chapter10- The BraveG2

INFOCUS | INDIA-CHINA | INTERVIEW

and the challenge has reduced to some extent. What still remains a challenge is the need to be understand on how big mobile advertising can be.

As far as the Chinese business environment is concerned, we faced challenges with the local companies as they are very cost competitive and concerned about quality and creativity. Now there is no measuring scale for creativity, so lot of the challenge is faced in the process of project management and costing of these elements.

They differ in terms of the process they follow and the way they define the scope of work.

There is lot of talk about the need for Guanxi (relationships) when doing business in China. What has been your experience?

Guanxi is followed in some extent in China. But then if you provide good service and quality products, you do not need Guanxi for your business development. The Chinese like anywhere else always want good services and quality products. If you provide them with that they will look forward to doing business with you. The key to doing good business in China is to provide a unique product or service which will certainly add lot of credibility to your business. And at the same time you have to maintain the balance between foreign and local culture, follow a blend of both cultures.

What is the mindset of the Chinese regarding Indian companies?

What we have seen generally is that the Chinese see Indian companies from the digital side, as the Indian software industry is very famous.

There are no specific issues with Indian companies. They consider us like any other foreign company doing business in China. There are no issues with the staff also, which includes Chinese, Indians and some others from abroad.

As a marketing and advertising expert, what differences do you see between Chinese and Indian consumers? |40| India-China Chronicle  APRIL 2012

The basic outlook of consumers is price. Indian consumers are more price conscious than Chinese consumers. Chinese consumers have a taste for uniqueness, they try to purchase new things with some unique value attached to it. In China, gadgets are more preferred especially in the digital segment. Chinese are always trying to change and buy something new from the market. The same trend has also started picking up among Indian consumers. At the same time, Chinese consumers are very brand conscious and look for branded product. If they think of getting some particular brand they will either buy it or if it is not affordable they will purchase the counterfeit of the product.

INDIAN CONSUMERS ARE MORE PRICE CONSCIOUS THAN CHINESE CONSUMERS. CHINESE CONSUMERS HAVE A TASTE FOR UNIQUENESS, THEY TRY TO PURCHASE NEW THINGS WITH SOME UNIQUE VALUE ATTACHED TO IT. What do you think about Made in China products?

Basically there are two kinds of made in China products. One includes your high range products for MNC brands such as Sony, Nokia and Apple.

Most of the big brands have their manufacturing units based in China.

When people buy products of these brands, they go by the brand name and are not concerned whether the product is made in China or not. This is one perception of consumers.

Then there are low priced products manufactured by local Chinese brands such as TLC, Haier and Hisense etc.

When consumers buy low price products, their general perception is that this product is made in China. But then it provides the consumers with a lot of options and flexibility. So there no reason to complain about made in China products. Basically the high end products are used worldwide and the low end product face this made in China concept.

In India there is a lot of negative perception about China. What do you feel about it and how do you think it can be minimized?

The negative perception of Indians towards China is mainly due to the media, which is very biased in nature.

Most of the time they do not have first hand news about China and it is taken from other sources. Only one or two Indian reporters are based in China.

But slowly things are changing. There is huge trade happening between the two countries. More and more Indian traders, professionals are coming to China to do business and once they come here, their perception changes.

One of the other things is that there is limited cultural exchange between India and China. The existing efforts are all government linked and not well coordinated. Chinese here earlier used to watch Hindi movies and still remember Raj Kapoor in Awara.

Because of some political issues also there is a negative perception about China in India. And lot of this is coming from the Indian media, for which Chinese media has started to hit back.

This certainly is not a good thing in improving the relations.

What suggestion would you like to give to those Indians interested in setting up business in China?

First and foremost, the Chinese market is available for local as well as foreign companies. Before starting any business in China, you need to have good market knowledge through market research. Enter into China after having a good understanding of the available opportunities and the Chinese consumers. Then it will be easy to start your business in China.

Secondly, China is not an easy market to survive. It is not a cash cow where you can start earning immediately. Many companies have come and failed to even establish themselves. You need to have a long term approach.

Important is to break even and keep your costs low. Start with a small base, see how your Chinese counterparts operate and keep the cost low and understand your customers well. 

The Brave New G2 World CHINA-INDIA AS TRANSFORMATIVE FORCE

While most people are looking for a US-China G2 along the lines of the old school, the most important G2 could be that of China and India. We should see these two in a relationship that is mutually beneficial.

Dennis Pamlin

T

he two countries that will dominate the 21st century in many ways, China and India, face a very challenging situation, but also very inspiring opportunity.

On the one hand they need to ensure that they can lift people out of poverty and do so in an environmentally sustainable way. On the other hand they need to design a global governance system that can help the world to move beyond the industrial society with a single-minded focus on economic growth and embark on the next chapter in human history.

These are two very big challenges,

maybe the biggest challenges humanity have ever faced and they will take place during a time when the phase of change is higher than it has ever been through history. Collaboration between China and India will be complicated, but is necessary to ensure robustness, to avoid conflicts and ensure that wisdom from both cultures is embedded in the new governance system.

The financial crisis in the world has brought the western superpowers to their knees and they now understand that the emerging economies must be given a more important role when global economic policy is being developed. Unfortunately so far China and India have not taken the opportunity

to formulate a proactive policy and instead large corporations, with business models that are based on great income differences and consumption patterns that are destroying the planet, are setting the agenda.

But the different financial problems are however getting worse and instead of ad-hoc solutions it is time to launch initiatives that look beyond shortterm fixes. Below the surface we have a number of trends that require a dramatic change in how the current global governing system works, including the Bretton Woods institutions that were created after World War II. The firm action that the current financial crisis requires is a perfect April 2012  India-China Chronicle |41|

INFOCUS | INDIA-CHINA | GLOBAL ORDER

opportunity to begin looking toward a new global architecture. At the very center of this architecture are two different G2’s that will play a very important role.

The first G2 is the one that has been discussed in media since the beginning of the financial crisis, that of China and the United States. This is the G2 that follows the logic of the current system.

Few would disagree that the G8 that exists today is increasingly outdated and that something new is needed.

The G8 was a response to the oil crisis in 1973 and when it was formed in France in 1975 it was the major western countries that came together. That time is gone and we have a different situation today.

The two major economies on the planet should have a special relationship and the “strategic and economic dialogue” mechanism that was launched during the G20 meeting in London provides a great opportunity.

It is important that China is clear and does not allow the old, polarized agenda to dominate, so that G2 becomes a smaller, more effective version of G8. China’s global role so far has been a breath of fresh air as it does not seek global leadership, but instead wants to work in collaboration with all countries and on all levels.

With the US as a major consumer and China as a major producer, we can hope for a “global collaboration” initiative. This could focus on the major challenges we face and how China and the US could together, with other countries, to find solutions for them.

These solutions could range from major initiatives with incentives that support sustainable innovation and standards that ensure future buildings are the net producers of energy. Instead of being the largest problem for climate change and resource use, the buildings of the world could become the epicenter for climate-smart and resourceefficient solutions. For this to happen, China and the US must cooperate.

India could play an important role as a credible mediator in these discussions.

Strategic collaboration in trade, investments and finance, as well as in security |42| India-China Chronicle  April 2012

policy and other important areas should be encouraged.

In order to identify the second, and more important, G2 we must take a step back to the macro level. It is easy to see that the centre of the global economy is moving east. The need to find long-term solutions for a financial system where the money can move at the speed of light will require new regulations and new institutions.

But there are other issues that are harder to see, issues that will not hit the headlines before it is too late, as they happen slower. These include issues such as the demographic crunch with an ageing global population, the increased population pressure as the world moves toward 10 billion people, growing inequalities within and between countries, and finally an accelerated development of new technologies.

All these can bring humanity fantastic gifts if they are met with the right framework, but they could

THE FINANCIAL CRISIS IN THE WORLD HAS BROUGHT THE WESTERN SUPERPOWERS TO THEIR KNEES AND THEY NOW UNDERSTAND THAT THE EMERGING ECONOMIES MUST BE GIVEN A MORE IMPORTANT ROLE WHEN GLOBAL ECONOMIC POLICY IS BEING DEVELOPED

also drive the world into conflict and problems beyond imagination.

Especially since natural resources on the planet are not enough to provide everyone with a “G8 lifestyle”.

This brings us to what I think is the more interesting, and less discussed, G2 – China and India. I was fortunate to be in Delhi during President Hu Jintao’s visit in 2006. During this trip, a number of initiatives were started and it is clear that the two billionplus population countries share many challenges and opportunities.

Cynical observers have focused on the differences between the countries and many western observers seem to view China and India as pawns in the power play between the G8 countries.

But anyone who can do the math and look at the history of these two countries will realize that there will be a very interesting G2, whether we like to call it that or not.

By ensuring closer and more strategic ties between China and India, the world will get two countries with long, proud histories that are a welcome balance to the dominating Western narrative in most of today’s global institutions. The world would also get two countries that are reflections of how the world as a whole looks like, with a mix of rich and poor people and different development paths.

The most interesting aspect of the “Chindia G2” would probably be the end of the idea of material and economicgrowth as the goal of ”development”. We could also get a discussion about where the world can and should go next. We need a global circular economy for that and the two countries that probably have the best opportunity to provide guidance on how this can be done in a practical way are China and India.

Every time I visit China and India, I see more and more similarities when it comes to the major challenges.

With their roles as global economic engines, it becomes very important what direction those engines will move and what fuel they will use. If China and India start collaborating in a way that shows the world

the two countries – which together contain about 40 per cent of the world’s population – can develop joint innovative strategies for global sustainability, it will be a very good step forward for this current crisis.

This Chindia G2 understands the need for innovative solutions that deliver more than incremental improvements, as this is necessary to lift people out of poverty and deliver solutions that do not result in conflict over natural resources a few years from now.

So while most people are looking for a US-China G2 along the lines of the old school, the most important G2 could be that of China and India. We should see these two in a relationship that is mutually beneficial.

With a global agenda that delivers global benefits, China would start building a global governance culture beyond narrow self-interest that also includes scientific consideration for the planet in a way that the current economic system has failed to do.

This would be a very good start for the 21st century and a way to turn the current economic crisis into something that will benefit both the people and the planet in a way that we have never done before, but something we urgently need.

Deng Xiaoping once said that a real Asian century will arrive only when China and India are developed – the time is now emerging and for it to deliver a positive outcome, the two G2s could play a crucial role.

China and India are in a position where small investments and initiatives today can determine structures and rules during the coming decades.

In order to ensure a positive outcome strategic collaboration in three areas is necessary:  Education/ research  Technology development  Urbanization For these three areas Chindia could collaborate to ensure the following: A 10 billion filter In order to ensure that we can eradicate poverty and ensure environmental sustainability we need to focus on transformative solutions,

not just incremental improvements in current systems.

By introducing students from all disciplines to think about what solutions that can be used by 10 billion people without harming nature and resulting in conflicts over natural resources.

Extremely resource efficient solutions, using renewable energy and supportive of a global circular economy should be encouraged in all areas.

At the end of 2011 during COP17 in Durban the BASIC expert group presented their first joint research report about sustainable development and equity. This is the kind of initiative that should be further developed and provided more resources in order for it to also be able to develop concrete policy recommendations.

China and India could challenge themselves and the rest of the world to begin reporting how public procurement can be used to encourage transformative solutions that can be used by 10 billion people in a sustainable way. If China and India could get the EU, the US and Japan on board more than 5 trillion dollars would begin to support poverty reduction and true sustainability.

A global research initiative Global collaboration, rather than international collaboration, should be initiated where major scientific breakthroughs with global benefits are to be expected.

Nano-technology and cognitive research are likely to be two areas that will redefine how our societies look this century. The opportunities are almost limitless, but so are the potential dangers. A council of independent and non-commercially connected stakeholders should be provided with the task to set up an open source and transparent forum where strategies to guide this research and implementation in a way that is beneficial to humanity as a whole.

For the first time it could be possible to have a technological revolution based on collaboration instead of competition, where many that are engaged would identify themselves as global citizens rather than from a specific

country. Hopefully many in the first generation of global citizens would come from China and India.

A global collaboration platform could be launched during 2012 to encourage researchers and entrepreneurs from all over the world and from different disciplines to collaborate in order to address poverty and resource scarcity in a limited number of areas to start with. Besides becoming a key collaboration platform it could also reward those delivering solutions and become a Nobel prize for the 21st century.

Use global forum to launch global initiatives In 2012 India, with Manmohan Singh as the host, will arrange the second BRICS meeting. This would be a perfect time to launch initiatives for the 21st century.

One of the most difficult challenges will be to develop frameworks that support transparency and ensure that citizens all over the world can use it.

A good first step would be to support an initiative that would allow citizens all around the world to understand the consequences of their consumptions.

By developing an application for smart mobile phones that could be used to scan different products people could see in real time if people are helped out of poverty though the value chain, if the company making the product is lobbying for smarter regulation, what goals for poverty reduction and resource savings the company have, etc. In short a world that western industrialization made invisible would be made visible and the birth of this transparency that can drive sustainable innovation and poverty reduction could happen in Delhi in just a few months. 

Dennis Pamlin is an entrepreneur and founder of 21st Century Frontiers. He works with companies, governments and NGOs as a strategic economic, technology and innovation advisor.

April 2012  India-China Chronicle |43|