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Globalization: China and India: contrasting styles

- Avik Chattopadhyay

Sometime back, I read an editorial by Dave Leggett of Just Auto about the
Chinese automobile brand Chery exploring a manufacturing set-up in the
Catalan region of Spain.
Very thought provoking. Especially as some of the world’s emerging
economies, read China, India, Brazil etc. globalise, there is always this debate
about which strategy to use – globalise through fresh projects, or through
acquisitions or, go for a mix.
As an observer of both Chinese and Indian automotive brands going 'global', I
see striking dissimilarities in their respective strategies.
The “automobile” is one of the most potent symbols of national pride as well
as neo-colonialism. Almost every nation dreams of its ‘national’ car, as if
otherwise its people would not drive any other vehicle. And, exporting your car
to other countries is implied as a symbol of superiority and a subtle form of
creating modern colonies. Maybe the motorcar being such a high involvement
product leads to such mind games that we cannot wish away.
This holds greater relevance as we Indians have an obsession with China. Be
it from doing down Chinese goods, imposing import barriers on them to
protect our industry, to claiming at any available platform that we are ‘different’
and thereby better than China.
The Chinese have clearly chosen the primary route of globalizing through
‘fresh projects’. Not that they do not acquire other firms and businesses
[remember IBM and Lenovo], but then setting up a green-field is their core
strategy. They have clearly understood that an automobile / automotive
component plant is more than just automobiles / components. It is a socio-
economic-political investment that China makes in that part of the world. It is a
green-field project, ensuring lots of employment both during and post set-up.
Then you employ people in the plant, in the ancillaries, in the ecosystem
around the place, in the new malls that come up, in the new schools, hospitals
and training institutes. There is a ‘positive’ part of China that is planted in that
region and allowed to blossom and bear fruit. This is truly long term. Truly
geo-political. And socio-cultural. Hence, if the Chery plant comes up
somewhere close to Barcelona, there will be a little bit of China implanted in
that part of the world.
In Namibia, in late 2009, there were already close to 300,000 Chinese
working in co-creating the country’s infrastructure. So, while a Chinese firm
was working with the government on a bridge project in the south of the
country, another was employing hundreds of Namibians in the north to build
bricks for the same!
Indian automotive companies have a completely different take on
globalisation I feel. Their take is primarily the acquisition route. Buy the soft
targets. That is easiest and quickest to gain a footprint, enhance notional
market share and 'group' turnover. The easiest way of technology transfer /
exchange, cost efficiencies emerging from scale and getting into new
markets. Basically a cautious approach. With the subliminal fear of failure.
Finding safety cushions in existing set-ups, however inefficient, complex and
mis-aligned they may be. And, then again, also driven by the typical Indian
ego of “owning” a foreign brand, an outcome of the colonial trauma. But I
guess the Indian corporates cannot be solely blamed for this. The government
and industry bodies have no idea of how having a long-term strategy on
globalization will actually help. The government, as it always does when in
doubt, rests its faith in India's great democratic tradition to allow the country,
its citizen, its industry and economy to progress. It is due to this complete lack
of collaboration and co-creation of the globalisation strategy between the
industry and the government that leads to such short-term sub-optimal
measures being adopted by the corporates.
And why are these measures sub-optimal? First, acquisitions have their own
"integration" issues that, quite frankly, are never sorted out. The initial
euphoria of ‘trophy’ acquisitions soon leads to cultural chasms over the ‘ruler’
and the ‘ruled’ ending in a substantial amount of collateral damage. Second,
there is this obvious lost opportunity in creating a truly global Indian product or
service brand. We have some formidable corporate brands like the Tatas and
Mittals, but no real product brand. In fact, as recently as 2004, the Tata Indica
was sold in Europe as the City Rover [beats me!!]. Third and most pertinent,
the world does not really get to understand, experience and appreciate "India"
as an idea, a way of life and a mindset. One may argue that India is best
understood through its dance, cuisine, music, art, films and fabric, but to me
that is just one part of India. It does not cover the industrial and socio-
economic India, the India that once had invented an iron alloy that would
never rust for more than 2000 years, or the India that has been the original
‘melting pot’ of the world! And that is a huge opportunity lost.
Is it? Let me know what you think about it. Cheers.