DOING BUSINESS IN 21st CENTURY INDIA: HOW TO PROFIT TODAY IN TOMORROW’S MOST EXCITING MARKET by Gunjan Bagla. Hachette Book Group: New York, 2008. Hardcover. 272 pages. $24.99.
It is election season, and it’s fashionable again to demonize India as the country that’s “stealing our jobs” with outsourcing. Indeed, Virginia’s former governor, Mark Warner, raised the talk about “sending jobs to Bangalore” in his keynote speech at the Democratic National Convention this August. Politicians in both major parties talk about bringing jobs back to America as if they were referring to poker chips in a zero sum game.
While the pain caused by some American companies transferring work to low cost economies is undeniable, it is a small part of the picture. As a business consultant active in the evolving dance between the world’s two largest democracies, I see a much more hopeful picture for both the United States and India.
In the Mesabi Iron Range in upper Minnesota, a different kind of “steeling” is taking shape. Essar Steel of Mumbai, India, is building an integrated plant that will create 2,100 construction jobs for Americans and 700 permanent high paying blue and white collar employees. Essar’s subsidiary, Minnesota Steel, will excavate American iron ore, process it in a new American steel mill where it’s investing $1.6 billion, and create products that will eventually sell in the American Midwest. You won’t hear this in any national-level politician’s speech!
The San Ramon-based Chevron Corporation saw great opportunity in India when it invested $300 million into a new $6.1 billion refinery in Jamnagar, India, owned by Reliance Industries Limited. 3,500 engineers employed by San Francisco-based Bechtel Corporation were deployed in design and construction of this facility which began initial production this September. By December, Jamnagar’s two Reliance refineries will process 1.1 million barrels of oil per day, the largest complex anywhere on the planet. Besides Bechtel and Chevron, dozens of American companies have benefited from these projects.
Over the last two years, my firm and I have helped a California farm products company find a market for U.S.-grown pistachios to satisfy the burgeoning demand for nuts in India. And we’ve helped large aerospace and defense suppliers in the United States to understand how India’s market is organized and how decisions are made. These initiatives create and sustain American jobs as India prospers. It’s win-win, as opposed to zero sum.
Health is another sector for closer collaboration between the United States and India. And I don’t just mean medical tourism and medical transcription. American device, product, and therapeutics companies have served the wealthiest 1 billion people on the planet so far. In their search for new revenues, such companies are redesigning their product offerings to serve the next 4 billion customers. In such redesign, Indian engineers, chemists, pharmacists, and biotechnologists are turning out to be viable talent partners. Indian talent not only accelerates product development, it also makes possible products that may not otherwise see the light of day. At the same time, India is a vibrant market for these new products. At a more pragmatic level, American hospitals replace hundreds of millions of dollars of instruments and devices with newer products every day. Hospitals in India are ready buyers for some of this equipment, which is in perfectly serviceable conditions.
Now I don’t want to imply that it is easy for Americans to do business in India. In fact, cultural and geographic barriers can make it quite challenging for the unprepared executive. It’s even worse for Americans who go to India expecting to apply their learning from China. India is a different ecosystem, and one really has to start afresh. I teach a seminar at Caltech University for managers and executives from all over North America to learn how to deal most successfully with India. Invariably, I am asked about China.
As readers of India Currents know, the top-selling Bollywood movie this year so far appears to be Singh is Kinng starring Akshay Kumar. Its producers chose to record the title song in Chicago, and the song features popular rapper Snoop Dogg. That wouldn’t be so easy for a Chinese movie producer. Media baron Rupert Murdoch, whose wife is Chinese, is on record saying that it was easier for News Corp to do business in India and that he could also depend on the Indian courts to be fair to his company. Media companies of most ilk are allowed relatively free rein in India, and this shapes not only the media companies but aspirations of upwardly mobile Indians. Most Indians feel positively towards the United States, in repeated surveys conducted by the Pew Center. Most Chinese don’t.
Of course, the infrastructure in modern urban China is way ahead of India. I’ve travelled on commuter trains in Shanghai and Beijing where no one around me speaks English without difficulty. I don’t advise my American clients to take trains in any Indian city, with the exception of Delhi. Airports, roads, and traffic in India leave much to be desired.
For this reason many executives are reluctant to relocate to India, even if business requires them to do so. The good news is that I have interviewed several Americans who lived in India for a while. I found that most people who stay in India for more than six months end up liking it; many fall in love with India to the point that they keep returning even after their tour of duty is over. I advise Americans who do business in India to mingle with local Indians as much as practical and to avoid living in an expatriate bubble.
Developing robust and trustworthy partnerships in India is a challenge for most Americans; in fact, it is just as hard even for Indian Americans who don’t regularly travel to India on business. The indirect style of Indian managers gets misinterpreted as confusing, incompetent, or even deceitful. The differing attitudes toward time and timeliness continue to confound people in both countries, even as business relationship develop and mature.
While the United States is among India’s top trading partners, India barely makes it to America’s top 20 today. But this is changing rapidly as bilateral trade rise exponentially. In fact, American exports to India rose 73 percent in 2007. Why don’t we hear that number in this election cycle?
Gunjan Bagla is Managing Director of Amritt, Inc. (www.amritt.com) a Los Angeles, Calif., area management consultant which helps top American companies to succeed in India.