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Survey: China, India rival US competitiveness
Updated: 2005-02-25 08:59

China and India rival the United States when it comes to business competitiveness, and the Asian countries may soon surpass American rivals in technological innovation, according to a new survey.

More than 300 executives who participated in the study, released Thursday by consulting firm A.T. Kearney, said Chinese companies were nearly as formidable competitors as U.S. firms, particularly in the technology and telecommunications niches.

Approximately 63 percent of U.S. executives surveyed said their competition would come primarily from the United States, while 59 percent said it would come from China, and 45 percent said it would come from India. Nine out of 10 executives polled said the competitive threat posed by Chinese and Indian companies would likely intensify in the next two years.

The executives surveyed were randomly selected members of the Business Performance Management Forum and the Chief Marketing Officer Council, nonprofit organizations that helped produce the report.

Five years of extreme cost-cutting have made many American technology firms downsize research and development departments. American managers have also given foreign competitors a boost by outsourcing important business functions — from accounting to microchip design — to workers in low-cost countries, said Donovan Neale-May, executive director of the BPMF.

"At one time, the U.S. was head and shoulders above the rest as the most competitive market — but there's been a big shift," Neale-May said. "China and India are now on the same level as the U.S. in terms of competitiveness."

The lack of competitive planning among U.S. companies shocked survey organizers and made them worry about the United States' ability to continue to dominate the global technology sector.

Two-thirds of American executives said their companies have not instituted formal practices for tracking and analyzing competition. Many executives said they de-emphasized product innovation and customer service, focusing instead on cost-cutting since the technology industry began flagging in 2000, organizers said.

"U.S. companies risk falling behind global forces that are reshaping the competitive landscape," said John Ciacchella, a vice president in A.T. Kearney's High Technology Practice. "U.S. executives clearly feel the pressure of these changes and most rate their efforts to respond as fair to good. This is not good enough. Too few are putting in place the formal processes needed to adequately assess, act and measure their progress in this more intense competitive environment."

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