THE SILK ROAD REDISCOVERED
How Indian and Chinese Companies are Becoming Globally Stronger by Winning in Each Other's Markets
Anil K Gupta, Girija Pande and Haiyan Wang
Jossey-Bass (Wiley)
269 pages; $34.95
India and China, and their supposed common geo-strategic interests may be all the rage among media analysts, but what's the practical reality of collaborating with the Middle Kingdom? If you are looking for answers The Silk Road Rediscovered is a good place to start. The book has been written by Anil K Gupta, Girija Pande and Haiyan Wang. Ms Wang and Mr Gupta have been researching, writing and consulting on topics related to China and India for over 10 years now. Mr Pande was, until recently, chairman, Asia-Pacific, for Tata Consultancy Services. With deep exposure to the big picture and ground realities of the business environment in China, the trio decided to collaborate to bring out this book.
Though it preceded Chinese President Xi Jinping's visit to India by some months, the authors say the timing of this book is just about right. India needs to launch an infrastructure revolution just like China did starting in the mid-1990s. This demands large amounts of capital and machinery. China has an abundance of both. Importantly, Chinese machinery is not only cheaper than the American, the European or the Japanese ones, it also comes bundled with lower-cost financing. Thus, from the Indian side, having Chinese suppliers and banks play a role in the infrastructure build-up, and this was very much in evidence in the deals that were signed between Indian and Chinese corporations during Mr Xi's visit.
From the Chinese side, the picture is a mirror image. The Chinese economy is slowing, and Chinese companies urgently need to look outside China for growth opportunities. India is clearly an attractive opportunity. For the next couple of decades, India will remain one of the world's largest and fastest-growing economies among the G20.
In the first few absorbing chapters, the authors have compared the workplace behaviour of Indian and Chinese professionals. While in India employees think nothing of arguing with their supervisors to get their ideas across, in China, employees tend to have unquestioning respect for hierarchy. Next, Indians are more creative, but the Chinese are renowned "execution experts". These comparisons may appear generalised, but they do reflect how the global business community perceives professionals from the two countries. For instance, the authors have pointed out that for Indian professionals, it is fine to work on a stretchable timeline, whereas professionals in China are very punctual. The authors also provide interesting tips on hiring and retention for business leaders planning to enter China. Chinese employees place an exceptionally high value on monetary compensation. In fact, turnover rates among professional staff are as high as 20 to 40 per cent.
The authors have many useful suggestions for Indian companies planning to enter China. If an established Indian company is eyeing China, the best way forward is to sign a joint venture with a Chinese company. Large Indian businesses, such as the Tata group, the Mahindra group and Reliance Industries, are extremely comfortable in working with Chinese state-owned enterprises (SOEs). But the authors have a word of caution: alliances even between two private-sector companies always involve an element of competition.
Just as with any other potential partner, it is critical for the Indian company to understand what's driving the Chinese company to work on the deal, and what can go right as well as what can go wrong. The authors point out how blind trust would be just as misplaced as blind mistrust. Chinese partners respect due diligence and pragmatism. So there is no reason for an Indian company to shy away from asking relevant questions. Later, the authors point out how SOEs in China have access to cheap capital and cheap land. This could be a strong competitive advantage.
The case study on NIIT's partnership with Chinese institutions is undoubtedly the best example of an Indian company overhauling its expansion strategy to adapt to the dynamics of the Chinese education market. To begin with, the company changed educational methodology. This was done by reversing its teaching style. The Chinese students are used to getting started with the practical and then moving to the theoretical. When franchising to entrepreneurs did not work as an expansion strategy, NIIT signed up universities as franchisees. This solved two major problems. First, universities already had the licences to offer educational programmes. Second, unlike entrepreneurs, universities already had the requisite infrastructure and would not need to make any new investments.
In the chapter "Driving Indirectly into China", the authors have brought insights from Jaguar Land Rover's (JLR) journey in India from the time Ford started importing Land Rover into China before 2003 to when Tata Motors took charge in 2008 and until now. Interestingly, to sell cars in China without paying a 25 per cent import duty, JLR's executives began discussions in 2011 with potential Chinese partners for a joint-venture manufacturing operation. By 2012, Ratan Tata joined hands with Chery Automobile to to manufacture 130,000 vehicles a year. One may argue that JLR's iconic status would be marred if the company starts manufacturing in China, but the top brass of the company is optimistic about the acceptance of Chinese manufacturing.
By the end of the book, the authors manage to convince readers that if a company plans to enter China, the growth objectives must be long-term.
