Govindraj Ethiraj: China - Not just an infrastructure story

DOUBLE EDGE

The taxi, a Volkswagen Santana, weaves in and out of thick traffic, switching between the main throughfares and bylanes of Beijing. The driver is concentrating on the road, but only somewhat. From the backseat, Laxman C Hemnani is issuing a stream of instructions. And directions. We arrive at our destination. Prakash hands out the fare and thanks the driver. The entire conversation was in fluent Chinese.

Hemnani is the China head of IT training company Aptech, known locally as Aptech Baida Jade Bird Company. Sitting in his offices in the Haidian District in north-west Beijing, Hemnani explains how the IT training industry works in China.

First, a comparison. In India, Aptech, like NIIT and others, function on the fringe of the state-run education sector. In China, Aptech has a 50:50 joint venture with a Chinese company (Jade Bird). Moreover, Beijing University (called Baida) has a stake in Jade Bird. So, unlike India, where IT education and by extension firms like Aptech operate from the periphery, in China, the government seeks them out and embraces them totally. A Beijing University tag is precious to most Chinese students.

Then promoter of Aptech, Atul Nishar (he sold it to IT-training firm SSI), recalls how, after some correspondence, the China minister for science & technology visited India and his office. This was Mumbai and the year 1999. On most days, the area around Nishar's office in Andheri (E) in north Mumbai is jammed with a constant cacophony of traffic. The air is dusty and thick with diesel smoke. This part of Mumbai is also host to hundreds of engineering workshops. And increasingly some IT companies.

Nishar says he walked into his boardroom expecting to meet with the minister and a few aides. "I was shocked. There were 20 Chinese sitting there," he recalls. Nishar says his shock turned into amazement when the minister said he would visit a few IT training centres himself. Which he did subsequently. "I didn't expect him to actually visit a centre," admits Nishar.

The minister began by saying they wanted Aptech to come to China and "help with development". The deal was signed only later. Nishar says options were a 100% subsidiary or partnering with the government. "We chose the latter. We signed a joint venture with the ministry of science & technology, which in turn assigned the venture to a company called Jade Bird."

In five years, Aptech has set up over 200 training schools in 57 different Chinese cities. The joint venture, according to the China Centre for Information Industry Development had 19% of China's IT training market in 2005, up from around 15% in 2004. The business itself is growing close to 20% annually with total billings at $40 million. Pramod Khera, CEO, Aptech, says they now want to build an education content development "factory" in China. "We are thinking of taking the JV public in a year's time," he says.

At the Haidian centre, close to Hemnani's office in Beijing, some 2,000 students have enrolled for either a two-year degree or a one-year network administrator's course. Hemnani explains they also work with individual colleges and universities directly. "When it comes to English and IT, they are empowered to tie up with companies like us," he adds. Not quite the case in India. I ask Hemnani about this apparent contradiction in approach. He thinks about it but refuses to be drawn in. "It's a little different here, I guess," he says.

Little is an understatement. Aptech is not just running IT-training classes through franchisees, it is also re-designing curriculum for several universities. In India, Aptech would possibly be shooed away from the gates of Delhi or Mumbai University for even suggesting something like this.

The curriculum replacement model is fascinating. Aptech plugs its two-year course into a three-year university degree in computer science. At the end, students sit for Aptech and University exams and get twin degrees. Some 50 colleges have opted for this model. The teachers are trained by Aptech. And it's the University, not the students, that pays Aptech.

What are the lessons here? Before that, there may be many reasons why Indian universities are not joining hands with private education firms, Indian or overseas. Most may be legitimate. But the Chinese do hold their universities close to their heart. And nowhere is there talk of a foreign hand destabilising the education system.

To use Nishar's words, the Chinese are a determined bunch. In information technology in specific and lots of other areas in general. As the Chinese minister's visit demonstrated. Nishar says he still can't imagine collaborating with government-owned universities in India in this manner. "Government bodies are wary. Maybe in airports or some companies, but not quite education," he says.

Nishar says the other lesson is that in China, the government is a good partner. "They enable you and enhance your presence; they are not a hinderance." But the important thing is this. "They begin by asking whether it will help China as a country. Will it help meet with objectives? Is it in their interest?" And then they work from there.

Nishar today marvels about a new road out of Shanghai which will cut travelling time to Hangzhou. This is one of the places he is considering taking his IT services company Hexaware. But as he also realises, his former company's success in China had very little to do with roads and airports. Or the China infrastructure story.