Thursday, January 17, 2008

Chinese Dragon Roars At Indian Elephant

This blog is a comment on

On the 3rd I’d written something similar called Apples & Garlic and Italian Terracotta.

The writing on the wall is clear for those who know how to read. And it says that China cannot be contained unless China is matched with Chinese determination that quashes doubt and doubters, and Chinese manufacturing and training infrastructures that can produce huge quantities of anything, and Chinese quality that now is pretty much a world standard for mass produced affordable consumer goods or reliable industrial components and products.

iPod is produced in China, so China is able to fabricate and manufacture excellence - given that in this case it is building on amazing excellence in product design. But it also means it can be trusted to produce very fine items.

USA, Japan and Germany haven’t been able to contain China, and one by one their core industries like clothing, footwear, industrial products, household goods have been wiped out. India will not fare any differently unless it gears up to compete with China on Chinese terms and turf of massive complexes producing good quality, on time.

The dream of selling services and technology to China has broken many hearts and dreams. Chinese trade surplus with the US - and now India - proves that China has a lot more of what the world needs than what the world can sell to it because the Chinese may not even fully know what they want or can have. In the interim the world is as dependent on China as a junkie on heroin. Always needing the pusher because what the pusher has it can’t do without.

Most of the Western world has shut its plants unable to compete with Chinese prices. As industrial jobs are lost, or as jobs are sent abroad demand for cheaper goods increases since many have to reinvent themselves in middle age ending up with lower paying jobs - every laid off machinist hasn’t become a programmer that is for sure, perpetuating the dependence on Chinese goods.

The only way to beat or compete with China is to do better than what China does, or lose your industries. Or do something that China doesn’t know how to do, or wants to do, yet - design products and technology. So Cisco, Apple and other thought and innovation leaders can propel American economy because of their intellectual and marketing strengths.

India needs to be very careful - or Hosiery’s in Ludhiana, Laboratory products factories in Ambala, Garment makers in Trichur, Bed sheet and towel manufacturers in Gujarat, Plastics extruders in MP, and host and most of other low technology companies will vanish. Gone will be electrical cable, plumbing and pipe fitting, transformer and relay, rubber chappal and shoe, luggage, furniture, bicycle, battery and consumer electronic manufacturers. The owners of those companies might emerge okay as they will shift manufacturing to China and retain distribution control of the Indian market. However the Indian factory worker, the raw material suppliers, the small entrepreneurs and the general industrial and manufacturing procceses will be bloodied.

India cannot take that chance, and instead of basking in the glow of massive foreign reserves which will shrink quickly if the US dollar falls to Rs. 30-32 range, needs a plan to become the manufacture for the world markets as its own domestic demand might drop with the drop of BPO earnings. So Reliance, Tata and other biggies should look at the Chinese model and create companies that will sustain Indian economy and be profitable by creating and fulfilling global demand for daily life products.

And that India doesn’t have an Apple or HP or Dell makes it’s economy more vunerable than the USA because the USA has a global market for its design technology companies. India doesn’t have design and technology companies with worldwide markets.

And TILL IT EMERGES AS A GLOBAL BRAND LEADER it has to create sustainable, scalable global suppliers of high demand items. It needs a trade surplus in its favor to invest in reserach and technology. Or what it earns from the US it will spend on China netting nothing.

China is the world’s biggest maker of socks and panties and bras. India knows how to make all that. Now it needs to make all that as fast, as good, and at the same price as China. And to do that India will have to stop patting itself on the back and get into a serious fight for not only global domination but also survival. At this time India is not a global leader of any industry, so it needs to stop pretending and get serious about success - maybe starting with using Times of India as toilet paper since that (paper) skewers perspective and reality.

The dance of elephant and dragon is not the right dance for India. India needs to be a dragon slayer or an aggressive animal, faster than the dragon, so a Cheetah perhaps?

No comments: