But companies have to balance the apparent savings -- which may not be so large once you account for differences in regulations across 35 Indian states and territories and 32 Chinese provinces, municipalities, and autonomous regions -- with the costs of doing business in a difficult environment. For all but the biggest multinationals, serving several countries of 30, 50, or 70 million people where doing business is relatively easy might be more profitable than fighting for a share of China's market. Not every company should be in China, India, and the other BRICs, just as not every company should be in the United States, or any other country for that matter.
The flip side of this conclusion is that China and India, even as their economies cool a bit, still offer fantastic opportunities to grow. The gradual opening of their economies over the past three decades has already lifted hundreds of millions of people out of poverty. It's hard to imagine that China and India could repeat this feat, yet they just might by removing some of the obstacles outlined above. By fighting corruption, making legal systems more transparent, and instituting better protections for investors, these countries could see a second, perhaps even bigger boom.
The possibility of these reforms has long seemed remote, like the advent of democracy in China or the resolution to India's feud with Pakistan. Now, however, the economic picture has changed in a way that makes change more urgent.
The BRICs are still feeling the effects of the global downturn; the International Monetary Fund has predicted growth rates for this year that are just a shadow of what they were in 2007. Moreover, the BRICs can now begin to see the limits of their growth in the absence of reform. Wages are finally rising in China, along with the currency, making exports more expensive. Brazil is reaching peak urbanization. Russia's energy-based influence will dwindle as substitutes and other sources come online, and India has been reluctant to lay out the welcome mat for foreign companies in many industries.
Soon enough, all the BRICs will need to find new ways to attract investment, create jobs, and raise living standards. Making their consumers a more attractive proposition to foreign companies would go a long way to achieving all three by laying the groundwork for new production facilities staffed by local workers making goods and services for local households.
India, the poorest of the BRICs, has finally started down this road. In the past few months, it has made industries ranging from insurance to supermarkets more open to foreign companies. Joint ventures with local players will still be required in many cases, but greater foreign ownership will be permitted. It's not quite a multitrillion-dollar free-for-all just yet, but it's a start.