India SW-China HW, Let Us Join Hands.

What if a software superpower meets hardware superpower?

The possibility of joining hands together between India and China, the world two main developing countries which boast themselves as a SW and HW superpower respectively, has been becoming greater. This is a change brought by India’s new diplomatic strategy which has taken actual economic benefits by admitting Tibet as China’s territory.

India’s Prime Minister Atal Behari Vajpayee, who visited China for the first time in a decade as an Indian melting down once frozen diplomatic ties, emphasized that “It is time for the two countries not to compete but work together,” at the IT Area Cooperation Conference held at the International Conference Center in Pudong, Shanghai, Chinese media reported in chorus as a headline yesterday.

“If we combine China`s hardware and India`s software, we can produce cost-effective products by blocking developed countries` intervention,” Prime Minister Vajpayee said.

“In the past Olympics, companies of advanced nations which got the contracts in software development subcontracted Indian companies, but this time, we both countries can cooperate at the 2008 Beijing Olympic.”

China is a superpower in producing hardware. Its sales and export in IT area only during the last year reached 1.4 trillion yuan (about 200 trillion won) and 92 billion dollars (about 110 trillion won) respectively. China`s success in agglomerating world best level companies in the southern part of Guangdongsheng where labor is cheap has helped the economy grow average of 20 % every year. A Chinese computer company, the Legend Group Limited, is called as China`s IBM and even its technological power is even highly recognized in the Silicon Valley.

India is also a superpower in computer with over 185 of Fortune 500 companies buying software from India. Another advantage of India`s software industry is 280,000 of low paid but highly skilled human resources. McKinsey, a management consulting company, also reported last year that India`s software industry will be rapidly expand to a size of 87 billion by 2008.

Economic cooperation mood between the two nations is now on the peak after India’s Prime Minister Vajpayee clarified in Beijing that “Tibet is China`s territory.” A new office for the Coalition of Indian companies has opened in Shanghai working as a bridge for entering Chinese market, and the two countries also made a joint statement that promises increasing trade volume of the two countries to 10 billion dollars by 2005.

“Let us, the two countries companies, make a synergy effect in trade investment areas,” appealed a full page advertisement by the Coalition of Indian Industries printed on the third page of the Shanghai Daily.

Rae-Jeong Park ecopark@donga.com