China out India in, says Gartner

NEW DELHI: Indian firms could benefit from the continuing Sino-Japanese tension, according to research analyst Gartner,Inc. With the straining of relationships between the two economic powers, Japanese technology firms will reduce their commitment to the Chinese market, with many ultimately withdrawing completely. India, actively supported currently by the Japanese government, would become Japan's new base for low cost manufacturing, says the technology analyst.

In case of continued uncertainty and volatility in relations between China and Japan, Japanese technology firms will assume a lower profile in China through intermediaries and local brand strategies. According to Gartner, Chinese IT service and software firms will reduce their Japanese business initiatives. As they refocus on North America and Europe, these Chinese firms will meet more direct competition from established global IT service firms, particularly those from India, said Gartner.

Gartner has also issued a new report encouraging enterprises to develop contingency plans for reducing dependency on products and services from northeast Asia in anticipation of unstable relations between China and Japan for the foreseeable future.

"More than 95 percent of the largest 2,000 companies in the world have extensive interests, investments and employees in China and Japan," said VP and research director of Gartner Dion Wiggins. "Most large global companies will have to adjust their strategies and plans if the China-Japan situation remains volatile. For many companies, it is no longer 'business as usual' in northeast Asia," he added.