hiring (0-100)
Difficulty of firing (0-100)
11
50
Firing costs (weeks of salary) 91
Next phase is to secure your property. What time it costs, how many procedures and how much money it costs in percentage of the property value
71
Indicator China
Procedures (number)
Time (days)
4
29
Costs (% of property value) 3.1%
9 13 14 Russia
30
2.7
30
66.1
37
4,9
Russia & India
China
54 37 37 India & China
704
33
195
2,104.7 2,394.9 579.2
0
336
11
India
China
India
40
17
6
43
70
56
5
44
50
91
4
29
Russia
Russia
China
China
70 http://www.doingbusiness.org/ExploreTopics/EmployingWorkers/Details.aspx?economyid=42
71 http://www.doingbusiness.org/ExploreTopics/RegisteringProperty/Details.aspx?economyid=42
37

0,1% 7,4% 3.1% Russia
69
55
55
777
269
402
2,107.4 0.1
2,461
584.1
7.4
3.1
38

MaBa Russia
39

MaBa India
MaBa China
40