State Absenteeism in India's Reverse Migration? A Comparison with the Chinese Experience.

1. The Dilemma of ‘State Absenteeism:’
Comparing Reverse Entrepreneurial
Migrations to India and China
Prof. David Zweig and Dr. Didar Singh
Center on China’s Transnational Relations
The Hong Kong University of Science and Technology
Presented at Seminar, IEMS, 9 April 2018

2. Part A:Comparing India and China: A
Macro and Micro Perspective

3. Figure 1. The Role of Preferential Policies in Bringing
Entrepreneurs Back to China, 2004
Note: The Y-axis is frequency and also percentage (we have 100 observations)
29
15
21 21
14
0
5
10
15
20
25
30
35
1 very
small
2 3 4 5 very large

4. Table 1. Most important reasons for returning,
Indians and Chinese, 2004, 2017
China, 2004 India, 2017
1st Doing well overseas, but could
do even better in China
Can do better professionally
working in India
2nd I have a technology which has
good prospects in China
It was a family decision
3rd Decided to return before going
overseas
I wanted to be close to my
parents/family
4th Want to be close to my parents I can enjoy more culture comfort
in India
5th Hard to get into mainstream
Western society
I have technology which has good
prospects in India

5. Table 2. Five most important ways the government
helped your company
CHINA Item
First
(Frequency)
Second
(Frequency)
1st Land, office space and/or equipment 28 24
2nd Financial resources 33 9
3rd Helped get domestic clients 8 6
4th Helped with import/export
procedures
6 4
5th Human resources 3 10
Total 70 47
INDIA
1st Financial resources 6 6
2nd Land and office space 2
3rd Tax reduction 1 2
4th Created special economic zone where
company is located
2
5th Helped get foreign clients 2
Total 11 12

6. Table 3. Important Government Offices and
Attitudes toward them
Most
referred
China (frequency mentioned) View India (frequency mentioned) View
1st Tax Department (76) 2.43* Income and sales Tax (44) 3.45*
2nd Trade and Industry Bureau (75) 2.42 Local Government Bodies (36) 3.30
3rd Technology Bureau (52) 2.83 Customs and Excise dept. (24) 3.19
4th Development Zone’s
Administrative Committee (45)
3.01 Municipal industrial
development corp. (MIDC) (9)
3.00
5th State Banks (29) 2.62 Police (4) 3.25
Note: The number in parenthesis refers to the number of returnees who reported
such interactions. The scores are 1 positive and 5 as negative. * means statistically
significant in 0.05 level.

7. Table 4. Did the returnees’ company face
impediments from the state
China India
Yes 6% 18% (28)
No 89% 81% (122)
No response 5% 1% (2)
Note: The chi-square test is statistically significant at the 0.05 level

8. Table 5. Depth of Relations with local government
Nature of Relationship China India
1. No contact 3% (3) 47% (72)
2. 13% (13) 24% (36)
3. 57% (57) 20% (31)
4. 23% (23) 4% (6)
5. Close working relationship 4% (4) 2% (3)
Missing 0% (0) 3% (4)
Total 100% (100) 100% (152)
Note: The chi-square test shows a statistically significant difference. p<0.01

9. Table 6. What is best strategy for dealing with the
state? India and China
China, 2004 India, 2017
Take government as business partner,
form public-private partnership
4% 7% (11)
Proactively work to establish a good working
relationship with the state government
23% 9% (14)
Try to establish a cooperative relationship
with the state government
57% 20% (30)
Work with the government when necessary,
but avoid becoming too involved with them
13% 28% (42)
Have little or no contact with government 3 % 36% (55)
Total percent (number) 100% (100) 100% (152)
Note: The chi-square test result is statistically significant. p<0.01.

10. Table 7. Attitude towards running their company
Notes: 1 is strongly agree, while 5 reflects strongly disagree.
Items with an asterisk (*) means t-statistics for India and China comparison is significant at the 0.05 level.
Question China India
1. Financial discipline is important in running a company. 1.56 1.51
2. All companies have a responsibility to society. 1.57 1.86
3. Environmental concerns should not be a priority for a company. 3.79 4.13
4. Corrupt behavior is widespread in my industry. 3.18 3.64
5. Relatives are the only people you can trust fully. 3.89 4.12
6. Companies should always respect others’ intellectual property. 1.47 1.48
7. Good relations with government officials protect my business. 2.68 3.07
8. Many government officials are corrupt. 2.30 2.55
9. Citizens have an obligation to pay personal income tax. 1.27 1.69
10. In my business, the end justifies the means. 2.44 2.72
11. Returned entrepreneurs need political support to succeed 2.24* 3.59*
12. The use of external auditors is not necessary 2.90* 3.57*
13. Board members should not be involved in day-to-day management of firm 2.91* 2.30*
14. Better to go along with existing business practices than behave morally correct. 3.58* 4.26*
15. The use of independent directors is not necessary 2.54* 3.33*
16. If employees benefit personally from a deal, that’s fine with me. 2.97 2.70
17. I support whatever my sales people do to get the sale done. 3.33 2.85

11. Part B. Returned and Local Indian
Entrepreneurs and the State, 2017

12. Table 8. Most Important Government Office, Indian
Returnees vs. Locals, 2017
Most
important
Indian Returnees View Indian Non-returnees View
1st Income and sales Tax
(44)
3.45* Income and sales Tax (24) 2.43*
2nd Local Government (36) 3.30* IT department (20) 2.42
3rd Customs and Excise
dept. (24)
3.19 Local Government (12) 2.83*
4th Municipal industrial
development
corporation (MIDC) (9)
3.00 Customs and Excise Dept. (5) 3.01
5th Police (4) 3.25 Police (3) 2.62
Note: Frequency is in parentheses. 1 is most positive, 5 is most negative
*The t-test between returned and local entrepreneurs is significant at 0.05 level.

13. Table 9. Most important way local government
helped your company
Returnees 1st Choice 2nd Choice
1st Financial resources 6 6
2nd Land and office space 2
3rd Tax reduction 1 2
4th
Created a special economic zone where
the company is located
2 0
5th Helped get foreign clients 0 2
Total 11 12
Locals
1st Tax reduction 4 2
2nd
Created special economic zone where
company is located
3 2
3rd Land and office space 3 0
4th Financial resources 2 1
5th Import/export procedure 2 1
Total 14 6

14. Table 10. Meeting impediments from the local
government, Returnees vs. Locals
Returnees Locals
Yes 18% (28) 8% (6)
No 81% (122) 92% (69)
No response 1% (2) 0%
Total 100% (152) 100% (75)
Note: The chi-square test was statistically significant. p<0.05.

15. Table 11. The best strategy to deal with the state in
this location, 2017
Note: The chi-square test result is statistically significant. p<0.01
Returnees Locals
Take government as business partner,
form public-private partnership
7% (11) 1% (1)
Proactively work to establish a good working
relationship with the state government
9% (14) 5% (4)
Try to establish a cooperative relationship
with the state government
20% (30) 11% (8)
Work with the government when necessary,
but avoid becoming too involved with them
28% (42) 27% (20)
Have little or no contact with government 36% (55) 55% (41)
Missing 0% 1% (1)
Total percent (number) 100% (152) 100% (75)

16. Table 12. Attitude towards “How to run a company”
Returnee vs. Locals
Note: An asterisk (*) means that the t-test for the value is significant at the 0.05 level.
1 = strongly agree, 5 = strongly disagree
Question Returnees Locals
1. Financial discipline is important in running a company. 1.51* 1.21*
2. All companies have a responsibility to society. 1.86 1.75
3. Environmental concerns should not be a priority for a company. 4.13* 3.52*
4. Corrupt behavior is widespread in my industry. 3.64 3.56
5. Relatives are the only people you can trust fully. 4.12 4.16
6. Companies should always respect others’ intellectual property rights. 1.48 1.59
7. Good relations with government officials protect my business. 3.07 3.26
8. Many government officials are corrupt. 2.55 2.64
9. Citizens have an obligation to pay personal income tax. 1.69 1.83
10. In my business, the end justifies the means. 2.72 2.80
11. Returnee entrepreneurs need political support to succeed 3.59 3.64
12. The use of external auditors is not necessary 3.57* 2.36*
13. Board members should not be involved in day-to-day management of
the company.
2.30 2.57
14. It’s better to go along with existing business practices than to behave
morally correct.
4.26 3.91
15. The use of independent directors is not necessary 3.33* 1.47*
16. If employees have a personal benefit in a deal, that’s fine with me. 2.70 2.61
17. I support whatever my sales people do to get the sale done. 2.85 2.98

17. Table 13. Rating their Company’s Performance
Notes: A score of 1 says that they see their firms as performing much lower than the industry average on that
issue, while a score of 5 reflects a score much higher than the industry average; 3 would be equal to the mean
of their industry. * t-test results show a statistically significant difference between the two cohorts, p<0.05.
Scale Returnees Locals
Profitability of Return on Assets 3.07* 3.31*
Cash Flow 2.92 3.04
Sales Growth 3.05 3.18
Market Share 2.66 2.66
Technical Product/Service design and
development 3.23* 3.51*
Quality of product / service 3.58* 4.16*
Employee satisfaction 3.60* 4.14*

18. Thank You!