India reception

DAVOS DIARY

Over 500 business and government leaders attended the annual India reception held in Davos. The large attendance exceeded even the most optimist expectations.

"We could barely get 40 to 45 people to attend our reception in Davos when we started this practice in 1993," said Tarun Das, chief mentor of Confederation of Indian Industry.

Over the years, the reception has acquired a character and a following of its own. "Now everyone looks forward to this reception," said Das.

Azim Premji of Wipro, Mukesh Ambani of Reliance Industries, Vijay Mallya of the UB group, Sunil Mittal of Bharti Enterprises, Naresh Goyal of Jet Airways, Baba Kalyani of Bharat Forge, Pawan Munjal of Hero Honda and Nandan Nilekani of Infosys were among those who were seen interacting with three Indian ministers and the Planning Commission Deputy Chairman, Montek Singh Ahluwalia and a host of foreign dignitaries.

"These people know how to get their food right," a couple attending the reception was overheard just as they were leaving the hotel.

Global Agenda

The World Economic Forum (WEF) itself was in the midst of a controversy here today with one of the articles in its house journal, Global Agenda, raising a storm of protests from many of its members. Global Agenda's latest issue, circulated to all participants, had an article headlined: 'Boycott Israel'.

WEF Executive Chairman Klaus Schwab reacted quickly by withdrawing all copies of the magazine from the venue of the meeting and issuing an apology to all the participating delegates.

"With great concern and pain, I just learned that Global Agenda, a publication distribution to our members at the Annual Meeting 2006, contains an article calling for a boycott of Israel. This article is totally in contradiction to my own and the Forum's mission and values," Schwab said in an e-mail to all participants.

He also admitted that there was an "unacceptable failure in the editorial process... for which there is no excuse. I on behalf of the Forum, profoundly apologise and express my regrets to everyone." All this happened on a day when Hamas, an Islamic group, won a thumping victory at the elections in Palestine.

Chinese scenario

Different growth scenarios for China were presented at a session on whether the Asian giant could implement internal reforms to further its development and how its relationship with the rest of the world will affect its development.

Only one of the three scenarios, projecting China's developments in 2025, received the approval of most participants at the session.

This was the 'Regional Ties' scenario, under which China was faced with a global environment marked by growing protectionism and turned to its Asian neighbours for trade and investment as also for support of its reforms and economic development.

The two scenarios that got rejected were: 'Unfulfilled promises', in which China's struggle to implement tough reforms led to economic and social disruptions, and the 'New Silk Road', in which China was seen on its way to achieving balanced development, driven by strong, inclusive global growth and accompanied by deepening economic integration and more trade.  

Latin America

If you thought China and India took so much mind space in Davos this year that Latin America was forgotten, think again.

A well-attended session on Brazil and Mexico explored how the two countries could be the engine of growth in the Latin American region. Both countries saw lower inflation and an easing of their monetary policies. However, China and India also cropped up.

The consensus was that both Brazil and Mexico were facing the pressure of competition from China and India, although Mexico would be a bigger casualty of this competition.

The UN noise

The United Nations too has made a noise about itself in Davos. Kofi Annan, secretary-general of UN addressed a session and called for a change in the mindset towards international relations.

The mindset that international relations was nothing more than relations between states and that the UN was nothing more than a trade union of governments must change, he said. So, what was his solution?

"My objective has been to persuade both the member states and my colleagues in the Secretariat that the UN needs to engage not only with governments, but with people," he said. Now how the governments would react to this UN initiative is anybody's guess.

Organic growth

Martin Sorrell of WPP stumped everybody when he said at a session on Saturday that organic growth for companies was always more durable and sustainable.

Realising that participants were wondering what the man who engineered the growth of WPP with a series of acquisitions actually meant by that statement, Sorrell quickly added: "Yes, the organic route to growth is more sustainable, but if you want to grow fast, choose the inorganic route."

He also felt that the markets did not value innovation, a view with which Jeffrey A Rosen, deputy chairman of Lazard, disagreed. The middle path was offered by John F Megrue Jr, co-CEO of Apax Partners, who said it was a cyclical issue. During the dotcom boom, the markets did value innovation. Sorrell had other gems on offer.

"Markets are the most expensive source of funds and they have always penalised companies that tried to cut advertising budgets to show better quarterly performance," he said with a smile.

Family business

A session on how to run successful family-owned enterprises brought out interesting views on the problems of identifying CEOs for such companies.

Rahul Bajaj, chairman of Bajaj Auto, whose company employed 27,000 people, said the CEO of the company need not come from the family. The caveat was that it would be nice if the CEO came from the family, because a member of the family had a greater commitment to the company.

"In a troubled company, you look outside and in a good company, you look within," Bajaj said. The family-owned enterprises faced another problem, pertaining to succession.

He admitted that there should be a genuine process to identify the correct guy from within the family who could run the company.

"Family management is not better or worse... we have continuity, commitment, but we have our own problem "" which family member is the one who should lead?" he said