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1 INTRODUCTION
China and India has emerged into major economies that are attracting inward
foreign investments at a greater rate as they are gradually and readily embracing
globalization
...
, can be said as to be on the same road to globalization but
with different destinations
...
This report discusses the nature of the
labor reforms in both the economies that call out to more inward foreign
investment and MNCs
...
It provides abundant
and cheap labor
...
They are those workers
who does not receive even the minimum wages and who are prone to workplace
exploitation and social discrimination in urban areas
...
China offers a coverage for
basic education but it records a drop in the number of people enrolling for
higher education or training
...
As mentioned above, the workforce of prereform China was highly polarized due to the ‘hukou’ system
...
China experienced a large employment gap as well as wage gap
...
This changed due to the
economic reforms that happened which allowed mobility of the labor
population
...

The reforms also paved way for firms to choose who to hire and fire
...
Wages were provided based

on the seniority and managers promoted based on the allegiance with Party
rather than based on the skill set
...
The final result of the
reforms in China was inequality and social unrest
...
But as China is
moving towards a more market oriented economy, the selection and
recruitment processes are becoming less influenced by the political bodies
...

Recruitment practices are affected by networks and connections of a person
being employed though
...

China is gradually growing from a communist system to market oriented system
and so is the recruitment system transforming from seniority based to
performance based
...
Foreign MNCs are
trying to transfer their HRM practices to China as well
...
This could be
credited to the strong state support that China enjoys which has helped the
country to economically grow internally
...
In 2002 China
did stand at being the highest receiver of world foreign direct investment, way
above the US
...
More stress has been
given to training in foreign firms as well
...
China being the provider of
abundant low skilled and cheap manufacturing sector labor is also an attraction
for the MNCs
...
World’s
top multi nationals remain attracted to China due to the chances arising from

increased spending of the consumers, urbanization and technological and
infrastructure advancement and development
...
The transfer of Western HR practices
or standardizing them can be a complex process in China due to the Chinese
values of respecting seniority and recruitment practices as the MNCs would
require to bend the practices such as performance appraisal, reward systems,
etc
...
But there is hope that the newer
generation of the workforce being adaptive to the new practices such as
employee participation, of foreign multinational companies thus giving way for
the firms to bring in more innovative practices and provide ample training to suit
their business standards
...

China tops the 2015-2017 list of the economies which is more attractive to
multinational firms
...
But factors like less transparency, no protection for
intellectual property, corruption, middle management system that is under
developed, cultural inequalities in business practices and high rates of staff
turnover can pose threat to the inward flow of foreign investment
...
However, compared to
the past decades, China has been successful in gaining inward flow of
investments through the reforms that happened and is evident from the fact
that it is one of the largest global players attracting the most foreign investment
due to its cheap labor, infrastructure, booming manufacturing sector, higher
investment in R&D in IT, pharmaceuticals and automotive industries and
abundant labor
...
There is a large gap between
the skilled and unskilled workers as well as wage gap and the large number of
migrant workers with minimal social security and welfare access and poor living
conditions in the cities or towns
...
The State remains supportive so as to
increase the foreign direct investments further
...
Innovative business practices are being
introduced in Chinese markets where the traditional systems still persist
...


3 INDIA
India – The back-office of the world, that enjoys global competitive advantage
through its IT firms is the second highest economy in attracting FDI after China
...
China
and India are countries that share few similarities in economic development,
population and various other factors
...

India also like China is moving towards market orientated systems from a
socialist system
...
5%, way ahead of China
...
One of the greatest
advantage that India possess is the English speaking population
...
Family owned businesses also exists
and the recruitment processes for these are based on family relations
...
The State has moved from being intervening factor to a more
supportive guiding and management system
...
Thus India enjoy a mixed economy that
provides importance to both public and private sectors
...
These reforms led to liberalization that encouraged foreign
investment and even the private sectors were now entering public sector areas
like electricity, transport, banking, etc
...
As mentioned earlier, there is a huge gap between the skilled
and unskilled labor workforce in India
...
Even
though the government is centralized, the labor laws and regulations and its
implementation varies at state levels
...

Thus informal labor has risen since the labor reforms, allowing the employers to
replace formal or permanent workers with temporary or informal workers in the
manufacturing sector, who requires less or no social security or minimum
wages
...
The advantages in the software and service industries
in India include the English speaking population, highly skilled workforce in
software sector and the timeline that allows a 24/7 service to global MNCs that
invest more on outsourcing services from India
...
The number of employees at the age of 25 and below is huge,
i
...
the majority of India’s workforce are young and highly talented graduates,
hired by BPO and high-tech firms through on-campus recruitments
...
The employees tend to cling on due to the wages
offered
...
For this very reason
manufacturing MNCs locate themselves in industrial areas where the
concentration of migrant or informal labor is high comparatively
...
The highly skilled
workforce working in proper environment with all the benefits provided by the
state like provident fund and medical coverage are rewarded well and identified
to grow in the career
...
They are not provided with trainings
unlike the skilled sections
...

India has many family houses or business which are now global giants
...

But currently most of the MNCs recruit employees based on merits rather than
the family connections
...
The nature
of unions is regional, varying at various regions
...
Due to the financial strength of the MNCs in
the IT and service sector, the employees enjoy less bargaining power
...
In
MNCs that require high technical skills, the wages are high and is important to
retain the high skilled workforce by providing various benefits and schemes like
profit sharing, social security and better working conditions
...
This is evident from the fact that many Indian as well as foreign
MNCs in India arranging provisions for the workforce with opportunities to
enroll for Masters whilst working for the firm
...
There is more inflow of foreign investment
in outsourcing services from Indian Software and service sectors
...
The changes in the Indian economy, employment
relations and the globalization can be owed to the role of Multi Nationals in
India
...
The
initial investments were in automobile production units and call-center services
and this lead to the immense growth of country in IT and software sector
...
, has many projects, providing
technical support and software development and testing activities for various
multi nationals across the globe
...
India has grown to levels where it shares partnerships
with various global firms and many of the IT firms subcontracting to
locations/countries that provide services at a lower cost
...
Being a democracy, is of greater advantage as a democracy
respects laws of human resource and thus leading to greater economic growth
...
From being a fragile economy to an
economy where inflation is becoming in control, stable political systems and
policies, India is growing immensely as well as identified as a global player with
staggering rates of economic development that poses competition to other
developing countries including China
...
India with its demographics, abundant labor
supply, supportive State and institution and high skilled workforce remains a
favorite option for multi nationals to invest more
...
So India would continue developing and growing at a greater pace
and there are chances that it would outperform China in the long run
...
The
commodity prices and oil prices are less in India
...


4 CONCLUSION
Two of the world’s largest economies, China and India has come a long way
through to achieve the growth rates they have reached, that they are being
discussed at global levels
...
But currently, India
is at the fastest growing phase compared to China where the growth is
happening gradually
...
But there are few factors that seem quite different
in the economies such as the state interference
...
Both economies are undergoing transition, China a gradual
change, whereas India changing faster and thus growing at a faster rate
...
In India, the condition is different with the State providing room
for expansion of multi nationals supporting and managing the economy rather
than the former intervening nature
...
But hopes and demand rising, India’s chance of being on top is
looming
...
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