VOL. XXXXVI NO.4
OCTOBER 2020
CONTENTS
CHINA: Business, Technology & Economy in 2020
The Art & Power of Nudging M S Narayan
Partnerships in the Age of Covid Panel Discussion
Transforming India & Indian Businesses Pradeep Deshpande
Women Leader Series: Policing in Covid Times & Beyond
Lakshmi Venkatachalam
Panel Discussion
EDITOR Gp Capt R Vijayakumar (Retd), VSM EDITORIAL SUPPORT Gp Capt Dr R Venkataraman (Retd) LAYOUT EXECUTIVE D Rajaram
MADRAS MANAGEMENT ASSOCIATION Management Center, New No.240 Pathari Road ﴾Off Anna Salai﴿, Chennai 600 006 Ph:044‐2829 1133 Email:mma@mmachennai.org | mandate@mmachennai.org www.facebook.com/mmachennai
They think big and want to be number one... They are, in general, implementers of technology, not particularly inventors; and they are not ashamed about that. suitable technologies, factories and opportunities. China is a very large country, three times the size of India. The population is almost similar. They have one common language—except for two or three of the farflung provinces—which helped in bringing and keeping them together. The unemployment is very low at 1.7% and youth unemployment is remarkably low. India has something like 23%. The few good things that they did I have lived in Hong Kong and China for
and a lot of support from some of the
started from 1978. Premier Deng
a little more than 10 years. I have been
developed countries nearby. The
Xiaoping brought in a sharp focus. He
very much interested in their culture
Northeast provinces like Heilongjiang
tried to open the country and develop it.
and made a lot of good friends and
and Liaoning were adopted by Japan.
In 1978 when he took over, there were
business associates. I have tried to learn
Places like Shandong got support from
88% of people below poverty line and
a lot from them.
Korea. Fujian was adopted by Taiwan
today they are at 1.7%. Life expectancy
If we look at the map of China, we
and Guangdong by Hong Kong. Thus,
from 1978 to now has improved by
can understand how the transformation
the strong influence came from these
about 10 years. Infant mortality has
happened with the State's own interest
neighbouring countries and brought in
come down from 53 per thousand to 8
Business Mandate fountainhead of excellence
per thousand, and literacy also
Along with Deng Xiaoping, there was
factories—400 of them owned by China.
improved to 96%. The State provides
another economic mind—Zhu Rongji,
The road from Shanghai to Myanmar is
free education up to class 9. Labour
who contributed a lot to where they
so well developed that fabric is able to
force participation by women is 60%,
have reached today and how they think
reach from the textile mills in Eastern
whereas in India it is about 25%. That
now. Government policies are in place
China to the border of Myanmar in 10
means the State has provided jobs,
to create selfsufficiency, stability and
days. Also, Myanmar is one of the
income, healthcare and education.
continuity. That is the bigger approach.
countries where the important Mekong
China’s economic liberalism is a
They have something called the
transformation story of 40 years. In
‘whole nation system’ which started as
1980, their GDP was less than India’s.
a system to support sports and develop
Today they are at about 14 trillion and
a number of worldclass athletes. There
India is at 3.2 trillion. China is a global
is also another parallel system for
River flows. Water, of course, is a resource of the future. China has a lot of interest in Pakistan and Myanmar for these reasons. Pakistan gives them access to the Gwadar port and has river water up north.
China has made a lot of developments and inroads into Myanmar, to an extent that Myanmar is like another province of China. In Myanmar, there are 600 garment factories—400 of them owned by China
China has developed infrastructure extremely well—power, roads, railways, ports and communication. They think big and want to be number one. Even within their subsystems, they aspire to be number one. They are, in general, implementers of technology, not
trading power. They are trading at
education. Some of their best minds are
particularly inventors; and they are not
4,600 billion dollars with 54% exports.
grown in special universities and
ashamed about that.
India’s trade is about 844 billion.
military universities and are developed
The people want to be safe and
China's trade with India is about 100
for serving the country. China has global
respected. They are a collective lot and
billion dollars. For them, we are not a
ambitions. You take the Belt and Road
do not stand up as individuals. They
very big trading partner. But for us, they
Initiative, which is a big Silk Road kind
work as a team. They look up to the
are important because we import 75
of movement to connect countries from
government, and the government unites
billion dollars of products from them.
China to Asia, Africa, Europe and
them. They cannot perform without a
China has tweaked RMB to USD very
Australia.
leader. They are good at working as
opportunistically and intelligently, and
China has made a lot of inroads into
tries to maintain parity where imports
Africa because Africa has a lot of
and exports are both supported. In
minerals. They are not there in Africa to
Guangxi and Renqing
essence, China is a very interesting mix
make textile garments. China has made
Guangxi and Renqing are two important
of Confucian tradition, communist
a lot of developments and inroads into
concepts. Guangxi means relationship.
orthodoxy and super capitalism!
Myanmar, to an extent that Myanmar is
They are very particular about personal
like another province of China. In
and business relationships. Vendors try
Myanmar, there are 600 garment
to support each other. Even if there is a
How do the Chinese think? 10
OCTOBER 2020
teams.
Business Mandate fountainhead of excellence
minor accident on the road, drivers get
From Three Gorges to the Great
down, exchange cigarettes and start
Railway: The Han penchant for
making relationships!
greatness
People have ‘hope’ as poverty has been removed. For them, Apple and Amazon are not the happiest places to work. China’s story is somewhat like that. Happiness is not the important thing. It's about being successful and their nation being an important
2,000 gigawatts and 25% of that is coming from new energy. They have the vision
to
identify
new
energy
opportunities like solar, wind and nuclear. They set up and commissioned the Three Gorges hydroelectric power plant, which is one of the wonders of
country! They
focus
on
setting
up
infrastructure projects and identify potential industries like steel, mining, cement,
automobiles,
aluminium,
fertilizers, machine tools, armaments and food. As time progresses, they are willing to recalibrate the list of potential industries and add artificial intelligence,
drones,
ecommerce,
electric vehicles, robotics and space. So firstly, they identify the right industries and then the government supports them
They
invest
first,
start
developments and coursecorrect later. It is not uncommon for the pollution control board people to go to the factories with chain and padlock and lock it up. They shut down all the small dyeing units and revised their standards for water pollution, several years after developing the industry. In general, their approach is to finish projects ‘ontime,’ if possible to finish ahead of schedule. OCTOBER 2020
modern
engineering
world
with
generating capacity of 22.5 GW. It took them 14 years working 24 x 7. They helped in resettling some of the villagers. It has also helped them to control the flooding problem. China adds additional power every year by the same amount which Spain consumes in a year. Let us take semiconductors. They have a goal to meet 70% of their own needs locally by 2025. In April 2018, when America decided to ban ZTE, Xi
with land and tax subsidies.
12
In power, their installed capacity is
Jinping arranged a meeting with his industry leaders within a month—in May 2018 itself. They have 139,000 kms of railway lines; almost double that of India’s. They executed the Qinghai to Tibet train project covering 1400 kilometres –with 1000 metres of the stretch set up at altitudes of more than 4,000 meters, overcoming lots of challenges and yet, completing it one year early! Then they set up a train system
The people want to be safe and respected. They are a collective lot and do not stand up as individuals. They work as a team. They look up to the government, and the government unites them.
Business Mandate fountainhead of excellence
through Kazakhstan and Kyrgyzstan to
are very important part of the Chinese
from USA. Once China decided to
Europe, and it is functional. A lot of my
system. They have labour incentives.
embrace the world, USA decided to
produce is going by train from China to
The workers and staff have a lot of
embrace China and trade was going to
Germany and Spain now.
respect. Among the business units
be a big opportunity. For instance, the
Recently China had the foresight to
within an enterprise, there are profit
entire city of Chongqing is modelled on
seize the opportunity to set up the Tesla
centres and profit sharing. The unions
Chicago. Everything is big like
Gigafactory. It took them just 18 months
are generally passive. They don’t believe
McDonald and Kentucky. They like the
to
to
in gossip but only work. The
big scale concept. The banks favour the
commissioning and start of production.
government does a good job on skill
bigger and stronger companies.
This is an entirely American investment
development using many vocational
Let's take the example of Midea and
project. They were able to change their
training schools. People are getting
Galanz, two Chinese home appliance
mind and did not wrangle about the
more tech savvy. In the global
companies. Midea makes washing
factory being halfChinese and half
Innovation Index, they are at 14,
machines and Galanz, vacuum cleaners.
American.
Vietnam at 42 and India is at 48.
They reached the peak in that category,
go
from
land
approval
When we decided to go in for 3D
then Midea decided to make vacuum
They are agile and think in very
designing, we invested in two licenses
cleaners and Galanz decided to make
innovative ways
for India, 2 for China office and 2 for
washing machines. They just went with
They develop ecosystems in clusters. We
Vietnam office. But one of my Chinese
the proposal, got their approvals and
also have clusters in India, like Tiruppur
suppliers called Ningbo Kashion bought
loans and got into production.
and Surat in the textile industry. When
50 licenses! That is the way they go
we talk of Chinese clusters, they have
The Canton Fair is an amazing fair
with muscle, scale and power. The
the
and
held in Guangdong. It is held two times
government and banks support them.
ecosystem of all the vendors and all the
a year, in three phases because of the
They are agile and think in very
subassemblies available around. So this
number of products they have to cover.
innovative ways.
It is a place where businesses get really
complete
infrastructure
is the difference. The government
My garment sample room in
transacted and huge orders are closed.
Hangzhou make samples in about six
I went in and walked around Canton
working days and we courier it out to
Fair for the first time. I went to a booth
Zara in Spain. What did my Chinese
and picked up a garment. I looked at it
To cite an example, in January
competitor do? He moved his sample
and made some remarks. The next day,
2005, the global textile quota was about
room to Spain, just outside Zara. I could
I was back in my office and I saw that
to be abolished, and the world was going
not beat him on that. These are some
the same product which I had seen in
to become a level playing field and
interesting things our competitors do
the fair was sent to me. I did not ask for
China was expected to boom. Around
and we learn from them.
it. This is their initiative. They know
provides a lot of incentives by means of tax rebates. In India, we call them as duty drawback.
February 2005, the Indian government
how to promote and develop business!
withdrew duty drawbacks! These kinds
When it comes to thinking of business
of signals can often be very confusing to
development…
the industry. Speed, agility and support
The inspiration for size came to them
14
OCTOBER 2020
For those who cannot go to Canton Fair, there are places like the Shanghai
Business Mandate fountainhead of excellence
Mart which is a 365 daysayear
one with 100,000 pieces capaciThey
anomalies exist and one keeps
exhibition. It is one huge mall where
always get the benefit of doubt due to
wondering how they manage to do that.
suppliers from all over China have their
their scale.
Subcontract is a way of life. They
stalls, all the time. There is the Yiwu City
They have already gone ahead to
don't think anything wrong about it.
consumer product wholesale market. It
develop base line on the electric vehicle
They take it for granted. They don't
is an amazing place and a Disneyland for
batteries. Two of their companies are in
always ask for permission. Subcontract
the consumer products business. There
the top five–CATL and BYD. A number
is something you have to live with if
are huge malls all around the city—one
of other Korean and Japanese
you're producing or sourcing from
mall is only for stuffed toys, one for
companies are also producing in China.
China. The factories are profit centres
footwear, and one for household plastics
I believe they struggle in a couple of areas. They have a culture of cost‐ cutting in the factories and there is a rampant problem of counterfeiting
and they decide whether to do inhouse Of the 'counterfeit’ mindset &
or subcontract. They think it is cheaper
subcontracting
to buy outside. This is not only for
I believe they struggle in a couple of
apparel but many other engineering
areas. They have a culture of cost
industries too.
cutting in the factories and there is a rampant problem of counterfeiting.
The mysterious ‘shadow factories’ &
There is also a problem which some
the 'third shift'
people call as ‘quality fade’. The quality
There are ‘shadow factories’ in China.
of products starts declining over a
They project at the front a factory as the
period of time. One has to patrol a lot to
face to the client and behind them are
achieve the quality standard. This I
other factories, which don't always
and so on. You can go there and buy one
believe is because of their mindset of
follow all the compliances and laws of
piece or 600,000 pieces. That is how
frugality. They believe that one should
the land.
they
not spend too much and they look if
When faced with quotas or
something can be cut down to a cheaper
restrictions on the amount of export
level. Not always do they take approvals
from China, they wriggle out by moving
and permission for that change!
the goods to Singapore, Cambodia or
think
of
their
business
development. In terms of capacity and delivery, the factories are so large. To traverse from Line No.1 to Line No. 20 of a T
The counterfeit business is also
Dubai, repack, redocument and re
Shirt factory, we need golf carts! Why
because of their mindset. They feel,
export. Then, we have the famous
does scale and size matter? Let's take a
“Why should only some people have
China's third shift philosophy. If they
customer like Uniqlo. They have got an
Louis Vuitton bags?” They go around
get an order for Hugo Boss shirts, in two
order for 100,000 pieces. They know
copying Louis Vuitton because that
shifts, they will make Hugo Boss and, in
that things may go wrong in the pre
doesn't need any marketing. They have
the third shift, they will make a precise
production or planning. When it comes
Land Wind car which is a direct copy of
copy and these will be sold in other
to the crunch, who will catch up with the
a Range Rover. It was launched almost
outlets. Where they falter are in the
delivery faster? The factory with 1000
at the same time when the Range Rover
areas of product integrity. German
pieces per day capacity in India or the
was launched. These interesting
engineers from Bosch once walked OCTOBER 2020
15
Business Mandate fountainhead of excellence
around a factory in China looking at the
humanely acceptable or not? I raised the
Partnership (CPTPP) with Canada and
ball bearings. They were so experienced
question to ETI (Ethical Trading
Australia has come through. Free trade
and by the handfeel of the bearings
Initiative) in the UK and they said, “No,
agreements are very important to boost
found out that something was wrong.
Sorry. We cannot approve and you
the business.
When questioned, the supervisor
better pull back.”
We have to benchmark and improve
scratched his head and said that they are
China is often blamed for ‘dumping’
our ease of doing business. All the
made in another factory. The infant
because of their mass production. One
parameters on ease of doing business
milk powder case was very famous. The
has to be very careful about IP issues
are very relevant and directly contribute
milk powder had melamine plastic
with them.
to the growth of Indian industry. We
components which were added to
should partner with Taiwan and
increase the protein content of the
Can India do a China?
Singapore for electronics to move away
powder. It does not just happen by
Can India become as big as China? They
from our dependence on China. We
default; it has something to do with the
started reforms in 1978 and we in 1991.
import about 66% of our electronic
culture.
We are now at $3.2 Trillion GDP and
products from China.
I had placed an order for shirts and
they are $14 trillion. 15 years back,
when I went for inspection, nothing was
China was at 3 trillion. So we are 15
going on in the factory. When asked
years behind them. As time progresses,
about my order, they said they are made
maybe we will ramp up. It is not about
in another place called Anhui. At Anhui,
trying to be as big as China but trying to
I saw that every house in a village was
have our own position in global
making my shirts!
business. I feel that we must give economy the primacy and which I
We should take Koreans and Japanese as our mentors. Wherever the Koreans and Japanese have gone, they have developed the industries very well. Japanese bring in the quality angle while Koreans bring discipline into business. We have to make worldclass quality and execution our brand!
Jianyu Gongchang and the question
believe is not being given. We should
of ethics
cast a vision for 2047, when our country
We have to set a time plan for self
My Quality Controller once went to a
will be 100 years old. We should be
reliance. We can't say that we will stop
factory for inspection. They replied that
forwardlooking. Our policy should not
importing from China from tomorrow.
the job had been subcontracted. As my
be two steps forward and one step
We have to sharpen the saw in terms of
QC insisted on inspection, with a lot of
backward. Government should try to lay
skills, competencies and logistics
reluctance, he was taken to a state
the carpets out, offer incentives, remove
infrastructure. We should try to develop
prison. Their state prisons referred to as
the barriers, lower operating costs and
Northeast India where there is a lot of
Jianyu Gongchang have a lot of
try to make the factories thrive. We
potential. That will also help us in
workshops not only for tailoring but
should pitch for FTAs like Vietnam.
keeping these states closely bonded with
also engineering and other industries.
Vietnam was working on free trade
us. We have to maintain our software
My QC brought back samples. They
agreements with USA and Europe. Their
asaservice (SaaS) leadership and Start
were pretty good. But something
Europe FTA has come through. Their
up leadership. We have to be assertive.
bothered me.
Comprehensive
Progressive
We should try to be a little more
TransPacific
powerful. Chinese people respect that.
Is prison factory production 16
OCTOBER 2020
Agreement
and for
Business Mandate fountainhead of excellence
China's rise was not limited to just export oriented factories and shiny new physical in‐ frastructure. It made startling shifts in power relations too. sprees of Western Nations including Spain where I am sitting right now. During the seven years that I spent in China, I worked in three capacities —initially as a teacher; I was teaching news writing in English. Subsequently, I was an advisor to the CII. Overlapping with that, I worked as a journalist, eventually becoming the China Bureau Chief for The Hindu newspaper. At that time, I was the only Chinese speaking Indian foreign correspondent based in China, which I always found amazing, considering that together we
I had written a lot about the challenges
2009 and this was really an epochal
of Indian businesses and also tried to
time in the country's opening up. China
unpack the complex reasons behind
had just joined the World Trade
China’s success in driving itself and
Organization in 2001 and Beijing had
transforming itself from a bit of an
won the bid to host the 2008 Olympic
Although Indians remain obsessed
agricultural backwater into the kind of
Games. So there was really a kind of
with China, there was very little
manufacturing
visceral energy that was palpable across
investment in trying to understand or
the country in those years.
learn about it as evidenced by the fact
and
infrastructure
superpower that it has become. I have often said that the Yiwu City Market was more spectacular and amazing and jawdropping than the Forbidden City.
China's rise was not limited to just export oriented factories and the kind of shiny new physical infrastructure
At least 90% of the world's
either, indicating one of the most
Christmas trees and ornaments were
startling shifts in power relations.
being manufactured in and around
Beijing had also begun to emerge as the
Yiwu and being sold there. Similarly
globe's chief creditor and it had
80% of the world's zips and buttons,
accumulated the world's largest foreign
plush toys, even Ganesha and Krishna
currency reserves. Particularly after
statues were made there.
2008,
I lived in China between 2002 and 18
OCTOBER 2020
formed a third of the world's population and were very important part of the geostrategic picture.
that there were so few journalists stationed over there. When I moved to China in 2002, like most Indians, I knew very little about it. There had been a long diplomatic freeze between the countries and there were no direct flights. Between 2002 and 2008, the growth was really exponential. My first impressions of the country
financing
were about scale. The size really hits you
powerhouse, financing the spending
—the roads and the buildings. This was
it
became
a
Business Mandate fountainhead of excellence
not only true of modern China but true
itinerant vendors that would pass by
nothing at all that we could learn from
throughout the history of China. For
there. People addressed each other in
them. I travelled the length and breadth
example, the Forbidden City was huge.
familial terms just as they do in India.
of China and visited about 25 Chinese
We saw it replicated during the
When quizzed on their perception of
provinces during the years I lived over
Communist period as well. They relied
India, they would talk of India as a
there. I went looking for poverty and
on this kind of gargantuanism with size
Buddhist country.
was taken to a village in Ningxia, which
and heft as a symbol of authority. It has
A certain demographic people had
is one of the poorest provinces in China.
translated into the modern and
been watching Hindi movies that were
I met two old couples who were
contemporary times too.
massive hits from the 1950s and 60s
supposed to be really poor. They lived in
through to the 1980s. They would even
a room, had a motor cycle, fans and a
dance to the songs from the movie
refrigerator. Looking at the consumer
‘Awaara.’
products definitions in India, they were
The rhythm in Hutongs As I lived in the city and learned Chinese, I ended up living a very local
very firmly middle class. This was
life. Unlike a lot of expats, I did not live
Some would comment on our
in the suburbs. I lived in the Hutongs
population and suggest that we should
(narrow lane in Beijing) and spent a lot
have ‘onechild’ policy. Once I asked an
of time with the workingclass Chinese
old bicycle repairman for his views on
Prelude to Covid‐19
people. I learned quite soon that a lot of
India. He didn’t open. After a lot of
I began my reporting career writing
the stereotypes we had about the
prodding, he said that India’s telecom
about a strange new virus that had
Chinese as being inscrutable, unfriendly
policy is quite advanced, people have
begun over the winter of 2002 and
and inhospitable were completely
choice in choosing the operator and the
which the Chinese government was
wrong. They laughed readily, had a great
tariffs are low. I was blown away by that
covering up. That was a novel kind of
sense of humour and were very much
—the fact that this guy had that kind of
corona virus. That's how I began my
into teasing people and teasing me as an
knowledge, but I think it was also a
China journey and we seem to have
Indian as well.
reflection of the broadening out of
come full circle today!
They were rustic and easy to approach. Like in India, people
coverage that they were getting about India.
supposed to be like the deepest poverty that you could find in a village in China!
I think that China has learned a lot of lessons from 20022003 in managing
welcomed you very effortlessly into their
In India too, we had very little
the present outbreak. South Korea,
homes. Lower down the socioeconomic
knowledge about China and when I
Japan, Taiwan and Vietnam have been
order, people were more open.
asked the reverse question in India, I
relatively successful in how they have
would get the full spectrum between
handled the corona virus as opposed to
Pride and Prejudice.
Europe. We can trace the epochal
If you took a bus into the countryside, people would share their eggs and oranges and nuts with you just
There were people who either
change after Xi Jinping came to power
like people would, on a train in India.
believed everything was so amazing in
in 2011 2012.The China of today and
There was a sort of rhythm of everyday
China and we should emulate it in every
the trajectory it has taken is quite
life in the hutongs. That was again very
way or people who thought that China
different from the one I would have
familiar to an Indian. You had one to ten
was the biggest enemy and there was
predicted 10 years ago. OCTOBER 2020
19
Business Mandate fountainhead of excellence
The ‘mandate of heaven’ also shares the platform with other philosophies and values of China... This is the basis of the underlying belief system of the Chinese people.
Professor Vijay Govindarajan. This flagship program is offered for about five large US based multinational companies and one British company, which is RollsRoyce. I started picking up a liking for China. I could connect a lot of dots from the past to the present. Incidentally, ethnography is my speciality and that's the reason why Tuck School absorbed me into their programs. I started seeing different aspects of China, largely from I am primarily an educator. I used to
of the ancient travellers of China came
run Indology programs for American
to India and vice versa; and these were
and British based museums and also for
so compelling on me. I decided to go to
educators who teach about India. I had
China. In 2008, I landed in Beijing.
this big apathy for China like most Indians. I had one long stint in the Nalanda archaeological site in Bihar. My guide, an elderly person, always used to tell me that I should see the beautiful Chinese Museum which was being constructed by the Chinese. The map that led to China
I was there for a BMW foundation and a CII meeting. Then I took off and I spent about a couple of weeks in the region of Zhengzhou. That is where I could really learn about China’s glorious past, the Chinese people and their backgrounds, cultural moorings and why they think the way they think today.
an American lens, but also from working on developing leaders who were yelling in pain about doing business in China. I also went through the transition of China with Xi Jinping coming in and the metamorphosis of China happening. Experiential learning was my specialty. My job involves taking people and putting them for half a day in a small little Communist Party office in a village, then bringing them out and having conversations with them.
One fine day, he took me to the Chinese
I went all the way to Kashgar which
Museum and what struck me was the
is in the extreme west of China. I
What I learned is that in China, there is
huge map of China. I looked at the
travelled extensively and that was my
a deal between the rulers and the
Xinjiang province in the West of China
passion. From 2005, I have been
subjects. This deal was made some time
and thought about the connection
running a Global Leadership 2030
in 600 BC. It is known as the ‘Mandate
between India and China through the
Program for the Tuck Executive
of Heaven.’ They don't necessarily
West, the pathways through which some
Education in which I am a partner of
believe in gods and goddesses, but they
20
OCTOBER 2020
The deal
Business Mandate fountainhead of excellence
do have a notion of a heaven.
emperor is gone and the rebel hero
authoritarian rule. It is not a
Metaphorically, let us assume that the
becomes a new emperor, a new dynasty
dictatorship as when Mao Zedong ruled.
heaven is like the ocean and the earth is
starts off and people follow the new
Subsequently, there have been a series
the only ship in the ocean. The emperor
dynasty.
of wellplanned successions in China,
has the mandate of the heaven to steer
This cycle has been going on. The
which do not exist in any other
the ship in a way that there is harmony
last cycle in China was broken in the
communist country. Xi Jinping has
at all times.
‘century of humiliation’ as Chinese call
taken that away. As long as he is
Then there are subjects in the ship
it, when westerners for the very first
winning, one cannot argue. It is also
and their responsibility is to serve the
time came into China and ruled for
very difficult to say that the people have
emperor and follow him. This deal has
about 100 years. For Chinese, it is all
not given him the mandate. Of course,
helped China sail in the past. The
right, if the problem is within China.
there is unrest going on in Hong Kong.
‘mandate of the heaven’ says that
Now the Chinese Communist Party
subjects have the rights to rebel but they
(CCP) has this deal with the people of
better be sure because the emperor's axe
China is a country which believes in
China. The ‘mandate of heaven’ also
could fall on their neck. It also tells the
meritocracy, which is very important for
shares the platform with other
emperor that it is his responsibility to
them. This is not imposed by the
philosophies and values of China, like
lead in righteousness and if he does not
government or Chinese Communist
the Confucian and Taoist values. This is
deliver, there's going to be a rebellion.
Party. Meritocracy is something which
the basis of the underlying belief system
came to China way back from the 12th
of the Chinese people.
century.
The ‘mandate of the heaven’ also
Merit all the way
tells that from time to time the heaven
China is an authoritarian state, but
will give clues to the people when
You need to very good. You need to
that doesn't mean that the people are
righteousness is being defiled. Those
have excelled in school not only in your
unhappy there. People are proud of their
clues are diseases, earthquakes, natural
studies, but also in games and extra
culture and they have managed to
calamities and foreign enemies ganging
curricular activities. Then you get a
maintain this heritage in all these years.
up and trying to break the fort and come
ticket to the Communist party. You are
With this as a mooring, you can drop
into the country. This might sound very
judged and rated as you pass out from
down to presentday China.
school, college and in the party affairs.
much like a fantasy, but this has been in
Xi Jinping has a vision that no
Only if you are good in all these things,
other country has in the world today.
you can climb up the party ladder. You
In China, there were many
His vision is to deliver China as the
can imagine the people who are sitting
dynasties which came up and went
number one country in the world. That
right on top in the politburo of China
down. Every time a dynasty came up, it
vision is backed with the traditional
—the seven member committee who are
was because there was a rebellion. It
Chinese values. This is the single most
reporting to Xi Jinping. They are highly
starts from the intellectual circles. There
important differentiator between China
qualified and very capable people who
are wise people who start voicing up and
and any other country and it percolates
have risen up the ranks.
eventually there are people who take up
down into everything else.
vogue in China.
arms. When the civil war ends, the
22
OCTOBER 2020
China
is
a
bureaucratic,
If as a CEO of a company, you end up in one of the cities in China
Business Mandate fountainhead of excellence
discussing with a local Communist Party
vision of saying that they had to come
When we talk about freedom, there
office about doing a joint venture with
out of the ‘century of humiliation’ and
are three kinds—the personal freedom,
the semiconductor factory in China, you
become the best. The roles were very
political
better be sure that the person sitting
clear; the commitment to the party and
freedom. Soviet Union and most of the
there is amongst the best CEOs in the
to the Communist Party Chief was also
Communist Bloc countries started with
semiconductor industry.
clear. But the mission was all a series of
political freedom, which is not possible
experiments.
without personal freedom. Then they
There is no inheritance in China. What I mean is that in India, we had a legacy from the British. They left us a ‘workinprogress’ sort of administrative system. But for China, there was nothing like that. When they got the country, it was a clean slate development. They had to learn everything. So they had this grand
freedom
and
economic
allowed markets to take care of Decentralised China 85% of the total spend of China is done by the local governments. The central government or the federal government spends only about 15%. Even in the most developed economies, the rate would be something like 5050 at best.
economic freedom. Most of them failed, or so say most authors. In China, they never gave personal freedom and political freedom. The freedom they gave is economic freedom. And, this is the kind of a competitor we are actually up against.
The ‘mandate of heaven’ also shares the platform with other philosophies and values of China... This is the basis of the underlying belief system of the Chinese people. recruited a number of Chinese staff and sales managers. We supplied fabric to a number
of
Chinese
garment
manufacturers who used to ship the garments over to USA and Europe. Coming to the Chinese staff, one of the most important aspects that I noticed was their total focus on quality and productivity. Compared to an Indian staff member, they were not as quick in grasping things. They took a lot more time and needed handholding. I will share my experience working with
two decades back and one more recently
Chinese people, competing with and
between 2015 and 2018. I set up from
supplying to Chinese companies. My
scratch the AsiaPacific regional office
experience is in two parts—one is about
for Arvind Mills in Hong Kong. I
24
OCTOBER 2020
But once they understood the process and requirements, they could do the same thing again and again. I could close my eyes and trust my staff with the shipping documents, bank documents,
Business Mandate fountainhead of excellence
invoices and any operational aspects.
would deliver something to the
they would work very hard to learn
There would be absolutely no fault.
customer, they would do it. One of my
English so that their teacher need not
Their productivity was two to three
biggest challenges in leading the team
lose her face.
times what I used to observe back in
of sales personnel was to be able to
With respect to competition, they
India.
make sure that the backend team in
do not have a profit motive but market
India meant what they had committed Face value
share is very important. They work
to the customer. It was a hard time
The second important aspect I noticed
backwards from the selling price while
retaining the sales people because they
is a basic philosophy in China called the
we normally work on cost plus profit
would not want to lose face with the
‘face concept’. What it means is that: “I
model. Therefore, competing with
customers. If once or twice the
cannot lose my face in front of either a
Chinese in manufacturing is especially
deliveries got delayed, they would just
customer or somebody superior.” They
very difficult.
leave the company. This was their
will go to any level to make sure that
mindset.
their ‘face’ is protected.
Chinese customers expect us to be extremely agile and nimble. The
My wife worked as a teacher in
I noticed this very strongly with my
commitment made to them should be
Hong Kong teaching English to Chinese
sales team. If they promised that they
met and they follow up closely. Promises
school children. They used to say that
must be delivered, come what may.
OCTOBER 2020
25
What should we do to attract Apple and Samsung to India? Mr Venky Nagan: When I drive down in Hanoi and go past the Samsung factory, I find it humongous. It is really a giant factory that provides employment to around 20,000
Will the supply chain move away from China?
people. The question is—will our policies change every few
What is the impact of an adverse USChina
years?
relation?
Mr Balaraman, Past President, MMA: Mahesh told
Mr Venky: Many are scared by the tensions in USChina
me that in China, the government makes sure that the entire
relationship. But they feel that things can change in
value chain is competitive.
November. So they adopt a wait and watch approach. They
Mr Mahesh: In China, the entire value network is important. They are into many fields—Electronics, PCBs,
look at other options but after going through all the pros and cons, they still find China as the best option.
Semiconductors, Wafers, Fablabs and so on. They probably
Ms Pallavi: There has been thinking in China in
don’t have raw materials. In India, we can only get contract
preparation for this scenario. They may challenge the entire
manufacturers like Foxconn to set up shops. The
world. Whether they have miscalculated their strength or
government gives incentives and capital subsidy. As
not, will be known only in the next few years.
components are not made here, China can possibly create
How do you view the strength of India’s history of
roadblocks in our getting the components.
democracy versus China’s authoritarian rule?
Due to the failure of globalisation, many companies that
Ms Pallavi: India has a safety valve in democracy. In
have established their entire value chain in China feel they
China, things can change only by revolution. There is no
are stuck. Now, if we go on an audacious scale by having the
question mark on the future of India as a country. Transition
entire value chain here, countries will not want to risk now.
of power can be China’s Achilles heel. But I don’t think there
For them, it will be shifting the problem from China to India.
will be a revolution in the near future. They have developed
Maybe, we should tie up with other countries like Malaysia
domestic markets. They say that the Communist Party is an
and Singapore so that we can assure the big players that they
elephant riding a bicycle. An economic slowdown can be a
are not putting all their eggs in one basket. Because of the
serious challenge for them.
trade war between US and China, many companies who have set up their factories in China are anxious. They begin to realise that they have to work with pockets of excellence like India in spite of changing governments and policy issues. Ms Pallavi: Countries like Japan want to diversify away from China but they do not prefer India. They prefer Vietnam or even Bangladesh. This is because of the policy changes in India. For India to emerge as an alternative, they have to convince the manufacturers a lot but I think it is difficult.
Mr Balaraman: I know that many Chinese workers have lost their jobs in the recent slowdown and they are moving to their villages. There are huge empty buildings in the cities. Mr Mahesh: Xi Jinping and the Communist Party have promised to deliver to their people. The people of China do not know what is happening in the world other than what is told to them by the Chinese media. So, there may not be a major shift in the near future.