Tuesday, June 13, 2006
The ISB-IIM battle seems to have hotted up a little, going by the furious exchanges flying around. I wonder why..a friend whos familiar with the turf says its because students have returned to their colleges. Ah, the privileges of being one !
Am tempted to throw some fresh fundas into the fire (like who the hell cares anymore) but will desist for a day or two. Meanwhile, am posting a column that appeared in Business Standard this morning !
China Will Fix Its Micro, Will India Fix Its Macro ?
What does the average Chinese businessman think of India ? I put this question two months ago to an Indian trader I met in China’s textile capital Shaoxing, some four hours south-east of Shanghai.
Over a vegetarian pizza, he told he that most of his Chinese clients considered India with respect, some even with fear. After all, Indians were teaching otherwise crafty Chinese entrepreneurs a trick or two about the textile trade. And then there was the tale of a school teacher's son and his six colleagues setting out with $250 in their pockets 25 years ago and creating the $2 bn Infosys Technologies.
A few months ago, the owner of a large Chinese textile unit accompanied him on a visit to India. The mill owner was sewing up some big contracts with Indian garment exporters. And of course to see this `fast growing nation' for himself. "Guess what," said the Indian trader, "The moment we landed at Mumbai and emerged from the airport, something changed. I could see the Chinese mill owner breathing a visible sigh of relief."
Perception On Arrival
He said other traders had similar stories to narrate. Visiting Chinese businessmen would speak well of India for its market potential and entrepreneurship. But on India as competition, they changed their opinion. The moment they cleared immigration. The perception they had built up did not match the reality they experienced. "We don't have much to worry," the mill owner told me," the Shaoxing businessman said, polishing off the last piece of the pizza.
Two weeks ago, GE chairman Jeff Immelt towered over Mumbai's corporate who's who as he outlined his firm's revised India vision. "$8 billion by 2010," he announced to an attentive audience. How ? "Well, for an economy to grow 8%, you need power, planes." Immelt said broad-based consumerism, which wants basics as power, transport and water supply, was the driver. "Once people have tasted an economy that grows at 8 percent a year, they get used to it," he said.
And then Immelt dropped his gem for the day. "The government and everything else works in China. The expressways and airports are just like those in Chicago and New York. China has got the macro picture right, India the micro picture. India’s pluses are fantastic companies and systems." So, he said, with a flourish, India has to fix the macro picture. China has to fix the micro picture.
Focus On The Perception !
Since then, I've been posing that question to myself. Lets for a moment focus on the perception of whether we can fix the macro rather than whether we will fix it. Lets also assume, this writer's perceptions are clouded by journalistic pessimism.
Take the case of Mumbai, the city I live in. After years of debates, protests and court cases, a `new’ airport will rise in the place of the only, old one. Will it be bigger ? Not sure, that depends on whether the slum dwellers who muscled in alongside can be rehabilitated. Will it have better access. Not sure, looks like I will have to pass the same shanty towns to reach the international terminal. And no direct road. So, its a look and feel show. A new airport is under consideration though, for, possibly two decades.
A city metro system was under debate and discussion for as long, if not more. Work should start later this year. With the city’s population straining over 17 million inhabitants, a metro (as and when it sees light of day) will help. Unlikely, it will change life much.
New York, Chicago & Shanghai
An island city like Mumbai needs a water transport solution: think Star Ferry in Hong Kong. We must be in the third or is it fourth decade of planning and announcements. No solution is even in sight. So, don't expect dramatic quality of life changes for a few decades. What about power ? Mumbai city scores here, though northern suburbs suffer. Lets not even talk of Bangalore.
In my last column, I talked about how investors are pouring money into China’s mega bank IPOs. Only because they feel China is fixing its micro, to use Immelt’s term again - he spoke of airports like New York and Chicago. Actually, China might do a little better. Particularly if you were to consider Shanghai’s Pudong International which is going from two runways to five. Or the recently completed 1,142-km Qinghai-Tibet railway line, a massive engineering feat.
So, will India fix its macro ? And more importantly when ? If I haven’t seen real action for the past two decades, what do I see today that suggests a magical transformation in the next two. Very little. I've heard of $150 billion opportunities number for a decade at least. Funny, the figure does not change. Will we win the marathon against China in the next three or four decades ? Probably. But chances are I may not be around. Nor, if you are reading this, will you. But China will fix its micro a lot sooner. That I am sure. And I am sure Immelt is sure too.
Micro Or Macro ?
So, what should the average Chinese think of India ? What should the average Indian think of India ? The Shaoxing businessman tells me India has opportunity but should stop comparing itself with China. "Forget the infrastructure. Even we are treated better here," he tells me. Now, is that a macro or a micro problem ?