Thursday, October 06, 2005

India Chronicles - Episode II

It has been nearly three months since I landed back here and many things have changed. Firstly, I have gotten accustomed to some of the nuances of living here. Secondly, I have not yet killed my interior decorator for overshooting the timeline for completion of my apartment by about a month (& running), so, my patience towards incompetence and unprofessionalism has increased. Things are looking upward though in terms of the opportunity and challenges that lie ahead. In this Episode of my chronicles, I will be touching on some of the lesser known aspects of business and the interesting attributes of people and how they are the same all over the world.

Made in China/ Korea/ Japan:

China is dominating the market in almost all fragments of business these days. In the US, as we see, the consumer durables are virtually all made in china. If they were to sell the same goods here in India for the same price, no one would buy them. So, they are deeply discounted and sold in the Indian market to match the purchase power of the Indian consumer. That leads us to believe that the $4.50 nailcutter you buy at the cornerstore in your city is actually made for under $ 0.75 as it is sold for a little less than $1.0 here in the Indian markets !! A new Chinese brand of electronic equipments called Haier electronics has been launched here in India. Their stuff is priced about 10% less than the nearest Korean competitors. While the quality of the products is still under the radar, I am sure they will come out ahead with their TQM goals in place. Eventually, these products will hit the US markets and cause a lot of downward pressure on pricing for the in-house walmart brands etc. The Chinese manufacturing sector is steamrolling as the economy is expanding. As I travel, I see rolls of steel laden on massive 18 wheeleers headed straight for the port in Mumbai. Ironically, all that steel is headed for China for the immense infrastructure expansion that they are investing in !! Lesser amount of quality steel is locally consumed although infrastructure development here seems to be growing. In the Chemical sector, the chinese compete fiercely for price and quality. Although a majority of all raw material expenses are controlled by one Reliance petrochemicals & it's b**ch the Indian government, these cannot be sustain if the economy is to grow and imports are to grow correspondingly. The Korean product is also one to be observed. About 10-12 years ago when LG was first launched here in India, everyone was laughing at their quality and now LG and Samsung have captured the electronics markets. Large Japanese corporations like Sony no longer differ in their high quality and fail on their pricing, no wonder Sony just laid off 10,000 people. The Japanese giants are collapsing in their market share in asia and they are losing to the same people they virtually mentored. I have high respect for the Korean manufacturing sector that has put Japan to it's knees. In the US, we see the same trend with Hyundai and Kia gradually gaining ground.

Twist of fate:

People believe in Karma, fate and religious superstition a lot. Herein I want to cite some examples of the funniest top 10 superstitions that are most common and almost taken to be dogma: In David Letterman style
# 1: Do not proceed if a cat crosses the street (let someone else cross before you) (especially bad if the cat is black)
# 2: Do not shatter glass in the house (especially mirrors)
# 3: Do not crack knuckles in the home
# 4: Do not clip nails at night or on Saturdays
# 5: Do not start new projects without consultations with the local astrologers (they have the best set of dates to start new projects)
# 6: Do not walk under a banyan tree at night
# 7: Do not give money with the left hand
# 8: Do not enter a new home/ office with your left foot (these people should watch the movie 'my left foot')
# 9: Do not make excessive profit on the first sale of the day (for mom & pop retailers. These people land up making 'good day deals' early in the morning)
# 10: Do not forget to put a black dot on your kid's face. It absorbs all the evil radiation emanated by jealous and yet powerful people.
As a result of all these superstitions, I decided to do everything on the most inauspicisous days possible. My mother calls me a rogue, a rebel without a cause and wants me to COMPLY with POLICY. Now I know where that gene comes from.

Do whatever it takes to make it work:

In a poor country where resources are not in abundance the principle of functioning at the minimum subsitence level is observed to it's limit. Under these circumstances, aesthetics takes a back seat, possibly the last seat in the house. A common example is the drugs and packaging of commercially available OTC drugs. Virtually no effort is put in making the packaging glossy or attractive. At times, the drug colors are not altered and they are at times grey or black in color. Tablets dont show the gloss we see in a tylenol for instance and capsules dont radiate their red color as much either. That way, the extra expense of making it 'sexier' is saved. It is not always that this saving is passed onto the consumer, but, competition forces most to do so. ISO 900X certified companies have dirty premises and unclean shop floors. Almost none of the companies I have visited have put any effort in making it look good. Here is an extreme example of this attribute at work. I'd heard of a reputed local company that makes a highly corrosive brominde. Bromine stinks, corrodes and is a dangerous solvent to handle. So, in the ideal world, all equipment that handles liquid bromine needs to be glass lined or plastic lined. This manufacturer was known to export his bromine based intermediate. As I was passing by, I thought I would pay him a visit. To my surprise his plant consisted of everything from plastic pipes, straws, water hoses, 2 liter coke bottles and milk/ gasoline gallons plus carboys. The whole unit did not have a single standardized reaction vessel !!! Such is the ingenuity of making it work at any cost. An ISO consultant would faint if he/she were to visit this unit. I was hoping he did not have a website... phew and he didnt. Another very interesting example of how economics works in a poor nation is the one of milk delivery guys. Milk is delivered in plastic or tetrapak containers in the cities, but, in rural and suburban areas, it is carried straight from the dairy in large vessels on motorbikes and delivered straight into your home milk container using a measure. These delivery guys ride motorbikes for miles. Since there is adulteration in the fuel, these bikes tend to die sooner than later. To offset the cost of dying bikes, the dairy farm guys collaborated with a local engg firm and started a piston making business. Now, they would mix gasoline with about 40% kerosene and virtually anything under the sun that has any calorific value. Such kerosene is heavily subsidized by the government for home use. It is bought from the government run institutions at the subsidized price and put to commercial use. They run the piston block till it corrodes and dies. Then get a new one from the local (self owned) store at cost and replace it !! The business thus remains viable.

More phone antics:

I realized that people here have developed an interesting way of stating phone numbers. the phone number 9983334777 will be stated as " double nine- eight- triple three- four- triple seven". When numbers exceed three they often use phrases like "five sixes after that" to constitute five sixes in a number. I get annoyed with this double-trouble BS and ask people to just state the number. It is a net new skill to be quick to understand and write a number down when some one promptly tells you a number in this fashion.

Corruption:

Corruption is not alien to any society. Even the US is out of the Top 10 most least corrupt countries in the world. The problem occurs when gross inefficiency is tagged along with corruption. If you pay someone kickbacks to get something done, it is not certain that that will really happen in a timeframe you desire. The Chinese government doesnt tolerate inefficiency in its proceedings and people are often punished severely for being a roadblock in the way of progress. Here in India, there is hardly any punishment of any form and hence no real accountability. Bribery and corruption is a way of life. Most people believe that corruption is good for society that it actually acts as a lubricant in the economic machinery. What they dont understand is that it causes a great gap in the income differentials between classes of society. Take for example, a simple boiler inspector for our zone. The guy is so rabidly corrupt that even if you give him the gold standard, he will ask for platinum. These guys get transferred from location to location very quickly, so, the interpretation of policy for the next guy becomes an easy mode of creating a scenario of non-compliance. Thus the next guy makes it an issue with the sole intention of accepting bribes/ gifts in exchange for a certification. Such a boiler inspector should be making about $ 120 a month and that would be more than sufficient amount of money for him to lead a decent lifestyle and be paid well for his educational level and skillset. In our case, this guy makes close to $ 4,000 a month. This money is not passed on to any lower income group and it gets stuck in his throat. So, a class of society has been created that doesnt deserve what it makes. Corruption has been the root of disaster in this society. We are very close to the bottom of that list and virtually nothing is done to build any form of accountability. Learning from other countries, I guess, the levels of corruption go down as the pressure to be corrupt goes down as the living standard improves with employment.

So much for this Episode. I have content for another episode, but, will be releasing it next month.