Kanika Datta: Pride, prejudice & performance

SWOT

Much indignation has been expended in the press on recent expressions of doubts in the West about Indian companies' ability to understand the concept of luxury.

Last month, it was the head of the Jaguar car dealers' association who spoke of "unique image problems" if the Tata group were to buy Jaguar and Land Rover, which Ford has put up for sale.

Then came a somewhat stinging letter from Paul White, President and CEO of the Orient Express chain of luxury hotels, about his company's reluctance to collaborate with a "domestic Indian hotel chain", Indian Hotels (better known by its Taj brand-name).

Last year, there was the (then) chief of Arcelor's silly and widely reported comment about how this French maker of steel made "perfume" compared with predatory Mittal Steel's" eau-de-cologne".

The implication of Guy Dolle's statement was not lost on anybody, though he ultimately had to accept the reality of Mittal's deal-making superiority and the formation of Arcelor-Mittal. (Some suggestions have been made that Vijay Mallya's bid for Tattinger failed for similar reasons, though there is no evidence of this.)

Offensive as all these statements and insinuations may be, the blunt truth is that such prejudices are inevitable. Parrying them requires more than expressions of chagrin, outrage or jingoism. It requires a hard-headed approach.

Almost every nation has faced chauvinism in some form or the other when it has challenged entrenched hegemonies.

In the seventies and eighties, when Japanese car-makers changed the rules of the global automobile game and gave American car-makers a run for their money, the popular US press was replete with disparaging remarks about Japanese personal habits and so on. One US newspaper even referred to them as "ants".

The British took a long time to stomach Egyptian Mohammad Al-Fayed's ownership of that very British institution Harrods and, later, an English Premier League (EPL) soccer club Fulham.

The British satirical magazine Private Eye called him the "Phoney Pharoah". No doubt the fact that he briefly re-launched Punch, another British institution and a rival of sorts to the Eye, played a part in this description.

Again, there was much heart-searching when fallen Thai Prime Minister Thaksin Shinawatra bid for a more successful EPL club in Manchester City, one issue being "Asian" ownership.

More recent are reports of abuse against Indian call centre staff from US consumers angry at job losses in their country.

Most businessmen usually prefer to ignore such overt expressions of prejudice. This is the most prudent approach since, ultimately, performance is a great leveller. It is worth noting, for instance, that shares of US aluminium company Novelis jumped 14 per cent the day the A V Birla group's Hindalco acquisition was announced. The markets are generally prejudice-neutral.

Japan demonstrated the efficacy of this approach with little fuss with its government realistically accepting American help to rebuild its shattered post-World War II economy and providing the enabling environment that ultimately helped its companies become world beaters. The "Just-in-time" and "lean manufacturing" concepts owe as much to Japan's superb infrastructure as Toyota's innovative prowess.

The more Indian companies prove their abilities in the global marketplace, the quicker the chauvinists will be silenced. The Tata group has already done so with its 2001 acquisition of British tea company Tetley.

Indian Hotels' chief Krishna Kumar's reply to White's ill-informed and widely-publicised letter shows that a domestically-owned hotel chain can match a global one on a host of parameters.

This includes the "luxury" parameter since Conde Nast, the oracle of luxury travel, seems to have no problem clubbing Taj and Oberoi properties with the world's best hotels.

Krishna Kumar's letter is available on our website (www.business-standard.com/general/pdf/122007_03.pdf) and is a highly recommended read.

For India, the challenge of perception might be considerably higher given the huge reputation it has developed "" together with China "" of a supra-ability as a low-cost provider of goods and services.

This and the two countries' large proportion of people living below a dollar a day have raised doubts about their ability to understand the concept of luxury. (As an aside, the fact that the bulk of luxury goods of leading fashion houses are made in such countries has perhaps escaped those who choose to raise these objections.)

Perhaps contemporary westerners have forgotten that Asia knew about luxury long before Europe did. For the East India Company the balance of trade in the early 17th and 18th centuries was skewed towards its Asian markets.

The company made its enormous profits selling Eastern spices and exotic textiles to Britain and Europe "" India muslin was all the rage in regency England "" but was rarely able to sell the coarse woollens and tweeds that British manufacturers hopefully sent out to the East.

But this is the 21st century and India must face archaic prejudices with modern-day realism. If the world now doubts India's ability to understand "luxury", the answer to that is to show them otherwise.