Fat Cats And Hungry Tigers

A visit to Korea can knock the scales from the eyes of anyone who imagines that India is destined to be the next Asian tiger. The sheer aggression of the big Korean chaebols, or conglomerates, like Hyundai, Samsung, LG and Daewoo, is awesome. They not only compete ferociously with each other but audaciously seek opportunities abroad. Not content with automobiles or consumer durables, they have successfully launched huge projects in widely diversified fields like construction, refrigerators, ship building, oil exploration, power, excavators, entertainment, electronics, cameras and computers. And they do not just do assembly jobs, they advance the designs and technologies and make many components like the tubes for their TVs, fuel injection pumps, starters and compressors for their cars and micro-chips for their computers.

They go boldly for huge volumes. Immediately after breaking up their joint venture with GM in 1992, Daewoo made as many cars as India makes today. This year they plan to make 1.5 million units. Their ship building yard at Okpo consumes almost as much steel per year as Tata steel produces. And Daewoo is considered an upstart among the Korean biggies. Just as Japan earlier knocked global competitors out of cameras, cars, electronics, ship building, durable goods, telecommunications, etc, Korea is now striving to become a world leader in every field of advanced technology. Like Japan it knows that the key to world markets is leading edge technologies, faultless quality, timely deliveries, original research, competitive pricing and ruthless marketing.

Compared to these chaebols, most Indian industrialists look limp, gutless, stolid and pompous. A few examples from the automotive world are illustrative, especially as auto companies are regarded as India’s most progressive. Mahindra’s had the Willy Jeep for 40 years and it has remained virtually unchanged. Korea’s Koronado from Asia Motors has evolved to become a far more refined product in engine, gears and styling. Their rival Sangyong makes a range of classy off-roaders. The UN recently picked their Musso over six global rivals including Chrysler, Toyota and Mercedes Benz. India may be proud that the Tatas have graduated from trucks to the Sierra and Sumo but these sorely lack refinement. They remain trucks in jeeps’ clothing.

Bajaj scooters, arguably guilty of killing many thousands from respiratory diseases, sat for a decade doing nothing with Orbital’s technology for direct fuel injection into two-stroke engines which could have made their engines among the most fuel-efficient and environment-friendly in the world. An Escorts team worked for three years on the 600 cc Citroen 2 CV car which the government did not allow them to make. There would have been no restraint if they had indigenously developed a similar car from the technology they had learned. All India’s automakers remained riveted to the orthodoxies of their technologies, corporate bureaucracies and culture and lacked the vision and guts to venture beyond.

With a few exceptions, India’s industrialists greedily stuff their mouths at the first opportunity but their stomachs fill so quickly that they soon settle back in self-satisfied complacency. They will usually flog an old product, technology or production process till its last breath and shirk the trouble and expense of upgrading it. The old cow will be milked until it yields blood. Hindustan Motors, PAL and Bajaj only stirred to change their obsolete products after modern competitors were already in the market. They all had an amazing predilection for short-cuts or cheap options. Old hand-me-down Peugeot or Isuzu engines for Jeeps or Ambassadors and cast-off Mercedes or Peugeot 309 body shells for their prestigious new offerings. Only in India could anyone have even considered putting an under-powered, over-bored and over-weight Standard Vanguard engine into a sleek Rover 2000. They often buy off-the-shelf technologies and use them as lifetime crutches unlike the Koreans who go for leading edge technologies, quickly absorb them and move ahead on their own research. We are then surprised that our products are not good enough for domestic, let alone international, markets.

Indian corporate bosses also egotistically decide themselves what their companies should produce. Ignoring the advice of their own experts, they typically abandon a sedate but successful Standard 10 car for a flashy Herald or decide that India needs an expensive Mercedes Benz E class instead of a more affordable C class car or insert a small Nissan engine into a highly successful Fiat 124 because small was once considered beautiful. Perhaps they should all be flat-tened like the level playing field that the Bombay Club pleads for.

They blame their governments and their workers but seldom move out of their ivory towers where their eager sycophants and consultants console them with flattery, managed press reports and convenient research data. True, oppressive taxes, restrictive regulations, power and infrastructural problems, bureaucratic delays and antiquated labour laws remain a serious problem but most of India’s industrial leaders only complain and meekly appeal through their chambers and associations instead of vigorously campaigning with their political leaders and workers to make them understand the risk and opportunities of the brave new world which is going to change their lives whether they want it or not.

In retrospect, Korea was fortunate to have risen from the ashes of a devastating war which smashed old orthodoxies and made everyone realise the need to work hard to get ahead. They remember hunger but were fortunate to have had an excellent and practical education for everyone. Though there is political and corporate corruption, there is also a corporate democracy where everyone becomes involved in great corporate adventures. Their unions may fight aggressively for their rights but they do not shirk work or responsibility. Their bosses delegate easily and set personal examples of dedication, daring and hard work.

Their Indian counterparts usually bury their heads in their lavish cars, country houses, foreign jaunts, boardrooms and offices but become craven cowards at the prospect of the big corporate gambles that can put them in the big league. They seldom have the stomach to keep pace with their corporate partners in big joint venture investments. They can be arrogant but lack genuine pride in their products, their corporations or their country. Lacking true ambition, they settle for the safe sanctuaries of reasonable growth with reasonable profits and shrug helplessly when the hungry cats of smaller and less fortunate countries grow into ferocious tigers.

(The writer is a management consultant.)