Unleashing Your Entrepreneurial Potentials

Preamble z i
Unleashing
Your
Entrepreneurial
Potential
ii z Unleashing Your Entrepreneurial Potential
Preamble z iii
Unleashing
Your
Entrepreneurial
Potential
Raghu Nandan
iv z Unleashing Your Entrepreneurial Potential
Copyright © Raghu Nandan, 2009
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First published in 2009 by
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Preamble z v
Dedication
For over 35 years, I lived and worked on industrial development assignments in many
developing nations across the world. Though I was based in Kuala Lumpur, I travelled
the world over and would often come to India as a part of overseas delegations: not
as an Indian but as one of ‘them’.
I learnt to see my country and my people as others see them.
Indians who moved out of India long ago and have settled in countries like Fiji,
Malaysia, East Africa and in the West Indies have been overwhelmingly shopkeepers,
small time businessmen and semi skilled workers. It hurt me to see that they did not
have much respect for themselves and nobody respected them either.
But a few decades ago, things started changing. Their children started getting edu-
cated and entering professions like medicine, law and accountancy, in that order. These
youngsters changed our image in the eyes of the world and our people started earning
solid respect. Today, a local person anywhere would rather go to an Indian doctor or
a lawyer, than to anyone else.
I have noticed the same in India too.
I have realised that the next generation is a breed apart from the earlier generations
in talents and aspirations. They are brilliant, inquisitive and challenging, and far
more eager to leave their mark on the world. Our youth, with their new found vital-
ity, calibre and the remarkable capacity for sheer backbreaking hard work, are driving
astounding changes in the marketplace. As I said, they are demanding solid respect
from the world.
I am convinced of the following:
1. The new breed, the qualified professionals coming out of our premier institutions
would be the relentless driving force of our economy.
2. For most of human history the middle-aged have ruled. Maturity has almost
always trumped youth. It was taken for granted that only with years came
wisdom, experience, connections and influence. At work, like everywhere else,
grey hair, years of loyal service and seniority counted most. Now the tables
are turning, may be for good. Older entrepreneurs will not disappear, or even
necessarily shrink in numbers, but they will now have to share power with
fresh-faced youths.
3. Our new breed of professionals, while running the economy, will make the
babus, the bureaucrats, the politicians and the political activists more and more
irrelevant. Just like I have seen in Thailand, Taiwan, Korea and, to some extent,
Japan, how the relentless onslaught of their powerful economic workhorses
vi z Unleashing Your Entrepreneurial Potential
has almost made the politicians sit back, watch and enjoy the benefits of the
economic windfalls.
4. They will also make the hordes of children of politicians—and the children of
the friends of politicians—masquerading as entrepreneurs equally irrelevant.
Already, the culture of political patronage and the power of black money are
disappearing.
I dedicate this book to

The New Generation of Our
Qualified Professionals
Preamble z vii
Contents
Dedication v
Introduction ix
PART 1: Your Personal Skills
1. The New Face of Our Nation 3

2. The New Definitions of Entrepreneurship 11
3. The New Entrepreneur 17
4. New Soft Skills for Entrepreneurs 38
5. New Communication Skills for Entrepreneurs 51
6. Your Attitude to Life and Work 67
PART 2: Your Intrapreneurial Skills
7. What is Intrapreneurship? 81
8. The New Executive Environment 89
9. New Manufacturing Opportunities 99
10. Making Intrapreneurship Work 110
11. The New Meaning of Quality and Finish 122
PART 3: You, the Globalised Entrepreneur
12. Our Rapidly Globalising Nation 135

13. Having a Global Mindset 161
14. Understanding the Overseas Indians 177
15. Understanding the Overseas Chinese 199
16. Understanding the Koreans 211
17. Understanding the Japanese 221
PART 4: New Opportunities in Tourism
18. What Part 4 is All About 237

19. New Face of Tourism 251
20. Handicraft Tourism 258
21. Heritage Tourism 272
viii z Unleashing Your Entrepreneurial Potential
22 Gastronomic Tourism 279

23. Festival Tourism 287
PART 5: And Finally, the Project Plan
24. Do Your Homework First 295

25. Stages of a Project Plan 301
26. Opportunity Study 306
27. Pre-feasibility Study 311
28. Explaining the Financial Tables for Non-financial Executives 319
29. Sample Financial Tables (Tables 1 to 8) 325
Appendices
1. Can India Overtake China? 332

2. Who’s Got Performance? 339
3. Indian Business vs. Chinese 341
4. Global Entrepreneurship Monitor 2005 342
5. The Global Competitiveness Report 2006–2007 345
6. International Trade Statistics 2000 348
Index 351
About the Author 355
Preamble z ix
Introduction
I want to begin by introducing myself and talking about the homework I do before
starting to write my books. In doing my homework for this, my second book, I had some
surprising interactions with the students coming out of the premier management, en-
gineering, finance, tourism and other professional institutions across the country.
These have radically changed my approach to writing this book.
Before I started writing my first book, Unleashing India on World Markets, I travelled
across the country and met many businessmen and exporters, socially and through
various chambers of commerce and trade associations. I found that they, the next gen-
eration of Indians, sure, were different from what we were at their age. Fifty years of
Independence had indeed created a new breed of entrepreneurs and businessmen, but
sadly, there was no quantum leap. In attitudes, business cultures and professional mind-
sets, they were just about the same as what we were.
Now, in researching this book, I interacted with what I thought was my new target
readership—our young entrepreneurs and executives, what I can call the third
generation.
I got the shock of my life when I started doing workshops and seminars in some of
our premier management, engineering, finance, tourism and other professional insti-
tutions across the country and started informally interacting with the youngsters
there. I would make it a practice to join the students for dinner in the college canteen
after my presentation and chat with them casually, often without any faculty being
present.
I saw them; I spoke to them; but I did not recognise them. This new breed of qualified
professionals of my country do not have the slightest resemblance to what we were
at their age, or, for that matter, the highly westernised youngsters one sees hanging
around the malls and disco halls.
When I was with the students, I, of course, could not take any notes, but as soon as
I got back to my room in the guest house, I would try to recollect every precious word
that they said and made copious notes. Then, I would lay awake the rest of the night,
filled with thrilling visions of the direction these powerhouses were going to take my
country.
The youngsters in different institutions in different parts of the country talked about
many things, but there was nothing frivolous or casual about what they said. They
knew what they were talking about, and spoke with conviction.
There is one strong theme that seems to brand many of these youngsters. They have
not seen the nation go through bad times, thanks to the economic boom that has been
running for nearly their entire memory, and they know that their prospects are brighter
x z Unleashing Your Entrepreneurial Potential
than for any before them. Plus, their parents are increasingly affluent, employed and,
compared with previous generations, more in touch with their children’s interests.
So, this new wave of professionals no longer have ‘getting a good job’ as their top priority; or
rather, any priority at all.
They are confident that come what may, they will make a good living.
Instead, I think for the first time in our history, our youth is no longer thinking about them-
selves and are getting more and more obsessed with giving India a commanding presence
on the world markets.
I had started off trying to find out how I should focus my second book and what the
youngsters would find interesting, useful and inspiring. Instead, it was I that ended
up learning a lot of interesting things and, in the end, it was I that got inspired!
Now, it is time to talk specifics. Do sit back and relax and I will tell you what the
children told me that I found so amazing and inspiring. In reading this, please remem-
ber that the children are not criticising their elders or running anyone down. Instead,
they are articulating their plans and dreams about what they need to do to make our
presence felt in the world markets and make India a world power.
I am thrilled with the fact that, at last, we have a generation of youngsters who feel so
strongly about their nation and about what their older generation of businessmen, in
cahoots with the politicians, has done to the nation. They see it; they do not like it one
bit; and of all the people, these young dynamos would have the guts to do something
about it. I am sure they would turn the tables and, as happens in the US, instead of
the business magnates running after the netas, it is the netas that would come look-
ing for handouts.
Here is what the youngsters said.
Are Our Domestic Firms Internationally Competitive?

Remember, the students are looking at this from their own points of view, and there are
two delightful aspects to this.
First, they feel strongly about how our nation spends enormous amount of money
and brainpower to train the cream of the Indian youth in the IITs, IIMs and other top-
rung institutions. Then, the best of the lot gets plucked up, first by foreign firms and
then by foreign joint ventures in India, leaving only the dregs for our domestic firms.
Why does our media talk about this with pride? Splashing the huge salary figures
on the front pages, they proclaim how good our students are. Concomitantly, they also
advertise how awfully non-competitive our domestic firms are. And, by giving the for-
eigners our best talent, we are making ourselves even more non-competitive!
But wait. There is a delightful aspect to this. Students from at least six institutions
have told me with pride that they will be quite unlike the earlier generations of subser-
vient cap-in-hand, ji-hazoor type of executives. They know that they are the world’s best
Introduction z xi
and do not need to kneel before anyone to beg for a job. They are capable of making the
choice for who they want to work for, and demand to be treated with respect, as equals.
As a particularly brilliant student remarked, ‘You better treat me like an equal, a part-
ner or you will find me a competitor.’
A Remarkable Show in Davos? So What?

I was talking to the students of a management institution in Mumbai about what I
saw at the World Economic Forum in Davos. I noticed that there were a few overseas
students there. I told them about the remarkable show India put on for the world to see
and mentioned that the heartwarming thing about the presentations was that the old
fogies and suffocating babudom were missing and it was the youth of the country that
actually carried the show. While I was excited, I was also confused when I saw the
reactions of the students. I asked myself whether I was missing the point of the whole
exercise. Sure, I was delighted about India’s chest thumping declaration of arrival
on the world’s stage, and surely I have my own views on the issue, but the youngsters
had their own views on this.
z That evening, after dinner, the students let me have it. They really let me have it!
What they said leads me to include appendices 4, 5, and 6 here.
z Not only that, two overseas students, one from Kenya and the other from St. Lucia
in the West Indies, both born to parents of Indian origin, opened my eyes on where
we really stand on the world’s stage. I talk of this below.
You will see in Appendix 4 that a study of entrepreneurial activity in various nations
conducted every year since 1998, by Babson College, London, The London Business
School, The Kauffman Center for Entrepreneurial Leadership and Ernst & Young (UK),
say that the Total Entrepreneurial Activity Index averages 9.6 per cent for the whole
world and is 3.4 per cent for Asia. Where are we? We are an unbelievable 17.9 per cent!
Sorry, I take that back. We are one of the most entrepreneurial countries in the world.
One look around myself in India, and I see that there is nothing unbelievable in that.
And remember, size has nothing to do with this, as we are talking percentages.
So, we are recognised as being highly entrepreneurial, but the Global Competitive-
ness Index presented in Davos, (Appendix 5) places us at 43 out of 125 economies: we
are entrepreneurial but not at all competitive. We just want to stay at home and do
not want to step into the wide world to compete!
Then again, we are the world’s second biggest nation, but the International Trade
Statistics published by World Trade Organization (WTO), (Appendix 6) says that our
share of the world trade is a humiliating 0.7 per cent.
We stand nowhere in the world when it comes to competition and trade and yet, we
are declaring our arrival on the world’s stage!
I do not imply that we are not doing well. Surely, we are doing better than the previ-
ous years, but many tiny countries, which are a fraction of our size, are doing far better
xii z Unleashing Your Entrepreneurial Potential
in areas that matter. For example, post-war Japan, whose commanding position on the
world’s markets gave it a clout grossly out of proportion to its size or wealth, the Asian
Tigers and now China are increasingly dominating the world’s markets and are getting
in a position to demand respect. They have the clout that the world respects.
We already have our outstanding managerial competence which means that we can
succeed in any sector anywhere. If I add the unchallenged superiority of our intellects
and our inner spiritual strengths to this, we should have had a commanding position
on the world economy long ago.
But we are far from attaining any commanding position and there is something
missing.
Moreover, the younger Indian generation is of the opinion that what is missing is our
attitude towards entrepreneurship in manufacturing world quality goods and areas
like innovative tourism. Allowing the world to come here and exploit our huge markets,
and use our superb brain power in Information Technology Research and Development
(IT R&D) and outsourcing surely brings us money, but not clout.
To this I would add that it is only when our young entrepreneurs lead us to a com-
manding position in the world’s markets that we can get respect and be influential.
How the World Looks at Us

I have lived and worked with people of diverse races across the world and my views
on how the developing world looks at us are expressed throughout this book.
I have always maintained that to be able to sell to any market away from home, it is
essential to have friends there.
I would, further, like to add some delightfully refreshing comments of the two for-
eign students I mentioned earlier. They put forward three points:
1. Indians are only interested in India.

The students said that the most remarkable thing about being in India and talk-
ing to Indians here is that no one is interested to know about the countries they
come from and about their life there. The overwhelming feeling is that India is
surrounded on all sides by India and the only other country that matters is the
USA, albeit far away. People have no interest or awareness about what is hap-
pening in, say, Africa or the Carribbean except, of course, when India is playing
cricket there. Sure, many youngsters can give you the personal details of players
in the West Indies team, but ask someone to show the place to you on the map
and the topic is changed.
2. The perception of the common man-on-the-street in most of the smaller nations
is that India is a competitor; most of the East Asian nations are friends; and the
West is too high-tech to bother about.
This is something I have noticed myself too, because all the developing nations
are trying to make and sell low technology, labour intensive items like readymade
garments, leather goods and agricultural commodities, and this is where India
Introduction z xiii
competes with them. By contrast, these nations admire the success of most of the
East Asian nations because these have become a part of their daily lives. The com-
mon people there use mainly Korean, Japanese and, of course, Chinese products
in their everyday life; see most of the roads and bridges being built by Malaysian
and Korean contractors; and are familiar with telecom and aviation help being
provided by tiny Singapore. The small countries turn to these nations when they
are looking for technology, training and equipment for their low technology pro-
jects. India does not come into this picture.
3. Where is the international clout India is supposed to have?
Putting the aforementioned points together, it is no surprise that when faced
with international competitive situations, India finds it has no friends: be it the
election of top UN officials or the bidding for sites for future Olympics. When it
comes to voting on international platforms, people vote for their friends! This
gets extended and these nations prefer to trade with their friends too. So, the
list goes right down to selling a host of daily-use items like hardware, sewing
machines and bicycle spare parts where again India is losing its markets to small
nations from Fiji to Malaysia to Kenya and all the way to the West Indies.
Our Inward Looking Attitude

Listening to the young people express themselves was both exciting and inspiring.
They said, ‘Sure we are the world’s best, but who is there to assert the superiority of our
nation over the wide world, when all that our big firms want to do is to look inwards?’
The young generation feels very strongly about this and soundly condemns the
Indian corporate sector for its lack of competitive spirit. Strong words indeed, but no-
tice two things. One, you read earlier how our firms are meekly giving away the cream
of our expensively trained talent to foreigners. But there is also the fact that a growing
number of young professionals coming out of premier institutions are themselves
rebelling against big Indian companies for their entirely inward looking attitudes.
They are increasingly choosing not to work for such large firms because of the strong
corporate cultures that do not suit their personal beliefs or their character. They do
not like the degree of undeserved economic and political power that these corporations
wield merely by political manipulation.
To support this, the students first showed me a detailed analysis of the 50 top cor-
porate houses of India, excluding the recent IT and the newly emerging high-tech
firms. It seems that none of them, not one of the large corporate houses, is a net foreign
exchange earner! Huh?
Then they compare this with the large business houses in every successful nation
where the large corporations are the vanguards of overseas market penetration. A
householder in Kenya, who uses a National Iron or a Sony Walkman, is happy with
it and his respect for Japan increases.
At our side, it is a fact that we have always been inward looking and have never
tried to aggressively capture foreign markets. However, it is also true that this is now
xiv z Unleashing Your Entrepreneurial Potential
changing and there are some notable exceptions. But by and large, it is the world that
is getting unleashed into India and not the other way around.
The idea behind the opening up of our markets to Multinational Companies (MNCs)
was to upgrade our performance by exposing us to open competition: It was an excel-
lent concept, but it did not work. There are a number of case studies that show that our
firms either meekly stepped away from any sector where an MNC entered or joined
them and helped them produce consumer goods for domestic markets. There is not
a single instance of an Indian firm having held its own against an MNC on our own
home turf.
Moreover, the world finds it immensely attractive to come here and use our superb
brain power for IT R&D and back-office work. American business is not just shifting
research work because Indian brains are young, cheap and plentiful. Our engineers
combine skills, mastery of the latest software tools, a knack for complex mathematical
algorithms and fluency in new multimedia technologies that surpasses those of their
American counterparts. As Cisco’s Scheinman puts it: ‘We came to India for the costs,
we stayed for the quality, and we’re now investing for the innovation.’
z This has always been the case with us. It is only the others, the outsiders that have
been able to cash in on our unique skills and talents.
The world comes here, tells us what to do and we do it superbly and inexpensively:
They save money and we make plenty of dollars. But, this, in no way, makes us super-
ior in the eyes of the world.
The youngsters are particularly bitter about the top priority strategies of some of the
largest and the most successful firms who are shouting from the rooftops about their
grandiose plans to enter the retail sector and, for example, buy out entire cinema chains.
They are planning massive investments and even boast of the foreign retailers that
plan to join hands with them.
Of course, there is no denying that we need to upgrade and organise our retail and
entertainment sectors, and this is good for the shareholders and their image in the
country, but is this a step in the right direction to improve our presence in the world
markets? The students were keen to know what percentage of the goods, apart from
clothing and leather goods, sold in these massive malls were made in India by Indian
companies?
Who has Read Chanakya (Kautilya)?

I felt stunned, while talking to these youngsters. So would you have been, had you been
there. You will get what I mean when I take you on a trip to the past, via the northern-
most part of India.
I was saving the best for the last.
I particularly remember a very fair and petite student who was doing her MBA from
a premier institution in Delhi. She looked Chinese, and said that she was from the
northern most part of India: Ladakh. I found her as charming as intelligent. It was
Introduction z xv
much later that I found out that she was the grand-daughter of my colleague and close
friend, Dr Tashi Tongyal, who you will read about in Chapter 11. Talk of coincidences!
She told us that being snow-bound for most part of the year with no TV, and so on,
the educated youngsters in Leh get into the habit of reading. I was expecting her to
be like the most of her generation and say that she had read everything that Sydney
Sheldon or Fredrick Forsythe had written, but she surprised me by saying that she
had read all the translations of the works of the great sage Chanakya. She, also added,
that she could read Kanji, and had read the transcripts of the copious notes taken by
his Chinese disciples. These disciples were mostly interested in Chanakya’s discourses
on entrepreneurship and competition, and so took notes only on these.
This again came as a surprise to me, since the great sage, also known as Kautilya, is
known more for his work on statecraft and statesmanship than on entrepreneurship.
I myself had never thought of the sage in this light. All through my professional life,
my interests lay in the promotion of manufacturing and entrepreneurship and I have
not been the least interested in ancient Indian philosophy of any kind.
Seeing my blank expression the young lady went on to explain the life and works of
this sage of the 3rd century BC and I was amazed to find that she did not merely quote
him but had incisive comments and analysis to give. Being a management student,
she had been particularly interested in the great sage’s thoughts on entrepreneurship:
It showed him in a completely new and different light.
That night, I sat till the morning, making notes of what we had discussed. I was get-
ting more and more impressed with the calibre of the young professionals my country
is now producing: An MBA student presenting an in-depth analysis of the thoughts
of Chanakya!
She gave me many quotations, but I made separate copies of two quotations I found
particularly interesting. I had them engraved, and they are framed above my desk
at home.
The quotations are in the form of discourses to the King. Here is the first one:
My Lord, every living being, be it a lion in the forest, a fish in the river or a bird in the sky, has
been charged with the primary task of feeding itself. I may call this the task of earning one’s
own living.
Man is a superior being and is charged with some superior responsibilities. Of course,
the most sacred task for any man is to earn his living, but he has been charged with some
other sacred tasks too. He has to bring up and protect his family. Then he is charged with
the sacred task of building, strengthening and protecting first the society he lives in and
then his state.
Man can only do this by producing more than he himself consumes. Not only this, he has
to tirelessly strive to make himself better and better at whatever he does. This brings endur-
ing prosperity and prosperity brings strength and peace.
If the state is weak and withers away, no citizen can feel secure and at peace.
Remember this was said more than two thousand years ago! Of course, the young
professionals of my country are living up to what one of our greatest minds said,
but it would surprise you to know that most of the Asian nations have based their
business cultures on very similar thoughts of a later sage, Confucius of China. You
will read about this in Chapter 5, and a more detailed discussion in Part 3.
xvi z Unleashing Your Entrepreneurial Potential
I will close now, by giving you the other quotation that I have had engraved and
framed.
My Lord, your humble servant would like to pose a question to this court:
‘Loving the whole world and being kind to everyone’ are of course, very laudable thoughts
but then, how do you compete?
These are our children to whom

I fondly dedicate this book.
Preamble z 1
Part 1
Your Personal Skills
2 z Unleashing Your Entrepreneurial Potential
Preamble z 3
1
The New Face of Our Nation
Before we talk about the personal aspects of entrepreneurship, we need to have a

quick look at our rapidly changing nation. This is because the skills needed by the
next generation to succeed as entrepreneurs, do not have the remotest similarity to
the ones that made the earlier generations successful.
Here are some notes to lay the foundation for what is coming in this chapter:
1. In this book I talk to three kinds of youngsters:
z Young professionals wanting to go on their own.

z Children from business families who want to take their family business in
a new direction of growth.
z Young entry level executives in the fast changing corporate world.
2. My focus is to help you develop your entrepreneurial skills.

3. This is not a book about our performance on the economic front, globalisation,
multinational firms or direct foreign investment. Whatever is discussed on these
and other related topics is purely in the context of the main subject.
4. This book consists of personal experiences. You would not find here, any text
book element, or any of the enormous mass of material one reads on the Internet.
I have read a lot of this and, I assume, so have you. In the appendices, however,
I have included useful downloaded reference material indicating their respective
sources.
5. I will often be taking a hard look at ourselves from various angles and do some
plain speaking. There is no other way to prepare our youngsters for the very cut-
throat world of competition. I am neither running down my team, nor am I prais-
ing the opposing one. But when, despite the superior calibre of individual
players, our team loses matches, we do indeed need to talk about where we are
going wrong.
The New Face of Our Nation

The international media is all hyped about the two emerging entities on the world
scene—India and China.
But.
Read carefully what the world is saying. The major corporations say that they are
keen to do business with China and in India. They are making it clear that they will
treat China as a partner but will treat India merely as a market. Yesterday, I would not
have liked the sound of it. But today, my nation is not the same. We have changed and
are increasing the pace of change.
How?
I feel very strongly about this and have addressed this at considerable length in my
dedication. Let me quickly summarise what I said about who is taking us forward:
I see a bus.
I see our qualified youngsters, our new generation of professionals, firmly in the driving
seat. They are Indian to the core and I see them taking India forward towards a command-
ing position on the world economy.
I also see many passengers on this bus. They want to go ahead and get somewhere
but need to be driven. These are the sharp, brainy, enlightened, but highly westernised
youngsters. Sure, if you see them tomorrow, they would have gone ahead.
And then, we have the bystanders, the roadside spectators who will see the youngsters
moving ahead and wave at them. These people, our politicians, the hordes of political ac-
tivists, and the black-money class of our businessmen, are happy to be where they are and
are not at all interested to go anywhere. But yes, they can indeed ‘participate’ by throw-
ing stones and putting barriers on the road to our progress.
In this book as well as in my previous one, Unleashing India on World Markets, there
is neither any mention of government policies, nor a discussion on the role of the
state in the economy. The reason is simple: The days of the all powerful bureaucrats
and politicians are over.
z They are powerful only in a closed, inward looking economy. The more our entre-
preneurs venture out on to the world market, the more irrelevant these fellows
are becoming.
Do look around yourself: How much role did our politicians play in our resounding
success in the IT, R&D, Bio-tech, Pharma and Auto-component manufacturing sec-
tors? How much can our bureaucrats interfere? Except, of course, to create nuisance
by holding back resources for infrastructure.
Also, I am convinced that it is not so much the government policies as the attitude
of the businessmen and the people that takes the country forward. You will see in
The New Face of Our Nation z 5
Part 3 that similar closed door, protectionist, policies that we had in India produced
diametrically opposite results in Korea and Japan.
The Power of Social Stigma

This is an unusual topic for discussion in a book on entrepreneurship. Do bear with
me and you will agree that this is by far the most important concept that we need to
understand.
In simple words, the power of social stigma means, when a society solidly condemns
something, the people just do not do it.
Tragically, in India, the reverse is true. We do more and more of what our society does
not mind, and this has played its part in the mess that we are in. I have never read or
heard this term being used by our media.
I will explain by giving an easy to understand example from our daily life.
Every society is built upon what people learn from their childhood—things they,
as children see their elders doing. This is what gets embedded into our psyche and
this is what forms the basis of our nation’s character and attitudes. Remember, we
do not learn much from what our parents, elders and teachers tell us. All this goes in
from one ear and out from the other because we hear them telling us one thing but
doing quite the reverse.
What do our children see their elders doing? On the positive side, they see us rigor-
ously following certain religious traditions, they see our moral behaviour, and accord-
ingly imitate us. But, on the negative side, for example, in Punjab and most of North
India, they see the way the elders never ever trust each other; they hear a mother talk
nothing but nasty things about her in-laws; and they see how some of the elders bring
cash home in paper bags. They see all this and it becomes a part of their mental
make-up too.
So what happens? Well, two things: On the positive side, we see the moral behaviour
of our elders and we grow up with strong moral character. Moral character, is what
we Indians have in our blood. This is true across the length and breadth of the nation,
irrespective of caste, religion or social status, and sure, nowadays there is a decline,
but by and large, this is true today as it was yesterday.
For example, if a teenage unmarried girl from a middle class family in a small town
gets pregnant, it no longer remains a private issue concerning the family. Instantly,
the entire family becomes the subject of ridicule, the younger brothers would hesitate
going to school and the father may even consider committing suicide, not to mention
the horrors that are brought down upon the poor girl.
This is the meaning of social stigma. If you do something against well accepted so-
cial norms, the entire power of social stigma is brought down on you.
Now, take the same case anywhere in the West. The children in the West are brought
up on very different moral values. They routinely see their friends’ sisters getting preg-
nant, they see and hear their parents say, ‘Ho hum, what is new?’ There is no social con-
demnation and no one bothers about teenage pregnancies.
We will now come to the topic of the negative aspect of our daily life, I said earlier that
every society is built upon what the children learn from childhood and what forms the
basis of their characters and attitudes are things they see the elders do. How can we
expect our children to grow up and respect us when they saw in their childhood, that
we did not respect our parents? What if a teenager knows that the junior excise in-
spector in the next house has property worth crores? Or, he/she knows an uncle who
has always been a good-for-nothing crook but has joined politics, got elected, and is
now suddenly living very well?
We grow up never having heard anyone condemn all this.
These are generalisations but I think you have got my point: social stigma is a very
powerful weapon, but it works either way. If a Marwari cheats and breaks up the fam-
ily business, entire society comes down on him like a ton of bricks. The children grow
up seeing this and it gets embedded into their psyche. It is the same for a traditional
South Indian family—children see how the elders treat their elders and consequently,
respect for elders becomes a part of their society. Their family businesses are built
on this foundation.
On the other hand, children of the Punjabi families see that internal rifts, bickerings
and dishonesty with one’s own people are the norms of the day. They grow up seeing
that the children of the wealthy businessman across the street, who died last year,
have split and ruined the business. Or, an uncle has cheated his brothers and run
away to the US. So, how can anyone dare to tell them that breaking up a family busi-
ness is bad? As I said earlier, everyone makes it clear that he will trust no one and
that he expects no one to trust him, siblings included.
Social stigma is a very powerful weapon indeed, but it works either way. On the
positive side, it is responsible for a teenager getting pregnant being a comparatively
rare occurrence in India. On the negative side, we are unique in the world when we
repeatedly split up political parties because everyone wants to be the boss and make
the most money. Our society says that this is perfectly acceptable and respectable, and
we merrily go on doing this. We can only have coalitions as merger means bosses
giving up their status. And, a politician getting filthy rich is only a part of the game.
It is OK, there is no point blaming the fellow.
Ever heard of any party in the UK, US or Japan splitting? The reason is that while
children in these nations, indeed, grow up with very different moral values, they never
see an all powerful Margaret Thatcher being thrown out of her job and starting a new
party. What they never see is a junior excise inspector in the next house, strutting
around showing off property worth millions. And so on.
I have made three points above:
1. Family traditions of a particular community are not built overnight.

2. For anyone to learn from them, it will take at least a generation.
3. But it is imperative that we learn as we are no longer merely competing with each other
in India. Others are here, ready to step in and take over whatever we cannot do.
Perhaps, you have got my point, but I can see you asking yourself: what does all this
have to do with entrepreneurship and our competing with the world market? Read on.
Our Competitors are Brought up on a very Different Diet

Social stigma is one of the most powerful tools responsible for the mind-boggling suc-
cess of the Asian nations, right up to Japan.
People of Chinese origin anywhere in Asia, as well the Koreans and the Japanese, are
brought up from childhood on the teachings of the great sage K’ung Fu Tzu (Confucius)
(551–479 BC). He was a famous sage and social philosopher of China whose teach-
ings deeply influenced East Asia for 20 centuries.
z If you have not read about him, I suggest that you do. There are plenty of refer-
ences on the net.
The ‘Teachings of Confucius’ is a Chinese ethical and philosophical system and is

a complex system of moral, social and political thought. The cultures most strongly
influenced by Confucianism include those of China, Japan, Korea and Vietnam, as
well as various territories (including Singapore, Hong Kong, Taiwan and Macau) settled
predominantly by Chinese people.
His teachings are completely non-religious. He teaches the need for society to organise
itself and for people to form strong economic and social bonds at family, clan, village
and community levels.
He preaches that you must join hands and work together to defeat the outsiders.
And, this is driven deep into the psyche of the common man. If you do not do this, the
society condemns you. As simple as that!
I need to repeat what I said above. He preaches that you must work together to
defeat the outsiders. And, outsiders nowadays mean your competitors.
z Just think for a moment. All successful nations are like that. The French love
the French and hate everybody else. Same is the case with the Germans. This
is exactly the reverse of what we do. We love the whole world and hate our own
people.
z How can anyone compete against deep-rooted ideology? How can you compete
against someone who is a fanatic about, not personal growth, but the growth
of his firm, his community and his nation?
The followers of the great sage among the modern generation, have taken the teachings a
step further and believe that permanently destroying your enemy is better than winning
the battle.
Japan and Korea have captured the world markets by a determined policy of creating and
producing products that no one can compete against, in price or quality. Their first objective
is to kill the competition before it is born. Now, China is determined to become the sole
factory in the world by relentlessly upgrading the design, finish and variety of consumer
goods at a price that no one can match.
This is not anyone’s individual strategy. This is in their blood. Their people and their
society, demand that their entrepreneurs and their businessmen should do this. If they do
not, the entire society condemns them.
This is the power of social stigma.
I need to make it clear that all of this has nothing to do with personal morals, busi-
ness honesty, ethics and human kindness. I am not even remotely suggesting that
they are not corrupt, and so on. But they have their own code of ethics that they rigidly
follow. This is the reason why our people find it difficult to understand the Asians
and their code of ethics. This is also the reason why our people find the Japanese and
the Korean bosses here, very difficult to work for. Since you are not one of them, they
can be ruthless to the point of being cruel.
You will read a number of examples in this book where I have described the amazing
success of entrepreneurial ventures where a number of different small firms join hands
and work for the common good without any sort of a written agreement. The power of
social stigma makes sure that you do not cheat one of your own. Cheating others is,
however, a part of the game.
Before going on to the next point, I will point this out to you in chapter 5 where I have
asked four questions based on the teachings of the great sage. I know that all of us
would give very different answers.
Does Anyone Talk to us about this?

Whereever I go in India, read the Indian newspapers, talk to the professional students
and meet the people in social gatherings, I get confused. I cannot understand why my
entire country is so overwhelmingly westward looking. It is almost as if nothing else
exists.
Also, the exposure that the average young Indian professionals, the MBA and en-
gineering graduates, get; be it a text book or a book on popular management or light
reading in our newsmagazines or TV programmes, everything is again slanted towards
the West.
So is the case with our entrepreneurial skills. These have always had enormous in-
fluences from the West. India has always been known as one of the easiest countries for
Westerners to adapt to and to be comfortable in. And that’s the reason the way things
are done here and all our institutions are of the West, not the East.
So, now we thoroughly know and understand the West: We know how they live and
work; how they run their business and their attitude towards work; in short we have
a deep insight into their entire mindset. We can’t necessarily say all those things are
bad, but the strongest competitive challenges are now coming from the East.
It is the East that is ruthlessly capturing the Indian, and indeed, the world’s
markets.
Yet, our young people are taught nothing of the Eastern mindset.
Do we understand their mindset? Does anyone talk about this?
Surely, something is not right. I do not know the answer to that one, but I do know that
the West cannot teach us how to take India to a commanding position in the world mar-
kets. We need to look towards the East and understand their mindset.
There is only one way we can fight them: by understanding them and then confronting
them with their own techniques. Like the Japanese did, when they learnt marketing
from the Americans and then went and conquered their markets.
Menial vs Skilled Jobs

Late Mr S.L. Kirloskar wrote:
Whether India will be a leading player in the coming years will depend to a large extent
on how fast we increase the scope of our industrial activities and sell quality goods
abroad….Charity never gave anyone self-respect. Well paying jobs do. And industry
alone can create them on a mass scale. (Kirloskar 1982)
What the great Indian industrialist meant by ‘charity’ were the demeaning hand-
outs we give to our rural people in the form of various types of employment guarantee
schemes: paying people for doing nothing.
I do not pretend to be an economist or a social scientist, but I fully agree with Mr
Kirloskar in that, by simply creating more menial jobs cannot take us forward, this creates
more problems than it solves. Apart from initiating undesirable urbanisation, the me-
nial, unskilled or low paid workers become a burden on the state and society. While not
making any contribution to the economy at all, these workers need subsidisation of
their health, housing, sanitation, education, kerosene and ration benefits, and, they
need it lifelong!
The dictum of many successful developing nations has been ‘not more but better
jobs.’
No other country in Asia, not even high-flying service hubs such as Hong Kong
and Singapore, has climbed out of poverty or lower-middle-income status without a
manufacturing boom. Even in India, despite manufacturing’s low profile, it contrib-
utes a much higher share of GDP (16 per cent ) than IT does; it is the source of 53 per
cent of exports (compared with 27 per cent from services); and it is the destination for
four-fifths of foreign investment. In industry as in services, India has produced world
beaters: in pharmaceuticals, steel (where Tata Steel is the world’s lowest-cost producer),
in automotive components, precision forgings and now, in bio-technology.
On the other side of the coin, despite manufacturing’s remarkable success, the num-
ber of jobs in our ‘organised sector’, that is, firms employing more than 10 people, have
hardly changed since 1991. It is just above 6 million, out of a total of about 48 million
in manufacturing as a whole.
The needs of the Indian economy have changed beyond recognition. I seek to estab-
lish that now we do not merely need enterprising people who set up trading organisa-
tions to create wealth.
The need is less for labour-intensive projects and more for upgradation of employ-
ment levels.
We need entrepreneurs who create jobs—professional, well paying, managerial jobs.
z So, in this book, we will discuss entrepreneurship only in the context of creation
of professional jobs: jobs mainly in the manufacturing and tourism sectors.
The Way Ahead

I believe that for my country to become an advanced and globally competitive econ-
omy within the next decade, we must have manufacturing and services as our twin
engines of growth. This strategy would help diversify our dependence beyond any single
industry, sector or market, thereby reducing vulnerability and providing a broader
economic base.
Manufacturing must become an integral component of India’s new outward looking
economy, with capabilities in the entire manufacturing value chain beyond production,
from research and development and design to marketing and sales. We are weak in this
area because our manufacturing capacity is mostly in the small and medium scale sec-
tors. Unless we try to upgrade ourselves, we can make no progress.
Having said that, it should be noted that manufacturing can never become the base
for India’s growing economy, if India remains purely a production base. This is already
changing. We are on the way to positioning ourselves as a critical hub where MNCs
and our own firms use India as a base, both for the manufacture of high-tech high-
value-added products and to provide manufacturing related services to companies
all over Australasia. We are already moving upstream in the value chain of R&D and
design in some sectors like pharmaceuticals, bio-technology and automobile compon-
ents, and are encouraging overseas firms to have their regional operational headquar-
ters here.
Reference
Kirloskar, S.L. 1982. Cactus and Roses: An Autobiography. Pune: C.G. Phadke.
Preamble z 11
2
The New Definitions of Entrepreneurship
The Approach
Entrepreneurship is a highly context-sensitive activity and it can mean different things
in different circumstances. So, there are many text book definitions.
Because the focus of this book is on entrepreneurial skills rather than on the vast
subject of entrepreneurship itself, I am starting with a very limited discussion on the
new definitions of entrepreneurship in the context of rapidly globalising India.
The idea is to lay the foundation for what has to follow in the subsequent chapters, as
well as to explain the approach I am taking to the subject.
The needs of the Indian economy have changed beyond recognition. I seek to establish that
now we do not need only enterprising people who set up trading organisations to create
wealth.
The need is less for labour-intensive projects and more for upgradation of employment
levels.We need entrepreneurs who create jobs—professional, well paying, managerial jobs.
z So, in this book, we will discuss entrepreneurship only in the context of creation
of professional jobs: jobs mainly in the manufacturing and tourism sectors. The
entire focus of this book is to help motivate and train our youth to go out and
create, not menial or unskilled, but professional jobs.
Three points:
1. I have noticed that before the management, engineering and tourism students
come to my workshops and seminars on entrepreneurship, they have already
surfed the Internet and familiarised themselves with the subject. I think I can
safely assume this for my readers too, so I will try not to repeat what you are
likely to have read.
2. I said earlier that there are many kinds of entrepreneurial activities and it is
clear that the entrepreneurial skills and training needed by the rural self-help
groups in India are nothing like the skills needed to promote, say, a tourist
resort. These again are markedly different from the entrepreneurial skills and
training needed for the promotion and management of IT, software and sectors
like BPOs, and so on. Any discussion on these is outside the scope of this book.
3. I have already said that entrepreneurship should only be taken to mean creation
of professional jobs, so almost all kinds of trading activities, such as the setting
up of retail and wholesale outlets, and service activities, apart from tourism, are
also outside the scope of this book.
Entrepreneurship in the Indian Context

Everybody says we need to create more entrepreneurs to keep the economy rolling. Every-
body also says that finding them won’t be easy because we are a conservative-minded
nation, but I do not agree. So let us begin by being clear about what we mean by the term,
in the Indian context.
There is no general definition for the word, as the term has come into common usage
in India only a few decades ago. It has been used in a large variety of ways and has been
defined in different ways by different people.
As far as the classic text book definitions are concerned, they are almost all of American
origin. The term entrepreneur applies to someone who establishes a new entity to offer a
new or existing product or service into a new or existing market. These are people who,
based on a strong feeling about a market opportunity, are willing to accept a high level
of personal professional or financial risk to pursue that opportunity. These people
do so without any regard to resources currently controlled. In other words, if they do
not have adequate funds on their own, they still push ahead, being confident of being
able to raise the money.
Some of the classic text book definitions used in India are:
z Entrepreneurship is the process of creating wealth by bringing together a unique

package of resources to exploit an opportunity.
z Entrepreneurship is the practice of starting new organisations, particularly new
businesses generally in response to identified opportunities.
z Entrepreneurship is about risk-taking, as many new businesses fail.
In the context of the new emerging India, I would condense and modify the above to
say that:
Entrepreneurship is less about creating wealth than about creating new organisations
that generate upscale employment. But of course, any successful organisation is sure to
The New Definitions of Entrepreneurship z 13
create wealth in the long-term. As regards risk-taking, surely there would be risks, but
a good entrepreneur does his homework so thoroughly that the risk is minimised. The
Japanese are notorious for not taking risks, and yet they are highly entrepreneurial. This
is because anybody and everybody connected with the idea is included in the discussion
process and every idea or proposal is taken apart and discussed threadbare. This takes
time, but prevents heartbreaks.
In other words, an entrepreneur is a risk-taker who enjoys the work he is doing and
has a fully integrated personal and professional life. Entrepreneurs are not only repre-
sentatives of their company, they are the company. They are the image; they possess
the skills and knowledge and in the last analysis, they are the limits of what the com-
pany is capable of doing.
The Motives
The answer to the question of why should one become an entrepreneur in India, depends
on the person we are talking about. In the context of our discussions, he/she could
be any of the following:
(a) Someone who wants to do something on his/her own, or

(b) Someone from a prosperous family who wants to take the family business in
a new direction, or
(c) A young executive in an intrapreneurial organisation.
Broadly speaking there is entrepreneurship that comes by way of necessity and there
is entrepreneurship that comes from opportunity.
Till the last decade, being entrepreneurial in India simply meant starting any busi-
ness and the reasoning given invariably was that good job opportunities were few and
far between. So that meant entrepreneurship by necessity—start a business if there
was nothing else to do so.
Now, by raising the standard of living and providing many jobs, India has raised
the bar to the point where necessity-based entrepreneurship has been virtually wiped
out: Nobody needs to set up an industry simply because there is nothing else to do.
Is that a bad thing? Maybe, maybe not! We will talk about this in Part 2.
Talking of entrepreneurship that comes from opportunity, if we look at wealthy coun-
tries like the US, we see many instances of entrepreneurship that is not driven by
necessity, in all sectors. We see young people detecting opportunity in simple concepts
like a coffee house or a video store and build billion dollar empires like Starbucks and
Blockbuster. Look at Hong Kong (also Singapore) where you have more entrepreneurs
per square foot than almost any other country in the world. Yes, all over the world, there
are people who have good employment opportunities, yet are seeking that dream and
willing to take a risk.
Surely, there are an increasing number of people in India who have other avenues
open for them, but choose entrepreneurship for the challenges, the rewards and maybe
the glamour. But the irony is that most of them have been enamoured of the high profile
IT and the BPO sectors.
Indian Entrepreneurial Mindset

I would have like to say that things are changing here too, and that there are an increas-
ing number of young people who fit in the first two categories I mentioned above, that is,
of those who want to do something on their own, or those who want to take the family
business in a new direction. But that does not seem to be happening.
This may sound strange but it is true. I know it from my own experience.
When I go into professional institutions, I ask the MBA or postgraduate Engineering
students what they want to do when they leave college. The unanimous reply is that
they what to join an MNC, failing which, they will work for a Lala company1 for some
time and then do something on their own. When I press them into telling me what they
would do when on their own, the reply is, ‘Get into marketing, or consultancy, or some
good agencies and set up a trading firm,’ in that order.
This seems to be the meaning of ‘seeking that dream and willing to take a risk’,
and this seems to be the meaning of entrepreneurship to us.
The very attitude of an entrepreneur reflects that of a person who is willing to put his
career and financial security on the line and take risks in the name of an idea, spend-
ing time as well as money on an uncertain venture. Do we have such people? Why are
our talented young people moving away from entrepreneurship to seeking employment
with MNCs? For an answer, we need to ask ourselves if there are any common traits
among entrepreneurs in India.
Yes, there are three.
z One, almost every single successful entrepreneur seems to have skipped school.
Probably they never fitted into our school system, and maybe they ended up as entre-
preneurs because they escaped the brainwashing that goes on in our schools and
colleges that eventually makes us job oriented.
z Two, our style of entrepreneurship is very much the lone ranger, I-am-the-boss
kinds. Nobody works with anybody and no one trusts anyone. I will buy from
you or sell to you but never work with you! Though we have produced many
great workers and managers, an employee’s ability to think independently has
been a disqualification.
z Three, the mentality of why should one does something that someone else is will-
ing to do for one? India has always been known as one of the easiest countries for
Westerners to adapt to and to be comfortable in. ‘Let them come here and set up
the larger manufacturing units and we will take agencies for what they make.’
It is to the credit of the next generation that in the last few years the profile and rec-
ognition of entrepreneurs has been raised. Ten years ago, the word ‘entrepreneur’ was
not even in our vocabulary. We only had ‘businessmen.’ And they were generally thought
The New Definitions of Entrepreneurship z 15
of as sleazy and money-grubbing, concerned more with avoiding the taxman than with
improving quality and finish of their products.
Further, our entrepreneurial skills have always been enormously influenced by the
West. And that’s the reason why things are done here the way they are and why all our
institutions are biased towards the West, not the East. We can not necessarily say all those
things are bad, but the strongest competitive challenges are now coming from the East,
and our young people are taught nothing about the Eastern mindset.
A question needs to be asked. How long is it going to take India to create an entrepre-
neurial mindset?
To some extent, it is already happening but it will probably take a full generation to
do so completely. We need more role models, more success stories and critical mass. It’s
not just about finding and grooming more entrepreneurs. In the new India, an entre-
preneur’s first dozen or so employees really have to be treated as co-entrepreneurs, in a
way. They may not take the full risk, but as members of a small and young team, they
need to have a slightly different mindset. If they think that everything will be neatly
laid out for them in terms of what they should be doing, it won’t work.
So how do you find the people who will work for you? This is a tough one. You can’t hire
people for whom you will need to do the thinking. You have to encourage diversity and
hire people with some ability to execute independently.
Here again, things are looking up and graduates from some of the better institutions
are showing greater ability to think out of the box. They have been exposed to alter-
native ways of thinking and they don’t take everything as exactly what it is said to be;
they tend to look at things from a different point of view.
These are the people that will take India forward!
The New India

I lived and worked outside India for over 35 years, during which I visited her many a
time. I have started looking at my country from an outsider’s view-point and thus, am
taking a unique and different approach to the subject. I would say that six critical as-
pects have changed:
The new entrepreneurs have changed. The next generation of India is a breed apart
from the earlier generations, regarding talent and the aspirations. They are brilliant,
inquisitive and challenging, and far more eager to leave their mark on the world. Our
youth, with their newfound vitality, calibre and the remarkable capacity for sheer back-
breaking hard work, are the driving forces behind the astounding changes in the mar-
ketplace. They resent orders—they need directions.
The rules of competition have changed. Our young entrepreneurs are no longer
merely competing with each other. They know they do not have the protection of the li-
cense raj. They know that rampant globalisation has brought all kinds of people into all
the aspects of Indian economy.
The very meaning of entrepreneurship has changed. The days of making cheap imita-
tions year after year are gone. Now you need to relentlessly upgrade, improve and
innovate, repeating the process continuously. The tragedy is that the teaching of indus-
trial product design, the most critical subject for this, is disappearing from the Indian
academic curricula.
The markets have changed. We have had astonishing changes in recent years, mak-
ing the older concept of entrepreneurship meaningless.
The attitude of the Indian corporate world has changed. Indian companies now con-
sider training their junior executives in entrepreneurship, an essential asset, rather than
considering it as a risk of the executive leaving and starting something on his own after
the training.
Our position on the world market has changed. Our youth have realised that merely
performing well on the world markets is not enough if the others are performing better.
Everything boils down to competition.
A Quick Summation
z Rule 1: ‘ You do not have to do it alone.’ Forget our centuries-old mindset. It is good
to reach out, to ask for help, to outsource your mundane activities and to team
up with like minded people and work with them. You will read more about this
in Chapter 5.
z Rule 2: ‘ The pie is big enough for everyone.’ Establish alliances and partnership
with complimenting organisations and institutions. The most effective market-
ing strategy is based on referrals from partnerships and alliances. Learn from
what I say of the overseas Chinese in Chapter 15.
z Rule 3: ‘A five-year business plan is a box you don’t want to live in.’ If you think
you need someone else’s money to start with, you will be marching to the beat
of someone else’s drum. Learn from what I say in Part 5 about raising money.
z Rule 4: ‘Recognise your successes.’ Success comes from your personal assessment
and acceptance of accomplishments. You must make time to sit back and enjoy
what you are doing and what you have accomplished. Even the small things like
making your first presentation or public speech. There is more for you, on this, in
Chapter 4.
Note
1. A local, individually-controlled company.
Preamble z 17
3
The New Entrepreneur
While talking about our next generation, I have a unique advantage. My professional
work over the last 35 years has been such that I have been able to live and work with
executives and entrepreneurs in India as well as in many developing nations all
across the world. I have seen both grow in their own ways, and I am looking forward
to talking about this here.
During my frequent visits to India in the last few years, I have been overwhelmed
by the collective euphoria over our huge international success, particularly in the soft-
ware field. Our children in the US and our software companies here are glowing ex-
amples of what my country is capable of.
People get emotional while talking about how, at last, we are able to teach the world
a lesson. Of course, I too feel proud too when I look at our next generation, but when
I go to other countries in Asia and look at the people that we are competing with, I
feel equally strongly about what we easily can be.
That, my readers, is the focus of this chapter:

We take a hard look at our youngsters who are doing such a remarkable job of taking
India forward, and then we also take an even harder look at the youngsters of the Asian
Tigers— Malaysia, Singapore, Taiwan and Korea, who have taken their countries further.
It has always been my principle in life to try to understand the mindset, the way of life and
the work ethics of my competitors and then try to hit them with their own techniques.
We will do the same here.
I am dividing this chapter in four sections:
Section I: First we will take a hard look at the new breed of our entrepreneurs and
executives.
Section II: I will take you on a very interesting trip to the US, the main battleground
of international competition.
Section III: Then, we will take a hard look at the entrepreneurs and executives of
the Asian Tigers.
Section IV: Lastly, for the benefit of my young readers, I will spell out some useful
‘mantras’ to help them in their professional lives.
I: The New Breed of Our Entrepreneurs

The Youngsters who are Taking India Forward
When I am in India these days, I look around myself and see the youth of our country.
I hardly recognise them: They do not have the slightest resemblance to what we were
at their age.
Things are indeed looking up and graduates from some of the better institutions are
showing greater ability to think out of the box. They are getting exposed to alternative
ways of thinking and they don’t take everything exactly as what it’s said to be; they tend
to look at things and analyse them from all points of view.
I can see that the next generation of India is also a breed apart from the earlier
generations, with regard to talent and aspirations. They are brilliant, inquisitive and chal-
lenging, and far more eager to leave their mark on the world. Our youth, with their new-
found vitality, calibre and the remarkable capacity for sheer back-breaking hard work,
are driving the astounding changes in the marketplace.
Indian society is going through rapid technological evolution and this is one of the
reasons that the relationship between the young and old is becoming a dialogue, rather
than a lesson. It should be noted that now parents have little to offer their children in
terms of professional guidance because their knowledge is no longer relevant. Adults
don’t have all the answers any more and are not in a position to tell young people what
to do. This is affecting the traditional role of authority in a delightful way because it
brings generations closer together: The young cannot rebel against helplessness.
Rebelling against Big Companies

But there is one strong theme that seems to unify many youngsters. As I said in the be-
ginning of this book, our new breed of professionals has, no longer, ‘getting a good job’
as their top priority; or rather, any priority. A growing number of young professionals
are rebelling against big companies. They object to the undeserved economic and pol-
itical power these corporations wield. On a personal level, they are increasingly choos-
ing not to work for such large firms that have strong corporate cultures that do not suit
their personal beliefs or their character.
This might seem odd, at first glance. It is also a fact, that our companies are becoming
more youthful and are offering more responsibility and opportunity to the young, thus,
The New Entrepreneur z 19
allowing more scope for youthful individualism. So, what is the problem? The reality
may be that although traditional firms are changing for the better, attractive alterna-
tives are popping up even faster.
Thanks to the technology boom, the opportunities to work for a new enterprise, or
to start one yourself, have multiplied enormously. The mindset of our budding young
executives has undergone a remarkable change. They no longer have to make safe bets
by sticking with big firms to protect their careers. More and more young people are
choosing to turn away from the corporate world to take their chances with smaller, faster-
growing firms where they have the opportunity to do more, have more fun, and give their
personality free rein.
As such entrepreneurial firms grow in number; the pressure for established firms
to encourage their own youth movements gets stronger. Technology and a tight labour
market have done more to break down the walls of a corporation than any amount of
protest.
In the past, our youngsters had a lot more stumbling blocks in their careers, and they
were never so outstandingly successful as the youngsters of today. In today’s India,
youth is increasingly a powerhouse, both at work and in society at large. Thanks to tech-
nology and the ever-accelerating change, they know all this and are thoroughly enjoying
themselves. They are bright and full of optimism; and every day is a keenly anticipated
brand new day. They see the world with fresh eyes every day. The young in today’s India
will be the richest, best-educated and healthiest generation in history, and the largest
one, too. The future belongs to them.
I am sure their accomplishments will exceed our wildest dreams. We are in the
middle of a changing of the guard. The young are moving from the shadows, towards
the spotlight in the workplace, thanks to a convergence of forces that play to youth’s
strength—from technology to the pace of change to the tearing down of the traditional
corporate order.
These days, young people are increasingly creating their own environment, thanks
to the shift in power that gives them opportunity, responsibility and tools that were
once reserved for their elders.
The same has happened to all types of entrepreneurial activities. It is to the credit of
the next generation that in the last decade or so, the profile and recognition of entrepre-
neurs has changed beyond recognition.
A Quick Summary
Now, let me summarise what I see of you, as the new entrepreneurs who will take India
forward.
1. You have Technological Adeptness. The technology you grow up with can have
a profound impact on your life, even if you are not particularly interested in it.
If there is a digital divide today, it is between generations. Most of the Indian
households with children have computers with Internet access. Youngsters are
technologically precocious, growing up with a rattle in one hand and a computer
mouse in the other. By contrast, the Indian adults who do not have children at
home generally do not have Internet access, and the group that is least inter-
ested in getting online, consists of those over 50 years of age. For the first time
in history, children are more comfortable, knowledgeable and literate than their
parents about an innovation central to society.
2. You are Immersed in Technology. The profound difference between learning
something and being immersed in it is familiar to language students. There is
the same sort of difference between the way young people and adults approach
technology. Children are immersed in it and adults have to make special effort to
learn it.
3. You Welcome Change. Our young adults are, by nature, better suited for the
unpredictable workplace of the future. They have less baggage and can, there-
fore, afford to take risks. Young Indians are getting married at a later age and
the women are giving birth much later as compared to their mothers. Each gen-
eration is born into an era of rapid change, making them ever better adapted
for the frenetic world they are about to enter.
4. You Think Differently. While years of training and experience were once con-
sidered necessary to succeed, young entrepreneurs now increasingly see them
as irrelevant, even a liability. Young companies are running circles around their
older, richer, slower rivals. It is a good idea to remember that if you want your com-
pany to think outside the box, try working with people who don’t know there is
a box. This trend is already showing up in teenagers with self-taught technical
skills. They know that they will never again be as quick learning and full of energy,
as they are now.
5. You are Independent. One of the most pervasive business trends of the past dec-
ade has been the rise of the ‘self employed’ caused by the breakdown of the social
contract between companies and employees. Today’s twenty-somethings came of
age when that social contract was dissolving. They have never expected loyalty
from a company, nor are they looking forward to giving it. They define them-
selves by their skills, not the firm they work for. The overwhelming majority of
graduates see their career at graduation not as a straight line of advancement
in one company but as a zigzag path from company to company, job to job, skill
to skill.
6. You Don’t Need Job Security. Our children face an employment market that offers
no hope of long-term job security with any one employer. The new economy, being
unpredictable and fiercely competitive, has shaped the habits and career ex-
pectations of our youth. All they have known is a technology-based economy
that moves quickly, downsizes constantly and places a premium on change.
Young managers are quick to roam from job to job, hungry for quick results, wil-
ling to do things differently.
7. You are Entrepreneurial. With a booming economy, capital for the taking and
unprecedented technological opportunity, it is of no surprise that more young
people are thinking of striking out on their own. When asked to name their hero,
almost everyone would take the name of Bill Gates (who dropped out of college to
start Microsoft) or the senior Ambani. Nor is this just the bravado of callow youth.
By the time they enter university, most teenagers know far more about the busi-
ness world than their parents ever did.
8. You want opportunity more than money and security. Given the choice between
being someone’s assistant or getting real responsibility and challenges, a lot of
young people are going to smaller companies. Given the strength of the economy,
they know they will not starve whatever they do. So, they prefer smaller com-
panies because that is where they get ‘real responsibility and challenges’ that
allow them to grow professionally much faster. And job security, well, is there
such a thing any more?
9. You Demand Respect in a way young people never could before. Thanks to the
tight labour market and the high demand for technical skills, young people have
a say over their future, and no longer need to defer to older generations, be they
parents or bosses.
I repeat what I said above about the prospects for the current new generation be-
ing brighter than for anyone before. We have an entirely new breed of youngsters, due
to the economic boom that has been running for nearly their entire memory, and their
parents being increasingly affluent, employed and compared with previous generations,
much more in touch with their children’s interests.
It has made today’s youngsters aware that they will be entering a changed, highly
competitive world, where their ideas, skills and talent will be valued only if they have the
correct training.
Surely you are good, but so is the fellow sitting in the next seat in your class.
z So, how well we are doing is not important: how many others are doing better is
more crucial. Like, when I was in College in the early 1950s, passing in first division,
getting more than 60 per cent marks was considered an outstanding achieve-
ment. You know how this is looked at, now. 60 per cent is good, but there are many
who leave you behind!
A Small Wet Blanket

I hate to break this delightfully euphoria-filled line of thought, but I have to explain the
apparent conflict between what I just said and what I said in the previous chapter. I
said in the preceding section that it is our youth that is taking India forward, but in
the previous chapter I said that the need is less for labour-intensive projects and more
for upgradation of employment levels, and we need entrepreneurs who create jobs—
professional, well paying, managerial jobs which does not seem to be happening.
Well, both are true. Indeed, our economy is booming and the credit for this goes
completely to the newcomers who were nowhere on the scene, 10 to 15 years ago.
But looking at the direction they are taking our economy, where are we headed? The
new employment we are creating is, overwhelmingly, in the services sector. Looking
dispassionately, this simply means that the world likes to give us work because we are
good and everyone likes to come here because of the increasing opportunities we offer.
This does not give us any commanding position or any clout over the world economy.
What sort of jobs are we creating? Apart from the IT sector, are we upgrading employ-
ment levels? Are we creating better paid jobs across the board, rather than just more
jobs, for our professionals—our mechanical, electrical, mining, metallurgical and chem-
ical engineers? Published statistics do indeed show that we have made some remark-
able progress in manufacturing, but the same statistics show that the number of jobs
in the ‘organised sector,’ that is, firms employing more than 10 people, has hardly
changed since 1991.
Well, something is not right, and I think it will be a good idea to take a hard look at
the youngsters of the Asian Tigers because their economies seem to be going in a better
direction. Before taking you to study the army that is putting up such a tough fight
for us, let us go straight to the battlefield—the marketplace, where the main battle
is taking place—the US.
z From this point onwards, my readers would detect a strong undercurrent of a

thought running throughout this book: That we are good at everything except at
working with each other.
z The fact that we do not easily trust each other, that someone will buy from you
or sell to you for years and yet never work with you, is holding us back.
z This is a complex issue and I will be looking at it from various angles.
II: Let us Go to the US

I have found an excellent person who can help us with some information. Meet
Dr AnnaLee Saxenian.
Dr Saxenian is Dean and Professor in the School of Information and Professor in the
Department of City and Regional Planning at the University of California, Berkeley.
Her most recent book, The New Argonauts: Regional Advantage in a Global Economy
(2006) explores how the ‘brain circulation’ by immigrant engineers from Silicon Valley,
has transferred technology entrepreneurship to emerging regions in China, India,
Taiwan, and Israel.
z I would strongly suggest to my readers to read some of her publications and

speeches, on the performance of immigrants in the Silicon Valley, on her website.
There are a few lessons to be learnt there. In particular, I would refer you to
Saxenian 1999.
Though this paper is now more than six years old, the data and the arguments still
remain valid. Building on her earlier research on Silicon Valley, Dr Saxenian takes a
careful look at the role of immigrant capital and labour in the development of Silicon
Valley that is now considered an economy by itself and is an example of how a region
can develop.
She finds that immigrants account for one-third of the scientific and engineering
workforce in Silicon Valley and that Indian or Chinese Chief Executive Officers are run-
ning one-fourth of all of the high technology firms in the region.
The focus of the study is Asian immigrant engineers and scientists in Silicon Valley.
When local technologists claim that ‘Silicon Valley is built on ICs,’ they refer not to the
integrated circuit but to Indian and Chinese engineers. This case has relevance beyond
the region.
She makes four points that have relevance to our discussion here:
1. The maximum contribution of brainpower to the Silicon Valley is by the Indians,

but it is the Chinese that are drawing the maximum benefit.
2. Comparing the average productivity per person of the firms of the same size, the
Chinese owned firms come first, Americans second and Indians last.
3. Again, comparing the average wages per person of the firms of the same size,
the Chinese owned firms have the highest and Indian owned ones the least.
4. The Chinese build strong cohesive associations that command respect and have
a clout. The Indian associations are known for their divisiveness and internal
bickering and that they often split up.
Some extracts and some comments:

The Chinese are simply better organised and this is reflected in all spheres of activity. The
National Taiwan University Alumni Association in the Silicon Valley has 1,500 members
in the Bay Area, and Chiao-Tung has 1,000. These alumni associations are extremely
active and serve as important sources of trusted personal and business contacts among
the Taiwanese engineering community in Silicon Valley.
(Saxenian, 1999)
The Indian Institutes of Technology (IITs), which are our elite engineering institu-
tions, appear to have played no such role among Indian immigrants to Silicon Valley.
Indian Alumni Associations are insignificant and disorganised.
It is a prominent characteristic of the successful Chinese entrepreneurs all over the world,
and a very common experience in the Silicon Valley that the successful entrepreneurs
become community leaders and role models for subsequent generations of Chinese
entrepreneurs.
As their communities grew during the 1970s and 1980s, these immigrants responded
to the sense of professional and social exclusion by organising collectively as well. The
feeling of being an outsider, not knowing the language, and so on was common for Chinese
immigrants in that period. This sense of being an outsider was reinforced in many ways.
They often found one another socially first, coming together to celebrate holidays and fam-
ily events with others who spoke the same language and shared similar culture and
backgrounds. Over time, they turned the social networks to business purposes, creating
professional associations to provide resources and support structures within their own
communities. The institutions they created have mirrored those created in an earlier
generation by native engineers in the region.
(Saxenian, 1999)
There is nothing even remotely close to this among the Indians, and this contrasts
sharply with the arm’s-length behaviour of Indians in the US towards each other, in
general, and towards newcomers, in particular. It is a rare Indian student or job hunter
who finds any social or community support, except from immediate family members who
happen to be there.
The networks Silicon Valley’s Chinese immigrant entrepreneurs are building are not
simply local. They have far-reaching professional and business ties to regions in Asia.
They are uniquely positioned because their language skills and technical and cultural
know-how allow them to function effectively in the business culture of many Asian coun-
tries. A transnational community of Chinese—primarily Taiwanese—engineers has thus
fostered two-way flows of capital, skill, and information between California and the over-
seas Chinese people in countries like Taiwan, Malaysia, Singapore and Thailand. In this
process, Silicon Valley–based entrepreneurs benefit from the significant flows of capital
that these immigrants coordinate, as well as from the privileged access that they provide
to Asian markets and the region’s flexible, state of the art semiconductor and personal
computer manufacturing capabilities.
(Saxenian, 1999)
It is true, Silicon Valley’s Indian engineers have played a similar role, linking tech-
nology businesses in Silicon Valley with India’s highly skilled software programming
and design talent.
But this role has been played more at an arm’s length. ‘I want to help you, can tell
you what to do, and how to do it and give you all the contacts, but leave me out of it.
I am busy with what I am doing.’ The result of that attitude is reflected in the poor
productivity of our people (Table 3.1).
Table 3.1 1998 Sales and Employment of Silicon Valley High-Technology

Firms Led by a Average Sale
Chinese or Indian No. of Total Sales Total Per Employee
CEO Firms USD Million Employment USD
Indian 774 3,588 16,598 216,110
Chinese 2,001 13,237 41,684 317,555
Source: Dun and Bradstreet database 1998. Quoted in Saxenian 1999.
Note: The average sale per employee of all the technology firms in Dun & Bradstreet database, 1998
for Silicon Valley is USD 242,105.
III: The Mindset of the Asian Entrepreneurs

Now, A Short Trip to Malaysia
I am going to tell you a story—a Malaysian story. In this story I will not talk about
Indians in India, but about Indians who have lived in Malaysia/Singapore for gener-
ations and who, in many cases, have never been to India. But, it is surprising to note
that in attitude, thinking and behaviour, they are exactly the same as our folks back
home. The following description of how a car mechanic in Malaysia runs his business
could well be the description of a fellow in Bhagalpur.
z I wish it to be clearly understood that it is very much outside the scope of this
book to discuss the business ethics, and so on, of the overseas Chinese or of any-
body else, for that matter. We shall be talking only about the art of working to-
gether, the art of integration of diverse capabilities, that too, only in the context of
how the Chinese are able to do things that we cannot. This will lay the foundation
of what I will be talking about in the subsequent chapters.
There is a common saying in Malaysia:
z While driving in the Malaysian countryside, if you have an accident and your car
is damaged, you should hope that the nearest mechanic is a Chinese. But if you
are hurt, you should pray that the nearest doctor is an Indian.
Before proceeding further, a word on the ethnic composition of Malaysia. The nation
consists mainly of people of three racial origins—the Malays who trace their origin to
the Arabs, the Chinese and the Indians. All are Malaysians, have local citizenship and
are either called Malaysian–Indians or Malaysian–Chinese and so on.
The Indians, especially the South Indians, were brought in by the British as in-
dentured labour; and the Sikhs for the police force. The other people followed as
traders. Today, Indians, about 10 per cent of the population, overwhelmingly form the
working class and are into small time trading. Some have done well and have educated
their children to be professionals—doctors, accountants and lawyers—but there are
very few architects and engineers. Indians the world over do very well only in profes-
sions where one can look forward to being self-employed.
The Chinese, in contrast, are almost everywhere and are the work engines of the econ-
omy. The Malays, with the encouragement provided by the government, are catching
up fast. The Indians are losing ground everywhere. But that is another story.
I also need to explain that, much like the situation in India, there are no large clinics
in the small upcountry towns in Malaysia—only the small individual doctors’ clinics of
various specialisations. Similarly, for auto repair, there are only small mechanics do-
ing minor repairs in the countryside, as the large automobile workshops are only in
the big towns.
Coming back to the common Malaysian saying, the reason one wishes for the nearest
doctor to be an Indian is that our people make the best doctors anywhere in the world.
They are clever, considerate, take genuine interest in their patients and one can wake
them up at any time of the night.
Notably, the doctor works purely as an individual, but that is all that you need for
emergency treatment. On the other hand, if your car is damaged, you may need an en-
gine mechanic, a body repair workshop, an electric wireman, an aircon mechanic, and
so on, or all of them, before you can get on the road again.
If you take your car to a small town Indian mechanic, if he is, say, an engine mech-
anic, he will do the repair work he is good at and direct you to the other mechanics as
required. If he needs any spare part, he will invariably, not have any in stock and you
have to wait till he gets it from the nearest source. The other fellows would also be in
small independent workshops. Each will do only his job and have an arm’s-length at-
titude to the other problems you may have. Everyone makes it clear that he is an indi-
vidual and minds his own business. You pay him and then pay the others separately.
However, if you find a Chinese mechanic, no matter what his particular skill is, he
will have a good look at the problem, and tell you to go across the road and have a cup
of coffee. You will be surprised at how organised he is. He will create an instant net-
work of other Chinese mechanics to participate in the repair of your car. ‘Participate’
is the correct term as you will be surprised to find that the other mechanics are
quickly informed, and a schedule of work is set up. Remember, all are independent
workshops, can even be some distance away, but you will be amazed to see them work-
ing as an ‘instant consortium’. Before you know it, the spare parts are already on the
way. Though the first point of contact would not automatically assume the role of the
leader, you will see that your work gets done with an incredible degree of efficiency
without any one being the leader or the boss. Each is clearly his own boss, but works
as a part of a unique team to seize the opportunity that has arisen. You can pay your
first point of contact by credit card or cash for the entire work done.
What is the lesson of the story?
At the end of the day, one finds that though there are plenty of excellent Indian car
mechanics in Malaysia and Singapore, they remain small and the business dies out
with the old man. The children have nothing to inherit unless they become mechanics
too. Even then, there is work only for one son. The Chinese mechanics do much better,
are more expensive, yet do better business and can afford to build their businesses
into small organised set-ups. Most can afford to carry a good inventory of spare
parts. Often the whole family is involved. An educated daughter may be working as
a secretary during the day, but she sits in the shop in the evening to help out.
The Korean Entrepreneurial Mindset

In this section, while giving you an insight into the Korean mindset, I will tell you
about an incredible situation that was occurring right under our noses but none of the
people I spoke to were aware of what was happening and why.
z Do read this section carefully as there are many lessons to be learnt.
The first lesson is that you cannot really understand someone’s mindset, the way
he works and does business, unless you have been really close to him and he has
treated you as a friend. (I will talk about this in considerable detail in Part 2.) For ex-
ample, I am able to give you this amazing insight into the Korean mindset because, as
I said at the beginning of this chapter, I have the unique advantage of having lived and
worked with executives and entrepreneurs of many races in many nations across the
world: I have lived and worked with the Koreans and am giving you a view, so to say,
from the other side.
A few years ago, I happened to be a guest speaker at one of the smaller business
schools in a small town in Tamil Nadu. I would not have gone there except for the fact
that the Dean was a former colleague and a good friend. In the class, I was surprised
to see a Korean student. This did not make sense. Why was a Korean student in such
a nondescript college, in the middle of nowhere? I would have understood someone
from a poor country, but why Korea? When I asked my friend the Dean about this, he
saw nothing remarkable about it as many colleges in India admit foreign students.
In the evening when I was having a drink with the Dean, he mentioned that the
Korean student, I will call him Kim, had requested if he could come and see me. I
invited him to join me for breakfast the next day.
I found Kim to be a very pleasant young man with a sharp inquisitive mind. He
had become fluent in spoken and written Tamil and had endless questions about
the Indian economy and market. He said he liked India and wanted to live here as
long as possible.
That was the start of a superb friendship. After finishing his course, Kim joined a
Korean firm in Chennai and was a frequent guest at our home in nearby Pondicherry.
He had the remarkable knack of making everyone feel comfortable with him, and my
wife started treating him as her son.
Though he said that his joining the particular college was a mistake on his father’s
part, I did not believe him. But I kept quiet. I knew that Koreans do not make mistakes
of this sort. My romantic heart told me that there must be some Tamil young lady some-
where in the background. I found later that this was not so, because he went back to
Korea to get married. He brought his charming wife to meet us and to give us the good
news that he had taken over as the manager of the Korean trading firm in Chennai.
My curiosity would not let me rest and, with my contacts in Korea along with my
probing into the Korean mindset, it took me quite some time to put together the
entire story.
z Here, my readers, are some important lessons for you. Please read this carefully.
About a dozen or so Korean trading companies had got together to work out a strat-
egy to enter the Indian market, both for buying and selling. No single firm had the
range of products to justify the cost, so it was a joint effort. They did a careful study of
what they needed from India and zeroed in on Kolkata and Chennai as the ideal bases
for the location of their trading offices.
They selected two suitable young men to send to India to pursue MBA in small
business schools located deep into the countryside. The idea was to understand what
the Indians were taught about business, how they behaved and how to win their affec-
tions. The logic was impeccable: spend a couple of years with simple country folks deep
in the interior of the country and become one of them. If the boys had gone to prestigious
business schools in Mumbai or Bangalore, they would have become half Americans.
I never met the other fellow who went to Kolkata, but admired the way Kim tried to
get to know my country from the inside out. He spoke the local language, knew the
ways of the local people and his wife was learning Indian Classical dances in Chennai.
He had established a strong circle of local well placed friends and knew who to turn
to for help, get the information and turn it to his advantage without hurting anyone’s
feelings.
I can guess what all of this has to do with business. Here is a possible scenario. Say,
Kim is interested to buy granite for export. He is friendly with all the main producers,
and over drinks and dinner with each of them, he does not have to pump anyone for
information. The fellow will invariably boast about his own business acumen and the
prices he is able to get, and he will let out the prices the others are selling at, what he
calls distress sale. It is in our nature to run down our competitors, and we love blurt-
ing out the juiciest gossip about them.
The strategy is reversed when Kim has something to sell. The actual price does not
matter, because he always found out the highest price the customer can pay.
During my long years of association with business persons from the East—not
only Koreans, but also the Japanese and Singapore Chinese—I have found that they
somehow get priceless insider’s information. They always do incredibly profitable busi-
ness, and yet no one can accuse them of being even remotely unethical. People do indeed
call them cruel and ruthless, but they queue up to do business with them.
One last point. It was by a sheer stroke of luck that I found that Kim had been send-
ing daily reports to Korea, to all the participants in the scheme, where everything in-
cluding the eating and drinking habits of the people he met, were detailed.
Are there any lessons for us? You bet there are:
z Can a few small Indian companies join hands and invest in developing a long-
term strategy for entering, say, the Kenyan or the Brazilian markets? You ask me
to join and my first thought would be, ‘Can I trust the fellow you select? Will he
be neutral when some juicy business opportunities arise?’ And the idea is dead
before it is born.
z When we buy from or sell to someone, how much do we know about him? How much
time and effort do we put in to know him and his business from the inside out?
z How much of our social skills do we put into our day-to-day business? How many
Indian businessmen you know who meet and have, say, a family meal with someone
who is not his relative?
z When our executives go overseas on assignments, how detailed are their reports?
How much information do they send to the head office and how much they keep
to themselves for use if they leave the company?
Asian Executive Mindset

In addition to the traits I have discussed above, I would quickly list five points that I
think are worth noting by our young entrepreneurs and executives. I feel these are con-
ducive to the corporate success of executives from the East.
My personal view after having lived and worked with executives of many races is that
it does not matter how outstanding you are in your subject, you will be defeated in the
international arena by executives who have the following five characteristics that I am
spelling out in an easy-to-remember acronym: ROADS
1. R—Relentless drive for upgradation.

2. O—highly Organised and systematic in daily life.
3. A—Attitude to quality in daily life.
4. D—personal Dignity and self-respect in daily life.
5. S—Sharp and observant everywhere and at all times.
R—Relentless Drive for Upgradation

Upgradation does not simply mean improvement. It is the same as the difference be-
tween improving your employment prospects and upgrading them. Improving means
you have more chances of getting a job, but upgrading makes you aim for a better
job. And relentless means continuous.
So, what I am talking about here is pushing yourself in an unremitting and ruthless
manner for doing things better and better—all the time and everywhere. How does one
do this? You are your own teacher. Keep your eyes and ears open and look around you.
Observe things and then analyse. Why is this being done like this? Can I do it better?
And then, if the activity directly concerns you, go ahead and change it for the better.
This is what I have noticed in the executives of the East. These people are trying all
the time to do everything better and better, and it shows in the products they make
and in everything they do. People who regularly do business in Singapore have noticed
that if they go to someone’s office, home or study room after some months, they find
changes. The changes by themselves are not important; the attitude is.
We are not like that at all. The older generations in India, even when rich, have always
been happy with the way things are. Simple living is one thing, not wanting to change
is quite another. Why bother to change? My father did it this way and I do it the same
way. We do not want to change. I repeat. We are happy with the way things are, and
do not want to change. We have plenty of shops and stores doing excellent business,
but over the years, the set-up remains the same. And we have factories producing what
they were making 10, or even 20 years ago.
9 That was fine for my generation. But if you youngsters do this, you are sunk.
And remember, a relentless drive for upgradation should be a matter of attitude. It

should be your comfortable way of life. It does not mean a mindless pursuit of better
things in life, because that can only lead to stress, hypertension, and so on.
O—Highly Organised and Systematic in Daily Life

The problem with modern executive life is that everything has to be done on the run, and
you have to do many things at the same time. This makes the task of being organised
and systematic a highly challenging one.
Here is a scenario that is common in all parts of India, particularly in the smaller
firms. Walk into the office of any senior executive of a company and see how he is work-
ing. This could be the office of your father, your uncle, or anybody who is a reasonably
senior executive in a commercial organisation. Sit down and watch. You will notice
that he has to look at, read, understand, assimilate, and decide on a large number of
memos, notes, minutes and papers put before him throughout the day. He does not
get time to look at these papers in a completely undisturbed manner. Invariably he
does not have a private cabin and nobody can have a ‘do-not-disturb’ sign all the time.
Remember, what he is doing is far more critical than, say, your cramming for an exam.
You were left alone in peace and quiet and you can always revise what you read, but
an executive does not get a second chance.
Now imagine a situation when the executive has to go to Mumbai with his boss,
by the late flight, for an important meeting. He has his juniors, or his colleagues, or
suppliers sitting in front of him discussing some very critical aspects of a memo he is
preparing for the meeting. The phone rings. His wife is on the line. She wants to ask
him what suit she should pack for him. He talks to her calmly, remembering to tell her
that he would be late and to have the bag ready. By the time he puts the phone down
and is ready to get back to the topic which was taking up his full attention, the door
opens and his boss pokes his head in and asks ‘What time do we leave for the airport?
Do we take your car or mine?’ Again, an important client comes on the line and asks for
some bit of information. Our executive says he will check and call him right back.
You can see that neither can the executive shout at his wife, nor at his boss, and
he has to keep switching his mind from what he was doing, to completely unrelated
topics and give his full attention. He has to keep doing this again and again, throughout
the day. And, if he forgets to call the client, he can forget about the promotion he was
promised!
This happens to every executive, most of the time. Life is to be taken at a run. It is an
essential part of an executive’s life to often make decisions under pressure and severe
time constraints. On the run. Not only that, he has to read the documents and memos
in such a manner that he retains critical pieces of information for future meetings.
Sure an executive who cannot tackle this will have stress, hypertension and so on,
but that is not the point I am making. This executive also has to remember which
critical files to take with him and keep checking whether they are ready. Then, he
may also have to remember to pick up the tickets from the agent on his way home.
In his frantic schedule it would need a superhuman mind not to forget any item and
prevent the trip from turning into a disaster.
One of the ways an organised and systematic executive does is to keep a scribbling
pad at his elbow all the time, jotting down the points as they occur to him and keep
updating the tasks.
I may have over-dramatised the example, but how many executives do you see
around you who are organised thus?
A—Attitude to Quality in Daily Life

This point is closely related to the fourth point below because a manufacturer who
is fastidious about the quality and finish of his products, is indeed a person who is
proud of what he is doing.
The word quality has as many meanings as there are management gurus. You do
not have to be a manufacturer to be quality conscious. To me, quality as a way of life
simply means ‘doing things in the correct manner, all the time’.
It is the firm belief of world class customers that you must have a tradition of strin-
gent quality control for all activities at all times, rather than doing something especially
for a purpose, or doing it because you have been ordered to do it. This is never as good
as doing the same thing automatically, by habit. The operative phrase here is ‘all ac-
tivities at all times’.
Let me also make it clear that I am not only talking about how we do things in India.
I have lived and worked with people of Indian origin all over the world. Well, they may
have lived overseas for generations, but their attitudes, particularly towards shabbiness
and shoddiness, remain the same. The point I am trying to make is that even if we see
people next door doing things in a different way, we simply ignore it.
Well, we ignore it, but the world does not. I remember a news item in the press, some-
time in December 1999, about Prince Charles commenting on the shoddy wiring in
his bedroom. He said, ‘It must have been an Indian contractor.’ There was an uproar,
of course, but can anyone who has lived anywhere outside India, honestly deny the
truth contained in this remark?
Like the point discussed before this, all this is not as simple and insignificant as it
sounds, and I am going to devote a full chapter to the topic of ‘finish as a part of quality’
in Part 2.
D—Dignity and Self-Respect

The fourth point pertains to the immense amount of personal dignity and self-respect
that everybody has, as I have noticed, particularly in the East. Anybody; executives,
managers of shops or anybody one meets. People are proud of themselves, their organ-
isations and their nations. You will be surprised when I compare this with our attitude
towards personal dignity and self-respect. One can think of countless instances in
our everyday life, but here I am talking about executive life, particularly in the inter-
national context.
One of the worst examples I can think of is about the visitors from India I had
while living in Kuala Lumpur—top level executives, big businessmen, professionals
and so on. I, or the people who were interested in what the visitor had to offer, would
invariably arrange a small dinner for the visitor to meet other local people. Always,
the visitors would give endless assurances and made promises—we can do this and
we can do that, and I can send you this and I will send you that, and so on.
I never got a note of thanks and only few people in Kuala Lumpur got a follow-up.
One person from Delhi put it straight, ‘Why bother? I just went to see what it was
like. I am not interested in the market and I am not going there again.’ So, where
is his dignity and self-respect? I am talking of an international situation and these
people humiliate themselves, their companies and their nation in the eyes of others.
If nobody takes Indian visitors seriously, it is because of our own doing.
All of this is not as simple and insignificant as it sounds, particularly when you
are working for or with MNCs. We will be talking about this in some detail in Part 2,
when I discuss the normal interaction our executives have with foreigners, both when
the latter come here and when we go to their countries.
S—Being Sharp and Observant

Many of you may have liked the concept of upgrading yourself but would want to
know how to do it. My answer is: The only person who can show you new avenues to up-
grade yourself is you. You have to be sharp, alert and observant, all the time and
everywhere. See things that others miss.
My mantra for doing this is to ‘Look, Observe, Analyse and then shut up.’
Wait, this is not a misprint. The ‘shut up’ part is crucial, but before I explain that,
I will mention two things I have noticed in all successful executives in the East. The
first is that these people are very sharp, alert and observant. They notice things that
others do not. And they do this all the time. No matter where they are—at home, in
the workplace or travelling. Apart from that they keep what they notice to themselves.
They offer advice, help and ideas only when asked. This does not mean they are selfish,
because they are often involved in social activities and help out where needed. The
point is that they participate but do not interfere.
To you, as future executives, the ‘shut up’ part is also crucial. You will meet many
sharp, alert and observant executives visiting your factory or office. Surely they will
notice things. But they will not tell you what they have noticed. An executive who goes
around poking his nose into other people’s business, is asking for trouble. People
do not take kindly to being corrected, no matter how well meaning the other person
may be.
Those of my readers who have heard me talk will remember an anecdote I told you.
Here it is:
I was travelling from Chennai to Delhi by train in a two tier A/c sleeper. It was a long
journey and I was not able to concentrate on the book I was reading, so I was happy to
see a very interesting person sitting on the opposite seat who appeared to be an author-
ity on management. He had two teenaged children, a boy and a girl, with him. He was
a fascinating talker and I found it impossible not to eavesdrop on what he was saying.
Though I was pretending to read, my ears were only for him. He was talking about sim-
ple rules of management in our daily lives but was illustrating them with lots of hilari-
ous jokes.
Suddenly, he looked up at a person sleeping on the upper berth. The person had
pulled up the blanket to cover his face. He asked the children if there was anything they
would comment on. ‘Remember I have just told you that you must always look, observe
and analyse everything around you. Everything. So, tell me what you see.’ The children
looked up and then at each other. One of them got up to take a closer look, but none spoke.
By this time, I had forgotten all about the book that I had in my hand and was listening
intently.
Then he asked something that I thought had no relevance at all. He asked the girl if
she noticed the footwear most of the passengers were wearing and the condition of their
feet. She said, ‘Dad, these are train passengers and they are mostly wearing chappals
and of course their feet are filthy.’
‘So, people travelling by train mostly have filthy feet. Right? Now imagine that I give
you a piece of cloth and tell you that this has been used by many such travellers to cover
their feet when sleeping. This piece of cloth is used for months without washing. Would
you put that piece of cloth on your face?’
‘Come on Dad,’ the girl said, ‘ you are making me sick!’
What a stupid question to ask, I said to myself.
‘OK, now let us look around us. Look and observe. The Railways give you one clean
dhobi-washed cotton sheet, one clean pillow-cover and one blanket. But the blanket is
dirty. You can see that it is almost never washed, and hundreds of people have possibly
used these blankets. Now listen carefully. Analyse. The problem with the blanket is
that it does not have any top or bottom, it does not have any front or back and the area
of the blanket that comes in contact with your feet is exactly the area that will touch
someone else’s face if they take the blanket on the face.’
I could see the two children actually starting to feel uncomfortable. To save them
further misery, their father continued, ‘I ask you as future managers, if there is anything
you can do about it. No, I am not asking you to complain to anyone.’
Again the children looked at each other and nobody spoke. I was very impressed
with the way the fellow was explaining the problem. ‘You will notice that the fellow has
taken the clean white sheet and spread it on the seat. He is sleeping on the clean sheet
and is taking the filthy blanket over himself. Why not sleep on the bare seat, take the
clean cotton dhobi-washed sheet on yourself and put the blanket on top of the sheet?
This way, you do not let the dirty blanket touch your body at any point.’
Suddenly the person sleeping on the upper berth spoke up. ‘Why don’t you shut up
and also teach the children to mind their own business?’ He had obviously realised
what he had been doing and was very upset. He said a lot of things in a nasty language
and moved off to the toilet in a huff.
This ruined the rest of the long journey for all of us.
I repeat the point I am making.

People do not take kindly to being corrected, no matter how well-meaning the other
person may be. And an executive who goes around talking about what is obviously
none of his business is asking for trouble. So the ‘shut up’ part is crucial.
A small anecdote.
My friend and mentor, the late Dr S.V. Narayanan, the former Vice-Chancellor of
Pondicherry University, was the guest of honour at a University seminar and I was one
of the speakers. At the end of my talk where I had spelled out the five points R.O.A.D.S.,
I asked if anyone had any questions.
I was surprised when Dr Narayanan smiled and raised his hand. He is one of the
wittiest persons I have known and from his expression I knew he was up to one of his
tricks. He said that he had a question to ask the students, ‘What is wrong with the fol-
lowing sentence: People of most successful countries have these five traits?’
There was pin-drop silence and the entire hall was looking up to the Vice-Chancellor
with pleasant expectation because we all knew it was a loaded question. He pretended
to wait for an answer and said, ‘ The correct sentence is: Nations where the people have
these five traits are successful!’
There was a stunned silence as the students let the message sink in. Dr Narayanan
had, in one phrase, summed up my entire talk!
The students are not going to forget this lesson in a hurry.
Thank you, my friend.
IV: Some Useful Mantras

Entrepreneurship is a lot more than just getting an idea and starting a company. It
is a tough choice, not an easy one. It requires a great deal of sacrifice. The odds of
failure are incredibly high, so in order to succeed, one needs an incredible amount
of dedication and a generous degree of luck.
But this is one journey where the joy is as much in the ride as in reaching the
destination.
What I am talking about here is applicable not only when you are starting or run-
ning your own company but also where you are working, so you can make the project
that you are doing more entrepreneurial to the benefit of yourself and your employer.
A Vision for the Future

Perhaps the most important aspect of being an entrepreneur is developing a vision for
the future. You need to have a deep understanding of the business you are in, and
build a mental map of the players, the companies and the trends in the marketplace.
This is not something which will happen overnight, but requires an immense amount
of research, reading and thinking, as well as your personality and mental make-up.
You need to develop this thinking as if your life depends on it (doesn’t it?) so you can
place developments as they happen in this map, and even anticipate what is going
to happen.
This envisioning of the future also lets you paint a picture of tomorrow’s world for
your employees and customers, and enables you to see trends in the industry faster.
Getting to the Future First

Creating the future is more challenging than playing catch up, in that you have to
create your own road map. The need is to develop an independent point of view about
tomorrow’s opportunities and then work out a plan on how to exploit them. Path break-
ing is a lot more rewarding than benchmarking. One doesn’t get to the future first by
letting someone else blaze the trail.
There is not one future but hundreds of them. Getting to the future first is not just
about outrunning competitors bent on reaching the same prize. It is also about having
one’s view of what the prize is. There can be as many prizes as runners; imagination
is the only limiting factor. In business, as in art, what distinguishes leaders from lag-
gards, and greatness from mediocrity, is the ability to uniquely imagine what could be.
Other people and companies may have more resources, more money, more of every-
thing, but what you have as an entrepreneur is your vision, your imagination, your pas-
sion. Define what will be, define tomorrow, envision the future and then make others
play according to the rules you set.
Plan to Create that Future

Once you have a vision of your place in tomorrow’s India, the next step is to build a plan
to create that future. In doing so, ideas form a very important part. Ideas are like Lego
blocks—they can be assembled in many different ways. At the same time, ideas are
not everything. We get ideas all the time. The problem is that we all get too fascinated
with ideas. In fact, it should be just the other way round. All ideas are, in general,
good; it is what you make of these that separates winners from losers.
Ideas are Commodities

While dealing with my countrymen over the years, I have come to the conclusion that
we Indians tend to keep our ideas to ourselves. I view ideas as commodities, which are
to be shared with everyone. Only if you share will you get feedback, new inputs and
fresh insights from others who may have a different perspective. This is the only way
ideas can get refined. Only if you discuss your ideas with others, only if you present
your ideas to people different from yourself, will you get viewpoints which can add
depth to your thinking and provide varying ways of getting to that future. It is important
also to expose yourself to various situations which can stimulate thinking—it could
be reading different books, meeting people you have never met before, visiting trade
shows and conferences. Different environments help you think.
Do not think of Exits

When you are building a business, do not think of exits. You should only be building
a business if you believe enough in it to run it for the rest of your life. Making money
has to be an important objective, but if you run after money, it will not come. Build
the business as a labour of love. Make it the best thing you have ever done. No half-
measures, no short cuts. Your passion must reflect in every aspect of the business.
You cannot do Everything

Remember: you are the brains, the eyes and the ears of your company, so everyone
looks up to you for vision and direction. But you also need to accept that you cannot
do everything. This means being open to ideas and suggestions from others. Listen
to people and then make up your mind. Also, develop the social skills to manage the
relationships with your employees, customers, partners and vendors well. Being in
a small company gives you the advantage of adding that personal touch—which can
make all the difference.
Worst Case Scenario

Imagine and be aware of the worst case scenario. Know when to call it quits. No one
creates a business to fail, but in the event that your business does fail, get ready to
start all over again: make a clean break from the past, and focus once again on the
future. There is always some good which comes out of everything. In today’s India,
ideas and capital are not in short supply. If there is a shortage of anything, it is people
who understand the marketplace and are willing to think deeply about the future.
Our Economy is Booming

Opportunities for growth, contribution, and true success were never greater than they
are today—from both the corporate and the individual viewpoint. New product devel-
opment is looked upon all too often as a panacea for sagging sales, seasonal fluctu-
ations, dipping profits and corporate politics. But in the globalised Indian scenario, the
mortality rate for newly conceived product ideas is painfully high, not so often because
the basic idea was poor but because of poor planning, organisation, coordination,
execution and marketing efforts.
What about the individual? Many senior and junior executives and non-executives
still bewail the lack of personal opportunity in India today. The bald fact is that there
are far more big opportunities than there are big men. It behooves the little man to
become a big man or quit griping.
Broad Gauge Top Management

Today’s executive must have a wide range of skills, and this should constitute the finest
sort of challenge to the man emerging from the shop, or to the college graduate whose
training has consisted largely of principles derived from various academic text books.
The man who wishes to prepare for the broad gauge top management position must
realise that production, marketing, engineering and financial problems are caused by
people and can be solved by people. Thus an enlightened, tough-minded approach to
management requires a thorough knowledge of how to develop and motivate people.
Without this, few can qualify for the big assignment.
Pride in Yourself
While going over everything I said above, a thought came to me. I have lived with all
sorts of people in many countries across the world as one of them and I got a unique
insight into their attitudes and mindsets. One thing that I noticed in all the develop-
ing countries that have been particularly successful in attracting more and more in-
vestment is the attitude of the people about where they live, what they do and how
they do it.
I have detailed in Chapter 5 how one of my colleagues very dramatically demon-
strated that your desk, room, office, factory or even your mother’s kitchen may be clean
but it does not automatically mean it is neat, tidy and orderly. Then she went on to
show that if something is clean and tidy, it does not automatically mean it is beautiful
and aesthetically appealing. This is the only way of making sure that your output
would touch the hearts of your customers or consumers or guests.
Putting it in another context, I said that an executive cannot be meticulous in bits
and pieces—he is either meticulous in everything he does, as a habit, in his personal
and professional life, or he will lose out to someone who is.
And, Finally,
It is almost a truism that the busy, productive, outgoing mind is the happiest, yet
this concept seems to be eluding the majority of our youngsters. Listen on a Monday
morning to the tales of what happened over the weekend. Note the zest with which
most executives look forward to vacations. Of course, this is healthy and normal.
What is not so healthy and normal, however, is that so many dread—or pretend to
dread—the return to work.
Undoubtedly this is a reflection of the desire to conform (when we were youngsters,
after all, we never dared say we ‘loved’ school, we ‘hated’ it), but what sort of think-
ing is it that views time spent on the job as time sacrificed till we can again enjoy
ourselves?
Clearly, something vital is missing from our typical business environment. The will-
ingness to create, to produce, to mould and build, and, above all, the willingness to give
just isn’t there. I repeat: this is abnormal, rather than normal.
Research has shown that the average top executive made things happen to him
instead of waiting for them to happen. He was not preoccupied with security. He reacted
to the requirements and privileges of our free enterprise system with individuality,
a generous expenditure of midnight oil, and tough-minded follow-through. This is
the only way to get there—short of being born the boss’s son or marrying the boss’s
daughter—and it can, and should, be fun.
The realisation that productive work is one of life’s greatest pleasures is not just
desirable—it is absolutely essential for our nation to earn the world’s respect.
Reference
Saxenian, A. 1999. Silicon Valley’s New Immigrant Entrepreneurs. California: Public Policy Institute of
California. Available online at http://www.ppic.org/content/pubs/report/R_699ASR.pdf.
4
New Soft Skills for Entrepreneurs
As I said in the previous chapter, my experience of working over the years, with the
boys and girls who form the next generation of India, is that though they are ahead of
almost everybody else in the world with regard to intellect, and so on, they lose out to
people from other nations, in the rapidly globalising environment of new India when
it comes to communication and social skills.
Please note that I said, ‘lose out to people from other nations’. When I go to various
academic institutions and talk to young people there, often I am asked, ‘Why should
we bother knowing about these foreign people.’ My answer is simple. No matter what
type of a job my fellow Rotarians are having, and no matter what your business is, in-
variably you are buying from, selling to, or servicing the multinationals, right here in
India. One does not have to go overseas to meet the world. The world has got unleashed
into India. Not only that. It is a fact that, even domestically, our people will have to in-
creasingly deal, interact, work or live with people of other language groups, commu-
nities, races and nationalities.
If you have to compete and win, you have to understand the mindsets of people. You
have to understand how these people think, how they behave and how they do busi-
ness. An essential tool for this is developing your social skills. A common remark one
hears about our professionals is that they are good workers, but they lack interpersonal
or communication skills. I need to mention that I am talking to you, my Indians not
only for yourselves, but also for you in your capacity as teachers and parents. I think
it would be a good idea if the points I am making here are conveyed, emphasised and
explained to the young people around you.
New Soft Skills for Entrepreneurs z 39
I am dividing this chapter in two sections:
Section I: I will explain the new meaning of social skills.

Section II: I will discuss some other soft skills you need.
And then, we will discuss Communication Skills in the next chapter.
I: Social Skills
I feel very strongly about the lack of social skills. The problem is serious. True, some of
our boys and girls, particularly from big cities like Mumbai, Delhi and Bangalore are
facing the challenges superbly. Yet, there seem to be some glaring shortcomings when
it comes to personal skills in the rest of the country. You will understand what I
mean in a minute.
Though our youngsters from small towns and rural areas are very friendly, they
tend to make friends mostly with their own people and those from their own language
group, and do not seem to be comfortable interacting with people from other races.
Defining Social Skills

Social skills can mean many things to many people. It can have a different meaning
for, say, politicians, insurance salesmen and children of the very rich people, than that
for budding entrepreneurs and executives.
Remembering that we are talking only about our young entrepreneurs and execu-
tives, I will explain what I mean by social skills:
z In new India’s rapidly globalising environment, it is a fact that our entrepreneurs

and executives have to increasingly deal, interact, work or live with people of
other nationalities, communities, races and language groups: A young Gujarati
entrepreneur may find it attractive to set up a unit in Tamil Nadu, or a Bengali
executive may get posted in Punjab. In this context, your success would depend
largely on your social skills.
z When dealing and interacting with people of other language groups or races, it
is not enough that you try to feel comfortable with them: It is far more important
that you make them feel comfortable with you.
z If you have to be successful in whatever you are doing; if you have to compete and
win, it is essential that you understand the mindsets of people; understand how
they think, behave and do business. The essential tool for all this is social skills,
because you need to get close to people to really understand them.
z It is only when you have a friend who is not from your own background that you
can see and learn new things.
Now, let me list out a few things that I do not label as social skills for entrepreneurs
and executives.
z By social skills, I do not mean grace or etiquette; I do not mean eating with knife
and fork, attending cocktail parties, and so on. These are traditional English or
European manners. I have said earlier and I repeat that I am against your giving
up your traditional way of life.
z When interacting or developing personal and friendly relations with people, do
not make friends simply to use them: for example, my son is looking for a job in
a company and I start playing golf with the owner. This will quickly backfire and
there would be long-term repercussions. You must create an ambience, an environ-
ment or a circumstance where others meet you as equals, or as friends, and when-
ever needed seek your help or use the services provided by you.
z The over-friendly lifestyle is also wrong. An insurance salesman can stand next
to you in a bus queue and by the time the bus arrives, he becomes your best
friend.
z There are the highly social people who live a five star, flamboyant lifestyle that
starts on Friday evening and lasts till late Sunday night. In my dealings with
Indian organisations, I have noticed that the highly westernised Indian boys and
girls do not make good executives and more rarely, good entrepreneurs. They have
what is called ‘street smartness’ and can make excellent presentations, but they
are not there when solid performance and back-breaking hard work is required.
The subject of social skills is vast and a lot of academic research is going on it. If
you access the Internet and search for ‘social skills’ you will get many write ups, in-
formation and a lot of help.
Academically, you will learn that the meaning of acquiring what is called ‘social
wealth’, is your ability to interact with people who are not of your language group
and are not even of your nationality or race.
This is wealth like any other kind of wealth. Wealth is something that you have, it
is your possession, but if you put it to productive use it becomes capital. So terms like
‘social skills’, ‘social wealth’ and then going on to ‘social capital’ are being increasingly
discussed and written about.
I will say to the young entrepreneurs, that the more time you spend reading this
highly academic material, the more confused you will get. All of this is quite irrelevant
to how you have been brought up in India, and the working environment you will find
in the new India.
Do not Follow your Parents

Huh?
Well, it may seem funny, coming from a strong believer in traditional values like my-
self, but my strong message to you youngsters is that you should not follow everything
that your parents have been doing. There are many traditions, and I am going to talk
of a tradition that we need to give up.
Or rather, we need to acquire a tradition that we do not have. Let me explain. I look
around myself in India and at the businesspeople of my generation. Many of my
friends are running fairly large enterprises, but these are all family owned and family
managed businesses. I see how they conduct business with people they have been deal-
ing with, for years. These friends of mine will sell to you or buy from you for years but
always keep you at arm’s length. All business is conducted in the office, your office or
mine, and there is zero contact of any nature outside office hours.
Apart from invitations to weddings and auspicious occasions, nobody makes an
effort to know the person he is dealing with. Businessmen and their customers, or sup-
pliers hardly sit together for an informal lunch, or dinner, to discuss each other’s plans
or problems.
Let us look at the opportunities for social interaction in our daily life. Unlike in the
West, where children are trained to be comfortable with strangers, in India, children,
particularly from the small towns, have no such opportunities. Nobody drops in to their
homes except for relatives.
Remember, almost every businessman in India is also a member of some trade as-
sociation, chamber of commerce, cultural sabha and so on. Look at the vast difference
between the social aspects of these and similar organisations in the West.
The concept of fellowship is completely missing. Imagine yourself at a meeting of,
say, the Andhra Sabha or the Punjabi Sabha or maybe the governing body of a charit-
able institution. You go to the meeting, sit down in the hall, and observe that there are
three, four or five people sitting on the dais. You listen to the speeches, get up and ask
questions, and go home. Of course, you wave at people you know and they wave back.
That is it.
z Where is the opportunity for your wives and your children to meet the families of
the people you conduct business with? Where is the chance for the children to
learn any of the social skills we are talking about?
I am going to say something that will surprise you.

It is interesting to note that our society has no tradition of social skills because, say,
for my grandfather’s generation, their circle of business interaction was probably no more
than 25 to 50 miles from their home base and they rarely needed to interact with people
outside. If my father was a Punjabi, he interacted mostly with Punjabis. At the time we got
our independence, everybody lived and worked in the immediate vicinity of their homes.
So, the problem is that our elders did not train us for social skills because they never
needed to. They dealt only with people they had known all their lives, and that was that.
Whatever my generation has learnt, we have learnt ourselves.
In contrast, children in the West grow up learning social graces and how to interact
with people not directly related to them. From childhood, they are accustomed to being
comfortable with strangers, that is, with people outside the family. Children are encouraged
to attend birthday parties, club evenings and all kinds of social gatherings. Every festival is
a social festival. Even the Sunday church is more of a social occasion. Children are taught
the meaning of formal dress and the meaning of society.
Of course, the last few decades have seen enormous changes in this.
Life, in India, is changing. The western way of life is here and is becoming more and
more an essential part of commerce and trade. People nowadays do more business over
lunch and dinner, than in the office.
Now, if one of my readers is happy remaining a shopkeeper, you can forget all of this,
but if you want to grow to be a business leader, you have to have friends.
Friends of all sorts and everywhere.
Forget Working your Way up!

Huh?
It seems I am getting into the habit of saying something that sounds silly. Who in
his right mind would advise you not to work your way up? Well, read on. Here is some-
thing interesting for you.
Say, you are trying to make a sale. It could be your idea for a new project or even a
new assembly line of machines. You have made your presentation and you feel that
your prospect responded well to your presentation. So, you’ve made a sale, got the job,
or obtained the funding you were looking for.
Right?
Wrong! In the modern world, you already know—most likely from experience—what
usually happens next. You don’t yet get what you’re after. Instead, you get the chance
to make your presentation again, to someone higher up in the chain of command.
Think about this for a moment. If you’re very good, and if the person you made
your presentation to, was paying enough attention to realise that you have something
valuable to offer, then your reward is the chance to do it all over again in front of
somebody else, who is a little higher up in position.
You already know what often happens after that. While there’s a chance that you’ll
be speaking to some of the same people you’ve dealt with already, you’ll be doing
so before one or more strangers. And for these people you’ll have to begin your presen-
tation from the scratch.
If this ‘somebody else’ is impressed by your second presentation—and if they have
the time, the willingness, the interest, the authority and the gumption to pursue your
proposal within the organisation—do you then get the job, the sale or the assistance?
Most likely, not yet. They tell you that they will talk to the top management and let
you know.
Sounds familiar? This is what I call the bottom-up approach, and is possibly the
best case scenario for anyone who is following this approach. Also, notice that you still
haven’t gotten the sale, the job, or whatever.
Let’s say that you’ve made your presentation, have done a good job of positioning
yourself and/or the product or service you’re offering, and you’ve clearly demonstrated
that what you’re offering your prospect, addresses their needs, goals and objectives very
well. You’ve created a groundswell of support, and it seems your prospect will make a
decision in your favour. Now, what could go wrong?
All too often, here’s what happens next.
Along comes your competition—either another company in the same industry or
someone else who wants the same job, or the funding. Except that, they are coming in
with a difference. They have got a connection, a referral, or some other ‘in’. Maybe, they
know someone who plays golf with the head of the company. Or maybe, they have done
business with (or worked for) the organisation before. Whatever the connection, they
breeze in at a level way above from where you began—and, most likely, above where
you are now—and quickly sew up the deal, the job, or the assistance, even before
the top bosses even get to know about your proposal.
And where does this leave you? Dead in the water.
Sure, I may have exaggerated the scenario and this does not happen every time. But
it does happen often enough that I can bet you predicted it as you were reading it.
This is where your social skills come in.
If you observe what the bottom-up approach is exactly, it becomes obvious why it
is so ineffective in the modern world. The bottom-up approach involves approaching
the person with the least amount of power, authority and decision making ability—and
then slowly working your way up.
Most of us have been taught to target one person/client at a time, make our best
effort and then follow up for a response. But, in the highly competitive globalised world
that we are living in now, the bottom-up approach is just about the slowest, most in-
direct and most roundabout approach you can take.
Nevertheless, it is what most of us have been taught, as the proper way to do things.
Learning Social Skills

Remember what I said earlier: It is not about how comfortable you feel with people you
have just met; but about how comfortable they feel with you. I have seen many simple
and unassuming people do a superb job of going out and getting a job done, by simply
making people feel comfortable with them. You must learn to create an ambience, an
environment or a circumstance where others try to make friends with you, to seek your
help or use the services provided by you.
I must tell you about a lesson I learnt about social skills from a young Chinese girl
who was my secretary when I was at Kuala Lumpur.
I was running a unit for making ultra fine gauges of enamelled copper wires for electronic
industries and we made a stupid mistake while testing one of our batches. It was a dur-
ability test with the result normally taking three days. As luck would have it, before we
could find out that some of the material in the batch was defective, it had been shipped
to Hong Kong and the customer there had already started using it.
In cases like this, it is understood that we would be liable for compensation, but a lot
depends upon how vindictive the customer is. For a stupid mistake like this, he could
easily drive a small unit like mine, to bankruptcy.
Before we could take any remedial measures, I got a very nasty message from the
customer that he was on his way to Europe with his wife and would be in Kuala Lumpur
that very evening. He made it clear that the only reason he was coming here was to
chop off my head!
I called a meeting of my engineers but we already knew that we were in the wrong
and all that we could hope for was an equitable settlement with the client. I had four
of my executives in front of me, all Indians: One from India and the other three local
Malaysian Indians. I suggested that instead of me going to the airport, it would be better
if an executive went, preferably with his wife, to receive Mr and Mrs Wong. Since my wife
was not in Kuala Lumpur at the time, the idea was that if a couple took the very elderly
visitors to their hotel and then to dinner, and showed them around, this may remove some
of the sting of the punishment that was sure to come.
I wanted a volunteer who would be with them for the entire evening and somehow bring
them to the office the next day in a little mellow mood. That was all I could hope for.
Here, I was let down by my executives. At the back of my mind, I knew that none of the
wives would be comfortable with a foreign, Chinese couple.
Then, we were surprised when Yoke Chan, my secretary, walked to where we were
all sitting. She had been listening to our conversation and volunteered. I knew she had
been married for just over a year and her husband was a mechanic in another factory
nearby. They were simple folks and not used to going to posh places, but in my heart,
I knew she would do the job.
Well, that is exactly what happened.
That night I could not sleep. Obviously, I was very restless and after pacing in the
verandah I went to my study to read. But it was all useless. I was too tense.
Then, a little before midnight, I was jolted by the sudden ringing of the doorbell. I was
not in a state to think about what I was doing and went to the door in my dressing gown.
I saw a very well dressed, elderly Chinese couple standing there. Though I had never met
them before, I knew it was Mr and Mrs Wong. Their expression gave it all away, I knew
Yoke Chan had worked a miracle.
He tried to be stern and walked into the flat without saying hello and asked, ‘Where is
your kitchen? I need a knife to cut off your head!’ But as I said, his expression had told
me everything.
I looked behind them to see if Yoke Chan and her husband were there but Wong told
me that he had sent them away.
Wong had a delightful way of putting things. He said, ‘No business talks tonight. I
know what sort of a fellow you are and what sort of a company you run, so we do not
want to have much to do with you. We have booked on an early morning flight out of
here. We see no point in staying here any longer.’ All the while he was trying to keep a
stern face but he almost said it with a smirk. ‘Do you have something decent to drink
around here?’ Then looking at my still stunned expression, he continued, ‘Your girl has
told me that a replacement lot has already been sent. I will send you the rejected stuff
and my accountants will tell you the extent of the damage you have caused me. So no
more business talks and where is our drink?’
While we sat to have a drink, the story came out. Wong had decided to treat this as an
honest mistake, and had come to my flat to meet me and shake hands as friends, and since
there was nothing much to work out, they were simply leaving earlier than scheduled.
He explained that he fully understood why I had not gone to the airport and that, if
he were in my place, being a manufacturer himself, he would have done the same. But
when Yoke Chan met them, introduced herself and her husband at the airport, and
offered to shake hands, they were surprised to find that her hand was ice-cold! The
poor child was scared stiff! For what? Mrs Wong immediately put her arms around her
shoulders and gave her a small hug.
Here was a mere secretary, sent on a simple errand to receive visitors, scared stiff
because the company was likely to be in some sort of trouble!
Mrs Wong said they were touched by the honesty and the depth of feeling the young
girl had for the company and obviously, for the management. Just by her attitude and
conduct, she captured the emotions of the elderly visitors and the rest of the evening;
they were all just like one family.
I learnt a strong lesson that day.
Can I tell you what I think Yoke Chan did to win over the visitors?
Nothing! Absolutely nothing!
She did nothing apart from being her natural unassuming self. She did not pre-
tend to be what she was not, she did not pretend to be an important executive sent
to explain matters, nor did she go out of her way to see that the visitors had a good
time and enjoyed themselves. True, she had spoken about me and the company,
but only as a part of the conversation and not to plead any case. This had won the
day.
Sincerity of purpose and basic strength of your feelings is all that you need to get
your point across. That is what social skills is all about. Long arguments, stunts and
pretences are short-term and, in the end, quite useless.
So, as an answer to the question I posed earlier on how to learn social skills, I close
this section by saying that the only one, who can teach you how to do this, is you.
II: Other Soft Skills

Changing Careers
Until very recently, people often changed their jobs, but relatively few changed their
careers. You were a Chartered Accountant and you were an accountant for life. Mention
an entrepreneur starting a new project and immediately the picture in one’s mind
was that of an engineer. People would decide on a career and that remained for life.
People who did change careers were considered unstable, untrustworthy, irrespon-
sible or desperate.
Now, in India and throughout the world, the general employment conditions have
changed—that changing careers is no longer considered an exception to the rule. Today,
people often change their employers, job titles or employment basis (for example, from
employee to self-employed).
Obviously, there are a number of factors to consider before you change careers. If
you have decided that you want a change, you should undergo some self-examination
and be aware of why you want the change. Surely, being bored or being in a rut would
be a good reason, but change in career or position may not necessarily be the answer.
No doubt about it. We are living in the changing times. Some of the changes are
within our control, and some are not. You need to be ready to accept and even antici-
pate these changes. You need to be proactive in your career management. And for
this, you need skills that were not required by your parents.
Because, the entire career scenario has changed. Look at the jobs your parents did
or the job which someone did five or 10 years ago. These jobs may not exist at all today,
or if they do, they will likely be unrecognised from what they were back then. Also,
consider the job you are doing today. Did it exist 10 years ago? If it did, is it the same
as it was when you started? Was it the same as even, say, three years ago? What I am
saying simply recognises the trends and extrapolates them over time.
There are three factors that are inherently good for the world at large. They are
Globalisation, Open competition and Technology. Like most good things, they come with
a price, one is paid in human currency, unemployment or, at best, redeployment. You
may be in a splendid job, or you may be in the process of setting up what seems to be
a superb project, or anything in between, but whatever your circumstances today, you
cannot be sure what changes these three factors, and a host of more visible ‘threats’
or ‘opportunities’ will bring.
These factors are increasingly shaping the world we live and work in, at an acceler-
ating rate because they eliminate (but also create) jobs faster than ever before. Jobs are
changing at a pace never known before. Your supervisor may change, your budget may
be cut or your department may be closed. A year ago, this was your ideal job; today,
there is no job at all.
The impact of these factors on the world at large and on employment markets in
particular, are nothing short of staggering. If you are smart, you will learn to pay more
attention to how these factors are affecting you and your job situation, regardless of
the present.
z This is what I mean by learning other soft skills.
Contrary to how corporations operated a generation or even five to 10 years ago, when
jobs were often in the same organisation from cradle to the grave and there was no
need to worry about job security because ‘either the company or the union will take
care of me,’ today’s situation is different.
There are still a handful of companies which treat their employees this way, but
they are few and if you are employed in one of them, do not make the mistake of think-
ing that you are safe, because no one is.
The reason is that companies must respond to the factors I have mentioned and
the typical response is to cut the number of heads on the payroll, something often
roundly applauded by the financial markets.
The people affected by these changes are thrown on the scrap heap, some are left
with no place to go.
Many are too underqualified and/or overaged to have much hope of getting rehired.
Managing your Career

Managing your career is not something you do once every 10 years.
In the days of corporate paternalism, some people never thought about their careers
as something to be managed. They took up whatever job came along, or their company
managed their careers for them.
In India, even the oldest family-owned and managed firms, even the most pater-
nalistic of employers have completely revised their thinking in this area. They did
not necessarily want to, but they have been forced to, in order to compete (or even
survive).
This is not the case only in India. In Japan and other parts of Asia, where paternal-
ism has always been a way of life far beyond what it has ever been in the West, this
philosophy no longer enjoys the same degree of support.
The market is far too dynamic, to rely on your employer to plan your career. Your boss
and his boss are too busy thinking about competing, succeeding and self-preservation
to give due thought to your future. One simple reason for this is that often your boss
is in the same boat: no one is thinking about his career!
Of course, many bosses rightly consider their staff as their greatest assets, but in
times of trouble, they can become their greatest liability and indeed, are the most ‘con-
trollable’ expense, the one most able to be cut at short notice in response to market
pressures.
I am talking to our youngsters who need to be aware of the changing facts of life.
If your career needs a pick-me-up, it does not necessarily mean leaving your present
company or even your present job, but it does mean learning how you can respond
best to today’s environment.
Lifestyle and Work Ethic

I meet many young people, or young professionals, who are in a dilemma regarding
how to behave in society, and more important, in their workplace.
The dilemma arises out of the fact that the world is getting unleashed into India and
India is changing. People of all races are coming into our country and influencing every-
thing from how we work and how we spend our leisure time. Our youngsters realise
that they have to change, but how much? How much of their traditions, their own way
of life they can keep and how much should they westernise?
Well, before globalisation, when international business in India was mostly in west-
ern hands, the more a person gave up his traditions and became westernised, the
better were his chances of success. Invariably, one felt that the bosses from the West
expect one to be westernised.
This was certainly true of the earlier generations, but now that has changed. Ram-
pant globalisation has changed it. Now you will find that the firms from the West are
changing in their attitudes.
This will create a bit of a problem for you. Please remember that if you are working
for or dealing with an MNC, the boss may not be white: you might be living and work-
ing with Koreans; dealing with the Chinese; working with the Japanese or even dealing
with West Indian Blacks. This is even more relevant if you are planning to do something
outside India.
Surely, this makes the rules of the game confusing as the Germans do not live like the
Chinese, and either do not live like the Americans. But there is one thing in common:
All of these respect their own traditions and way of life.
This means that because the bosses in the New World, particularly from the East,
are themselves intensely nationalistic and traditional, they hate people who easily
give up their traditions. They do not like to see youngsters merely aping them. You get
more respect if you are good at your own traditions.
I will confuse you a bit here.

I need to make it clear that by traditions, I mean lifestyle. You have to understand the difference
between your traditional lifestyle and your traditional work ethic.
Here my motto is:
‘When living with foreigners, you do not have to live like them, but when working with them, you
certainly have to work like them.’
Understanding Work, Mindset and Work Culture

I will explain what I said in the preceding paragraph in some detail as this is an im-
portant point. You have to understand the difference between what is meant by lifestyle
and what is meant by work ethic. Please note that I am not talking about business
ethics. That is a different subject and beyond the scope of this book.
I am talking about what is called work ethic—our attitude to work and that towards
earning our livelihood.
So far as lifestyle is concerned, people from almost all successful nations of the
world are here in India, and have their own traditional lifestyles. You will notice that
most of the people from the West—Americans, Europeans, and so on do have more or
less a similar lifestyle. This is what we call the Western way of life, and as I said earlier,
this is what we can see and understand, but do not have to copy.
But, coming to work ethics, you will see that each western nation has a markedly dif-
ferent attitude to work. Look at the Germans and compare them with, say, the Italians.
Look at the way the Germans design and produce their goods, their sometimes unneces-
sary rigid standards of quality control and incorporation of long-term durability that
is the integral part of anything they make. Compare this with the Italians, and the pic-
ture is vastly different.
I do not say that the Italians are better or worse: that is certainly not the point here.
What we are saying is that they are different. If you go on to compare either of these to,
say, the Greeks or the Portuguese, the picture becomes unrecognisable.
You would be wondering about the point of this discussion, and what it has to do
with soft skills.
Well, if you have to make a success out of whatever you are doing; if you have to
compete and win, it is essential that you understand the mindsets of many people;
understand how these people think; how they behave, and how they do business.
The essential tool for this is soft skills—skills that cannot be acquired from any
text books.
Learning from other People

When we are at home, surrounded by our own people, with similar habits and atti-
tudes, we see everybody doing the same thing the same way, so we do not take any
particular notice of what we are doing.
I realised this very early in my professional career during my first trip out of India.
Let me tell you about this:
The first time I left India, I went to Bangkok. I had taken my lunch at a roadside café and
bought a couple of apples from a roadside vendor and kept them in my bag.
It was early afternoon, the weather was good and since I had some time to kill before my
next appointment, I casually started walking down an almost a deserted street. I took an
apple from my bag and started eating it. After one bite, I found that the apple was rotten.
I casually threw it away and was just going to take another from my bag when I felt a
tap on my shoulder.
It was an old man, simply and decently dressed. He smiled, folded his hands in the
traditional Thai greeting, Swaddi Khrab, and bowed from his waist. I smiled back but
could not understand what it was all about. Then, he took a tissue paper from his pocket,
went and picked up the apple I had carelessly discarded, walked to a rubbish bin a few
feet away, dumped the apple in it, and smiled back at me. He bowed again and walked
away.
This old man had given me a stinging slap on my face. Till today I have not forgotten
it. Since then, I have never thrown even a piece of crumpled paper, anywhere except
in a rubbish bin—be it at home, in the office, or on the street.
z The point I am trying to make is this: I was doing something nasty routinely and
without thinking, simply because ‘we all do it’ until I was exposed to an alien atmos-
phere, was shown how others do the same thing, and learnt my lesson.
I feel I am, in a small way, a better person: I have not merely improved but upgraded
myself.
This, my readers, is my message for you. The more you become close to people who
are not what you may call your own people, and the more you get exposed to the envir-
onment away from home, the more you can change.
Teaching Yourself
Note that I said that you can change. Whether you use this type of opportunity to up-
grade yourself and change depends entirely upon you.
Are you one of those who often says, ‘I can’t’, ‘Not with my luck,’ or ‘Nothing ever goes
right for me’?
If you are, you are certainly in the majority. However, it also means you are not ful-
filling your potential, because that is also the category the majority are in. I am sure
you do not lack the desire to succeed. All of us have hopes and dreams, but few are
able to realise them because we use the wrong tools. The problem is that most of us
do not know what the proper tools are or how to use them. So, our dreams remain
just that.
In this book, I will ask you to entertain several new ideas, some of which you might
find silly or wrong. But keep an open mind. Do not reject the ideas on sight. Think
about them. Try them out. You need not apply all of them. Choose the ones that apply
best to your situation, but apply them with enthusiasm and conviction, and direct all
your action towards your specific concrete goal.
You may be shy. You may be nervous about meeting new people (sweaty palms,
bowed head and pounding heart). But to make progress in life, and certainly in
the job hunt, you must be comfortable with meeting new people. Other people are,
undoubtedly, the key to your success. I repeat this throughout the book and make no
apologies for doing so. It is truly vital. You will need to get over your shyness and not
let your feelings of inadequacy stop you from getting what you want.
People often cannot stand being alone and simply must be in a crowd. Such people
usually have a poor self image and lack confidence. Many people spend much of their
time alone. They should spend a necessary proportion of this time trying to under-
stand themselves.
What do you want to do, have and be? This self-analysis is extremely important. Learn
how to entertain yourself.
If you are prepared to entertain these things in your life, you are already way ahead
of the pack.
Preamble z 51
5
New Communication Skills for
Entrepreneurs
This chapter is divided into two sections after the Introduction.
Section I: A general discussion on communication skills.

Section II: A practical training using the acronym SLURP-TEA to explain the five-
plus-three mantras.
Introduction
I want to talk about what I consider to be a serious handicap for the promising next gen-
eration of professionals in India.
What I noticed and have started feeling very strongly about is that in many develop-
ing countries, from Malaysia to Fiji to Africa to the West Indies, nations that have young-
sters of Indian origin who were born there, did well only as petty traders and invariably
lost out in professional situations to people of other races. I have myself been an em-
ployer and have worked with many employers of small, medium and large projects in
these countries. I found that though our boys and girls, the next generation of India,
are way ahead of almost everybody else in the world in intellect, calibre, talent and
sheer capacity for back-breaking hard work, we are losing out in open international
competitive situations.
Sure, there are outstanding exceptions but this is true even now, back in India. I am
not talking of the IT professionals going to the US. Our success in IT is a very recent
phenomenon and confined to a very narrow spectrum of professionals. I am talking

about what I found over the years, across a wide spectrum of professions—accountants,
civil engineers, architects, pharmacists and so on—in many developing countries
including India.
The problem is serious and what has been true over the years is true even today,
and what was true overseas is now becoming true right here in India. Sure, some of our
boys and girls are facing the challenges superbly, but there seem to be some glaring
shortcomings regarding communication skills.
I wish to make it clear that I am talking of this handicap in the context of modern
India. Both the employment scenario and the entrepreneurial world have changed be-
yond recognition.
z As long as the employment scenario is concerned, you are no longer competing

only with other Indians. One does not have to go overseas to meet the world. The
world has got unleashed into India and the best in the world in almost every field
are here and these are the fellows our next generation will be competing with.
z On the entrepreneurial side, the days of setting up a new enterprise in India merely
as a retail or wholesale outlet, a plastic factory or a printing press are long gone.
Considering the degree of sophistication needed to be a successful entrepreneur
today, the person needs a different kind of personal skills.
These essential personal skills are neither taught anywhere nor can be learnt by the
youngsters by emulating successful Indian entrepreneurs as role models. The older entre-
preneurs succeeded in a very different India and needed to have very different kinds
of skills.
I have thought a lot about this and to me lack of communication skills means three
things:
z First, I find it strange that though our youngsters are often better educated, they
lose out when it comes to putting their thoughts on paper in a concise readable
manner. Speaking good English is one thing, writing it well is quite another.
z Again, when it comes to writing, our brilliant youngsters are handicapped while
using computers, because they are not good at touch typing. While children of most
countries are taught touch typing as a compulsory subject in schools, Indians
consider ‘learning typing’ a degrading term.
z Then, there is a serious lack of personal skills. Though our youngsters are very
friendly, they make friends mostly with their own people and seem to be uncomfort-
able while interacting with people of other races. (We will talk about this in the
next chapter.)
I: General Discussion
For the young entrepreneurs, India is now a very different place.
New Communication Skills for Entrepreneurs z 53
z My strong message to you youngsters is that, in the New World, as managers

and entrepreneurs, your brilliance and technical skill will be of no use if you can-
not express yourself on paper.
z Everything boils down to the quality and lucidness of your memos, reports, multi-
media presentations or even a briefing to your senior management.
z Everything boils down to how you get your point of view across, and there is no
way you can do this unless you first put it down on paper, and keep editing and
polishing it till you get it exactly right.
z There are no shortcuts to the power of the written word.
I am not talking of the power of the pen here: I am not talking about journalism; nor
am I talking about writing powerful speeches.
I am talking of a basic skill that is crucial to the growth of an entrepreneur or an
executive in the globalised business environment of India; that is, being able to com-
municate one’s thoughts and ideas effectively, using a variety of tools and media. You will
need to develop and use this skill especially, when you start working in the big wide
world. It is often said that technical people do not possess the ability to communicate
well. Of course that is a load of nonsense. The problem of poor communication is com-
plex and cannot be solved by a single book, a course and certainly not by this short guide.
We will point out the critical elements and questions to think about. The idea is to get
you to start thinking in a new direction.
I talk to postgraduate engineering, management and tourism students across India.
Sure, they are already graduates and are training to become managers, but I am amazed
at the picture they have in their minds about their life as managers, and that of the
‘paperwork’ being left for junior clerks and stenos.
I need to remind you that the very word ‘manager’ nowadays conjures an image of a
desk and, maybe, a cabin. This means paperwork. Every meeting that you attend would
mean presentations and that means paperwork. And, that is what you will be doing
day in and day out, because the days of secretaries and stenos are over.
No matter what profession you get into: You may be a marketing specialist, an ac-
counts executive, an engineering shop floor supervisor, a self-employed entrepreneur,
or even a banker, you will have a desk and on that there will be a computer. A better
part of your working day would be spent working on and reading and writing reports,
memos, comments, analysis and recommendations. You cannot get away from it. At
the end of the day, everything would boil down to paperwork.
Gone are the days when it was just you and your boss in the firm and you spoke to
each other many times a day. Now, your boss or an important customer or a difficult
supplier may be in another city or even in another country. And, often there would often
be times when you have to put your point across to someone through a powerful memo.
And, that memo cannot be more than a couple of pages. You may be fluent in English
and may have the power of persuading people, but presenting strong arguments deli-
cately in a couple of pages is not easy.
This is what I mean by the power of the written word: The quality of your memos, re-
ports and presentations often would make or break your career. Your own words are the
bricks and mortar of the dreams you want to realise. Your words are the greatest power
you have. The words you choose and use will establish the direction your life and your
aspirations will take. And, the higher up you get the more crucial this becomes.
z I am going to give you some mantras to help you on your way; I am also going to
give you an easy to remember acronym for these. On the face of it, they would ap-
pear ridiculously simple and out of place in a book like this. But, the higher you
get in corporate life, or, the more ambitious entrepreneurial projects you start to
tackle, the more you are going to need these.
Before that, I am going to give you some pointers on writing skills, then on presen-
tation skills and then give you what I call five-plus-three mantras.
Writing Skills for Entrepreneurs

Writing is a complex tool for executives and managers. You need to train yourself in
its use or a large proportion of your professional activity will be grossly inefficient.
You must reflect upon your writing lest it reflects badly upon you.
I have explained above how it is absolutely vital for you as a young executive or
an entrepreneur to actively develop the skill of writing; not only because of the time
involved, but also because your project’s success may entirely depend upon it. Indeed,
since the business environment in India is changing, and a lot of communication be-
tween you and the senior management would be occurring in writing, your entire career
may depend upon its quality.
The most significant point about writing skills in management is that it is completely
different from what most people were taught about writing, and it is important that
you recognise and understand this difference. Management writing has very little to do
with the composition and literature you learnt at school: the objectives are different;
the audience has different needs; and the rewards can be far greater. As a young ex-
ecutive or an entrepreneur, you write for a very distinct and restricted purpose, which
is best achieved through brevity and simplicity.
In school you are taught to display knowledge: knowledge of English and the topic
being written about. The more information and argument you wrote, the more marks
you got. In industry, it is exactly the reverse. Here the wise executive must extract only
the significant information and support it with only the minimum amount of argument.
The expertise is used to filter the information and remove the ‘distracting noise.’
People in business do not have the time to marvel at flowery language or your poetic
imagery. They quickly want to know what the memo is about; there is no real interest in
style, except for ease of access. Your report or memo is primarily designed to convey
information. Sure, your job is helped if the report is interesting; but time is short and
the sooner the meat of the document is reached, the better.
Today’s senior managers have a lot to do all the time; they are busy and distracted.
On a top manager’s table, your document has possibly 20 seconds to justify itself.
If by then it has not explained itself and convinced someone that they need to read it,
they will go on to tackle something else. If this person is a good manager, he will insist
on a rewrite; if not, the document may never be read.
z Thus the beginning of your document is crucial. It must be made obvious to the
reader what the document is about, and why it should be read.
You start with your aim. Every document must have a single aim—a specific, spe-
cified reason for being written. Once you have established your aim, you must then
decide what information is necessary in achieving that aim. The reader wants to quickly
find the outcome of your thoughts. So, apply your expertise to the available inform-
ation, pick out the very few facts which are relevant and state them precisely and
concisely.
Writing can be very powerful—and for this reason, it can be exploited in manage-
ment. It all comes down to the problem of busy people and their short attention span.
You have to provide the information in small manageable chunks. When you have de-
cided what to say, to whom you are saying it, and how to structure it; put it on paper in
whatever form that first comes to your mind and then edit and polish it again and again
till you are happy with its clarity and effectiveness. The time spent doing this will be far
less than the time wasted by the others while struggling with a verbose and unread-
able document.
Presentation Skills for Entrepreneurs

It is important to understand that the central issue in communication is not the trans-
mission but the reception. In multimedia presentation, be it a performance analysis pre-
sented to a board of directors, a new project proposal presented to senior managers or
investors, or a new work scheme presented to staff members, the whole preparation,
presentation and content of speech must therefore be geared not towards the speaker
but to the audience. In other words, it does not matter how well you made the present-
ation, all that matters is how well the audience reacted to it. The presentation of a per-
fect project plan is a failure if it is not in a language simple enough for the audience to
understand. The objective of communication is to make your message understood
and remembered.
z The calibre of your presentation should be such that no one should argue with you
or ask you questions: They should only seek clarifications.
In this, it is difficult to overestimate the importance of careful preparation. Five min-

utes on the floor in front of senior management could make or break several months of
hard work by the executive and his team. With so much at stake, the presenter must
concentrate not only upon the facts being presented but upon the style, pace, tone and
ultimately, the tactics which should be used.
The next task is to consider the audience. Begin by identifying their aims and ob-
jectives for attending your presentation. Think about why they are there. If you can
somehow convince them, without actually saying so, that you understand that they are
busy people and that you are there to give them something they want, you will not
only find a helpful and receptive audience, but will also be able to easily achieve your
own objectives.
This is not as simple as it seems. This task of matching with the aims of the audi-
ence goes beyond the simple salesmanship of an idea—it is the task of obtaining their
attention right in the beginning in the simplest and most effective manner. As I said,
if your opening remarks should imply, in a subtle manner, that you understand their
problem, or desire or plan or whatever, and that you have a solution, then they will be
attentive to your every word.
If you can win over the audience in the first minute, you will keep them for the remain-
der. You should plan exactly how you wish to appear before them and use the beginning
to establish that relationship. You may be presenting yourself as their friend, as an
expert, perhaps even as a loyal and trusted employee, but whatever role you choose
you must establish it at the very beginning.
Also, please remember that the final impression you make on the audience is as
crucial as the first. The final impression is the one they will remember, so do not neglect
planning your last few sentences. This should be done with extreme care. As with
the beginning, where you managed to get their attention, it is important to hold their
attention which may have wandered. This may require a change of pace, a new visual
aid or perhaps the introduction of one final culminating idea. In some cases, the end-
ing can well be the summary of the main points of the talk, but here you need to be
extremely careful as this is also one of the greatest mistakes you can make. If you tell
the audience that this is going to be a summary, they will simply switch off, at that
very moment.
Indeed, the style of concluding would depend upon your topic and your personal ma-
nner of presentation. I always try that the ending comes unexpectedly with a flourish,
with the pace and voice leading the audience through the final crescendo onto the inevit-
able conclusion. It is only then that the final vital phrase will be left hanging in the air
and ringing through their memories for a long time.
Whatever you say and present; it is you, who will remain the focus of the audience’s
attention. So, there is no substitute for a rehearsal. You can do it in front of a mirror, or
in an empty room. In both cases, you should accentuate your gestures and vocal projec-
tion so that you get used to the sound and sight of yourself.
II: The Five-Plus-Three Mantra

I am going to give an easy way for remembering this. Here are:
z Five mantras that would address the power of your presentations, and
z Three mantras that would be more specific for written reports and memos.
An easy way of remembering these mantras is to take your mind to a shop or an office
of a small businessman in North India. When you meet him, he invariably will offer
you a cup of tea. Remember he does this for many visitors during his working day, so
he orders only one cup of tea and offers to share a few sips with you. He will pour out
a small quantity into the saucer and offer the almost full cup to you. While you are
having your tea, he will sip from the saucer. I will be a little rude here and say that he
will slurp from the saucer, because that is the exact description of what he does.
So, the easy to remember acronym for you is SLURP-TEA.
SLURP-TEA
The First Part: SLURP

The first part of this acronym is SLURP. This is an easy-to-remember acronym for the
five mantras for making your multimedia presentations more effective. These
mantras—See, Listen, Understand, Remember and Ponder—are not what you should
do, rather, what you should make your audience do. Also, these mantras are not
stand-alone activities but are stages of a powerful presentation.
We will come to the second part, TEA, later on. This is an acronym for three mantras
for improving your writing skills.
S—See
The first contact that your audience has is with you and for them the main difference
between reading a report and attending a presentation is that they are looking at you
and at what you are showing them. Both presentations and reports are ways of com-
municating ideas and information, but unlike a report, a presentation carries your
personality and gives you an opportunity to interact with others.
You must make sure that you capture their interest and whatever your audience
sees, they should find interesting. As I said earlier, it is you, who will remain the main
focus of the audience’s attention, and so you must concentrate not only on the facts
you are presenting but on your style, pace, tone and ultimately, the tactics.
Of course, like the overhead projector of the past, you will be using multimedia de-
vices to project your information onto a screen. Here is a thought. Say, you are project-
ing six points that you wish to highlight and explain. The biggest mistake you can
make is to list out the points, or the headings and project them all on the screen. While
you are reading and explaining the second point, someone in the audience is reading
the sixth point and wondering what it means. This person did not hear what you
said and by the time you come to the last point, you have lost him. This happens all
the time.
So what is to be done? I do not have an easy answer to that, except to point out that
this is an inherent danger while using projection devices to project text. How would you
solve this, and how much would you rely on what you project on the screen would
very much depend upon your own personality and presentation style and how you
make everything interesting to watch. I am sure you have watched hundreds of pre-
sentations. Think back not on what was said but how it was said. Think back and
make a list of the things you would not do and you are on your way.
My style is that I try to make my presentations a fun event. I use them as my chance
to speak my mind, strut my stuff and tell the people what I think they have come to lis-
ten to. For me, the eyes are the keys to the soul and I use them as an effective weapon
for convincing the audience of my honesty, openness and confidence in the objectives
of my presentation. Sure, in real life, one often has to fake it, and how effectively you
can do it, of course, depends upon your own personality.
During the presentation, establishing eye contact with each and every member of
the audience as often as possible is an excellent method of enhancing your rapport
with the audience. For small groups this is easily possible but it can also be achieved
in large auditoriums since the further a person is from you, the harder it is to tell pre-
cisely where he or she is looking. Thus by simply staring at a group of people at the
back of the hall or room, it is possible to convince each of them individually that he or
she is the object of your attention.
All said and done, your presentation puts you on display. If you are a young entre-
preneur and are talking to your newly recruited staff, they probably need to see evi-
dence of decisive planning and leadership and you need to make them confident of
your position as their manager. Only then will they be motivated and inspired to under-
take the tasks which you are presenting. If you are a young executive presenting a
new idea for a project, project leaders from other sections need to be persuaded on the
merits of your project and to provide necessary support. Senior management should
be impressed by your skill and ability so that they provide the resources to enable you
and your team to get on with the job.
L—Listen
The situation here is quite similar to what I said before about seeing, because, unlike
reading a report, the audience expects to see and hear something interesting.
The main problem here is, of course, the people to whom you are talking. The aver-
age human being has a very short attention span and a million other things to think
about. Your job in the presentation is to reach through this mental fog and to hold
the attention long enough to make your point.
One of the most irritating things I have noticed about people who use PowerPoint or
other multimedia devices is that they have written their speech on the computer and
merely read out the points as they are projected. Instead of facing and talking to the
audience, thereby holding their interest, they make the fatal mistake of turning their
back to them and, pointer in hand, talk to the screen. Nothing could be more boring.
I wonder why these people do not simply print out the PowerPoint file, distribute it to
the audience and go home!
Sure, there are presentations where it is crucial to use graphs, tables or illustrations,
and the advantage of this is that the audience knows this and looks forward to the
complexities being explained to them. The trick here is to realise that the audience is
already reading what you have projected on the screen and your job is to explain it
and not to read it out to them again. If you do this by facing them and not reading out
from the screen, you will reinforce the impression that you know what you are talk-
ing about.
Here again, I will repeat that the important part is—practice, practice and practice.
You should know your presentation so well, that during the actual presentation, you
should only have to briefly glance at your notes or the screen to see that you are on
track. But never read from your notes.
z There is also the question of your fluency in the English language. I meet many
students and executives, particularly from the rural areas, who say that they
can read and understand English easily but they face problems when it comes
to writing and speaking. I will give some suggestions through the three mantras
under the acronym TEA.
I have already explained about the importance of eye contact. After this comes the
voice contact. I have known very few people who can take their ordinary conversation
voice and put it on stage. In an ordinary conversation you can see from the expression,
perhaps a subtle movement of the eye, when a word or phrase has been missed or mis-
understood. In front of an audience you have to make sure that this never happens.
My simple advice is to slow down and take your time. The voice is probably the most
valuable tool of the presenter. It carries the content that the audience takes away. One
of the oddities of speech is that we can easily tell others what is wrong with their voice,
for example, too fast, too high, too soft and so on, but we have trouble listening to and
changing our own voices.
Remember the audience is constrained by good manners to not cut in and interrupt
you, so there is no need to maintain a constant flow of sound. A safe style is to be
slightly louder and slightly slower than you would be in an informal chat. And, you can
adjust this by watching the audience. A monotone speech is both boring and sopor-
ific, so it is important to vary the pitch and speed of your presentation. At the very least,
each new subsection should be preceded by a pause and maybe a change in tone.
My own experience of talking to students in India is that the students who failed
to get the point I was making did so because they were not aware of what they were
looking for. If the audience knows when to listen, they will. So I tell them: ‘…the im-
portant point is…’
Another thing I have found useful is repetition. I have told you that the average audi-
ences are people who are busy and are easily distracted; their attention may slip during
the most important message of your speech—so use repetition. You don’t have to neces-
sarily use the resonant tonal sounds of the repeated phrase, but simply make the
point again, and again, and again, with different explanations and in different ways.
I saw a cartoon on the Internet about a British Sergeant Major. ‘First you tell ’em
what you are going to tell ’em, then you tell ’em, what you told ’em!’
U—Understand
What is said in the preceding section is fine as far as it goes. These were the first two stages
of a powerful presentation. Sure, you must make the audience see and listen to something
interesting but it is of no use if they have not understood much. This is not easy but it is
the whole point of the exercise. Finding what you say interesting is one thing, understand-
ing it is quite another.
You need to make a careful point of knowing who you are talking to and then making
sure you only talk in a language they understand. You may be talking to your board
members about a new project, but if they are all businessmen and financiers, and you
talk hard core engineering, you are sure to have your proposal rejected.
I have attended many presentations where it was clear that the line of thought and
the string of arguments were clear and logical only to the presenter. The reasoning made
sense only to him and we as the audience felt lost. We had to work hard to find our
way through the information. These presenters forgot that it is only when the audience
will have to apply the least mental effort and where the facts are presented in an easily
digestible form that they will be able to receive a positive response.
Then there is another problem that is a fact of life in most organisations—the prob-
lem of a hostile audience. Often, the young entrepreneur or executive is faced with an
audience that does not want to listen or understand. They are there merely because
they have been ordered to be there. Say, the entrepreneur has been working on a pro-
ject that has come up against vested interests and so is unpopular, or, there has been
a serious problem in a particular department and the executive concerned is faced
with the problem of presenting his point of view.
There is no easy formula for handling this kind of an audience. What will work for
me will not work for you, but the basic fact remains that no one can remain immune
to a show of sincerity and honesty. If the audience feels that you are sincere in your
efforts to get them to understand what actually happened, you will win the day. How
you make them feel this way is your business. As I said, what works for me will not
work for you.
R—Remember
Now we come to a very difficult stage. You made what the audience saw and heard inter-
esting, and then you got through to them and made sure that they understood what it
was all about. That was not merely good: It was excellent! What you have done so far
is not easy. But then, these stages would work out fine if you are acting in a theatre
or have been called to entertain people in an after-dinner speech. Nobody needs to re-
member anything, except that it was fun.
The crucial aspect of a professional presentation, be it a position paper presented to
a board of directors, a new project proposal presented to senior managers or investors,
or a new work scheme presented to staff members, is that the points you made should
sink in, people should take them home with them and keep turning over in their minds
what you said: In simple words, they should remember what you said.
I know that the art of making presentations is a compulsory subject in most post-
graduate management and engineering institutions across India. Every week a group
of students are given a current topic, generally from a recent issue of Economic Times,
and asked to make a presentation to the rest of the students. I have sat through many
such presentations and find that at the end there are lots of discussions and even argu-
ments but nobody asks a single question seeking clarification.
The problem is this. The group of students that were asked to make the presentation
read the same magazines and books and went to the same Internet sites as did the
audience, and so the presenters only spoke about what the audience already knew.
The result was that every one in the audience had their own point of view on the topic,
there were arguments and discussions and nobody learnt anything new.
I have said it time and again that before preparing for your presentation, make an
assessment of the audience and how much they know about your topic. Never, ever,
make the mistake of telling people what they already know.
Remember you are not a group of friends chatting in a coffee shop where anyone can
say anything—the people in front of you expect to hear something new from you.
Try to crystallise your thoughts and combine your main message with some memor-
able phrase or imagery. Try the anecdotal type of presentation—weave everything into
a story. Everyone loves a story, and stories can both instruct and convey a message:
Ancient Hindu philosophy is recorded in its stories, and most religions were originally
taught in parables. If you can weave your message into a story or a personal anecdote,
it is easier to remember—even if the entire thing is fiction and you made it all up.
If you but strut and fret your hour upon the stage and then are gone, no one will
remember what you said. The presenter has the power to either kill the message or
enhance it a hundred times beyond its worth. Your job is to use the potential of the pre-
sentation to ensure that the audience is motivated and inspired rather than discon-
certed or distracted.
P—Ponder
There are presentations and presentations. Most are mere reporting of facts, an analy-
sis of the situation or prattling away of the features of a product you are trying to sell.
You have your say and that is that.
z But for an executive who knows he is on his way up, or for a young entrepreneur
who wants to make his mark, no matter what, a presentation has only one objec-
tive: it should make people ponder.
These four stages above are a build-up to this, the most powerful tool you can have.
Your presentation should have the clout and the punch to make people think. You
should have presented something new and original, a new method of production, a
new sales strategy, a proposal for a new range of products, or a solution to an irritating
problem. And your proposal must have the calibre to be taken seriously. This can only
happen if it is backed by your own determination to succeed, plus of course, your per-
sonality, your brains, training and years of experience gained out of sheer back break-
ing hard work.
If I say that learning this skill is not easy, it would be a gross understatement. There
are skills that cannot be taught and the art of making people ponder is certainly one
of those. But look around you. This seems to be a characteristic of all the successful
entrepreneurs and top executives: When these people say something, everyone shuts
up and listens. You do not have to know the person, but if you listen to him for five min-
utes, you know he is somebody.
Make this the end objective of your communication skills and you are on your way
to the top.
Second Part: TEA

The second part of this acronym is TEA. This is also an easy to remember acronym
for the three mantras on making your writing more effective. Unlike the five mantras
earlier, these three mantras, ‘ Typing, English and Attitude’ are about what you should
be doing. Again, these mantras are not stand-alone activities but stages towards
powerful writing.
I have explained already that no matter what profession you get into, as a manager
you will have a desk and on that will be a computer. You cannot get away for the fact
that your job would mostly consist of working on, reading and writing reports, memos,
comments, analysis and recommendations. Your success as an executive or an entre-
preneur would often depend upon how you get your point of view across to a wide
spectrum of people and there is no way you can do this unless you first put your
thoughts down on paper, and keep editing and polishing it till you get it exactly right.
Remember, you need to fully exploit the power of the written word because the
people you are dealing with are successful people and these people are busy. They
have short attention spans and there is no way anyone would wade through a 10
page memo.
z The way to do this is first to decide what to say, to whom you are saying it and
how to structure it. Then put it all on paper in whatever form comes to your
mind first and keep editing and polishing it again and again till you are happy
with its clarity and effectiveness in a one page summary.
So now we come to the second part of the acronym, TEA—Typing, English and
Attitude.
T—Typing
The first mantra is that you must learn what is called touch-typing or keyboarding—the
proper use of the keyboard of our computer. You should be able to type effortlessly;
you should be able to fluently transfer your thoughts onto the computer without look-
ing down at the keyboard.
While children of most countries are taught touch typing as a compulsory subject
in schools, we Indians consider ‘learning typing’ a degrading technique. In India, if I
suggest that it is good that your children learn typing, it has unfortunate connotations.
‘Hey, my child is not going to become a typist or a steno.’
The world has changed and India is changing too. It is with most developed countries
and it is now with India too, that the corporate organisations can no longer afford to
have secretaries, clerks, steno-typists, and so on, for the executives. It is a fact that even
the chairmen of some of the larger companies type their own personal and confidential
memos.
It is my contention that if you are not really fluent in the use of the keyboard, you
will feel handicapped in preparing reports, memos and presentations. The easy flow
of thoughts and expressions will become severely limited, and of course, your output
will be shorter and laborious.
I need to repeat what I said above. Remember, you cannot prepare a powerful one-
page memo unless you first put all your thoughts down on 10 or more pages and then
edit, cut, polish and improve your presentation. And keep on doing this till your memo
becomes an outstanding work of art. Only then can you be sure to get results.
But if you are doing the two-finger ‘seek-and-you-shall-find’ method of typing, you
will get tired and fed up after a couple of pages and the easy flow of ideas and persua-
sive arguments will dry up.
z Learning typewriting on the computer is no big deal. You do not have to join a
typing school: You can learn at home and it is fun. There are many typing tutors
available on the net and they can be downloaded for free. Also, you have typewrit-
ing tutors available on CDs in every computer shop and you do not need to spend
more than 15 minutes every day for a couple of weeks. The surprising part
is that these tutors make the whole thing into a game. I found it immensely
enjoyable.
E—English
The second mantra is that you must improve your English language skills. This is not
as difficult as it appears and I will show you a simple trick to do this.
Initially people wonder what I am talking about. Particularly when I say this even
to students of prestigious business schools in India, students who are absolutely the
cream of Indian youth. These are people who are fluent in English. They talk, fight and
think in English. How is it possible that they cannot write good English?
z Well, talking, arguing and so on fluently in English is one thing; writing good, read-
able English, and getting your point across on paper is quite another.
Again, please remember that, as I have explained earlier, I am not talking of aca-
demic or journalistic standards of English. There is now something called Business
English. You are not taught this in school. But this is what you are expected to use in
letters and emails.
Talking of emails, I regularly get them from students and junior executives some
of whom are from prestigious institutions. Sure there are exceptions, but the average
standard of English is atrocious. One of the reasons is that, people are not comfort-
able on the keyboard and are laboriously typing what they have to say. I think there
is another reason too. I said in the earlier chapter that people from the rural areas,
even when they can read and understand English easily, face problems when it comes
to writing and speaking.
When I ask the students how they can improve their English, I get all sorts of an-
swers. To me, the only way of improving your command and your fluency of the
English language is, not by reading, watching television, listening to other people or
even by speaking, but only by writing.
And another thing: There can be no better tutor for teaching you written and spoken
English than yourself.
I will give you a very simple way of first testing yourself and then teaching yourself how to
improve your written English. You can follow that by improving your spoken English too. I
suggest that you try this.
A very simple and effective way of rapidly improving the fluency of your written English,
and, a very simple way of testing yourself, is to spend fifteen minutes every day reading a
single paragraph in a newspaper, a magazine or any sort of a write up. Read a paragraph,
and read it three, four, five times. Pay attention to the language rather than the contents.
And then, keep the paper or the magazine away. The trick is to step a few feet away from
where you have kept the magazine, sit down and give yourself a couple of minutes to think.
(Box continued)
(Box continued)
Don’t start writing immediately.
Then, write what you have read. Do not write a summary, do not write about the ideas you
read, write the exact language that you have read. Try to recall and then write the sentences
as they were. Do not look at the original paper again.
After writing it, show the original and what you have written to somebody else and you will
be amazed at the mistakes you made.
Now you can follow through and make an effort to improve your spoken English too. You
will notice that by reading the paragraph a few times you have somewhat internalised it
and if you try to read it aloud, you can read this more fluently than the other paragraphs
that you read for the first time.
So, go ahead and read this paragraph aloud and record yourself on a tape recorder.
The trick here is not to listen to this recording immediately. Give yourself at least a day and
then when you listen to yourself, it would be the voice of a stranger. You will yourself notice
mistakes in your own pronunciation and be able to correct them.
Try to make it a daily habit. Soon, you will notice a remarkable improvement in your com-
mand and your fluency of the English language.
By the way, this is an excellent way of reading your textbooks while cramming for
your exams. Try it. Read a page or two, step away from the book, give yourself few mo-
ments and write a summary without peeking at the book again.
A—Archives
I have saved the most important mantra for the last. I will seek to establish that this is
one skill that we sadly lack and this indeed reflects on our overall competitiveness.
z I am talking about making a habit of taking notes everywhere and to build an

extensive personal archive: a solid data base of ideas, thoughts, information and
basic knowledge.
I am not talking of what you have in your memory. I am not talking about being
sharp and noticing things, and remembering them. I am talking about the need for you
to learn to build your own stockpile, a hard copy data bank, an easy to access refer-
ence source of your own collection of ideas, thoughts, information and basic knowledge
in the form of a collection of notebooks and indexed files.
What I am saying is that you must make it a habit of taking notes, not only in formal
meetings but everywhere.
Somehow our executives do not easily get into the habit of making notes immediately
after the occasion. I have had many Indian businessmen and executives visiting my
projects overseas. Invariably they go around with their hands in their pocket and if
they see something they wish to take a note of, they ask me for my card and scribble
at the back! Carrying a note pad does not seem to match the suits they wear. I am sure
they give long dictations to their secretaries back in their offices, but by then the good
stuff is lost.
I have lived and worked with the Japanese, the Koreans, the Chinese Singaporean an so on
and one thing I noticed, in sharp contrast to our people, is that they always have a small note-
book in the pocket and they take copious notes everywhere.
They talk very little, observe the smallest detail, listen to the most casual hint and write it
down.
These people place an enormous importance on keeping records. They build up a data bank
of whom they are dealing with. They want to know you as a person and then they decide
how to deal with you. They do this by noticing and keeping a detailed record of your personal
tastes, likes, dislikes and attitudes.
Our people take notes only in meetings, and so on, but these visitors take notes
everywhere.
And by everywhere, I mean everywhere.
You might think this is simplistic, but look around you and notice. How many people do
you see having a pen and paper handy if they need to note something? I see our Indian busi-
nessmen and the very casual attitude they have towards keeping records and maintaining
their own reference stockpiles.
Look at any entrepreneur or executive that you know. Say, this person had an important
visitor—a customer, a supplier or a possible investor, about six months ago. If your friend
is a good executive, sure he will have a record of the important points discussed, but does
he have a record of anything that the visitor showed particular interest in, outside the area
of your discussion? Does your friend remember any casual hints of their future plans? Is
there any record of the visitor’s personal tastes and habits? What sort of food he likes? Is he
a vegetarian?
And so on.
I have noticed time and again when I am in other countries, that a series of their ex-
ecutives will spend the whole day with you discussing various aspects of the business,
then do a late night on the town and yet have a full report ready on their tables the
next morning. I do not know how they manage this, but there are details of everything
discussed along with your eating and drinking preferences. I have seen them fill many
notebooks regarding this.
So the last mantra is that you should make a habit of taking notes: Not only in meet-
ings and your classrooms, but everywhere. You have to make a habit of keeping a small
notebook in your pocket all the time. See or hear anything interesting, jot it down.
This may appear as a simple suggestion but I seek to establish that this is one of
the crucially important tools for our executives and entrepreneurs.
I will give you an example where my habit of not taking notes lead to a feeling of
humiliation in front of others.
I was in Malawi (Central Africa) some years ago on an assignment and was invited for
dinner to the home of one of my friends, Mr Waseem, a local Gujarati-Muslim trader. He
had invited three visiting businessmen from India and had asked me to join in. As it
turned out, the group was from India but all three were not Indians. There were two
Indian industrialists accompanied by one Mr Kim, a Korean representative of the Indian
branch of a Korean trading firm. It appears that the Korean company in India was
exporting Indian products to the East and Central African markets, and had sole export
rights to the products of the two Indian businessmen. (The issue of why a Korean firm,
and not an Indian one were exporting Indian products and why we cannot do it ourselves,
is not the subject of discussion in this book.)
As is the case with Indians living in Africa, the dinner was a very informal family af-
fair. We all noticed that Kim enjoyed the food but in particular commented on the very
crisp Papads. Mrs Waseem casually mentioned that this was the last of the stock they
had and were waiting for someone coming from India, particularly North India, bringing
fresh stuff. This lead to a discussion on the huge variety of Papads made in different parts
of India and it turned out that our hosts, though Gujaratis, were particularly fond of the
more spicy Punjabi variety.
Both the Indian industrialists said, ‘Bhabhiji, your worries are over. We live in Punjab
and we will send you some by parcel. Plus the next time we are here, we will bring you
some more.’ Kim quietly asked me. ‘What is puppad? What is Gujaraty? What is Poonjbi?’
and so on. He quickly took out his notebook and noted everything down.
Some months later, I got a call from Waseem again, to say that the two Indian busi-
nessmen were there at his house, but instead of Kim, someone else had come from the
same Korean firm. He asked if I could join them for dinner.
Before sitting down, the Korean gentleman opened his brief case and took out a beau-
tifully gift-wrapped parcel from his bag and presented it to the lady of the house. On
opening it, she found five packets of excellent quality Punjabi Pappads!
This left the three of us intensely humiliated by our own actions, or rather the lack
of them. In the meanwhile I had myself been to Delhi for some work. Despite my trip to
Delhi and the loud assurances given by the visiting Punjabi businessmen earlier, all of
us had forgotten about what the lady had asked for: simply because we did not bother
to note down this insignificant matter.
The Korean executives take copious notes, and everything goes into the company
database and the result is the massive goodwill benefit they earn.
This brings me to some points I am trying to make.
z One can see that a simple practice of keeping records earned the Korean com-
pany a huge goodwill bonus. Waseem is not going to forget this in a hurry and of
course, he will talk about it all over the place. The firm has got itself a long-term
friend it can depend upon.
z The Indian businessmen and I cut an extremely sorry figure. We simply do not
bother to take notes and do not give importance to things like this.
z There was nothing individual about the Koreans. The person who brought the
gift was not even there when the topic was discussed, and was merely following
company procedure. This is simply the Korean way of giving priority to develop-
ing personal relations with whomever they are dealing with. They sent out a
strong message: we are here and we are here to stay.
This explains why the Koreans (and the Japanese) put great value on the background
information of the business, political and economic climate of the region. This also
explains how some nations manage to get advanced commercial information on tenders
and upcoming projects long before these are published. Indians get the information
when it is of almost no use.
That was the point of my third mantra—Make it a habit of taking notes.
Preamble z 67
6
Your Attitude to Life and Work
‘I do not think you can produce quality products.’

I was shocked. I had never expected Kimoto to say such a rude thing. I have known
Kimoto for many years and we have often been team-mates on industrial development
projects in many countries. I have been to his home in Osaka many times and he too
has been our guest in our home in Kuala Lumpur often. The only other person in the
car was our host in India who was chairman of a large group of companies. What
prompted this crude remark was that our host, while driving us back to our hotel after
a late dinner at his home, had not put on his seat belt and he had driven through
three red lights. Well, I do not blame him as it was late at night and the streets in the
open Rohini area of Delhi were quite deserted. We could see that there was no oncoming
traffic on both sides of the crossings.
I am aware that the Japanese would not cross a completely deserted road late at
night even against the pedestrian crossing light. But this is how they are and this was
India and he was our guest here. Kimoto realised his mistake and immediately apolo-
gised, saying that he was drunk. He lapsed into silence for the rest of the journey.
It has taken me a lifetime to understand the immense depth of the casual remark made
by my Japanese friend.
My readers would have, by now, noticed the undertone of a message in this book.
One of the things I have started feeling very strongly about is something we do not
normally notice or talk about in India—our attitude towards shoddiness in everyday
life, and our very casual attitude towards cutting corners, taking shortcuts and the way
we work.
In sharp contrast to what I have seen in successful nations, and in the newly emerg-
ing nations like Malaysia and Singapore, we are very comfortable with shabbiness
and tackiness all around us and the happy-go-lucky attitude to everything including
earning our living. True, there are flashes of elegance and real good workmanship,
which further proves my point. Making a special effort to do something is not the same
as doing it automatically, or by habit.
Yesterday, this was fine; we were a protected economy. Today, our young entrepreneurs
need to understand that this will not do.
It is my conviction that the newly emerging successful nations in Asia have acquired
a reputation for producing quality goods and offering a superior standard of service, not
because of particular government policies or incentives but because of the attitude of the
common people: The attitude of doing everything properly and diligently even in daily life,
and that towards work and earning their livelihood that borders on worship.
And, it is not only the Asian people; you will get an amazing insight into the mindset of the
Western people when I talk of how they select their top people for their projects in India.
As I said, I feel very strongly about this.
z In Section I below, I will talk about our attitude towards the way we live.
z In Section II, I will discuss our attitude towards our professional lives.
z I will talk about Finish and Elegance of Design as an essential part of Quality
in Chapter 11.
I: Our Attitude towards Life

I need to make it clear that I am not only talking about how we do things in India. I
have lived and worked with people of Indian origin all over the world. Well, they may have
lived overseas for generations, but their attitudes, particularly towards shabbiness
and shoddiness, remain the same.
I am not happy talking about this, but to see a situation where shoddiness and shab-
biness hits you in the face, is also to see it starkly contrasting with elegance next door.
Take a drive to Southall, the Indian conclave near London. Nobody has to tell you that
you have reached Southall. The very look of the Indian owned shopfronts tells you
that you are back home. The dirty and smudged glassfronts, showcases used for stor-
age of cardboard cartons rather than showing, the crude hand scrawled signs for
prices and announcements, the unkempt and unshaven shopkeepers, and the muddy
floors all have a story to tell. Contrast this with the squeaky-clean shops run by the
local whites, and as I said, you get hit in the face.
This is true of the Indian shopkeepers all over the world, be it in UK, USA, Singapore
or Malaysia. Do you want to see a really filthy toilet? The only place in the US you can
see it is an Indian restaurant, and I mean any Indian restaurant, anywhere in the US.
Our establishments are known for their casual upkeep, in stark contrast to superbly
maintained shops right next door.
It is only fair that we talk to the shopkeepers and get their side of the story. The fellow
says he has to work long hours seven days a week. The business is good and the more
they work, the more money they make. As simple as that. They also make a point
Your Attitude to Life and Work z 69
when they say that keeping their shops clean, and so on, is lost effort as it will not
improve their sales. Their customers, invariably Indians, cannot be bothered by how the
place looks!
I am sorry; I have to repeat what I just said. We Indians cannot be bothered by how
our surroundings look!
I apologise if I appear to be running down my country but I do not think any of my
readers will deny the harsh truth behind this.
Let me go back to the point I was trying to make at the beginning of this chapter.
I am intensely proud of our cultural and social traditions, especially that of our at-
titude towards simple living. All over India, many of our homes are clean but basic and
simple, to the point of being austere. Even the rich have usually almost spartan homes.
I am proud of this, but simple living is one thing, and shoddiness right outside your
door is quite another.
Let me say straight off that of all the chapters in this book, writing this particular
chapter has been the most uncomfortable, or rather painful one, for me. When I see my
nation and my people as others see us, I do not like what I see. Now, don’t get me wrong.
I am the last person who can have a holier-than-thou attitude.
But the message was driven deep into my psyche long ago when I was a young con-
sultant starting out on my professional consultancy career. Let me tell you about this.
Selecting a General Manager

My client was a German wholesaler of grocery items and they were setting up a fruit
processing unit in India, to produce canned and bottled fruit jams and preserves purely
for export back to Germany. The Managing Director was an elderly Jewish lady who
visited India frequently. Her name was Ingemer Johanstien, but she wanted everybody
to call her Inge. She had become a family friend and often spoke to my wife and to me as
if we were her own children. I learnt a lot from her.
I was responsible for planning and implementing the Indian aspects of the entire
infrastructure of the factory to the very rigid German specifications, and that is when I
started learning about what it meant to be really fastidious. My assignment would end
when the first Chief Executive Officer of the company took over.
We had short listed three Indian candidates for the post of CEO, who would be
solely responsible for the entire operation as the Germans would not be sending any
expatriates after the initial training period. All of the three, Suresh, Anand and Sitaram
happened to be in the same city and were neck and neck in qualifications and experi-
ence. I did not know how our German MD would select one for the job.
Well, what she did was surprising and was a lesson that was driven deep into my
psyche. I have never forgotten it.
One Sunday morning, two days after our final interviews, she called to say that she
would be picking me up from my house at 8:00 am. On the way, she told me that she had
rung up all the candidates, one by one. She told them that something urgent had come
up and she would be leaving India the same day. Could we come to their respective
homes and talk for a short while? She fixed up the three appointments an hour apart.
Surely, there was nothing urgent and she was not leaving, but she explained that she
needed an excuse to go to their homes to see how they lived without giving them time
to prepare for our visit. I could not see how this had anything to do with deciding about
the final candidate.
While travelling in the car, she saw the puzzled look on my face and posed a dilemma:
‘Say, you are selected as the CEO of this food processing unit. What if you find that a
particular small batch had been processed in some empty containers that had been
left overnight? The containers had looked clean, but had not been properly washed
and sterilised. Would you reject the whole batch and make the firm lose a fair bit of
money along with facing a lot of unpleasant questions from the head office?’
Then she answered her own question and explained that this would depend upon
how fastidious the CEO was in his daily life. She added that this did not apply only to
food products. Her group had some engineering projects in some other countries and
they had seen time and again that one can order a person to be quality conscious at
work, but if he is not neat and clean by habit, always and everywhere, it will not con-
sistently show in the quality of the work that he does. And, for a new project, the first CEO
makes a lot of difference. The systems and procedures he sets up would always have
a tinge of his own personality because there is a lot that cannot be written down in
specifications, and this would be very difficult to change later on. ‘See how the first CEO
lives and you will know how the new factory will end up looking.’
I sat in the car, stunned. No management book ever talked in this language.
So, for this project, she said she would decide on the candidate after seeing how they
lived. She added that, for her, the focal points of personal hygiene in a home were first
the kitchen and then the bathrooms. She would find some excuse to see both.
Well, the first home we went to was surprisingly large. We knew that Suresh came
from a well-off family, and his father was a well-known businessman in the city. As we
entered the large compound, we saw all sorts of flower pots and plants randomly spread-
out all over the place. Some were expensive types but were badly laid out and in a poor
state of maintenance. The place was a mess and I would not call it a garden. As we
entered the house, a simply but elegantly dressed elderly person came to the door to
welcome us, obviously Suresh’s father. He led us into the house and, as he was ordering
tea and sweets for us, Inge started looking around while pretending to admire the
house. The house was superbly and expensively furnished, was clean but had an untidy
and cluttered look. Clothes, books, old newspapers and children’s toys were all over the
furniture and floor. She continued walking and looking all around and, greeting Suresh
who had come and joined us, casually started walking towards the kitchen which we
could see was just off the main hall. There she pretended to be surprised and said, ‘Oh,
you have a large kitchen.’ We were there for a few seconds but could see that the kit-
chen was quite clean but here too, everything was disorganised. There were plenty of
utensils, clean but all over the place. There was an elderly man, obviously the cook, who
greeted us respectfully with folded hands and went back to what he was doing. He was
dressed in a white dhoti and singlet. I say white but it may have been white long time
ago. It was almost grey now, and not particularly clean. He was wiping his hands on a
dirty looking towel he had on his shoulder. There was a young boy sitting on the floor
under a window, next to a tap, washing dishes. His clothes were positively filthy.
We quickly walked out and Inge made a pretense of discussing some points with
Suresh from the office file. Then, she said she wanted to use the bathroom. Suresh
asked a servant to lead her upstairs to one of the bedrooms. She told me later that
everything in the bed room looked very expensive and the room had just been tidied
up. The bathroom was luxurious too; but not at all clean. She said she noticed a few
toothbrushes lying flat in small pools of water on a glass shelf just over the sink, right
next to a soggy cake of soap in a cheap plastic soap dish. There was a decorative tooth
brush holder and a soap dish that had been ignored.
We pretended to discuss some more points and made it clear that we were in a hurry.
We walked out of the house and I noticed that we had been there for exactly 14 min-
utes. I also noticed that we had seen none of the ladies of the family.
The next candidate, Anand, lived with his wife and young son in a small but new
flat. As we entered, we saw Anand’s wife bring out two steaming cups of tea and some
snacks on a tray. Her timing was perfect. We sat on their dinning table, talked to them
and enjoyed the tea. The wife was an accountant and worked for a multinational bank.
They said they had a maid who came in during weekdays to take care of the child. We
spent a few minutes with the young couple and I was surprised to see that Inge did not
make any attempt to make the quick trips to the small kitchen and the bathroom.
The last candidate, Sitaram, was something else again. His father had retired as the
headmaster of a local school and they lived in a simple house, on the outskirts of the city.
Sitaram and his wife heard our car coming in and came to the door to greet us. As we
were going to enter, the lady apologetically looked at the shoes we were wearing. I under-
stood and immediately started to take off my shoes. Inge also understood that shoes
were not permitted in the house. As I was going to take off my socks, Sitaram said with
a naughty smirk, ‘You can keep your socks on. Do not worry, they will not get dirty!’
As we entered the house I felt good, for no reason at all. The house was simple, sparsely
furnished and the floor was plain mosaic, but the entire house was remarkably clean.
That was not all. It was neat and tidy too, with everything in its place. But that, again, was
not all. There was something else. The ambience was aesthetically appealing and an ef-
fort had been made to make everything pleasing to the eye. There were plenty of books,
magazines and newspapers everywhere, but neatly arranged in shelves and piles.
The two pictures on the wall, probably of immediate ancestors, had garlands of fresh
flowers.
We found that the family was reasonably large and they all lived in this house. Sitaram
had been married only for a few months and had a younger brother and a sister living
with his parents. As we entered, we saw a good sized old-style kitchen straight ahead.
The family had been sitting on the bare floor, around an old lady who was making some-
thing on a stove. They were probably having their breakfast. Seeing us, they all got up
and Sitaram’s father came out of the kitchen wiping his hands with a towel. As we were
lead into the house towards the half a dozen chairs there, Inge started walking around
admiring the house. As she neared the kitchen, she surprised everyone by saying, ‘Oh
please do not get up. You are eating breakfast? What are you eating?’ I saw that they were
having Dosas and immediately the old lady, Sitaram’s mother, said, ‘Would you like to
have some? Sitaram Beta, please take the guests to the hall and arrange some plates.’ I
was surprised when Inge immediately said, ‘Why not? I like Dosas and this time I want
to try the homemade version, but why in the hall? Why not right here?’ Saying this, she
started to sit down on the bare but very clean floor! Then she looked at me and saw
that I was going to the kitchen sink to wash my hands. She did the same and, almost
instantly, the younger girl was at our side with a clean, fresh towel.
We were in the house for more than an hour and thoroughly enjoyed ourselves. After
breakfast, we kept sitting in the kitchen, talking. Inge asked, ‘How many servants do
you have? Who keeps the house so clean?’ No one answered and the old lady was a bit
flustered. She said, ‘Well, no one. I mean, I mean, everyone. I mean why should we have
anyone clean anything? You dirty it, you clean it. See dirt anywhere, just clean it. This
is our own home, is it not?’
As we were leaving, before getting into the car, Inge turned around, put her hand on
Sitaram’s shoulder and said, ‘I am going to make a rule that no one enters my new fac-
tory wearing shoes. And, you better make sure that their socks do not get dirty!’
So, Sitaram was selected. In the car, Inge explained that Suresh would never have
understood the need to sterilise all the vessels. For him simple washing would be
enough, plus he would never bother about how the workers were dressed. The Anands
were a typical professional young couple and their lifestyle was hardly different from
couples anywhere in the Western world. He is what I call a career professional and he
would have done exactly what our specifications required, to the best of his ability.
But when I was in Sitaram’s house, I felt a sense of peace and tranquility deep inside
me. It was so palpable that I could almost reach out and touch it. I have selected him
because he would bring the traditions his mother has drilled into him. Remember the
dilemma I posed for you? Sitaram’s mother would never ever cook something in a vessel
she is doubtful about.
So now you know why he is our man.
Patronising Shoddiness
Ever since the experience I just talked about, I have been asking myself a question.
True, we are fond of simple living and do not particularly bother about how things
look. But if we are asked to choose between an elegant looking place and an ordinary
or shabby one, how many of us would offer a premium for elegance?
I remember going to Sahar Airport at Mumbai. This was the old airport. Before one
entered the departure area, there was a restaurant run by a local hotel group; the usual
not-very-clean humdrum décor and fairly reasonable food.
An NRI put up a new restaurant in the same lounge, just a few feet away. This was
a neat and clean, spanking new glass and aluminium place, of the type one sees in
the West. The menu and the prices were about the same, but I found the old place full
and the new place almost empty.
The reason? All my friends avoided the new place simply because, ‘it looks
expensive.’
Well, it seems that far from paying a premium, we are intimidated by the mere ele-
gant looks of a place. My experience in nearby countries like Malaysia and Singapore is
that customers would first try the more elegant place and if they do not find value for
money, they would go elsewhere. Firms fight on the basis of price, quality, service and
elegance. Nobody would buy a car if the showroom looked shabby. Not so in India. Price
and the basic minimum quality were all that you needed to fight in the marketplace.
Notice that I have used the past tense. Kentucky Fried Chicken, McDonalds,
Dommino’s Pizza, Wimpy, and so on, are all changing the rules.
Education, Training and Attitude

It is common wisdom that the main role of education is to make us trainable. Training,
in turn, makes us employable.
But it is our attitude that will make us successful, or otherwise. Indian organisations
and individuals are slowly coming to understand this. Of the three, the first two—
education and training, are the easiest to tackle, quantify and assess. Attitude is the one
that takes the longest to form and is, indeed, the hardest to change. I have seen a very
interesting posting on the Internet where a consultant says that we should ‘Hire for
Attitude, Train for Competence, Coach for Performance, Manage to Retain.’
I fully agree with this. He begins with attitude because, if the right attitudes are in
place, it is much easier to transform all the others. It is easier to go back to school to up-
grade qualifications or learn a skill but it is very, very difficult to change attitude.
It is also necessary to focus on attitude because attitude predicts behaviour. This
works the other way around also, because once we see certain behaviours, we infer a par-
ticular attitude. We always extrapolate that attitude to a cluster of related behaviours
that are then used to define the person, whether positively or negatively.
Attitude can make all the difference. But what is Attitude?
There are as many definitions as there are management gurus, but to me, attitude
is a deeply entrenched mental state involving beliefs, feelings and values, and the dis-
position to act in certain ways. We develop attitudes depending upon our enduring feel-
ings about objects, events or issues. An attitude can be seen as being either positive or
negative in a specific cultural context. We in India certainly act on the basis of our at-
titudes, but we are not the only ones. Take the Japanese. They strongly dislike all non-
Japanese, and no matter how long a Korean or a Chinese has lived in Japan, they will
always treat them as social misfits. This is regardless of the place they meet them, the
station they hold and the substantive relationship between them.
On the positive side, it is seen in India that time and again managers are willing
to give individuals with the right attitude extra assistance, more opportunities for
growth and development, and more forgiveness.
z We all have come across persons who were a joy to work or deal with. If you are
perceived as a person with a positive attitude, options will become available to take
your life in directions that you could not have predicted.
You and your Attitude

I have found many executives who had their careers stagnated or even ruined just
because they had joined the wrong organisations. This is equally true of entrepreneurs
who started off with the wrong project and got stuck with it.
z So, it is very important that you must carefully and wisely choose the ‘battlefield’
that you wish to fight on.
z There are some roads which we must not follow; some enemy troops we must not
fight; some cities we must not attach; some grounds we must not contest; even
some orders from the ruler which we must not obey. (I have taken this from the
Internet. I do not know who said it, possibly the Chinese sage Confucius.)
There are certain priorities to consider when selecting the right ‘battlefield’ to fight.
First, know what you want, that is the job you would like to do. Talking to the students
in professional institutions, I have noticed that many of them do not seem to know what
they like or what they want or ought to do. I believe the root problem is that these young-
sters, while building small worlds around themselves, have lost the ability to look be-
yond themselves and their immediate protective surroundings.
Next, consider the type of working environment that suits you best. While some are
more productive in a highly charged and tense atmosphere, others may work better in
a slower and easygoing one.
There are as many definitions of corporate culture as there are management gurus,
but, I would sum it up simply as ‘a complex set of assumptions, beliefs, perceptions,
symbols and values that define the way in which an organisation goes about conduct-
ing its business.’
In this way, corporate culture can greatly influence the choice of goals, policies and
strategies in an organisation. Serious differences could lead to clashes if you try to
make people do things that are counter to their beliefs and values.
Without doubt, if you cannot take to the firm’s culture, there is no way you can be
happy working there.
That is why I have tried to impress upon you the importance of choosing carefully.
Whether you are a fresh job seeker, a seasoned executive, you must make sure you
are joining an organisation suitable for your temperament and capabilities, or you are
unlikely to go far.
And do not rely mainly on the wording of the job advertisement or the words of the
Human Resource Manager or even the boss himself. He may tell you things like ‘you
will enjoy working here. Absolutely no politicking at all.’ Do your homework—observe
for yourself when you are visiting the company. Watch for the little signs which can tell
you whether the people there work as a team or just could not be bothered about one
another. Seek out people who had dealings with the company and talk to them.
II: Your Attitude towards your Professional Life

In this section, I will take you deep into the mindsets of our competitors from the East,
the Japanese, the Koreans and the Chinese, and will give you four very surprising
and maybe shocking insights. These are four points that I think are highly conducive
to the outstanding success of their executives. I will be talking about some more at-
tributes of these highly successful nations in Part 3 of this book.
I am going to repeat a question which some of my students pose to me all the time.
‘Why should we bother about the executives of these foreign countries?’ And, I will
repeat my answer. What I had said was that no matter what type of a job you young
people are going to get or are having, invariably your companies are either multi-
nationals, or they are buying from, selling to, or servicing the multinationals, right
here in India. You do not have to go overseas to meet the world. The world has got
unleashed into India.
When we talk of foreigners, you youngsters do indeed have an excellent degree of
awareness about the Western world. Our media, the TV, your textbooks and most
of the literature on what is called popular management are all overwhelmingly slanted
to the West. So, here is a question: How much do you know about the people from the
East and their business culture? Look around you. Look at the products you use at
home and office. For every item made here by a Western MNC, there would be 10 made
by Asian companies.
So, if you children have to compete and win, you have to understand the mindsets
of the highly organised and ruthlessly efficient Korean, Chinese and of course, the
Japanese people. Understand how these people think, how they behave, and how they
do business.
I have lived and worked for many years in the East. I was on the other side of the fence,
so to say. Living and working with the Japanese, the Koreans and the Chinese, and hav-
ing Indian executives working there side by side in countries like Malaysia and
Singapore, and so on, I learnt a lot.
I will begin by introducing you to K’ung Fu Tzu (Confucius) (551–479 BC). He was
a famous sage and social philosopher of China whose teachings deeply influenced
East Asia for 20 centuries. If you have not read about him, I suggest that you do. There
are plenty of references on the net.
The teachings of Confucius is a Chinese ethical and philosophical system and is a
complex system of moral, social and political thought which has had tremendous in-
fluence on the history of Chinese civilisation up to the 21st century. The cultures most
strongly influenced by Confucianism include those of China, Japan, Korea and Vietnam,
as well as various territories (including Singapore, Hong Kong, Taiwan and Macau)
settled predominantly by Chinese people.
His teachings are completely non-religious. He teaches the need for the society to
organise itself and for people to form strong economic and social bonds at family, clan,
village and community levels. He preaches that one must join hands, work together to
defeat outsiders. Just think for a moment. All successful nations are exactly like that.
The French love the French and hate everybody else. Same is the case with the Germans,
the Japanese and so on. This is exactly the reverse of what we do. We love the whole
world and hate our own people.
Today, the teachings of Confucius are taught even in the primary schools all over
Asia. The strange part is that the ideas Confucius has taken and developed into very
powerful tools for economic progress are all very similar to what we already have in
our Vedas and our Shastras.
But we have ignored them.
To illustrate what I have been saying above, I am going to ask you four questions:
Now, please read these four questions carefully.

These questions have the potential of changing your way of thinking.
But, more important, you can use these points to change the attitudes of the people who
will work for you.
You will understand what I am talking about in a minute.
I am going to ask you the four questions and I know the answers that will im-
mediately come to your mind. I am an Indian and I thought the same answers when
I first heard these questions from one of my teachers who had lived for a long time
in Cambodia.
I am going to give you the answers as explained to me by my teacher, as explained
by teachers in schools in Asia, and as explained by the parents to their children right
from childhood. You will see the potential of having a profound influence on their at-
titude to life and work and on their behaviour patterns.
You will be shocked by how much the answers are in sharp contrast to our way
thinking.
Now the four questions.
The first question:
What is the most sacred Prashad or Prasadham that you ever got? I am asking this
question to all of you. You might be a Hindu, a Muslim, a Christian, a Sikh, or anybody in
India. I am convinced that no matter what our religion, our attitude to life and our work
ethic is reasonably similar. So, I ask the question again. No matter what your religion,
what is the most sacred Prasadham you ever got?
The second question:
What is the most sacred task for which God has sent to you on this earth?
The third question:
Which is most sacred place for you on this earth?
And the fourth question:
What is the most sacred thing that God has given you?
Remember, I am using the word ‘sacred’. You can say holy, revered, divine, some-
thing you worship, and so on.
I told you earlier that I am not talking religion or philosophy. The reason why I am
asking you these questions is that this will help you understand the mindsets of your
new competitors.
So going back to the first question: What is the most sacred prasadham you ever
got? I know what you are thinking, but the correct answer, according to Confucius is
your mother’s milk. There is no greater gift God, your mother and your ancestors gave
you than your first gulp of life giving nectar. Everything you are today started with it.
Taking this line of thought a step further, the nation you belong to is your mother too.
Every thing you are today is because of the nation to which you belong. If I was born
an Indian, I will remain an Indian till I die. I might take up American citizenship, my
great grandfather might have gone to live in Malaysia, but I will remain an Indian. No
matter for how many generations we live out of the country, we remain Indians.
It is important for us to understand this because when we meet other people from
Asia, at every step we realise that they worship their own country. While talking to a
Japanese you cannot say anything against Japan. He is likely to knock your head off.
The same goes for the French, the Germans and so on. This is in sharp contrast to
our attitude to our mother, our motherland.
The point I am making is that when talking to or in the presence of foreigners, we
love running down our country, our government and our businessmen. When your
non-Indian boss hears you criticise and abuse India, he feels as if you are doing some-
thing obscene and you lose your own respect and dignity.
Second question: What is the most sacred task for which you have been sent here?
Invariably I get the answer from students, referring to prayer or something religious.
No. That is not the correct answer. According to Confucius, God has not sent you to
this world to only praise Him. To thank Him, yes. He says that your most sacred task
is to earn your livelihood.
Here I will again give a comparison. We Indians invariably think that if we do our
prayers and rituals properly, religiously and sincerely, our livelihood will improve. Fol-
lowers of Confucius think that if they work sincerely, with full dedication, as if it is a
sacred task, then, maybe, their prayers will be heard.
Third question: Which is the most sacred place for you on earth? Again the answer
is not a temple. A temple is a House of God. A temple is the house we have built where
we go to worship, to perform our rituals and offer our thanks to the Almighty. That,
according to Confucius, is not the most sacred place. The most sacred place for us is
the place where we earn our livelihood. Our Vedas call it our Anndaata.
Here again the contrast is remarkable. Do we, in India, worship our place of work?
Whenever the workers of a factory, the workers of any organisation in India go on
strike, the first thing they do is damage their own machines, their own equipment,
their own office building, and so on. We burn buses and the very next day we stand on
the roadside complaining of the shortage of buses to take us to work. After the strike
is settled, the workers come back and ask to be paid to repair and undo the damage
they themselves have done. Where is the sense of worshipping your Anndaata, your
place of work?
If you read the newspapers, you will notice that the workers in entire South-east
Asia, all the way from Singapore up to Japan go on strike, and are often violent, but
they never ever burn buses, damage their own machines or do anything which will af-
fect their livelihood tomorrow.
And the last question: What was the most sacred thing God gave you? The most
sacred thing that God gave you is your body. Your body is God’s gift to you, and your
first task is to look after it. Now look around you. Look at the executives; look at the
business people around you. How they work, how they live. You will find signs of com-
plete neglect as if their bodies are something that they are least worried about. You
might be brilliant; you might be hard working; but unless you are healthy and unless
you are fighting fit, your attributes will fall by the way side. Your success will either not
be there or would become meaningless.
z I told you above that these points have the potential of changing your way of
thinking. But, more importantly, you should use them to change the attitudes
of the people who will work for you.
z Don’t preach or give sermons. Talk about these without being obvious. The re-
sults will amaze you and your bosses.
Preamble z 79
Part 2
Your Intrapreneurial Skills
Preamble z 81
7
What is Intrapreneurship?
The term ‘intrapreneurship’ has been brought into the mainstream management jargon
very recently by various American gurus. I have not read any serious discussion on this
topic anywhere in India and the reason is clear, if we look at the meaning of the term.
The recent editions of the American Heritage Dictionary define an intrapreneur as ‘a
person within a large corporation who takes direct responsibility for turning an idea
into a profitable finished product through assertive risk-taking and innovation.’ So,
by extension, intrapreneurship is the development of an enterprise culture within an
existing company.
This can not happen in our family owned enterprises as any entrepreneurial spirit is
actively discouraged. The boss tells you what to do and your job is to do it well. As sim-
ple as that. Try to be ‘too clever’ and you are out.
But, in the rapidly globalising India, this is changing and this is the reason I am
discussing it here at length. The development of an enterprise culture within an exist-
ing company, what we call ‘intrapreneurship,’ is crucial if our companies are to get the
maximum benefit out of the young professionals of today.
The Internet informs me that in an article in The Economist in 1976, Norman Macrae
predicted a number of trends in business—one of them being ‘that dynamic corpor-
ations of the future should simultaneously be trying alternative ways of doing
things in competition within themselves.’ In 1982, he revisited those thoughts in
another Economist article, noting that this trend had resulted in confederations of
intrapreneurs.
Again, the Internet says that the term itself dates to a 1985 book by Gifford Pinchot,
‘Intrapreneuring’; taking the concept from the 1976 article. He says that ‘An Intra-
preneur is the person who focuses on innovation and creativity and who transforms
a dream or an idea into a profitable venture, by operating within the organizational
environment.’
Thus, Intrapreneurs are inside entrepreneurs who follow their founder’s example.
Intrapreneurship, then, is the practice of entrepreneurial skills and approaches by
or within a company. Employees, perhaps engaged in a special project within a larger
firm are supposed to behave as entrepreneurs, even though they have the resources
and capabilities of the larger firm to draw upon. Capturing a little of the dynamic nature
of entrepreneurial management (trying things until successful, learning from failures,
attempting to conserve resources, and so on) is claimed to be quite valuable in other-
wise static organisations.
At some point an entrepreneurial venture reaches the point of being an established
business. While reaching a point of ‘being there’ is an achievement, a real concern
for most businesses is that somehow becoming an established business means the
entrepreneurial spirit is getting diluted and would be lost. Hence, the growth of
intrapreneurship—fostering entrepreneurism within established organisations.
New Attitudes of Indian Firms

When I organise my workshops on entrepreneurship, a point is often raised that the
larger firms may not send junior executives for training in entrepreneurship since
they may leave and start something on their own.
It may have been true 20 or 30 years ago in India. In those days Indian business had
an autocratic management style. People were told what to do and they did it. Nobody
liked employees as decision makers. India is changing rapidly and this is no longer
true today.
1. Today, particularly in the professionally managed larger firms, managers are

looking for entrepreneurial decision makers: Employees who understand the
meaning of business risks. All potential managers, even if they do not start busi-
ness themselves, should have enough of an entrepreneurial background to have
good business sense so that they can take the firms towards new directions
of growth.
2. Our management style is becoming much more democratic. Managers realise
that they do not have time to think of all the new ideas or be aware of everything
happening in the marketplace. Training in entrepreneurship would help junior
executives take a more creative role in business development: Instead of simply
reporting on and researching existing trends, the youngsters are encouraged
to participate and see things develop first-hand.
3. An enterprise grows faster if the planners and decision makers (often execu-
tives) are also entrepreneurial, are able to perceive further business opportunities
and are capable of innovating, using current enterprise and its available re-
sources as a base.
4. Young executives in companies that have survived the economic downturn
understand their business model much better. They have become really lean and
really, really tough. It is hard to teach toughness any other way.
What is Intrapreneurship? z 83
5. Entrepreneurship is by its nature multi-disciplinary, combining elements of strat-

egy, business law, human resources, leadership and finance.
6. In any case, today there is very little corporate loyalty and most people, from the
CEO downwards can now expect to have three to four different careers in their
work lives. So, denying training to a person to prevent him from leaving is self
defeating.
7. The working culture that the young entrepreneur wants to create is open, non-
hierarchical and energetic. Far from being threatened by having entrepreneurial
employees who will act on their own initiative, the new entrepreneurial managers
are actively seeking out such people to work for them. Ideas and resourceful-
ness are qualities that should not just be encouraged but expected of those
employed and, as a result, it is not always clear who is the entrepreneur because
everyone in the organisation tends to be acting with the same dynamism.
Use our Young Intrapreneurs, or Lose Them

Although increasingly young people are attracted to start a new business, it is clearly
not an ideal path for everybody. More likely, they have the desire to create their own
enterprise but lack the means. So, our young people need corporate entrepreneurial
environment to work. A corporate environment and culture in which an individual can
learn, develop and contribute to the success of a business is crucial if a company wants
to attract, foster and retain young talent. These potential entrepreneurs can offer the
industry sectors fresh talent, creativity and new ideas.
Most family owned Indian firms are failing in this respect.
I travel all across the country for my workshops and seminars, and interact with
young professionals employed in both large and small businesses. My talks with them
make it clear that many young people within Indian companies are not performing to
their full potential and they believe that employers underestimate the abilities of their
young employees. Young professionals say repeatedly that they do not get the chance to
stretch beyond their current roles, and have little opportunity to be creative or innova-
tive at work. The warning to these businesses who do not engage with their young talent
is obvious—they are likely to lose them to the more dynamic MNCs.
Our employers must seek out new opportunities for young managers to be engaged.
They must work even harder to uncover the passion that fires their young managers’
vision of what is possible, and provide opportunities for them to develop it and nurture it.
And employers must be proactive in this. It is no longer possible to expect young talent
to put a part of themselves aside, in the work place. Employers must address the needs
of the whole person and recognise that the desire to make a difference will not go away.
Instead the employee will.
Another danger for our larger companies is that as well as losing their existing young
professionals, they may fail to attract emerging talent. The young professionals I talk to,
feel that our large companies are more rigid and less creative than the small and young
businesses. While they believed they would be more highly valued by a small company,
these young people express preference to work in a MNC rather than a large Indian
firm, for reasons of security and personal betterment.
An entrepreneurial environment is crucial for inculcating an entrepreneurial mind-
set. This is demonstrated by the propensity of successful young entrepreneurs to have
grown up in a household where at least one parent ran their own business.
In the same vein, the ventures created by young entrepreneurs are excellent breeding
grounds for other young entrepreneurs who learn rapidly in this environment and,
consciously or unconsciously, pick up elements of the culture.
Partnership Approach and Intrapreneurship

Corporate venturing is an umbrella term coined by management gurus and covers a
range of mutually beneficial relationships between companies. Often it involves a larger
company investing in a smaller, younger company in partnership where strengths
are traded, and risks and rewards are shared. The smaller company retains its inde-
pendence and the larger company gains a window on a new technology, product or
niche area. It can also entail a larger company ‘spinning out’ a small venture started
within it.
One of the advantages of a larger company investing in a smaller one will be clear if
you look at our overall approach to productivity. In most Indian firms, supply chains
are still operated and driven on a lowest price competition basis rather than on what
provides the best solution to take the business forward. Our attitude begins and ends
with seeking the lowest price rather than seeking a longer-term partnership approach.
The partnership approach is not really embedded in our supply chain culture. You
need to get that right before you make the next leap forward to a more formalised
corporate venturing approach.
The employees in new companies created by our young entrepreneurs seem to have
four things that enable them to contribute to the success of the venture: they are in-
formed, engaged, empowered and rewarded. The entrepreneurial environment is very
open with individuals being able to readily access information and have a clear ap-
preciation of the aims for the enterprise and their contribution to it. It is all about ac-
cess to information. Everyone here knows everything about the company so that they
are empowered to understand the big picture. I believe the more you understand them,
the more they care.
I need to make it clear that it does not make sense for an entrepreneur to build a
company full of entrepreneurs. You need a balance of skills, competencies and per-
sonalities. Surely, the motivations of employees will be different to those of the entre-
preneur that founded the enterprise. I think what is important is that you must have
an open culture with very healthy communication relations so that if anybody has an
idea about how something could be improved, that idea can be picked up, nurtured
and turned into something really exciting.
How do MNCs Become MNCs?

While there are as many definitions of what is an MNC as there are economists and
management pundits, I do not think there can be a universal definition of an MNC.
It can generally be said that a company that has become an MNC, must have been
a world class intrapreneurial company at home first. You must be front-runners in
your respective fields, subscribing to state-of-the-art management and technological
practices in keeping with environmental changes at home. Only then can you hope
to enjoy global and diversified operations, and get the top market shares in your re-
spective business areas.
Today, size is no longer synonymous with being world class, as new manufacturing
techniques and computerised production allow small factories to produce customised
goods at mass-produced prices. The emphasis has shifted from size to efficiency, dyna-
mism, agility and a reputation for timeliness. A world class company today is one that
can meet the highest standards anywhere, in order to command resources and operate
beyond borders.
World class companies are significant contributors to domestic economic growth. The
Scandinavian countries provide an interesting example. Unlike India, these countries
have limited manpower and domestic markets. Nonetheless, they have companies that
are world leaders in their respective high technology fields and are key pillars of their
economies. Nokia of Finland, for example, is the world’s second largest producer of
mobile telephone and Ericsson of Sweden, the third.
I would also say that any Indian firm with strong entrepreneurial base can develop
into a world class company if it continues to build up it’s core competencies and is
seriously interested to compete in the international market.
I will not go into much detail here as there are any number of excellent books on
the subject. On a very rough basis, I can list out several key capabilities which are ne-
cessary for our companies to grow into world class companies:
1. Skilled Manpower Resource. Apart from highly trained workers, management

must be intrapreneurial, with an international perspective to track and capitalise
on the latest business trends in the region and around the world.
2. Research and Development. Firms must have an ability to develop proprietary
R and D in order to maintain their competitive edge.
3. Adequate Capital and Financing. Local companies with sound expansion plans
must have easy access to funding. This is especially important for high tech-
nology start-ups, which are normally deemed to be more risky by investors.
4. Market Networks for Access to Regional Markets. Apart from good distribution
channels, firms must also have market intelligence to meet customised market
needs.
An essential feature of being an intrapreneurial world class company is that you

should be able to bring along relevant smaller firms as your partners in rendering
supporting services for their operations. With this partnership, the expertise and
knowledge gained by the bigger companies will filter down to the smaller firms and in
due course allow them to gain their own foreign market experience and a foothold
in the region.
Need for Indigenous World Class Companies

As I said in the preceding section, if, in the list of MNCs we include partly foreign owned
firms who have been here for a long time, we can certainly say that the MNCs have
provided a considerable contribution to India’s economic growth. We have attracted
these world class players here by offering a cost-effective work force, good supporting
physical infrastructure and an emerging pro-business environment and the second
largest domestic market in the world. As compared to many developing nations, we
are politically stable and efficient.
However, as an infrastructure scarce country, we have a long way to go before we
can reach a near-developed state of economic development; this MNC-driven growth
will not be good for us in the long-term. Indian companies now face intense competition,
both in the domestic market and an increasingly borderless world. In this context, as
I said earlier, we need to build up a stable of our own intrapreneurial world class com-
panies with core competencies, which can compete effectively in the global economy.
Our ability to deploy relevant technology and manage our resources efficiently will
help to ensure our competitive edge. These competitive elements will be more and more
important in the next chapter of our economic growth. We must spare no effort to up-
grade the operating environment so as to both continue to attract world class MNCs
and root them here and to nurture the growth of our own firms.
I have already said that there is already a growing trend for Indian companies, both
local and partly foreign-owned, to have a global or regional emphasis. This expansion
of local companies into regional and even global markets is helping to build up our
external wing, and thus provide a firm foundation for India’s growth.
For our firms to develop into intrapreneurial world class players, they must be pre-
pared to recruit the best talent from around the world. Not necessarily expatriates. In
most cases, people of Indian origin are doing superb work all over the world. Indeed, if
our ambition is to build world class companies with a significant presence around the
world, the top management of these companies should take on a transnational com-
plexion and have an intimate knowledge of all the major world markets relevant to
the particular industry. This is where people of Indian origin who have been working
abroad come in.
Of course, we should be prepared to pay competitive rates for international or dom-
estic talents and, more important, have a risk-taking and entrepreneurial culture.
Many world class companies have found that the principle of giving subsidiary
companies the autonomy and responsibility for their own business and investment
strategies has been the key to their successful growth, and should be upheld. The
parent firm’s stewardship role should also be in ensuring that the right people are in
place and there is sufficient funding for the firms to grow, especially internationally.
Budding world class companies in India should build on this role, to oversee and moni-
tor the strategic business thrusts of the subsidiaries and associated firms and improve
the flow of information on business opportunities open to them.
Benchmarking for Indian Intrapreneurial Companies

Typically, benchmarking against global practices comes into the picture when an
Indian firm wants to start having employees in far-flung locations. This calls for both
empowerment and systems as these firms are increasingly looking for executives with
transnational experience. People who would fit the bill here are those who have either
worked in different countries or at least in an environment of international best prac-
tices. Practices ranging from concepts like measuring customer satisfaction and innov-
ations to improve it to efficiency-enhancing methods on cutting costs and increasing
speed, or simply to a more structured style of functioning like having an agenda for
a meeting, keeping on time, and restraining from loose brainstorming.
My own experience is that such moves are mostly happening in Indian companies
that have attained a certain size and now have a problem with future growth. They are
the types that are now retaining management consultants. They have the vision but
not the competence to get there.
The challenge of driving this change for India Inc. is one of the charms for multi-
national hands, long used to working as small cogs in a wheel. Because the managerial
base in most Indian companies is still in its infancy, Indian industry today provides
an environment where a dynamic executive can redefine and recreate. The creativity
employed can be a source of immense satisfaction.
An important benchmarking point is that an executive leaving an MNC and joining
an Indian firm has several aspects that he needs to look into. For example, does the
company have an open and free working style? Are its people valued components?
The level to which it runs on methods and systems is important too. One of the nega-
tive factors is the influence of family members, particularly when they have the author-
ity without proportionate accountability or power without the maturity which comes
after years of public dealing.
Actually, it should not matter if the company is small, as long as its vision is clear and
it has the wherewithal to get there. One has to see whether it gives an assurance of it
being in an acceptable level of risk and not a gamble. It should not be whimsical and
not operate on a day-to-day basis.
The new intrapreneurial organisation culture is one fallout of management philoso-
phy. Individual-driven to the core, employees in a large number of Indian companies
confer an almost God-like status on promoters, whereas most multinationals have a
more casual and open atmosphere. There are always a number of people referred to as
‘sirs’ and no one could think of arguing with the promoters. Respect for the elders is fine
and is the basis of the success of most Japanese firms, but sometimes thoughts need
to be challenged. When companies hire professionals from other MNCs, the old hands
do expect some changes anyway.
What remains unchanged is compulsions like managing in limited budgets. Indian

firms are more cost-conscious. Too much money to put behind a brand or a project is
just not available. Another difference that needs getting used to is little or no benefit of
global learning in local companies. When launching a new business or product, vast
amounts of data are normally just a phone call or an e-mail away in a multinational. An
immense degree of resourcefulness is necessary in an Indian company, which may have
to depend upon an advertisement agency with overseas links or a branch office which
may still be unable to come up with the sought information.
MNCs will remain an integral part of our economy. They are world class companies,
bringing with them the best concepts, competence, connections and knowledge of world
markets. We have to use this to develop our own pool of indigenous world class com-
panies to provide a major source of economic growth.
This also has nothing to do with whether an organisation is family managed, and so
on. As an example, in the western world, only professionally managed firms grow into
large organisations. But in the East, purely family managed Chinese firms exhibit all
the signs of a professionally managed firm and grow likewise.
In most cases in India, none of the above factors are visible. The organisational
infrastructure is simply profit motivated. The entire commercial activity is aimed at tan-
gible profit in the short-term, and the only effort made is to maximise this profit. Invari-
ably, the profit is ploughed back into the business only to an extent that it results
in immediate extra profit.
No thought is being given to the growth of the set-up as an organisation. The owner de-
signs the managerial setup more for absolute control and power rather than for growth
inducing strategies. ‘I want the firm to grow only to an extent that I can keep everything
under my own control.’ If the activity is profitable, the surplus is withdrawn for secure
investment in real estate, and so on. The owner has palatial houses and lives in five-
star comfort but the factory, the offices and so on, are shabby and ill maintained.
This is one of the points I often raise when talking to the MBA students. I ask them
the meaning of success in life. To most of them, it is simply making a lot of money. I
have not met anybody who is determined to work right from the beginning towards
growing into an organisation. I hear a lot of them planning to ‘work for sometime and
then do something on my own.’
Here is an interesting example. Many years ago, I was quite fond of visiting a res-
taurant called Moti Mahal in old Delhi. This was in the early 1960s, and the Tandoori
Chicken dish served there was just out of this world. The place was shabby and rea-
sonably dirty, but the food was superb. Recently, I went there again and found that
the place is all but closed down. I was told that the old man died and left an enormous
fortune to his children who have no interest in the business. They are simply enjoying
the money. Right across the world, in USA, I have been following the fortunes of an-
other outfit famous for chicken. The old man also died and left only a reasonable
fortune for his children, but the organisation he founded is now spread worldwide—
Kentucky Fried Chicken. In the Indian example, the business died with the old man
and the money went soon after. In the American example, the massive organisational
infrastructure he built, keeps on growing.
I think I have got my point across: It all depends on what you want to leave
behind—money or an organisation.
Preamble z 89
8
The New Executive Environment
z The Internet is chock-a-block with superb stuff on Teamwork, Leadership and

Loyalty. I have read a lot of it and I am sure, so have my readers. We will ignore
all of it and instead take a frank look at what these concepts mean to us in India
and, more importantly, what these should mean to the next generation in the
context of rapidly globalising India.
z At the end of this chapter I will get you thinking about a concept that I am sure
most of us have never given a second thought to: The concept of loyalty to
yourself.
Read on.
I have always said that the future of entrepreneurship (and intrapreneurship) in the
fast globalising India is not with large industrial houses, but with a number of small
specialist firms working together as a network. I am talking about manufacturing and
the idea is that each firm should do only what it is good at, rather than one firm doing
everything.
I am not talking of the Western model where large firms have now started outsourc-
ing their inputs, but a vastly different concept that is the foundation of the success
of the Asian Tigers. Implementing this concept in India is not going to be easy. While
I will be explaining it in its various aspects in the following chapters, here we will
discuss a very critical intrapreneurial skill needed to make these small specialist
firms a success: The art of working with each other.
Often in this book, I will be hinting at a thought that has always been bothering me: While
we are outstandingly brilliant and talented, we are not good at working with each other.
(Box continued)
(Box continued)
This is nothing new or recent. Recorded history shows that we have always been so. We
have always had a tradition of excellence running parallel to our divisive nature.
For our next generation, the need to understand this and to learn to work together is critical
because that is what leadership, teamwork and loyalty is all about in the context of mod-
ern India.
A Trip into our History

Throughout history, we have had far more talented, dedicated and brilliant people
than in most other nations. As an example that we can see and feel today, look at the
exquisitely carved temples and other structures our ancestors have left behind. Every
inch speaks volumes about our brilliance, our work ethics and our attitude towards
quality consciousness.
As a student I was very fond of going to the great temples we have in South India:
not for any religious reason; and not even to admire the handiwork of our ancestors,
but to try to understand what sort of people they were. I wanted to see, touch and feel
the superbly laid out and meticulously crafted stones to get the feel of their attitude
towards life.
What sort of man, I asked myself, would devote his entire lifetime meticulously fol-
lowing the very rigid specifications laid down in our ancient Agama Shastra, creating
something magnificent without any supervision or even reward? Not only that, nobody
left any signatures on any carvings. My ancestor was not seeking any personal credit
or recognition.
All over the world, I have seen many splendid places of worship. Every race has
built them over the centuries. I compare these to our ancient temples and I notice a re-
markable difference. I notice that, in their case, the grandeur is in the design, construc-
tion and in the sheer scale. In our temples, we have these too, but there is something
else. One is stunned by the incredibly intricate carvings and designs woven into the
structure. Every meticulously handcrafted stone tells the story of a lifetime of the love,
dedication and devotion of the individual craftsmen.
On touching the stones, one message comes to me loud and clear. This was not the
attitude of any single individual but that of generation after generation. We were a
great people, did what we thought was right and that was that.
I have often asked myself. Supposing, one of my ancestors was carving a piece of
stone that would go into the structure. Say, he had painstakingly spent months chip-
ping and carving the stone into a beautiful figure or an intricate design. After three or
four months, he detected a hidden crack or a flaw in the stone? Did the great Indian, my
ancestor, quietly look left and right, patch up the stone and put it in? There were no
supervisors. There was nobody looking over his shoulder.
My heart tells me the answer. He understood the sanctity of what he was doing.
I knew that he threw away the stone and started carving all over again, irrespective
of the effort spent on the work; irrespective of whether the stone was only part of a
compound wall.
The New Executive Environment z 91
Hence, I believe that man has created no greater monuments dedicated to God than
the ancient temples all over India.
And this is not all. My ancestors have left behind equally extraordinary structures
all over the country that did not have anything to do with religion. Also, we were out-
standing in arts, science and literature. This fills my chest with pride, but then, my
blood runs cold when I read in the history books how we behaved with each other. We
did not build strong social structures, and while some of my ancestors were dedicating
their lifetimes building the unmatched temples, others were busy fighting with each
other, breaking up the kingdoms into smaller bits and pieces, or joining hands with the
invaders. The latter took advantage of our internal bickering, got us to do what they
wanted and could easily rule over us.
In today’s world, we are still outstandingly brilliant, but, except for the very recent
case of IT, we always perform superbly when working for others. On our own we tend not
to build strong commercial, professional, political or cultural institutions. Rather, we
are good at splitting them, as each of us wants to be the boss. We have indeed built suc-
cessful business houses, but the organisation has always been a single generation
success story, the sons splitting and killing it as soon as the old man dies.
Well, my readers, that was the foundation of what I have to say in this chapter.
I said earlier that our next generation should understand the need to learn to work
together. That is what leadership, teamwork and loyalty is all about in the context of
modern India.
New Face of Leadership and Teamwork

What I have to say here is as relevant to those of you who are looking forward to start-
ing your own organisations, as to the corporate executives.
In the past, teamwork meant ‘together, everyone achieves more.’ In the fast changing
business and corporate environment of today, this term has taken on a completely dif-
ferent meaning. The very concept of teamwork has changed and become complex. Team-
work used to simply mean a group of people working together as one body and under
one leader. A sports team, a debating team, or a sales team on a special task—all are
people working as one.
While I want you to understand that, as a small business leader, of course you need
to have leadership skills, and your growth would depend on teamwork and leadership
skills of your staff, there is another side of the picture too.
z Things have changed; now, teamwork means relationship. Relationship between

people and relationship between companies.
z Also, there can no longer be one definition for teamwork and leadership for every
one at all times. The same persons can be excellent leaders and show superb
team spirit in one case and can be awful in another. I will show that this depends
upon the situation and it depends upon the organisation you create.
For my younger readers, what I have said may not be easy to understand. You are
told that some people are born leaders, and so on, so how is it possible that a person can
be an excellent leader, an excellent team member, and an excellent performer in one
circumstance, and be awful in another?
I can explain this with an example from our history. Let me take you back a few
hundred years to the time when the British were in India.
The British Army in India consisted of almost entirely Indians. As time went by, the
Indian soldiers working under the British developed a solid, worldwide reputation
for being one of the world’s best fighting force. They were outstanding in discipline,
dedication and in sheer performance. The qualities of leadership and team spirit, the
Indians showed became legendary and the historians are still writing about them.
Please remember that I am talking about the Indian soldiers that were fighting under
the British. But, there were Indian soldiers fighting on the opposite side, under the
Sultans, the Rajahs and the Nawabs. Similar people, identical in every way were on both
sides.
Now please understand the difference. You must remember that the Indian soldiers,
on the Indian side, say, under a Rajah were also very brave, highly motivated and
ready to lay down their lives. There were many legendry figures that even today the
world is proud of. But they lost almost all the battles. This is because at the battlefield
they were nothing better than an uncontrolled and wild rioting mob. There was no
military organisational structure, or no line of command of any sort. So the qualities
of leadership and team spirit were just not there and so, the Rajahs lost almost all the
battles.
What I am saying is that the same soldiers who were a rioting mob became the world’s
best when they went over to the British. Whom should the credit go to? The credit goes
to the organisation, the system. Admittedly, the British were not most brilliant people.
We had far more brilliant brains on the Indian side but the British had something we
did not have. And that was organisation. British were organised and it was because of
their organisational skills that the Indian soldiers under them performed superbly.
I am making a point here that is relevant even today.
The new face of leadership and team spirit depends less on the individual and more on
the organisation. It was seen, time and again, that if a soldier left the British and went
home to his native army, he quickly reverted to his old ways. The qualities of leadership
and team spirit just evaporated.
Today you have examples of the multinational companies in India. Say, a local
executive is giving an awful performance while working for a local company. As soon
this executive switches to a multinational company, his performance improves by leaps
and bounds. The same fellow joins the ranks of the world best executives.
Though many of our executives are far more brilliant than their foreign bosses, the
credit, again, goes not to the individuals but to the organisations that provide them
the tools to perform.
In the end, we need to look at not only the relationship between people within an
organisation; we also have to look at the relationships of different competing organ-
isations with each other. Building teams, networking together, are how you will get
important work done in the future. Teams are where the relationships will be created,
where problem solving will take place. Teams are where partnerships will be truly forged.
Networking is where the benefits are spread-out.
Here we have a problem. Many managers in India have experimented with new ideas
in leadership development programmes. One of their most frequent laments is that in-
jecting a new idea, or a different concept based on new knowledge is one thing; its sink-
ing in and taking root is quite another. In other words, we certainly want people to try
out new ideas and new ways of working but they do not see any sense in it. ‘I am doing
this, have been doing it and it has worked fine.’ Why change?
Well, pushing something down someone’s throat will not work because you cannot
drill something into a modern youngster. ‘Hey you! Do this and after that do that! It
is good for you!’ To tell him constantly and benevolently what is good for him is, in ef-
fect, to emasculate him, ‘Don’t you think I can think for myself?’
So it is essential that we create a total climate, an ambience, which gives the person
individual dignity and self respect. The planting of the seeds of a new idea must be
done such that it gives a man the feeling that he is the master of his own destiny. And
that he is doing something of his own free will.
It is all a question of motivation. I have found that it is very difficult to motivate peo-
ple from a rural or a small town background. As I said, you can only provide the envir-
onment, the climate, or atmosphere that will help him supply his own motive. I have
seen that these people can be made to learn, but not by simply feeding them knowledge.
With these people, learning must take place within some kind of emotional context: that
is mixtures and combinations of enthusiasm, fear, anxiety, grief, disappointment and
hunger. This basic principle is widely misunderstood, and no one should attempt con-
sciously to apply it without a measure of training.
One the other hand, I have known several executives who provide the right climate
for learning without even thinking of words like ‘emotional context,’ in most cases
because they are so genuinely convinced of the benefit of their counsel, and so objective
in giving it (or, so interested in the other man to the exclusion of self ), that these very
qualities stimulate a wholesome emotional context and promote real learning.
In the final analysis, a person must see the advantage, to himself, of learning. He
must want to grow, or very little development will be accomplished.
New Face of Negotiating Skills

Youngsters in India are deluged with an enormous mass of mostly American literature,
ideas, text books and media exposure. You have no problem understanding the West-
ern mindset. But the real threat to you comes from the East: The highly efficient and
ruthlessly aggressive Japanese, Koreans and of course the overseas Chinese. Also, you
must remember that the overseas competition is no longer ‘there,’ it is right here at
home. The world has got unleashed into India. No matter what type of a job an execu-
tive has in India, he would either be working for an MNC, or his firm would be selling
to, buying from or servicing MNCs. Right here at home.
I will explain what I mean by the new face of negotiating skills.
I have often come to India as a part of overseas delegations. I must say that most
of the executives we have met are indeed brilliant, have done meticulous homework
about their own products and services and make very impressive presentations.
But, I have more often than not found the Indian businessmen at the losing end
of any hard negotiation.
I think this is mainly because the foreigners, particularly from the East, already
knew all about you, your personal habits, your weaknesses and the status of your firm
before coming here. They had placed you and your set-up under a microscope. They
have an incredible insight into the mindsets of the people they are going to meet, and
they already know exactly where you stand.
But, the Indian counterpart knows very little about the people on the opposite side
of the table. We do generally have published information and data, but only about the
firm and have no idea of the personality and the attitudes of people we will be talking
to. We have done no homework before we face them across the table.
How do they know this? Simple. If an overseas firm is dealing with, say three Indian
firms, someone will casually meet some executives in these firms over dinner and
drinks—separately and purely socially. After that it is smooth sailing for them.
Please permit me to say that, often, when we have an informal meal with an overseas
visitor, the entire conversation would consist of us telling him stories about running
down our own government and our competitors. Our people take great delight in run-
ning down everyone, because we probably think this raises our own status. Our man
will talk his head off and disclose everything about the two competitors. And I mean
everything: the juicier the better. Please note that we talk and talk and ask nothing. If
you notice carefully, the visitors from the East talk very little, and take copious notes.
If our next generation has to compete and win, you have to understand the mindsets
of the people you deal with. I often hear you saying that the Japanese and Korean
bosses are very difficult to work with, as they are ruthless and sometimes cruel. Right.
That is why they are so successful. So try to read some more and try to understand how
these people think, how they behave, and how they do business, and you will do well
when negotiating with them.
New Face of Loyalty in India

The very definition of the term ‘loyalty’ has changed. There was a time when loyalty
played a much larger role in everyday life in India than it does today. We were deeply
loyal to our families, of course, but we also displayed unquestioning loyalty to a long
list of authorities plus to the organisations we worked for, and more important, bought
from. Almost all of these unconditional loyalties have now become almost extinct.
Earlier, loyalty meant one thing when majority of workers in the firms were unskilled or
semi skilled.
Now, it means something else in the fast moving, modern high-tech corporate environment,
where employee mobility at all levels, from the CEO downwards is taken for granted.
The unqualified, hierarchical loyalty that looked so much like blind obedience is gone.
Free markets have replaced it with something far superior—mutual, earned loyalty.
It is loyalty that works in two directions. It has become an investment.
Now we say to the corporations we buy from or work for, ‘I will invest my loyalty till
this business can deliver superior value. When value is insufficient or a reasonable
effort to fix the problem fails to produce results, I will defect to a business in which my
loyalty can get me better returns.’
No organisation can hope to work towards high productivity if the management
keeps chasing after new customers, employees, and/or investors. Here, what works is
the system, not isolated bits and pieces of best practice.
I have seen time and again, in Africa and in India, that when an executive shifts
from a local company to an MNC, he undergoes a magic transformation and becomes a
very different person in attitude and behaviour. In the local company, all that he cared
for was ‘What is the future of this firm?’ ‘What is my future here?’ And, ‘How will it
show in my CV?’ When he shifts to an MNC, often for only a little more money, far less
job security, and much greater work load, his focus becomes on helping the MNC to
succeed.
The best employees, as the best customers, are those who get swept up in a kind
of value-and-loyalty spiral. Specifically, the best employees are those with the talent
and motivation to raise their own productivity, their own incomes and they fuel even
greater upgradation in quality and productivity.
The world has changed and India is changing. Of course, the people who keep you
in business are your customers, employees and investors, but to them, loyalty is not
simply an isolated quality. It is an integrated system that affects everybody.
The tragedy in India is that there are many investors who are not committed to the
long-term welfare of the companies they own and are not loyal to their own investments.
This seems a silly thing to say, but a large number of our smaller firms have owners
who are busy fighting among themselves or playing hide and seek with the tax man.
The owners are doing one thing and are expecting their staff to do quite another.
z A company has to be loyal to itself before any sort of upgradation can even be
thought of. If the investors do not have a sense of commitment to themselves, the
workers cannot afford to have a sense of loyalty to them. Money does not come into
the picture.
Any objective of long-term growth has to go beyond mere loyalty slogans on the fac-
tory walls, because the real attitude of the company never remains a secret. The work-
ers know it and the market knows it.
Loyalty and Talent

The entire corporate scenario in India has undergone a remarkable transformation
and there have been incredible changes in the balance of power in the corporate world
too: Talented people need organisations less than organisations need talented people.
Our larger organisations are losing many of their bargaining chips, such as being
able to exchange loyalty with job stability and security. A permanent job in return for
the employee’s loyalty does not exist anymore because even if companies want to
provide such jobs, they have a hard time delivering them, because the average life of
an Indian company is now far shorter than the employee’s working lifetime.
The upshot is a steady decline in the number of people willing to wear the company
badge and at the same time, the average length of job tenure for Indian executives has
shrunk: Some of this movement is no doubt involuntary, but some of it reflects a disen-
chantment with their current employers. A growing number of high flying managers
now change organisations on their way to the top. Many Indian companies have CEOs
that were recruited from the outside.
Young high-tech professionals are also finicky about jobs. They have a strong sense
of their market value, plus they also have access to inside information. They know
what it is like to work for a particular organisation, and also have an excellent idea
of what they can expect to earn.
But growing Indian organisations still have a few things going for them.
z First, many people actually enjoy the sense of belonging and the rituals of office
life.
z Second, the best companies are repositories of skills that are hard to replicate.
Talent may reside in the brains of individuals, but it is also nurtured by organ-
isations. Talented people may think that their brainpower allows them to walk
upon water, but in reality many are walking on the stones that their employers
have conveniently placed beneath them.
The most important thing that Indian companies can do to attract talented people
is to boost their workers’ long-term employability. Employees no longer expect com-
panies to offer job security, but they do expect their employers to help them keep their
skills up to date.
Loyalty to Yourself, Huh?

Here is an anecdote that illustrates one of the very common problems faced by foreign
importers when dealing with small manufacturers in India who try to do their own ex-
ports. It should be remembered that the bulk of India’s export in manufactured goods
is through this channel. Foreign importers dealing with individual manufacturer/
exports here. Exports via large organised firms which have their own network of repre-
sentatives overseas is mainly in commodities and other low value added bulk items.
Here again, it will be seen that the problem is the poorly organised small family
owned firm where the owner has to allocate his time between taking his sick mother
to the hospital, look after the purchases, production and sales, plus the huge amount
of paperwork involved with exports. For small export orders, it is obviously not worth
while to engage a professional to handle all the paperwork. The problem I am high-
lighting here, results from the common practice of avoiding record keeping. For fear
of the taxman, firms try to have as little information on paper as can be helped, making
it impossible for the owner manager to keep track of inventory, and so on.
This story repeats itself all over India and is typical of the case of one man trying to
do everything.
Now to the anecdote I am talking about.
Once, when I was living in Malaysia, I had a visitor from Delhi; who was a friend of a friend.
He was keen to export bicycle seats. I took him to a Chinese friend who was importing
the items from Taiwan and Hong Kong. He was shown two brands, Ajanta and Ellora. The
quality and the price were about the same. The main difference lay in the very attrac-
tively designed brand emblems in embossed brass fixed to every piece. My friend liked
the look of the products and the price and decided to place an order for a fairly large
consignment.
My Chinese friend had two conditions. One, he would not, under any condition extend
the letter of credit (L/C) beyond the stipulated three months delivery period as this
would add to the cost, and two, the supplier was free to choose any of the two brands he
showed, but the brand must be mentioned in the L/C and cannot be changed after the
order was placed.
The supplier agreed to supply Ajanta and accepted the order.
I had been quite impressed with the way the exporter had presented himself and his
products, so I was not prepared for a frantic telex (this was before the days of the fax
and the Internet) which I got a couple of weeks after the L/C expired. It said that the
consignment was already at Bombay port, but could not be shipped as the L/C had
expired and if it could be, please extended by another three months.
If the consignment was already at the port, why three months?
Anyway, I could persuade my friend to extend the L/C by taking part of the cost.
Silence reigned for another two months. No response to our telexes. Then, I got a very
interesting and an unexpected telex again. I was told that the entire consignment at
Bombay port was stolen! However, to keep up the goodwill, they were willing to resupply
the whole order and take the loss, but Ajanta was not available and I was requested to
modify the L/C for Ellora!
Anybody but a fool could see through the ploy. As I confirmed later on, the ‘consignment
at Bombay’ was just a bluff. The exporter could not get the consignment ready till the
first L/C had already expired. Then, on getting everything ready, he found that he did
not have any stock of the embossed emblems for Ajanta. The lead time for delivery of
the new emblems was three months, so the fellow had no choice but to supply the other
brand and cook up a clever story of the theft.
This not only destroyed this fellow’s chances of ever getting any business from
Malaysia, he also destroyed his country’s goodwill because the Chinaman openly
ridiculed India and Indians.
I would say that the brilliance of thought and inventiveness shown by the fellow
after the event should have been redirected towards working more productively!
I cannot say that the fellow was a crook or a cheat or even a bad businessman. He sim-
ply had too much on his hands and never bothered about thoughts of losing good-
will, and so on.
Do look around at the businessmen you know. How many of them would fit into this
mould?
Question: did this fellow have even the rudiments of personal loyalty? Was he loyal
to himself, to his firm or to his nation? Did he have any sort of loyalty to his friend
in Delhi who had introduced him to me?
Loyalty to Yourself, Asian Version

Here is another anecdote from long ago when I had just set up my own consultancy
practice in Kuala Lumpur. My secretary was a young Chinese girl, Yoke Chan who had
been working for me for just over an year. I had three other engineers, all expatriates
from India.
I had to go to Australia for an important presentation, and one of my engineers was to

travel with me. Those days, there were not too many convenient direct flights from Kuala
Lumpur to Brisbane, so my agent had booked us one via Singapore.
That evening, we were delayed rushing through last minute corrections to our pre-
sentations and barely had time to rush to my flat on the way, pick up my bags and reach
the airport for the 8 pm flight. At the check-in counter, as I was opening my bag to take
out my passport, I got a shock. I noticed that in my hurry I had picked up the wrong
set of files. There had been three piles of files on my table and I had just picked up the
wrong set.
I was in a funk. I saw that there was another flight to Singapore at 9:30 pm, enough
time to make the connection to Brisbane but my office was a good one hour drive so there
was no way I could go to the office, pick up the correct set of files and come back in time.
Then it struck me that I did not have the keys to the office. I had left my set of keys with
Yoke Chan and I had no idea where she lived or how to contact her! Those days, there
were no cell phones.
I felt numb and dizzy and tottered towards a chair. I could not think straight. Lekhvir,
my senior engineer, just stood looking at me. We could not think of what to do. We looked
at the airline schedules. The first flight to Brisbane the next day was late in the evening
so there was no way we could reach the client’s office for our meeting.
Then, a thought struck me. Hoping against hope, I rang up the office and got another
shock when Yoke Chan picked up the phone. We all breathed a collective sigh of relief,
but then I got worried. My first thought was that something was seriously wrong. I knew
that my other engineers would have left office the minute I left, so why should a young
girl be alone in the office at 7:30 at night, particularly when the boss has left for overseas
for more than a week?
I asked her and she said, ‘No Sir, there is nothing wrong, but Sir, I am not very smart
and am just writing down all the instructions you gave me. Then I will sort out all the
papers and files. I do not want to forget anything important by the time I come back to
work tomorrow.
‘Of course, from tomorrow onwards, I certainly will take it easy.’
You can imagine the immense sense of relief that flooded over us. I told Yoke Chan
what had happened, and asked her to immediately jump into a taxi and bring the files
to the Airport. We could comfortably look forward to catching the next flight.
Talk of not being smart; the girl deserved a medal!

Over the years, I have thought about Yoke Chan’s actions that evening. I had just
come from India and the work attitudes of our people were fresh in my mind and I could
not immediately understand the motives of this girl in doing what she did. It was only
later, much later, after working with people of many races, that I understood that she
liked the job; she felt that my firm had a good future and that she had a good future
with me and was just being careful not to lose her self-respect and dignity by doing
something silly by mistake.
In other words, she was merely being intensely loyal to herself!
Preamble z 99
9
New Manufacturing Opportunities
While looking at the immense new manufacturing opportunities in India, I will seek to
establish that:
We need to think ‘out of the box’, and take a hard look at the world around us. There are huge
emerging markets in consumer goods all around us. If we are not looking for them, sure we will
not find them and that is why our larger business houses cannot be bothered.
It is true that whatever we can make, China already has a better and version cheaper on
our shelves. We should stop looking at what China is making, and start understanding how
they are doing it. Sure, we have the technology and the people, but something else is needed.
We will talk about it in chapter 10.
It is also wrong to say that all that a budding entrepreneur can export is garments, or lea-
ther goods, or commodities. Here again, we should stop thinking about what to export and
start understanding how others are doing it. While this topic is fully addressed in my first
book, Unleashing India on World Markets, I will briefly discuss the various entrepreneurial
angles here.
New Markets in the West

There are thousands of very simple, but highly innovative, plastic and wooden products
currently being sold in the USA and all over the western world. Cheap, well designed,
elegant and very popular—plastic toys, soft toys, games, gimmicks, kitchen and garden
items, clocks, picture frames, hobby and craft items, and so on.
You go to the same shop after a few months and a new version is already on the
shelves.
In the West, the market for these items is growing exponentially. The reason is the in-
creasing spending power of the consumers. People want to live better, their children ex-
pect better toys and their wives expect better devices in the kitchen. This has created a
massive new opportunity. Coupled with the shortage of skilled workers like carpenters,
masons, and so on, people find themselves doing everything. So, the mentioned list gets
enlarged to include items catering to the ‘Do it yourself’ trade.
These items are widely advertised and sold all over the western world, almost all are
‘made in China.’ ‘Made in China,’ on the label of a product we see in the overseas mar-
kets can mean two things. It could either be read as, ‘Made in Hong Kong’ which is also
China or ‘Made in China by the overseas Chinese.’
We are talking about a completely new range of immensely profitable products which
did not exist a decade ago. These are all quick turnover, high volume and low lifecycle
cost items. The western market has a voracious appetite for these items which come
and go in a few months, sell in huge numbers and cost very little. Every day there is a
new item on the market.
India has never been able to make and export such simple items, has no share in
this fantastic market and is not likely to have it either, unless the next generation of
our entrepreneurs wake up to the realities of the modern world.
It is not as if we do not have the technology. We are producing and exporting a num-
ber of far more complex and sophisticated plastic, metal or composite products, mostly
without any foreign technical inputs, at prices comparable with world prices. So what
is wrong?
The reasons are very complex, and were articulated in my first book.In particular,
we have to look at the very concept of entrepreneurship, innovativeness and the way
new products are made and marketed in the world.
The Approach: Three Angles

In order to understand some aspects of the highly complex reasons for not being able
to manufacture and export the items mentioned, I will be looking at the very concept
of manufacturing entrepreneurship from three angles.
1. I will give a stray example of an item that has a substantial market in India, and
discuss it in detail to show how others can earn huge profits from simple innova-
tive ideas. India has been making some very crude versions of this particular
item for generations and we are still making and selling what my grandmother
used.
2. In Part 3 of this book, when I talk about the globalised entrepreneur, I will in-
troduce you to Guanxi, the Confucian concept of networking. This is a complex
philosophy and its literal meaning is the ‘art of working with each other’. (For
now, it would be a good idea to surf the Internet and take a quick look at the
huge number of entries, when you type Guanxi. Be careful with the spelling!)
This is a concept where a number of small independent firms work together,
New Manufacturing Opportunities z 101
integrating an entire spectrum of activities from design talent, manufacturing

capacity, production management expertise, marketing and packaging skills,
and financing without which development of innovative items is not possible.
In a later chapter, I will give an example of how Guanxi caused us to lose a sim-
ple but highly profitable project to Thailand.
3. Lastly, we shall be looking at our own way of producing and marketing new
innovative industrial and consumer products. This is a major bottleneck for
exports. Indeed, India has an exemplary track record of innovation in the entire
spectrum of items from pharmaceuticals to computer software. We have a long
tradition of innovation. The roadside mechanic managing to repair a complex
carburettor with a piece of string is innovation also.
Though we are very good at this sort of a thing, but it is also a sad fact that the sub-
ject of industrial design is no longer being taught in the country. Except for some
stray examples, our industrial houses have no need for industrial designers and our
innovations in consumer goods have not been able to win any world markets.
New Opportunities in India

The driving force behind the creation of this enormous new demand is a new breed of
consumers: Our young professional couples. They are creating an incredible demand
for some upmarket daily use items.
Young Indian consumers and companies now demand the latest technologies and
features. If you search the Internet, you will find a plethora of academic and marketing
studies that show that the attitudes and aspirations of today’s young Indians resemble
those of the Americans a few decades ago. In particular I would refer you to a survey of
thousands of young adults in India by the marketing firm Grey Global Group where it
was found that our youngsters are overwhelmingly optimistic about the future, believe
success is in their hands, and view products as status symbols. It’s fashionable for the
upwardly mobile to switch high-end cell phones every three months, because an old
model suggests ‘you are not getting ahead and updated.’ That means India will be a
huge proving ground for next generation multimedia gizmos, networking equipment
and wireless Web services, and will play a greater role in setting global standards.
Apart from the Multimedia gizmos, networking equipment and other high-end pro-
ducts apart, I will show you that there are a number of huge, new and fast growing sim-
ple consumer markets in India that the Indian manufacturers are ignoring.
In the Indian society, there is a revolutionary change in the young people’s outlook
on life. The country’s younger generation wants careers, and longs for wealth and the
good life. While they know that they will have to work hard, they also want to play hard.
Thus they need everything that goes into making a good life.
Since the young people of today form the key consumer group of tomorrow, these
shifts have huge implications for the marketing companies and they should offer inter-
esting new opportunities for the former to exploit, but are our manufactures paying
attention? Look at what the affluent young people are buying; except for clothes, ac-
cessories and cosmetics, everything you see in the shops is imported.
Unfortunately our rising consumer class is not yet driving innovation in this sector.
In the example that follows, I will use young professionals in the big towns as my tar-
get market and will talk of a simple item they would like to buy from the market. I will
show how simple items are beyond the scope of our manufactures unless the young
entrepreneurs have a radical change in their thinking.
(Remember, this is just one of the segments of the large range that one can talk
about.)
Let us first take a close look at our young professional women and then we shall dis-
cuss the couples.
1. Traditionally, Indian parents regard girls as someone else’s future property. They
arrange marriages for their daughters, and the daughters go away to take care
of their in-laws, so the parents need and dote on sons. ‘As a girl, you never
spoke to your parents. They spoke to you.’ While this is by and large still true
in small towns, young women of in large towns are rebelling against all this.
2. A decade ago, most young women saw themselves as housewives. If they had a
profession at all, it had to be a noble cause, like teachers or doctors. Now, it is all
about glamour, money and the good life.
3. The relationship with the husband was that of awe. Now, women want a
partner and an equal relationship. They want to marry a man who takes an
equal share in the housework.
Now, let’s look at the young couples. You will notice that:
4. Today’s young professionals are far more affluent than the previous generations.
5. Both husband and wife are working.
6. They invariably live in a big city like Bangalore or Hyderabad.
7. Most young couples now live away from their parents and families.
8. Their lifestyle is very different from that of the previous generation.
9. They use many appliances and household goods that their parents never used.
10. As soon as the first baby arrives, they visit the market for items that did not exist
when they themselves were babies.
11. Their lifestyle does not permit them to use hand-me-downs from friends and
relatives. They mostly buy new things for their baby.
12. Their lifestyle is more westernised and they bring up their children very much
like young parents in the West.
These young people are creating an enormous demand for many new and innova-
tive products and as I said, by and large, the Indian manufacturers are ignoring this
sector.
I am not talking of baby food, clothing or toys. Walk into the children’s section of any
large department store and see for yourself. You will notice an amazing range of upmar-
ket consumer items that were not there 10 or 15 years ago, and the shopkeeper will
tell you how rapidly the market is growing.
z Believe me when I say that the future of Indian manufacturing, that is, your
future, lies in making thousands of items like these. The market is lucrative and
fast-growing. Surely it will not be easy, but you can do it and have the world mar-
ket at your feet.
Points to Note
1. Walking through a large store of any big town, you will notice that the vast var-
iety of items on sale carry the label of Made in China or Korea.
2. You will also notice that even though the plastic or metal working technology
needed for these items is freely available in India, the large range of designs and
the comparatively small turnover rules out the interest of our large firms.
3. It is left to the small firms in China and Korea to conquer the world markets be-
cause of a unique manufacturing strategy that I will describe to you here.
4. Modern small-scale manufacturing of upmarket consumer items, in the Asian
style, is not at all capital intensive. You may not need much of your father’s money,
after all!
Just for the sake of discussion, I am going to take one item, and explain, step by step,
what would be involved in manufacturing it.
Item for Discussion: Baby Walker

z Remember, I am choosing this particular item only for a discussion. After you read
and understand what I have to say here, and in the rest of the book, you can work
on a number of such items as and when you are ready to test yourself in the
marketplace.
The item, in question, is what is called a baby walker. This is not a pram, but a device
that helps toddlers to learn to walk. Every small town in India has a different and
simple design of this item: just a small wooden stand with four wheels. The toddler
takes its support and pushes it around. In some cases, it is a round plastic or metal
device with wheels and a hanging cloth seat into which the baby can be placed. The
feet just touch the ground and the baby can propel itself in all directions. There are
many traditional designs that are crude but quite decorative in their own way.
Walk into any large store and see for yourself. You will find a whole range of walkers:
From the crude local ones costing a few rupees up to very fancy imported Chinese
ones for a few thousand. The imported walkers have a superb finish with all sorts of
toys and gadgets attached which the baby can play with.
I am not suggesting that you imitate any design. But please remember that if you
are able to offer something new to the market at an attractive price, young couples
across the nation are your potential customers. The market is huge.
The Starting Point

As I said, you have hundreds of items like the baby walker to explore.
Please keep in mind that in the first reading, what I say here would appear confusing.
It would be a good idea to take a quick glance at the following, get the overall picture
and then read it once again.
Walk into any department store and look at an imported baby walker. It would be
an original design, obviously not a copy or imitation. You will see that the item needs a
combination of metal and textile technologies: The framework is all electroplated steel
and the upholstery textile. Now ask yourself. Who was the person that first thought
of making this item? How did the idea take birth?
Maybe the person has the manufacturing capacity and is looking for new items
to make. Say, the person could be someone from a metal working firm, or an upholstery
making firm or a firm making similar composites for other types of furniture. He could
be exploring new items to add to his production line.
Or, maybe the person has the market and is looking for more items to sell if some-
one could make it for him. What I mean is that he could be someone from a retail or-
ganisation already selling similar but simpler items.
Or, the person could be a budding entrepreneur, keen to enter manufacturing. He
could have liked this idea while looking at other imported items.
As I said, the starting point would have to be someone’s mind. Surely, someone some-
where would have conceived the idea, developed the design, and produced and sold
it. Right?
Wrong! Now read on!
Three Types of Integration

While reading the above options, you may be thinking of vertical and horizontal inte-
gration: A firm may be exploring its options for expansion by setting up wholly owned
subsidiary units to produce new items. This is where the two types of integration come
in. But, please note that the heading for this section calls for three types of integration,
not two. No, this is not a misprint. Let me explain.
Horizontal Integration
You must have read in your text books on microeconomics and strategic management
that the term horizontal integration describes a type of ownership and control while
adding capacity. It is a strategy used by a business corporation that seeks to sell a
type of product in numerous markets.
The horizontal integration of production is where a firm sets up plants in several
locations producing similar products. Horizontal integration of marketing is where,
to get better market coverage, several small subsidiary companies are created. Each
markets the product to a different market segment or to a different geographical area.
Horizontal integration in marketing is much more common than horizontal integration
in production.
Many large retail clothing corporations are good examples of businesses that practice
horizontal integration. They often control many distinct companies, each having its
own brand equity. Each company has stores that market clothes tailored to appeal the
needs of a different group. Some can sell expensive clothes with an ‘upscale’ image,
the others sell ‘moderately’ priced clothes that appeal to middle-aged men and women,
and the rest sell ‘inexpensive’ clothes geared towards children and teenagers.
By using these three different companies, large firms have been very successful at
controlling large segments of the retail clothing industry.
Vertical Integration
Again, you must have read in your text books that the term vertical integration also
describes a style of ownership and control.
Vertically integrated companies are united through a hierarchy and share a common
owner. Usually each member of the hierarchy produces a different product or service,
and the products combine to satisfy a common need.
It is contrasted with horizontal integration. Vertical integration is one method of avoid-
ing the hold-up problem. One of the earliest, largest and most famous examples of ver-
tical integration in India, is our steel industry. The companies control not only the mills
where the steel is manufactured, but the mines where the iron ore is extracted, the coal
mines that suppy coal, in some cases the ships that transport the iron ore, the coke
ovens where the coal is coked, and so on.
Networking Integration
This type of integration is practiced only in the East and is a new term in management
jargon. This is a networking of disparate capacities: small specialist firms integrate
their design talent, management expertise, marketing and packaging skills.
The entire spectrum of economic activities is carried out mostly by small family owned
firms. Their businesses stay singularly apart, but they work together all the time.
We will talk about this now.
Points to Note
z One, no single firm can undertake to develop and manufacture items like Baby
Walker and so on. You need to develop a very different strategy. For this new strat-
egy to work, you have to come together with some friends and form the basis of
a network. I am describing the various skills or disciplines needed for this new
style of manufacturing. Each of you has to select a skill and work at it.
z Two, very little investment is needed till you are ready to offer the first item to
the market. After that, the entire operation would need self-financing. The idea is
that each of you should do what you are good at. The more you do this, the more
you will upgrade yourself and make your network more competitive.
z Three, I am certainly not assuming any quantum change in your attitude and
behaviour, and you do not need any long sermons on anything. Just learn to work
together as a network without any of you being the leader. Once you see the pro-
spect of making good money, you will yourselves be surprised at the changes
in your attitudes.
z Four, surely there will be problems and conflicts. You will see that an important
aspect of networking is that all parties will develop the patience, the motivation
and the training in conflict resolution. The idea is basic instinct for survival. Each
member of the network will very quickly realize that there is money to be made
only so long as all the links in the network work well. That itself is incentive enough
for you to learn to work with each other.
z Five, I am describing the various steps of this strategy. In due course of time, peo-
ple who work at each step for your network would specialise in it and do more
and more of only what they are good at.
z Six, do not worry about being copied. You will see that in order to copy you, the
person would need to form his own network. But once he has such a network,
why would he bother to copy?
z Seven, it is crucially important for you to meticulously record all your findings
and discussions and these have to be easily available to all members of your
network. You will see that the more you are open to each other the faster you
will grow.
You Need a New Mindset

Remember I am talking only of the manufacture of consumer items—items that would
go on the shelves of stores, the growing market that is now mostly captured by China.
The Basic Idea

I have seen in Hong Kong how small specialist firms join hands and integrate their
design, production, marketing and packaging skills. The entire spectrum of economic
activities is carried out mostly by small family owned firms. Their businesses stay sin-
gularly apart, but they work together all the time. Each is a ruthlessly efficient entity
but they work very closely with each other almost as a strong cohesive group. When a
crisis arises or an opportunity presents itself, they close ranks and co-operate.
I have used the word ‘small’ above in ‘small specialist firms’ and ‘small family owned
firms’. This has to be taken in the context of the traditional style business because
many of them employ hundreds of engineers and have dozens of factories—exactly
like you have ‘small’ Indian owned trading firms in countries like Malaysia and Kenya
that can have the equivalent of a multi-million rupee turnover.
All family businesses of the overseas Chinese are networks of companies and other
enterprises, of clans and villages. An outstanding characteristic of the ethnic Chinese
network is that no one is in charge. The marketplace is in charge.
In India, there are excellent firms capable of all the operations I am listing below.
But each firm works in isolation. No single firm has the resources or the organisational
infrastructure to undertake all the essential tasks. So, if the idea appeals to you, your
project will have to be promoted, undertaken and financed exactly as I am detailing
below, because Indian firms rarely form consortiums or networks.
Brainstorming
First step is to decide on what to make. You do not pluck an item out of thin air and say
you have a gut feeling about it. This is nonsense. You have to evolve a systematic and
a continuous ongoing process where you do a lot of brainstorming and look at all pos-
sible ideas: Even the wildest ones. Listen to everybody. Then very diligently and system-
atically prepare a short list of a few items. Do further brainstorming on these items
in detail, but only on paper and in the field, without any investment. Talk about, dis-
cuss and study all aspects as detailed in the steps that follow and eliminate items you
think are not feasible. If you end up liking the concept of making, say, a baby walker,
go on to step two.
Market Feedback
Talk to as many people as possible about the item. Be very open, and pick the brains of
anyone you can find who has a comment to make. Talk freely. Nothing is confidential
and secret. You are not the first to think of this item and certainly not the last. The more
frankness you show, the better feedback you will get. Find out what people think of
the item, who sells it, who makes it and most importantly who tried making it and
failed. Find out why he failed.
Do not use pre-prepared questionnaires as you will get ‘yes’ or ‘no’ for answers.
For projects like this, it is always a waste of time sending college students with three
page questionnaires. At this stage you do not even know what questions to ask. You
want discussions, opinions and people opening themselves to you.
You can see that as time goes on, the fellows in your network who do this investi-
gation would get specialised and it is better that they be left alone to do this more
and more.
Initial Design Concept

If your initial market feedback is positive, you start the design stage. Remember you
are making an item that is already in the market so your motto is not to merely imitate
but to study and improve. There are many baby walkers already on sale but you will
be making something new and unique. Offer something different and next year offer
an improved version. That is the secret of success of the Chinese people. So go to the
market again and the market will tell you how to make it better. People will give you a
wealth of ideas. Traders, particularly those who are impressed with what you are doing
and are looking forward to sell what you will make, are the best source of ideas. Talk
to customers who are in the stores. What is wrong with the design as it is, what sort of
complaints were received, what is needed to improve it, and so on. This again is a con-
tinuous ongoing process where, even after your item is in the market, your network
keeps doing a lot of brainstorming and continuously looks at all possible ideas for
further improvement.
Safety and Security

Making world class consumer items no longer means engineering production
technology.
A very difficult but essential part of the product design is the incorporation of a lot
of new safety and security features. This is one aspect that is, by and large, ignored by
manufacturers in India.
Pick up an imported baby walker in a store and you will be amazed at the number
of safety warning labels and instructions all over the item, on the carton box and in
the leaflet that comes with it. See the safety and security features that have been built
into the design. USA is leading the world in demanding the incorporation of endless
safety features in consumer items, and the rest of the world, including India, is not
far behind.
This is a difficult subject. I feel it will be essential, and lucrative, for you to have a
member of your network specialising in the study of these features and requirements.
No matter what consumer item you make, particularly for use by children, this fellow
would have a significant role to play.
Knocked Down Packaging

This is again an aspect that is, by and large, ignored by manufacturers in India.
I suggest you walk through the children’s goods department of a big store, but no-
tice this time how the items were shipped to the store. Compare a baby walker made
in India and to an imported one. You will find that the Indian item was fully assembled
in the factory and shipped to the shops as it is. Not packed, but generally wrapped in
plastic or gunny. The item was bulky and meant to be sold for nearby markets only. The
parts and sections are often first encased in thin polythene tubing and then screwed
on and assembled. The flimsy polythene becomes an integral part of the item, making
it impossible for the customer to fully remove the ugly sheet from the product. Bits
and pieces of the torn polythene remain sticking and soon become black and dirty.
This is dangerous for young toddlers.
Now see the very nifty box the imported baby walker came in. Look around you some
more. You will see fairly large swing sets, very fancy baby cots, and even prams dis-
mantled and packed in impossibly small cartons. Not only that, the items are designed
to be sturdy even when put together and assembled by lay people without any tools,
and comply fully with the safety and security regulations.
This is the most difficult part of modern consumer product design. Each part is care-
fully designed and manufactured such that it would snap together and click on firmly
to another part, and yet can be easily dismantled. And then, the cartons are designed
with pockets and compartments to accommodate all the parts and accessories without
the risk of anything dropping out or getting damaged in transit.
Pre-manufacture Market Testing

This sounds silly. How can you test market an item before actually making it?
Well, this is how modern manufacturers do it and this is where computer graphics
specialists come into the picture. I have seen superb leaflets, brochures, advertising
video clips and customer handouts of items that were yet to be manufactured. This is
essential. The computer aided print and other media comes in handy in two ways. One,
you can find out in advance about unexpected problems, hurdles or design defects
before burning your fingers, and two, your marketing team can book advance orders
to help design production strategy.
Wish List Registration

Before going on to show you how people make incredible advances simply by working
together, I will divert for a moment to show you a highly innovative marketing gimmick
I saw in the US.
This is the gift marketing system in the Western world in nationwide store chains.
These are the large stores which have branches all over the region.
Say, my son is getting married. In India, the couple would get 15 toasters, 22 electric
irons, and maybe half a dozen rice cookers, and an assortment of items which have
no use except to pass on as wedding gifts to others. A complete waste of money for the
couple and there is nothing one can do about this.
In the US, most of the big chain stores have what is called ‘the store gift list’ com-
puter. My son and his future wife would visit a branch of a nationwide store chain.
They would select the items they need and enter the list in the store gift list computer
with their names, doing this in two or three different stores. When they print the wed-
ding cards, they mention the names of the stores they visited, at the bottom left of the
wedding card. Any of their friends would go to any branch of these stores, in any part
of the US, enter the couple’s names and see the items they selected.
Depending upon the budget, the person buys the gift and it gets deleted from
the list.
The couple get what they need, and no useless gifts pile up in their home. This works
very well for birthdays, weddings, anniversaries, anything.
10
Making Intrapreneurship Work
I said it in the introduction and I say it again here: It is my firm belief that the only way
we can start making our presence felt on the world markets is to undertake a deep study
of the work ethic of the people of the East. I also said that we have nothing to learn from
the West.
In this chapter, I will be talking about the work culture of the overseas Chinese and the
unique way in which they are using intrapreneurship and competing with us.
I will give examples drawn from my own experience, and talk about the Chinese in China
and those in Thailand.
Then I will explain how we lost an excellent export project to Thailand merely because of a
weakness in our intrapreneurial style.
I am sure this would lay the ground for you to understand what I say in chapter 15, ‘Under-
standing the Overseas Chinese’.
A Unique Perspective
I said in chapter 7 that an intrapreneur is defined as ‘a person within a large corpor-
ation who takes direct responsibility for turning an idea into a profitable finished pro-
duct through assertive risk-taking and innovation.’ Intrapreneurship, then, is the
practice of entrepreneurial skills and approaches by or within a company. Employees,
perhaps engaged in a special project within a larger firm are supposed to behave as
entrepreneurs, capturing a little of the dynamic nature of entrepreneurial management
(trying things until being successful, learning from failures, attempting to conserve
resources, and so on) is claimed to be quite valuable in otherwise static organisations.
Making Intrapreneurship Work z 111
There is another way of looking at intrapreneurship, which is the Chinese way. I had
explained in chapter 9 that there are now three types of integration: Horizontal, Verti-
cal and Networking. I suggest that you take a quick look at what I said about network-
ing where there are no large firms but several small firms joining hands, forming a
network and working together as one. Not as a team and not even as a consortium.
A close knit network, without any identifiable leader. Since members of the network
remain independent, each member doing only what he is good at, the network quickly
becomes a front runner in its respective field.
z I need to explain that when I say the ‘Chinese way’ I am not talking about China
but about the Chinese people, mainly the Chinese people who live outside China.
In other words, the network has become a world class MNC.

This also means that size is no longer synonymous with being world class, as new
manufacturing techniques and computerised production allow these small factories to
produce customised goods at mass produced prices. The emphasis shifts from size
to efficiency, dynamism, agility and a reputation for timeliness.
Cigarette Lighters in Wenzhou

Now, you will see an example of this manufacturing strategy—the strategy of small
independent firms working together—that has been working very successfully for many
years now. (You can read a lot more about this on the Internet.)
z Before reading the following, please close your eyes and imagine the sad situation
of our lock manufacturing clusters in Aligarh, brassware manufacturers in
Muradabad, bicycle parts manufacturers in Ludhiana and carpet manufacturers
in Murshidabad. These industries are dying out and there is no hope of revival.
Here is what I think is the reason.
Located in the southern part of the Zhejiang province, is the city of Wenzhou. This
smog-filled Chinese city alone is responsible for a majority of the world’s smokers to be
able to light up a cigarette; for tens of millions of sight impaired spectacle wearers to
be able to see; and for supplying zippers and buttons to most countries.
60–70 per cent of the world’s metallic shell lighters, zippers and spectacles are pro-
duced in Wenzhou. A significant reason for the city’s success is the development of
a unique cluster model that is more of a network, whereby hundreds of small enter-
prises work together producing complementary goods based on a very efficient divi-
sion of labour.
The city’s lighter manufacturers, for example, comprise hundreds of firms, some spe-
cialising in particular components, others in final assembly—leading to fast, flexible
and competitive production. As a result of this much specialised division of labour,
the city can produce over 10,000 different varieties of lighters.
The lighter makers grew from a mere flicker in the late 1980s to dominate the world
market in cigarette lighters, snuffing out the competition not only from the West but
also from Japan, South Korea and Taiwan.
Wenzhou does not have any large units. All are small but highly specialised family
owned units functioning as a network under the unique self-regulatory and protective
umbrella of the Wenzhou Lighter Industrial Association. This guild style organisation
comprising around 300 companies is a legacy from the traditions of long ago: the rigid
following of the teachings of the sage Confucius. The methods of the association are
typical of how business is done by the Chinese where local merchants form highly dis-
ciplined networks of credit and co-operation which even extend to overseas relatives.
The association enforces strict regulations that ban member companies from copy-
ing the products of other association members. It registers new designs, regulates sup-
ply and cracks down with a vengeance on infringers, giving iron-clad protection against
counterfeiters. When a company brings out a new design, it registers its product, the
style and type and a picture of it. An expert checks whether it adheres to international
standards and whether it is being produced by another member or not. A description
of the new product is carried in an industry bulletin.
That enables the companies to freely conduct research and design, and properly
market and distribute products without constantly looking over their shoulder for low-
end fakers who might undermine their product. It is described as ‘an informal strategic
network combined with a governance mechanism’ where enterprise and civil society
have replaced the government. Any member company found imitating a locally regis-
tered design gets heavy punishment. It has happened on a handful of occasions when
the association found a breach, destroyed the rival manufacturer’s equipment and
confiscated the counterfeit products.
But while tight-knit local loyalty has brought immense protection to the Wenzhou
lighter manufacturers, foreign brands are ruthlessly eliminated. Foreign brands and
designs are blatantly copied, improved upon and sold back to the same markets at, some-
times, below cost.
The banking sector in China is in a mess, so nearly all the units have to depend on
‘shadow banks’. These technically illegal institutions comprise groups of family mem-
bers, neighbours or friends who pool their cash and lend it. This is an advantage of
the tight-knit loyalty.
This ‘networking’ assures that though the world market for lighters is now declin-
ing because of the increasing ban on smoking, Wenzhou is prospering because it has
rapidly branched out to a host of other decorative, gift and presentation markets. The
overseas Chinese, particularly from the US, are bringing a host of ideas and designs
for development and production for their own markets. For the foreseeable future, a
steady stream of razors, buttons and lighters will continue to flow from Wenzhou for
consumers in the far reaches of the world.
A very crucial aspect of Wenzhou’s success is that overseas customers rarely need
to go there or even talk to someone there. A customer invariably has a member of the
network close to him in his own country.
z Wenzhou could turn out to be an interesting model for Indian companies, which
currently spend very little on R&D (research and development) because they have
no way of protecting their innovations. This would be a significant change from

our past experience and would serve as a model for the future.
This was the Chinese style of networking integration in action. It is called Guanxi. You
will read a lot more about this funny sounding word in chapter 15.
I will talk about another completely unrelated, yet remarkably similar example
below.
Pantip Plaza, Bangkok

Here is another example of this strategy, the strategy of small independent firms work-
ing together, that have been working successfully for many years now.
This is by far the world’s largest and the most successful market for pirated and
original CDs, DVDs and Software of all types. You name it, they have it, and the quality
is excellent.
Though this is also probably Bangkok’s largest computer market, I will confine my
discussion to the business angle of how the CDs and DVDs are sold. I will also not con-
cern myself with the legality or otherwise of the operation. I feel there is something for
us to learn from how the place is run and that is all that I will look at.
It is a sprawling six story building swarming with dozens of small shops and stalls,
with a very elegant upmarket look. On entering the building, the first thing one notices,
is the obvious prosperity of the place. I have been going there for many years now and
every year I notice improvements in the way the place looks and the manner in which
the wares are offered.
Over the years, I have noticed another thing. The price has remained rock steady:
A video CD for Baht 100 and software CD for Baht 150. (Roughly, a Baht is one Rupee.)
Thousands of the most recent titles are on offer and hundreds of smartly dressed
young men and women jostle you for business. But there is no bargaining. I repeat. There
is no bargaining! You get one CD free for every 10 movie CDs or five software CDs. That
is it. Nobody expects a higher price and nobody would sell for a lower price. If you need
wholesale, you are taken to the boss, and what happens there is just between the
two of you.
I am amazed at the incredible efficiency of the huge operation. I am always delighted
to go there as a customer and I have never had a problem with the quality even though
there are no arrangements for checking or testing anything one buys. Remember, I
am talking of pirated stuff. If you do find something wrong, it is replaced with no ques-
tions asked.
The way the CDs are sourced, compiled, printed and presented shows painstaking
effort. Songs, movie clips or software files are carefully sorted, and every CD is full of
recorded stuff. No half full or scratchy CDs and no shabbily printed covers. If you buy
pirated software, the access key or registration code is there too!
Sure, the reputation of the place is spreading around.
From the top to bottom, it is run by local people of Chinese origin, in Chinese style.
With a blank CD costing less than Baht 5 and selling for Baht 150, there are superb
margins for everyone down the line.
I cannot but wonder on how is it possible to hold the price so firm. Remember, all
that it takes is a computer and a blank CD costing a few Baht and you can produce
and sell your own copies. Why does someone not offer cheaper stuff ? Why don’t traders
undercut each other? I cannot understand how one cannot get cheaper copies even
across the street or anywhere else in Bangkok. True, there are stalls selling the same
stuff on the footpaths in some of the tourist areas, but here the price is far too high,
as in any tourist destination, and of course there is bargaining.
This, again, is Guanxi, the Chinese style of networking integration in action. I have
said earlier that you will read a lot more about this in chapter 15.
Working with each other, Indian Style

I have said repeatedly that the days of, one firm doing everything, are gone.
Now I will talk of two personal experiences of overseas buyers coming to India to get some-
thing made. I will show how our smaller businessmen and entrepreneurs work with each
other while dealing with them. Or rather, how they do not work with each other and are scared
of trusting anybody.
I will show how our style of playing with all our cards held close to the chest make our
overseas buyers feel highly frustrated.
Our businessmen and entrepreneurs need to remember that a buyer interested to buy
from India—someone who comes here bringing business for our manufacturers—is not
looking at India alone.
Idea Born in India but Developed in Thailand

As the first example, I will talk of an American friend of mine who was interested in get-
ting a simple food item made here.
Browsing through the supermarkets in the US, one finds superbly produced cans of
simple coconut water. The quality, design, and printing of the cans, packing, and so
on, are superb. This item is being promoted as a natural health drink which sells very
well. Thailand exports container loads of it every month with other items like coconut
milk, not only to the US but also to all the developed nations of the West. Coconut water
is no longer an ethnic drink popular only with Asians. The whole world is drinking it
and Thailand is the main beneficiary.
Here are some questions: Why Thailand? Why not India? Do we not have a huge
surplus of coconuts? Do we not have a well-established food canning industry? Why
are we not exporting this item?
Why not indeed. I was based in Kuala Lumpur at the time, and was involved in the
setting up of the project. I will tell you the inside story.
The idea was actually born in India.
I have an American friend who is married to a lady from Kerala. They were travelling
in rural Kerala on a holiday. He had a little tummy upset, and was advised that the road-
side fresh coconut water was perfectly safe to drink. He fell in love with the drink and
he could not stop talking about the possibility of canning it for the American market.
Since he owned a supermarket chain and had a fair amount of money, the market was
no problem.
I came to India again with my American friend, specifically to prepare an initial
feasibility study. The objective was simple: Get the stuff made as per the very rigorous
American standards.
On the positive side, the first thing we realised was that there would be no problem
in getting the raw material, the suitably printed cans and the packing material for our
initial target of exporting one container load per month. So I was sure that the project
would be ideal for India. The supply and transport of coconuts, the availability of cans,
the cost of the inputs and the export infrastructure in the southern state of Kerala
were highly competitive. (Thailand, where the project ultimately went, was about 40 per
cent more expensive.)
We found that there nobody had a suitable manufacturing facility for an output of
this quality and magnitude. Either a considerable upgradation of an existing cannery
or a new unit had to be set up. My friend was willing to make a considerable investment
but did not want to set up the new unit all by himself. He did not want to live here so we
were faced with the problem of immediately finding an entrepreneur willing to join him
by making the large investment envisaged for an untested product market.
I will spell out what happened and why the project went to Thailand. Simple: It was
all about competition.
To understand what I am saying here, we have to look at this from the point of view
of an overseas buyer. He was not looking at India alone. I will describe the response we
got in India which was lukewarm and disorganised. Then I will explain our going next
door to Thailand and the highly enthusiastic response we got. We never came back.
z I wish to be clearly understood that I am not running down our businessmen.

They spoke to us and behaved in a way that was perfectly normal, natural and
respectable. They spoke to us as they would to prospective customers from another
part of India, though with some reservations, as we Indians have a tendency not
to waste time on long-term export inquiries.
z But, if we have to start winning international business, we need to change.
Our Talks with our People

My friend made it clear that though he was keen to invest he did not want to live here
and run the project. The main problem was to find an entrepreneur or a businessman
who would be a minor investor but who would promote, implement and manage the
entire project as if it was his own. We found many rich individuals and small one-
man-show kind of firms. Each person spoke as an individual. Though some of the peo-
ple we spoke to were very rich, we could not find any of the larger well-managed
business houses interested in the project. We spoke to a few of the bigger firms in
Bombay and Chennai. They liked the idea and promised to look into it and let us know!
This stands out in stark contrast to what we found in Thailand. I will talk about this
in a minute.
During the initial survey, we met a number of entrepreneurs, businessmen, sup-
pliers and subcontractors. While we were looking for firms to take up the project, we
were also looking for quotations, terms of service and the organisational details of
the suppliers. Talking to suppliers and subcontractors created a problem. I will tell
you how.
There were some outstanding characteristics of our talks with the Indian people.
1. We were well-received and enjoyed the hospitality of some very nice people. How-
ever, everybody we met from the plantation owner to the transporter, wanted us
to deal only through him, leaving him to deal with people down the line. Each
clearly wanted to be the boss. The person talking to us as, say, the main entre-
preneur, did not like our talking to the suppliers and subcontractors. He asked
us to tell him what we wanted and leave him alone to do it for us.
z No problem here. This is common.
2. When we insisted on talking to everybody, each person made it clear that he will
talk of his own aspect of the deal only. Say, the coconut supplier made it clear
that he wanted the sole contract for the supply of the coconuts to the factory
but his role would be to supply and he would not have anything to do with any
transporter we selected. If we had problems with the transporter, it was our
business, and so on. He said that, of course, he could give us the names of some
good firms, but after that we were on our own.
z No problem here too. This is also common.
3. A very unpleasant aspect of our talks was that everybody we met talked his
head off over dinner and drinks, repeatedly stressing his own business ethics
being above those of the others in his line of work. People were full of nasty and
mean gossip about their competitors. It seemed as if the entire PR effort of the
businessmen was to run down others.
z Serious problem here. This created a terrible image.
4. The attitude of the large number of trade associations, government bodies, entre-
preneurs, businessmen, suppliers and subcontractors was the same. We were
well-received and promised all sorts of help, but every offer was at an arm’s-
length. ‘We will help but if anything goes wrong, you sort it out.’ Everybody knew
by this time that we were also considering Thailand but nobody was bothered
that India could lose the project.
z Though this also created a terrible image, it is quite usual everywhere.

We Go to Thailand
There was an amazing and very reassuring characteristic of our talks in Thailand. We
spoke to a single, cohesive group of people, each of whom spoke for everyone else. The
response was nothing but enthusiastic.
Let me explain. Our first point of contact was a large coconut plantation near Hadyai,
in the South. I spoke to them on the phone and was directed to meet the owners in
Bangkok. The person on the phone said he would fix up an appointment for us. We
went to Bangkok and met the owner who was a Thai of Chinese origin. His English was
not very good, but he easily understood what we told him. He gave us a patient hear-
ing and took us out to lunch. Over lunch he asked a lot of casual questions in his broken
English and suggested we meet again the next day.
When we turned up at their office, we were surprised to find there about a dozen peo-
ple from different organisations. All were people of Chinese origin. I was amazed to note
that there were three competing plantation owners, and two aluminium can manufac-
turers. And of course, the transport contractors, the shipping agents and the food tech-
nologists. How can competing firms meet some prospective customers at the same
time? I had a question in my mind as to why they were giving us so much importance,
but then I was amazed to find that they had already run a check on my friend’s creden-
tials via their contacts in USA. Overnight! We could see that everybody had businesses
that stayed singularly apart, but they instantly formed a network and worked together
when an opportunity presented itself.
z I have explained earlier that this is the Chinese way of doing things: They compete
in the morning for something and close ranks and co-operate in the evening for
something else.
It was immensely reassuring talking to a cohesive body that spoke with one voice.
Our discussions went smoothly because everybody connected with the proposal was
there, participating. People who were obviously competitors were co-operating! We
spoke directly to everybody and got data, offers, terms and conditions right across the
table there. We could see that the prices they were going to charge for the canned drinks
were much higher than India, but we did not care. We were at least sure of getting what
we wanted.
The bottom line is that we ended up with a firm proposal from the group with the out-
line of the corporate structure of the new firm to be set up.
z We did not have to run from pillar to post, like we were doing in India, trying to put
together a workable proposal. Sitting in Bangkok, we even got the involvement of
a Chinese firm in the US who would handle the American side of the clearing.
We never had the foggiest notion of who the shareholders of the new firm were. A
person was nominated as the CEO and thenceforth we dealt with one person only, but
were free to call any of the constituents and check on anything.
The project is now doing very well and is exporting a few container loads every month
to many countries. Walk into any supermarket in the West, pick a can of coconut water
and see where it is made. Thailand.
z In many places in this book, I am speaking about this Chinese concept of network-
ing or integration of an entire spectrum of activities. The trick is in networking of
disparate capacities and in how small specialist firms integrate their talents and
management expertise. This is called Guanxi. Do look this up on the internet. You
will find many articles and books. Also see chapter 15.
A Trip to Pondicherry and Auroville

I said I will give two examples of how we are losing manufacturing opportunities to
other people. Here is my second example where I will show how others are coming into
our country and doing far better.
In India, Pondicherry (and nearby Auroville) are probably the only places where there
are many non-missionary, non-religious foreigners who have settled down and made
India their home. These people have established a number of small enterprises and
are making an excellent living out of them. Enterprises like screen printing, bakeries
and confectioneries, handicrafts, decorative candles, greeting card production, fur-
niture and so on. The list is endless. These enterprises exist side by side with similar
units run by our local people.
The contrast between foreigner run units and Indian ones is shocking, and is there
for everyone to see. The former are excellently organised, clean and tidy, with a place for
everything and everything in its place. Workers invariably wear clean uniforms, are
better paid and more committed to their jobs. Everybody knows what is going on and
if you call when the boss is away, you will get a decent response and maybe even the
information you need. Though the prices are invariably high, the business is obviously
better. It is a pleasure doing business with these people. I do not think they advertise
or do any export promotion, but somehow they have an excellent export market. Any-
one who has been to Auroville will vouch for this.
The local run units are smaller and shockingly shoddy. Inventory, cartons, boxes
and the workers’ Tiffin boxes are all over the floor. Nobody but the owner knows what
is going on. There is a phobia of keeping any sort of records, and if you call when the
owner is away, you are told to call again. I have seen owners who send someone to
the store rooms to check how much of a particular size of an item is in stock. It is al-
most as if the owner is not aware that there is a customer out there who can go
elsewhere.
I am neither running down my own countrymen nor am I praising the opposing
team. I am talking of a personal experience.
Some years ago, when I was living in Malaysia, I visited Pondicherry in India on a
holiday. For a social function that was arranged unexpectedly, I decided to have some
special type of greeting cards produced in a hurry. I knew the cost would be a fraction
of what it would cost me back home in Kuala Lumpur. The work involved some digital
photography, computer graphic design, screen printing and a special way of folding
the cards. I knew that there were plenty of local people who could do these jobs. I went
to a well-established local printer and took great pains to explain the complications of
what I wanted. The owner listened, took the sketches I gave him, but I could see that
he made no detailed notes. I suggested that I talk directly to the various people who
would do the different jobs so that they understood exactly what I wanted. The owner
refused to let me talk directly to any of the other firms, insisting on doing the explan-
ations to them himself: ‘No problem, Sir, I will handle it.’ I was sure that I was heading
towards a nightmare. Sure enough, when the initial proofs came, they were such a dis-
aster that I walked out disgusted.
I was running out of time when I was introduced to a French lady running a screen
printing workshop in Auroville, about 5 kms away. She took one look at the job and
quickly brought the other people in to talk to me. Everybody understood what I wanted
and I got a fantastic job done. Of course, the cost was higher but I got the results I
wanted.
Indeed, the local small firms do realise that the local and overseas customers are
going away frustrated. The point I am making is that the local fellows have success
stories right next door, but they make no effort to learn.
Increasingly, overseas customers are demanding and receiving, customised solu-
tions tailored to their specific needs. The customer does not want what you have ready-
to-sell. He knows what he wants and if we cannot offer this, we should not only forget
about exports, we also look forward to losing our home markets to outsiders who are
increasingly coming here to do business.
The new customers are individuals, with distinct needs, requirements and concerns.
The generic customers are gone, and so are generic solutions and the ‘one size fits all’
sales process. The best of all worlds is that in which we are versatile enough—as organ-
isations, as individual businesses and as instant consortiums—to match export re-
quirements with the right products and processes. This can only be done by different
businesses working together as one.
I am trying my best to establish that the only viable, sustainable future business model
is one of collaboration. In almost every market today, the competitive dynamics and the
global economic system are simply too complex for any single player to bring all the core
competencies needed to the marketplace. The future will require instant alliances,
often with companies that were formerly competitors. For example, players A and B
compete in the market, have always competed against each other and would always
continue to do so, but for an opportunity C they join hands and win. Today, collabor-
ation and competition co-exist in relation to the market requirements. Today, you may
compete in the morning with a company and collaborate with them in the afternoon.
Guanxi in India
What I have described above is the direct result of the first thing the Chinese (and the
Japanese and Korean) children learn from their mothers: The teaching of the sage
Confucius and the strong tradition of working with your own people: You can fight,
you can disagree, but you remain within the same network. No splits, no staring rival
organisations and no involvement of outsiders in whatever you do. There is a close

knit networking combined with a ruthless attitude to eliminate outside competition. I
have seen mortal enemies working together when an opportunity arose, yet remaining
enemies.
People outside the region I mentioned are beginning to understand that to survive
and grow one needs this immense degree of trust, born out of a simple profit motive.
People find they do better if they are a part of a network, a group of people working
with each other purely on an understanding for individual profit, and so everybody
abides by the unwritten rules. The relationship extends to the particular project only.
It is a good business practice, pure and simple. Ethics and honesty do not come into
the picture. Everybody realises that if you trust me and I trust you and that if every-
body in the network follows a particular code, we all make money. That is it.
But, Things are Changing

I had asked some students to comment on what I have written till now and compare with
what they thought happens in India. Their comments were understandably negative.
The students mentioned first, the awful way pirated CDs and DVDs are sold all over
India. Each seller is on his own: everybody has his own price, everybody undercuts
everybody else, the quality is invariably junk, the customer gets a raw deal and nobody
really makes any money.
Then, some students mentioned our bicycle manufacturing industry in Ludhiana
which is now in a state of rapid decline, having lost most of its lucrative export markets
to China. There are hundreds of small and large manufacturers of component parts,
accessories, tools and the assembled bicycles, but each has an arm’s-length attitude
while dealing with everybody else. Nobody trusts anybody, there are too many people
doing the same thing and nobody has been able to specialise in anything. The net
result is that for outstation or overseas buyers, finding good suppliers and then deal-
ing with them is a nightmare.
I agree that what they said was true, but our country is changing and I will show
you how Guanxi is working in the new India. The changes are driven by forces of
globalisation.
Here are three examples.
One, I know some specialised engineering sourcing companies in Bangalore. They get
high-tech steel forgings, stampings and precision machined parts made in India for
American customers. Their main selling success is in the very stringent quality checks
they do here before an item is shipped. They have developed very viable networks of en-
gineers, raw material sources, vendors and fabricators, and the degree of trust and co-
operation between them is incredible. Everybody knows everybody else, work closely and
help out where needed. I know of an instance where some vendors chipped in to help
out a fellow supplier who was in temporary financial difficulties, so as not to disrupt a
lucrative chain of supply.
Two, another sector of the Indian industry where this is happening is the newly emerging
manufacturing sector of automobile components, spare parts and accessories for the
world market, mainly in South India. A large number of world class firms, each special-
ising in what it does best, are working together as close knit networks to capture more
and more of the world market. These firms talk to each other and help each other in im-
proving quality and reducing costs. Everybody is benefitting.
Three, the large and growing number of engineering firms in Coimbatore are getting
what places in the North, like Ludhiana, are losing. There is really no identifiable leader,
and these firms are realising the advantage of ethical dealings, promising only what they
can do and closely working with others above and below them in the chain of supply.
This, I think, is the new India.

11
The New Meaning of Quality and Finish
I have said repeatedly that one of the great strengths of our nation is our managerial
competence. The world recognises this. Because of our managerial excellence we can
succeed in any sector anywhere. In addition, with the unchallenged superiority of our
intellect and inner spiritual strengths we should have had a commanding position on
the world economy long ago.
But we are far from attaining any commanding position. With the world’s second
largest nation having a humiliating 0.7 per cent share in the world trade, something is
surely missing.
I do not have an answer to that one, but from my own experience I know that this has
something to do with the response of our businessmen to the protectionist policies we
had to adopt immediately after independence. This response has left deep scars on our
economy, and the irony is that even more rigid protectionism that is still functional in
countries like Japan and Korea have produced diametrically opposite results.
Let me first talk about our people and then I will do so about the Japanese.
Shoddiness as a Policy
Looking at the huge mass of industrial policy papers published during the first decade of our
independence, it is clear that our government made shoddiness and shabbiness of the pro-
ducts produced in our country an accepted norm.
It was the declared policy that finish and aesthetic appearance did not matter and all that
was needed was for the product to work.
This basic philosophy soon got gleefully adopted by the entire spectrum of our society and
the tragically pathetic results are there even today.
The New Meaning of Quality and Finish z 123
I have a copy of a speech made by one of our senior ministers at one of the symposia
organised by the United Nations Industrial Development Organization (UNIDO) (1972).
There are many tendencies that make the issue of Indian employment very complicated,
but the long established rigid consumption preferences of Indian society, are a very ser-
ious obstacle. If the accent on labour-intensive industrial enterprises is desirable, and has
to be pursued, our society ought to be prepared to accept less sophisticated and some-
what shoddy products for some time to come.
If locally manufactured shoes are offered at cheaper prices with a slightly inferior
finish, the consumer rejects them, preferring the better finished chain-store shoe manu-
facturers whose prices are much higher. The fiasco of the hand-woven and hand-spun
’Khadi cloth in the land of Mahatma Gandhi is too still vividly remembered; all the official
patronage and heavy subsidization cannot popularize coarse Khadi cloth among con-
sumers who are pining for synthetic fibers. The same fate awaits small-scale industries
working in the underdeveloped regions, whose products have to withstand oppressive
competition from the large-scale producers whose output enjoys a marked consumer
preference in our society. Thus, if the labour-intensive industries are to succeed, it will
be necessary to inculcate, if necessary by force, a deeper social consciousness and to
develop a preference for the rough and slightly shoddy in order to meet the great crisis
of unemployment.
True, this philosophy was based on very laudable motives of a socialistic pattern of
society, because, at that time, the entire developing world was immensely fascinated
by the Soviet model of development. It is only by hindsight that we now know how the
results of this ideology have been disastrous for the Soviet Union and more than tragic
for us.
Our businessmen quickly found it convenient to misinterpret this message to mean
that they can go ahead and produce anything of any quality. No one needed worry about
overseas competition because the Government was there to protect them to the hilt as
long as they created employment.
While our manufacturing sector grew by leaps and bounds, producing overwhelmingly
shoddy goods, our service sectors too used the protection from overseas competition
to give us incredibly shabby roads, buildings, airports and so on.
It is also true that our protectionist policy did indeed produce many outstanding
success stories, but the success was short-lived as the newly emerging Asian econ-
omies came on to the scene.
Here is a Thought
It was in 1969 that I was first posted to Kuala Lumpur. I noticed then that the super-
market shelves in Malaysia and Singapore were overflowing with Indian goods. Every-
thing from electric irons to ceiling fans to sewing machines and bicycles were from
India. Sure, the items were rough and tough, had no finish at all, but they worked
and were value for money. Indian engineers and contractors were in great demand,
helping the locals make roads and bridges, and our airlines were helping set up their
airports and airlines. We had a strong presence there.
In three decades, all of this has disappeared. Now it is their products that are flood-
ing our shelves, their contractors that are building our roads and bridges and their
airlines that are showing us how to run our airports and airlines.
Sadly, what is true of Malaysia and Singapore is also true of Kenya and the West Indies.
During the last three decades, we have not only lost our very lucrative export markets
in entire Asia, Africa and the Caribbean, the highly aggressive and efficient trading
organisations from the East, from Korea, Taiwan and Singapore, are now making mind-
boggling inroads into the Indian markets, bringing products and services. Where we
played a leading role once, now there is a fast growing tribe of business people in India
that are buying from and servicing the companies from the East, and their number
is increasing exponentially. To add insult to injury, our traders now merrily import items
that have been a part of Indian tradition for centuries: superb quality Hindu religious
idols, ceremonial lamps and dipawali diyas, mostly from China.
A Dramatic Presentation
I want to talk about a remarkably dramatic manner in which my friend Dr Tashi Tongyal
drove home this point to some students of a prestigious institution in North India. This
is one presentation that neither I nor the students are going to forget in a hurry.
Tashi says he has an Indian heart with a Chinese mind: He is Chinese by birth and
Indian by adoption. He was born to Chinese parents in Tibet, but his family moved to
Leh, in Ladakh when he was a baby, and his father took up Indian citizenship. After
graduating from Dehradun, he went on to pursue his PhD from the London School of
Economics. He has been with the UN all his working life and has been the economic
adviser to the Prime Ministers of many developing countries as a part of his UN
assignments.
I have known him for over 30 years ever since he was first appointed as a junior mem-
ber of my team to Lesotho. Tashi, with his pure Chinese blood, Indian upbringing, inter-
national exposure and powerful intellect has remarkably down-to-earth opinions on
what our youngsters are and what they can easily be. What he has to say, and how he
said it, would surprise and indeed shock my readers.
Dr Tongyal and I were visiting India and he was the Guest of Honour and the key-
note speaker at a ceremony to mark an Engineering college that had just become a
deemed University. It was a formal occasion; there were many invitees and all the boys
and girls had worn full-sleeved white shirts and neckties with dark trousers. The fac-
ulty and the guests were wearing full suits. I was stunned to see Dr Tongyal walk in
wearing a very shabby cotton shirt that was not even tucked in. While the shirt was obvi-
ously clean, it was badly rumpled and looked as if he had slept in it. It also had a bad
ink stain on the pocket.
I was speechless. I have always known him to be a very fastidious dresser. He non-
chalantly walked to the podium and smiling at everybody, took his seat.
Well, he was the Guest of Honour and after due introduction, he was asked to
speak. He ignored the podium, took a wireless mike and coolly walked to the front of
the stage, to be in full view of the students. He opened his talk by asking the students
about the muted sounds of smirking and laughing from the back of the hall and said
that if the students did not like the way he was dressed, he wanted to know exactly
what was wrong with it.
Of course, no one volunteered. Then he challenged the students saying that they
were training to become entrepreneurial professionals and the first thing they should
have learnt is to look at everything analytically. If there was something they did not
like about his dress, he asked them to be specific and list out as point A, point B and
so on. He kept goading them while the Dean and I smiled and nodded to each other.
By now, we understood that he was doing this to prove a point.
On probing repeatedly, he managed to get some hesitant responses, and cleverly
put words into their mouths by adding some comments of his own. Finally he said,
Boys and girls, I have your verdict. You have not liked the way I am dressed even though
I find nothing wrong with it. My shirt is modest, clean and very comfortable. You have
said four things: one, it does not look nice; two, it is not how one should dress; three,
coming to a function like this I should have had some self respect and four, sure it serves
the purpose but that is about all.
Saying this, he started to take off the shirt and we noticed that he was wearing some-
thing underneath. He paused and said:
My children, you have just received one of the most important lessons of your professional
life. Before I take off this offensive shirt, please remember your feeling of repugnance
when you saw me walk in. I will ask you to feel the same repugnance in many different
contexts today.
Then he took off the shirt and we were delighted to see that he was wearing a smart
designer safari under the shirt.
There was pin drop silence and he had everyone’s rapt attention, but I could not
see the point that he was making. I could see the bewildered expressions on the face
of the students too. But Tashi was in his element, and was relishing the confusion he
was creating.
‘I am going to rearrange and rephrase the four comments you made on my dressing’,
he continued, ‘and make what I am going to call the SINS test. S for Self Respect; I for
It is not the way it should be done; N for It is not Nice and S for Sure it serves the pur-
pose but is that enough?’
Then in an equally dramatic manner, he asked the students to come to the windows
on the left of the hall and look out. He said:
As I was being driven to your college, I noticed that this is a newly built area. But look at
the main road. It is obviously new, but look at the rubble and debris that is there on both
sides of the road, giving it an awfully shabby look. And again, look at the row of small
shops across the street.
Now children, I am going to ask you to close your eyes and imagine that this college
is in Singapore, Malaysia or anywhere in Europe. Imagine what the road and the shops
across the street would look like. Imagine the neatness and tidiness that you will see
as far as your eyes go. Before opening your eyes, ask yourselves ‘if they can do it, why
cannot we?’ Now, open your eyes and I am sure you will get the same feeling of repug-
nance as you got when you saw my shirt.
Look at the shops again. They seem to have good business but they already have
a derelict and ramshackle look. Can we apply the SINS test to the shops? Does the
owner have any self respect? Is this the way it should be done? Is it nice? And, sure it
serves the purpose but is that enough?
You now understand the meaning of the SINS test and have seen how these shops
have failed the test. Can I ask why you have never had any feeling of repugnance when
you have seen these shops many times? How is it that you see shoddiness and shab-
biness all around you and do not give it a second thought, but are so particular about
my shirt?
Your own answer to this would teach you an important lesson. I said earlier that you
have just received one of the most important lessons of your professional life. I need to
correct myself because you have just received not one but three important lessons:
1. One, I have just shown you a new technique of dramatising a presentation to

maximise the impact. You have seen that today I am not using any media aids
or reading any text from a paper. This is my way of creating an informal ambi-
ence with you. If I were to be reading points on a screen projection, I would be
reading and explaining the second point, but your attention would wander to
the sixth. Sure, there are many ways of explaining something but making you
remember what I said is something else again. I am sure even after five years,
when you think of me, you will remember my shirt and then recall a lot of what
I am saying.
z So, lesson number one: How you say something is as important as what you
have to say.
2. Two, my shabby shirt would not have been noticed if I was travelling in a bus in
Bihar, but while comparing with the way you all are dressed, I cut a sorry figure.
That is comparison, the other word for which is competition. The same is the
case with any product you make. In the marketplace, yesterday, most Indian
products had a minimum quality standard which merely served their purpose
so the poor finish did not matter. But today the same product would suffer in
comparison with vastly better finished imported products.
z So your second lesson: As India is increasingly globalising, how your product

looks is as important as how it performs.
3. Three, you found my shirt distasteful yet you never noticed the shabbiness of the
shops across the street. It is all a question of comparison. Surrounded by your
meticulousness and elegance, my shirt stood out. The shops represent all small
shops in India; it is shoddiness surrounded by more shoddiness so, of course,
you do not notice it. I remember I was in Chennai the other day and we were pass-
ing an industrial area. All the industrial buildings were, as usual, shabby and
ill maintained, but suddenly we passed a very elegant looking building with an
attractively maintained compound. The person next to me immediately com-

mented that it must be a foreign company. This is no doubt a strong indictment
of all industrial buildings in India, because the first reaction of an Indian was
that elegance is not a part of our thinking. This has to change. Indeed it is chang-
ing, as increasing globalisation is bringing our industries to the attention of the
world. The world first puts you and your set-up under a microscope before it deals
with you.
z That is my third point: now, how you make it and where you make it is becom-
ing as crucial as what you make.
I sat back, stunned. I had never heard such a perceptive analysis of our industrial
scenario and so brilliantly presented. I could see the entire audience; students, faculty
members and invitees, sitting on the edges of their seats, hanging on to every word my
friend Tashi was saying. I remembered his saying that he had a Chinese body and mind
but an Indian heart.
Of course, Tashi was fully aware of the grip he had on his listeners, and concluded.
When India got its independence, we took the highly glamorous route of socialism
and our sole thought was to somehow make the products we needed and employ as
many people as possible. The thing had to work and that was that. Considerations of
quality, durability, elegance, finish and of course, prices were ruled out by ruthlessly
barring the entry of better products. The foundation of the entire nation was built on
this attitude that quickly got extended to the buildings, schools, hospitals, roads and
other structures. And, everything the government built was outstanding in tackiness
and shoddiness.
The young Asian nations that came on the scene much later saw the resultant dam-
age to our economy. Governments in the newly emerging Asian countries; Singapore
and Malaysia, from the very start had the attitude that every thing had to be done cor-
rectly and no short cuts were to be adopted. From the start, they built superb cities, high-
ways and airports. Their post offices look better than hotels in India. It is amazing
that intensely Communistic nations like China also said that the private sector had to
fall in line because, as a policy, no protection was available to anyone who could not
compete in the world market.
As my friend finished his very impressive presentation and we were walking to-
wards the dining hall where we were to have an informal lunch with the students, I
thought about what he had said. I agreed with him fully. Elegance means a lot in the
increasingly competitive world, and while other nations are making elegant products,
our manufacturers have a could-not-care-less attitude. Sloppiness has become our
trademark, and is almost a way of life for us.
We have built an enormous number of factories, offices, schools, hospitals, and of
course, homes and while still having the world’s best brains, the overwhelming shoddi-
ness and shabbiness of everything hits one in the face. Be it, a worker in a factory fix-
ing labels at the bottom of a product, an electrician fixing a new light switch in my
house, a carpenter making a new table for me, or a painter whitewashing my kitchen:
The work is sloppy, nobody bothers about appearance and everyone leaves behind a
mess. It is all around us and we do not give it a second thought. It is there in the struc-
tures we build, in the products we make and in the surroundings we live in.
My reader may ask: We may be shoddy or we may be neat and tidy. Why make an issue of
it? What has all this to do with entrepreneurship?
Well, two things. One, I am not talking of shoddy workmanship as a stray example and I
am also not talking of the superb quality high-tech goods we are now making. I am talking
of the connection between the overwhelming shoddiness of consumer goods produced in
India and our way of life. To a small manufacturer, ‘quality’ does not include ‘finish’. I said
at the beginning of this chapter that many decades of indoctrination of the idea that finish
and aesthetic appeal do not matter has made shoddiness almost a part of our psyche.
Second, it is my firm belief that if the next generation has to make daily use products that
can compete in the world market, they have to understand this and break free from it.
There is no point in doing something that you really do not believe in. Doing something
meticulously for a purpose, or doing it because you have been ordered to do it, is never as
good as being meticulous by habit. You need to have a tradition of stringent quality control
for all the products at all times rather than for some items you make especially for export. To
me a label saying ‘Export Quality’ is an advertisement that the rest of the goods are shoddy.
Like a hotel advertising ‘clean sheets and towels in the deluxe rooms’.
In the dinning hall, I saw that we were to have a traditional Indian lunch of rice and
curry and stainless steel plates and bowls had been laid out on tables. The Dean waved
us to the tables and told us to feel free to sit wherever we felt like. It was all informal.
As the Dean and I were sitting down, we saw Tashi standing across the table from us
with a small curry bowl in his hand. He did not sit down. He was turning the bowl in
his hands, carefully looking at the inside and the outside. He held the bowl aloft and
called out, ‘Boys and girls, can I talk to you for a moment?’
Immediately the students surrounded him and he continued:
My children, here is a lesson for you. I told you that you can apply the SINS test to any
Indian product you see. You will know if the item can withstand international competition.
Here is a very common example that you can buy in any utensil shop anywhere. Pick up
this bowl from your tables and take a look. Notice that it is a superbly finished stainless
steel item, obviously new. Now notice three things.
z One, there is a very poor quality paper label of the brand name, Azad, stuck on with
a water-proof adhesive, but it is on the inside of the bowl. I find this amazing. Who
can eat hot curry out of a bowl that has a paper label inside? I would find it intensely
repulsive. Try peeling it off. Go ahead, try it. You cannot. See, if I try to peel it off, all
that I can do is to peel off one layer of the paper, leaving a very rough inner layer,
making it all the more awful.
z Two, someone has scrawled Rs 10 with indelible marker pen, also on the inside
of the bowl, partly covering up the label. There is no way of telling if this ink is toxic
or not.
z Three, there is a proper bar coded label at the bottom of the bowl, obviously put
there by the retailer, that says the price is Rs 8.50.
My own experience of all domestic use items abroad is that all labels are pasted on the
outside and that too with water soluble glue. The same is the case with price markings.
Everything must easily come off at the first washing or else the utensil just cannot be
used for any edible thing.
Now, let us apply the SINS test. S for Self-Respect; I for It is not the way it should be
done, N for It is not nice and S for Sure it serves the purpose but is that enough?
Let us talk of self-respect. The greatest item of concern for any manufacturer is his
brand image. Does this particular manufacturer have self respect? He has not only used
a very poor quality label, he has carelessly slapped it on in the wrong place with the
wrong adhesive and in doing all this he has destroyed the finish of an otherwise elegant
product. All that he has succeeded in doing is to create a nuisance for the user who has
to use the product. Believe me; removing this label is not a joke. No amount of scrubbing
will do. You need paint thinner. How many households would have paint thinner handy
at home?
Tashi quickly ended his talk by saying that the students could apply the rest of the
SINS test and we all sat down to lunch. I noticed that almost everybody ignored the bowls
and had the curries poured directly on to the rice, which again is the traditional way of
having rice and curry.
Actively Creating Shoddiness

I am reminded of one of my earlier visits to India. I have been to hundreds of factories
in India and elsewhere, but I need to mention this particular visit to make a point about
the role finish and elegance plays in modern manufacturing.
I need to interject here and explain what elegance means to me personally and what it means
to the buyers of most of the multinationals.
For me, elegance comes in three stages. First, my eyes would tell me if it is clean. It may be
my room, my mother’s kitchen, my desk in my office or even a project report I am working on.
I first notice if it is clean. Then, my brain takes over and checks if it is neat, tidy and orderly.
It is only then that my heart tells me that it is not merely clean, neat and tidy, but it also ap-
peals to the heart: It is elegant. Elegance has nothing to do with cost. I have seen far more
elegance in simple homes in villages in Rajasthan than in flashy and gaudy homes of busi-
nessmen in Delhi.
To the buyers, it means something far deeper than the mere finish of your product. They
want to be sure that you will produce batch after batch of superb products with no one
breathing down your neck to check every piece. To do this they put your own lifestyle, the
upkeep and layout of your factory and the attitude of your staff under a microscope.
I was a consultant to a Singapore–Chinese group of companies, and the project

was to set up a facility in Singapore to manufacture various types of Air Conditioners,
Refrigerators and other domestic appliances. We were exploring the possibility of out-
sourcing the supply of various types of automation switches and control devices from
India.
I located a fairly large firm near Delhi who were already manufacturing these items
along with a number of other more complicated items for the local appliance manu-
facturers. They sent us their detailed specifications, testing and quality control pro-
cedures. We were impressed with the technological standards and so I came to India
with a German engineer to see the plant and to talk about the technical aspects.
The owner had told us that he would be flying in from Bombay the same evening
and that he would arrange to have us picked at the airport and taken to his home. He
was keen that we accept his hospitality and stay with him for the night. The factory
visit was scheduled for the next morning.
The driver of the car that had come to take us to the home of our host was a young
turbaned Sikh. Just as I was getting into the car, I had an uneasy feeling that this was
not going to be a successful trip.
I was happy to see the car that had come for us as it was a medium size luxury model
but my happiness was short-lived. Though it was an almost new car, had been cleaned
and polished, it had a shabby look because the seats were covered with torn and dirty
plastic sheets. I need to explain this. I have always noticed that the interior of a new
car is designed to be the last word in finish and style for that particular class of vehicle.
Even for what are called people’s cars, that is the smaller economy models, the interior
has an elegant look and the upholstery material is designed to last a lifetime of the
particular model.
However, all the car manufacturers routinely install protective polythene sheet
covers on the door panels, the seats, and so on, to protect for damage during transit to
the showrooms. My experience with cars overseas is that before leaving the showroom,
these thin polythene sheets have to be completely removed. I have always wondered
why is it only in India that car owners insist that these covers not be removed. After a
couple of months, these thin sheets become discoloured, torn and filthy. They look black
with dirt and muck and offer absolutely no protection. Not only that, they are hot and
uncomfortable to sit on, are awful to look at and yet, in India, they often remain in place
till they completely disintegrate.
This car was of the semi luxury class and we should have looked forward to a com-
fortable one hour ride, but sitting on torn and dirty plastic sheets was not my idea of
comfort.
I looked at my colleague. He had a grim expression and said nothing. Well, I thought
to myself, here is a sorry example of our creating shoddiness ourselves!
The owner’s house was a mixed surprise. It was a very impressive medium sized
fully carpeted and air conditioned bungalow and the family were very hospitable. On
one hand, the lady of the house made us feel at home and saw to it that we had every-
thing we needed in our guest rooms. On the other hand, we could see that our rooms
had been specially done up for our visit and stood out in neatness from the rest of the
house which was in a sorry state of mess: our rooms were merely clean and that was it.
That evening, we met some of the young technical people from the factory over a
sumptuous dinner and were impressed with their knowledge and enthusiasm for what
they were doing. It was clear that the firm had an excellent track record of sales to local
appliance manufacturers, but had never exported.
The next morning we went to the factory. As we were nearing the factory in an old
industrial area, my feeling of unease returned. The area where the factory was located
was a typical industrial area, dusty with poor roads and rubbish piled up everywhere,
but I have seen worse industrial areas in other parts of India. Then we entered the
factory. It was a new building in a large compound but the state of chaos hit us as
we entered: discarded packing cases, scrap and factory waste were dumped all over
the place.
My pleasant surprise for the day was when I saw the manufacturing layout. Manu-
facturing is my specialisation and I was impressed. I saw a sophisticated operation.
The products that were being manufactured were various types of miniature electrical
and electronic switches and control gear. The production equipment was mostly new and
possibly bought from the best sources. The machines were very well laid out. There were
separate, well lit areas for assembly line tables and for testing and quality control.
There must have been over a hundred workers of various ages very skilfully operating
the machines. We noticed that there were very few women workers: Even the assembly
line workers were men.
On the one hand, I was impressed with the degree of sophistication. On the other,
the standard of housekeeping was atrocious. I was amazed at the all-pervading
untidiness and scruffiness of the whole place. None of the workers had a uniform,
the walls had been roughly plastered but not painted, and upper ventilation windows
were black with cobwebs. Goods, materials and cartons were cluttering up the already
messy floor. There were new racks and shelves, but these too were overflowing with
randomly dumped material.
We went around the production area and picked up some finished items at random.
These were in trays ready for packing. My German friend called me aside and showed
me some of the pieces. Though it was a sophisticated electronic device, it had a very
poorly finished plastic casing. There was a rectangular marking at the bottom where
a self-adhesive label detailing the technical specifications was fixed. None of the items
had a properly fixed label in the space provided. In some cases, the label was almost
outside the space provided. Pure sloppiness.
We could not help mentioning the finish of the items when talking to the owner
and we got a very logical response. The item is meant to be fixed inside the appliance,
where nobody will see it once it is fixed. Why comment on the finish of the casing and
the mere positioning of the label which, in any case, are not critical to the performance
of the item? He added with pride that his items were just about the best in the Indian
market: The customers have been happy and there have been no complaints!
Then he assured us that if we wanted he could arrange to have the casing better
finished and the labels properly fixed for an export order, as it would not cost anything
extra.
Then I understood. In a flash, I understood the owner’s mindset. He was a top class
engineer, knew exactly what he was doing and did it with the best possible equipment
and workforce, but that was it. Nothing more. To him, what he made was important, how
he made it and how it looked was not. Everything else was a waste of effort and money.
I went back to Singapore with a heavy heart but that was not the end of the story.
Many years later, the Singapore–Chinese firm that had sent their German engineer
with me to India decided to relocate their factory from Singapore to Pondicherry and I
found I had no problems in helping the above firm to bring their operations to inter-
national standards.
Reference
UNIDO. 1972. Small Industry Bulletin. Bangkok: Economic Commission for Asia and the Far East, United
Nations. No 9: 3–5.
Preamble 133
Part 3
You, the Globalised Entrepreneur
134 Unleashing Your Entrepreneurial Potential
12
Our Rapidly Globalising Nation
There are as many definitions of globalisation as there are politicians, and everybody
twists the definition to their convenience.
Also, it means different things to different nations.
Japan and Korea have not opened up at all and they keep out the MNCs. They
still import only raw materials. You cannot sell even a screwdriver there. They
are as fiercely protective of their home markets as they are ruthlessly aggressive
overseas.
China has made excellent use of imported technology to develop massive exports
of consumer goods and is now spreading out by building roads and bridges all
over Africa. They may soon build a harbour for us too.
Malaysia now has a commanding position as one of the world’s best suppliers
of quality wooden furniture.
Singapore is now second only to Switzerland as a financial services hub.
We are exactly the reverse of Japan and Korea. For us, globalisation is all inwards,
being all about MNCs and Foreign Direct Investment (FDI). The world has got
unleashed into my country and everybody is here to take advantage of our superb
brain power for IT and of course our huge markets for consumer goods.
All said and done, no matter how we define the term, the rapid globalisation of
my country is a fact. While there is endless argument and discussion on whether
this is good or bad for us, I think it will be a good idea to leave this discussion to
academia and of course, politicians. Let us go on to what matters for our youngsters,
because it is crucial that our youngsters understand and benefit from the changes this
is bringing in.
There is one other aspect of globalisation that I need to particularly highlight to

our youngsters:
Our young entrepreneurs and executives need to see through the hype surrounding the
success China has achieved on the world market and understand what it really means.
I said at the beginning of this book and I say it again that it is the Chinese business
culture and the mindset of the overseas Chinese that our youngsters need to understand
and copy. There is nothing, I repeat, nothing for us to learn from China.
The difference is critical. In China, it is the state that is getting all the benefit of international
success and not the people of China.
While any discussion on the comparative economic development of India and China
is well beyond the scope of this book, I will discuss this briefly later and there is some
additional reading for you in the Enclosures at the end of this book. But, the Chinese
business culture and the mindset of the overseas Chinese is an important topic and
is discussed in detail in chapter 15.
This chapter has four sections:
Section I, MNCs and Foreign Direct Investment in India: Forget the text book
definitions, what do our common people mean when they use the terms MNCs’ and
Foreign Direct Investment? We welcome NRIs but not foreign firms. What happens if
tomorrow Coke or Pepsi is bought in the US by someone like Lakshmi Mittal? Sure
it can happen, but would our NGOs still single out these companies for their violent
protests? In this part, we take a hard look at what MNCs are doing to the world and
the new business culture they are bringing into India.
Section II, Globalisation in India and China: China and India are said to be
the world’s next major powers. They offer competing models of development. When it
comes to gross domestic product (GDP) figures and other headline numbers, India is
still no match for China, but statistics tell only a part of the story—the macroeconomic
story. At the micro level, things look quite different. There, India displays every bit
as much dynamism as China. Indeed, by relying primarily on organic growth, India
is making full use of its resources and has chosen a path that may well deliver more
sustainable progress than China’s FDI-driven approach. Let us talk about this in
some detail.
Section III, MNCs and Indian Firms: True, there are dramatic changes taking
place in the Indian market due to the entry of the MNCs. Dramatic but tragic, because
our firms are not making the MNCs work for us. They are learning nothing from them.
We are not even working with them as equals. We are ending up working for them,
just like we did for the British. Nations like Malaysia and Singapore, that were only
yesterday begging us for skilled professionals, have harnessed the energy of the MNCs
to get where they are today. To me, all of this merely indicates an immense oppor-
tunity for our young entrepreneurs to upgrade themselves and take us to the world
markets.
Section IV, MNCs and Our Young Executives: There is a recent trend among
Indian organisations to bring in top professionals from overseas. Why should this
be so? There is a reason for this inspite of the hoopla about Indian professionals being
Our Rapidly Globalising Nation 137
the best in the world. Jet Airways always had expatriate professionals at the top,
but these people have not brought in any phenomenal managerial styles. The airlines
in their home countries are performing very poorly. The outstanding success of the
airline is less due to them and more due to the superb performance of the Indian
executives working under them. It is a regrettable fact that our executives have a
quantum leap in their performance if they shift from a Lala company to an MNC. It is
more regrettable that if, by a twist of fate, this executive reverts back to a Lala com-
pany, his performance plummets once again. So, what does this mean to our budding
entrepreneurs and executives? The one thing we need to learn from the foreigners
is how to build strong, highly disciplined organisational infrastructures. We have
everything else.
I: MNCs and Foreign Direct Investment

When the East India Company came to India, the structural weakness of our society
led to us losing our nation. Well, to some extent, it is happening again. This time,
it is the structural weakness of our commercial and professional sectors. It is a sad
fact that there is not a single example where an Indian firm has stood up, put up a
fight and won even though it is on its own home turf.
Hardly a day goes by without one of our political or business leaders voicing concern
about the almost unrestricted entry of the multinational companies (MNCs) into the
Indian market.
I will establish that though our nation is once again fighting a losing battle against
the conquerors, the result can be different this time. It is our youth who need to wake
up. They have everything and it is only a matter of time before they start giving the
MNCs a run for their money.
A Question of Definition
First, what do we mean by a multinational company in India?
There have been many partly foreign owned firms doing business in India for de-
cades: Phillips, Glaxo, ITC, ICI, Hindustan Lever, Colgate, Cadburys and so on. The list
is endless. Do we call them MNCs? And is the money they are investing called FDI?
Our definition of an MNC and Foreign Direct Investment (FDI) is hazy at best. We
welcome FDI from firms owned by NRIs with open arms but not from other MNCs.
As I have said above, if Coke becomes an NRI company, which it easily can, would
its status change in India? Would we lay out a red carpet and offer it all sorts of
incentives?
We forget the fact that the ownership can change hands overnight.
Look at this another way.
If an MNC coming to India is simply an outsider coming here to do business, then
this has been going on here for generations. Almost every state in India has ‘outsiders’
who always remain outsiders. A Marwari or a Punjabi going to Bengal, Assam or

Orissa is an outsider and will always remain an outsider for generations. If there is
any doubt regarding this, then consider this: A third generation local Marwari born,
educated and brought up in Bengal, can never be the Chief Minister there. So also,
a Punjabi in Tamil Nadu, and so on.
BEWARE OF THE MNCs! Huh?
We are not alone in our attitude towards the MNCs. The world press is often scream-
ing and telling us. Beware: multinational companies are on the rampage, destroying
jobs, stamping on wages and generally wrecking local economies! Or so the far left
critics of globalisation make out.
But a cool look at the numbers tell a different story, as is clear from a cross-country
study published in 1998 by the World Bank. This was the first document to take a
detailed look at the contribution of foreign firms to national economies. You can see
the full text on the Internet.
To be fair, the critics are right about one thing: multinationals are becoming in-
creasingly important. Foreign firms account for a growing share of production and
employment in most developed economies. In 1996, for example, the latest year for
which comparative figures were available in the study I mention, foreign firms pro-
duced 15.8 per cent of manufacturing output in America, up from 13.2 per cent in 1989
and 8.8 per cent in 1985. They accounted for 11.4 per cent of jobs in manufacturing,
up from 10.8 per cent in 1989. Britain, Canada and Sweden display a similar trend.
In Ireland, foreign firms account for a whopping 66 per cent of output and 47 per
cent of employment.
Some countries have been able to keep out the multinationals. In Japan, the world’s
second-biggest economy, foreign firms scarcely figure: they employ a mere 0.8 per cent
of workers.
The report goes into a discussion on whether the importance of the growth of the
foreign firms in national economies a bad thing.
The facts suggest not.
Fact one: Foreign firms pay their workers more than the national average—and the gap
is widening. In America, for example, foreign firms paid 4 per cent more than domestic
ones in 1989 and in 1996 they paid 6 per cent more.
Fact two: In most countries, foreign firms are creating jobs faster than their domestic
counterparts. In America, the workforce of foreign firms rose by 1.4 per cent a year be-
tween 1989 and 1996, compared with an annual rise of 0.8 per cent at domestic ones.
In both Britain and France employment at foreign firms increased by 1.7 per cent a
year; at domestic ones it fell by 2.7 per cent.
Fact three: Foreign firms spend heavily on Research and Development (R&D) in the
countries where they invest. In 1996 they accounted for 12 per cent of America’s R&D
spending, 19 per cent of France’s and a remarkable 40 per cent of Britain’s. Indeed,
in some countries foreign firms spend more of their turnover on R&D than domestic
ones. In Britain, for example, foreign firms spent 2 per cent of their turnover on R&D;
domestic firms only 1.5 per cent.
Fact four: Foreign firms tend to export more than domestic ones. In 1996 foreign firms
in Ireland exported 89 per cent of their output, domestic ones only 34 per cent. The gap
was 64 per cent to 37 per cent in the Netherlands, 35.2 per cent to 33.6 per cent in France
and 13.1 per cent to 10.6 per cent in Japan. The big exception is America, where domestic
firms exported 15.3 per cent of their output, foreign ones only 10.7 per cent.
These benefits of foreign investment are even bigger in Europe’s poorer economies.
Take Turkey, for example. Foreign firms’ wages are 124 per cent above average; their
workforce has risen by 11.5 per cent a year compared with 0.6 per cent in domestic
ones; and their R&D spending is twice as high as in domestic firms.
Clearly, we are in the midst of a revolution. A revolution, that is shaking the foun-
dations of business the world over. But this revolution is not just about the kind of
large-scale change that you watch on the evening news. It is more dramatic. This re-
volution will forever change the basic and the most primal connection of business—the
relationship between the buyer and seller.
During this revolution, the organisations and individuals which can create new
relationships with customers will find themselves in an unimagined competitive
advantage. Those who cannot will lose. Let us talk some more about this.
You Win if you are Organised

Before going further, I am going to go back a long time in our history.
One of the unusual ways you can understand the term ‘organisational infrastructure’,
is to go way back into history. Let’s look at the ‘how’ and the ‘why’ of the British people
coming to India, and subsequently taking over the whole world.
I will seek to establish that the strong and well-established corporate organisational
infrastructure they had at home was the foundation on which the British Empire
grew.
Also, I will compare the way the British set up colonies with the way the Spanish
and, to a lesser extent, the Portuguese did. I will show that the common man back
home in England got immense benefit from this, but the common people in Spain,
and so on, got no such benefits.
The British Conquest

True, the British people came and conquered India mainly because of our own
weaknesses and faults. But, that is not the aspect I am talking about. If one looks at
the conquest by the British from their point of view, and from a purely managerial and
organisational one, one is amazed at the amount of infrastructure and commercial
organisation they had even 400 years ago. They needed to have a solid base back
home to have successfully established such a large trading empire in India.
They could not have set up their trading and subsequently the political empire if
they did not have a well-established banking and financial system, a legal system,
postal services, company laws and regulations, and some large, efficiently managed
private companies in every field of enterprise. Remember, this is the early 17th century
we are talking about.
One should notice that each Englishman who came here did not come as an in-
dividual. He came as a team member, an integral part of the British empire. And every-
thing the British did in India was to the benefit of England as a nation and not for
any individual. The individuals who came here were not particularly clever, rather the
reverse, but they had the skill of setting us Indians against each other and making
us work for them. It is indeed, a credit to their style of management that the Indians
who fought for them were much better soldiers than those who fought for the local
princes.
They ended up having the whole world working for them to the benefit of England.
There was a mind-boggling rise in the standard of living of the common people of
Britain.
There was never an armed invasion by the British. They came here only as traders.
Neither an armed battalion nor a navy vessel was sent from England. They only came
as traders.
Their success is entirely due to the massive amount of organisational back-up

back home.
The Portuguese
They were here around two hundred years earlier, having defeated the combined
Gujarati–Calicut fleet in February 1509 at Diu. The Portuguese had immensely superior
naval firepower, and their arrival can be said to mark the beginning of European
colonialism over the subcontinent.
With the discovery of a sea-route to India by the Portuguese at the close of the 15th
century, movement in the Indian Ocean was strictly controlled. There are ample
records to show that right from the first decade of the 16th century, the Portuguese
under the presumption of having the right to supremacy over the Indian Ocean, in-
sisted on ‘passes’ for all ships plying in it. After Malacca, in the Malay Peninsula,
was occupied by them, the system of passes was enforced with great strictness. They
established their fortresses and settlements on eastern and western coasts of India
and detailed patrolling vessels to stop and confiscate ships which were not provided
with their passes.
But the point is that the people of Portugal, the common man, hardly benefited
from all this.
The Portuguese had better naval and military capabilities and they could control
the sea trade routes to a great extent, but the advantages were purely militaristic
and non-civil.
The Portuguese lacked the discipline, and the technological and economic infra-
structure back home to really benefit from all this. They controlled the sea trade routes
but, unlike the British, had nothing much to trade in. They had no manufactured
products to export and no marketing networks to sell what they could import from
the East.
Every commander who came here was almost in the business for himself and there
was absolutely no rise in the standard of living of the people back home. The new
colonies they set were small and were quickly lost to the more enterprising British,
and other North Europeans.
The Spanish
The same was true of the Spanish, and to a greater extent. They were more powerful
on the seas and conquered a greater part of the world, but Spain was and remained
a poor and backward nation.
Business Culture
We have been talking about the attitudes people of various nations have towards run-
ning their businesses. We can look at this in a more academic context. We can say
that, based on these attitudes, specific business cultures develop within individual
businesses and industries of various nations. Our management gurus have been
talking about business culture for a long time, without discussing what our business
culture is doing to our competitiveness in the world markets.
What is a business culture? A detailed discussion on this topic can indeed get to
be highly academic and would be completely beyond the scope of this book. Cultures
can exist across a society or in elements with it—families, religious groups, regions
or any other social institution. However, it does exist in economic organisations such
as industries or businesses, and this is relevant to what we are talking about.
A business culture will have its own special features. The origins of a corporate culture
might reasonably be expected to lie in the past and present entrepreneurial leadership
of the company, the type of employees it recruits, the way in which work is organised,
the technology used and the competitive environment within which it operates. The
characteristics of a culture will be found in the relations between individuals, and
between them and the organisation seen through various dimensions, such as the
exercise of power, the forms of communication, symbols and rituals, the degree
of commitment that the organisation and the individual offer one another, the capacity
to accept dissent, the ways in which new individuals are integrated, and the existence
of shared attitudes and objectives.
The strength and distinctiveness of the value system through which these various
dimensions are shared will vary from nation to nation, as will the extent to which
members of the organisation are committed to it. I will discuss it from another angle
later.
I am giving a number of illustrations in this chapter explaining in simple language
how business culture has implications on the efficiency of the organisation in the
short run, and its strategy in the long run. Efficiency can be seen in terms of cost,
innovation and competitiveness. Strategy may be seen in terms of the explicit plans
that emerge from the organisation’s controlling group, or the direction taken as an
implicit consequence of a particular culture.
Business Culture and MNCs

When an organisation is functioning only in the domestic environment, its business
culture can be recognised by practices, forms of communication and physical symbols
to which meaning is attached. These are the outward signs of a culture rooted in
the minds of its participants, created by shared experiences and routine exchanges
of technological or organisational requirements. These then get reinforced by group
pressures and the influence of those with power. This business culture then becomes
imprinted on the organisation and its members develop a strong resistance to change
or manipulation.
To a great extent this gives meaning and validity to the action of individuals and
they become committed to it. For this reason, attempts to impose a business culture
of one organisation or nation on another may prove superficial and often operates
against organisational interests.
As an example, I remember that many years ago, Malaysia had Dr Mahathir as
the new Prime Minister. The first thing he did was to deflect the immense influence the
western business houses were having on the local business culture.
He saw that the deep imprint of the western business culture on individuals and
organisations was creating an inertia that prevented the necessary adjustments when
the nation’s political structure, environment and objectives were changing. It was clear
that such a strong culture was proving dangerous for organisations facing change, by
reinforcing individuals’ capacities to continue to act in opposition to organisational
needs and to work in contrary directions.
Prolonged dissonance between culture and organisational needs was reducing ef-
ficiency or even leading to an organisational collapse.
Hence, Dr Mahathir brought in a policy of ‘Looking East’ and encouraged the import
of the Asian business cultures of Japan, Korea and so on.
Of course, organisations initially contained overlapping or conflicting cultures. Modern
businesses are complex organisations undertaking different activities in a variety of
locations. Malaysia was developing into an open economy and there were a number of
cases where the corporation was the product of a merger between firms with distinct
histories and cultures.
The result was that few organisations, especially businesses, had memberships that
shared a single culture. Technology, organisation and experience helped in shaping
a new business culture which was a variant of the original corporate cultures.
In India, the Malaysian example cannot work. There is no powerful central leader-
ship, and we do not have any history of a strong business culture. The conflicts of the
imported business cultures and our individualistic style of functioning can threaten
organisational efficiency and survival. Individuals or sections may pursue goals that
differ from the rest of the organisation. The benefits of a clearly identified business
culture for communication, co-operation and motivation are lost.
It is true that a successful business culture will not save a firm from the conse-
quences of a business situation that is disastrous—though it will certainly help it
to adapt and respond more effectively. Conversely, firms with a powerful market
position generating substantial profits may survive with apparently inappropriate
cultures—though they may be less able to cope with change and their survival may
be temporary.
The Opportunities and the Challenges of a New World Order

I am saying nothing new or original here. Everyday we read in the Indian media
about how rapidly the external environment is evolving. A number of journalists and
academicians are trying to make us understand the important changes in trade,
investment, technology, employment, finance and even ideology which are taking place
all over the world. Rapid technological improvements and globalisation have had a
dramatic effect on production and consumption patterns, particularly in the developing
world.
So, let us take a quick look at the key global trends and the opportunities and
challenges they pose to India in the immediate future. An in-depth understanding of
these critical driving forces and the uncertainties in the global environment is essential
for our business houses to develop an attitude to grow into world class companies.
For the last two decades, the world’s economy has been going through two great
changes.
The first change is that a lot of industrial production has been moving from the
United States, Western Europe and Japan to developing countries in Latin America and
South-east Asia. One can take the examples of the exodus of low-cost production of
things like textiles, clothing, shoes, handbags, car seats, electrical wiring, plastic toys
and cheap electronic devices from the rich world over the past two decades. Already
many big western and Japanese companies have more employees (and customers)
in poor countries than they have in rich ones.
The second great change is what I have already highlighted at the beginning of
this book. An important aspect for India to note and take advantage of, is that in the
rich countries as well as in countries like Hong Kong and Singapore, the balance of
economic activity is swinging from manufacturing to services.
So what has happened? Global merchandise trade has flourished, driven by the
pressure of trade liberalisation in most of the countries. Most countries now recognise
the benefits of economic liberalisation, boosting international trade and investments.
The direct result of this has been that the tariff barriers the world over have fallen,
and India is following suit by demolishing the massive import restrictions which have
been in place for a long time.
A household can use only as many cars and refrigerators and dishwashers in its
members’ lifetime. As countries get richer, a rising share of income goes on holidays, health
and education. Busy people want to hire other people to clean their homes, launder
their clothes, plan their holidays, entertain them and so on. Many jobs traditionally
thought of as part of ‘manufacturing’ such as the design and marketing of products
are now becoming service jobs. As demand for them increases, these service jobs
become better paid and more interesting compared with the drudgery of factory work,
much of which is, in any case, moving overseas.
In Asia, Hong Kong and Singapore now lead the world in the service economy
showing strong growth. I see on the Internet that in the United States and Britain,
the proportion of workers in manufacturing has shrunk since 1900 from around
40 per cent to a fraction of that. Even in Germany and Japan, which rebuilt so many
factories after 1945, share of jobs in manufacturing is now well below 30 per cent. The
effect of the shift is increasing as manufacturing moves from rich countries to
the developing ones.
The global and transnational trade in services is also growing in value and im-
portance. The rapid growth in global services trading is the direct consequence of
two factors:
The global and regional liberalisation and deregulation I mentioned earlier lead-
ing to greater market access.
The technological innovations and improvements like the Internet and electronic
commerce has eased the manner in which services can be traded across national
borders and great distances without the need for the physical movement of
people or goods.
Also, the unbundling and outsourcing of previously in-house services such as logis-
tics and IT services by the manufacturing sector has created vast opportunities in
services trade which will continue to grow. This will be driven by further services
liberalisation, increasing affluence and further development of e-commerce.
The rapid technological improvements in information and communications networks
have also been reflected in massive improvement in all sorts of freight movement and
transportation. While the volume of the goods handled has taken a quantum leap,
the cost of air and sea transportation has fallen significantly. This has lead to glob-
alisation of production networks.
The New Business Model

So, as I explained, a new business model has been created.
One cannot find a single large manufacturing conglomerate in any developed coun-
try that does not have subsidiary or contract manufacturing facilities in many parts
of the world.
There is a steep worldwide rise in the number of foreign affiliates boosting intra-firm
trade. WTO, in its annual reports has been estimating that one-third of world trade takes
place within transnational corporate networks, and more than half of foreign affiliate
exports of Japanese and American MNCs are conducted on an intra-firm basis. This
greater interconnectedness implies dynamic growth and change. Developing economies
can enjoy an accelerated transformation of their industrial, business and trading
structures and environments. Even services which were traditionally localised and
domestically-oriented have restructured to take advantage of economic liberalisation
and to serve customers overseas.
The day-to-day management of widely dispersed production and service networks
offers no problem. This ease of communication and movement of goods has also
intensified competitive pressures. Companies are pushed to reap the benefits of econ-
omies of geographical diversification. MNCs traverse the world in search of markets
and profits. The result is the integration of value added chains across the global econ-
omy, converting global inputs into outputs for global markets.
Whole industries no longer migrate, as ship building did from Europe to Asia in the
1970s. Because of the number of factors detailed before, manufacturing is becoming
a genuinely international affair. Production of the critical parts and the final assembly
work gets done in rich countries by skilled workers, the simpler parts and the non-
critical components are made elsewhere in the supply chain. The multinational com-
panies are developing the skills to see what is best done where.
Social Fabric of Competitiveness

I think the phrase ‘social fabric of competitiveness’ was invented in Singapore, because
I have often heard it used in all sorts of situations. This is probably one of the ways
the government is making the citizens aware of their responsibility in keeping
Singapore intensely competitive.
This is an admirable attempt to make people recognise that economic competitive-
ness and the ability to respond successfully to global forces, has a strong social
dimension.
Of course, it is understood that the social fabric, or the relationships between dif-
ferent groups in society, has important effects on competitiveness. In India, the sharp
divisiveness of society has an immense effect on our competitiveness in the face of
globalisation. The Marwaries and the Bengalies find it difficult to work with each other
in Bengal, so is the case with the Brahmins and the lower castes in the South, the
Hindus and the Muslims in UP and so on. It is impossible to think of, say, a Muslim
owned organisation in Chennai where the Brahmin staff works sincerely and with
complete dedication.
While there are as many theories about the competitiveness of nations and of econ-
omies as there are economists and social scientists, the underlying fact remains un-
disputed.
The agency which drives this competitiveness resides in individuals and organ-
isations.
II: Globalisation in India and China

While I compare next, the performance of domestic firms with that of the MNCs in India,
do remember that I am talking in the globalised context.
India is no longer an isolated, protected economy and we need to take a hard look at
others who are said to be doing better than us.
When I said ‘others’, of course I mean China. So, I take a quick look at China in the context
of what we are talking about in this book and see if there is something to be learnt.
Comparing the economic progress of India and China is to embark on an old

puzzle that has fascinated academicians for some years now. The new question of
economic leadership, however, of ‘which country will overtake the other in the fore-
seeable future?’, is an urgent and important one, because the two countries have em-
braced very different models of development. The reasons they have done so are
complex and are beyond the scope of our discussion, but the paths they have taken
are sharply different and are important for our young entrepreneurs and executives
to understand.
If one listens to anyone who has been to China for a few days, one gets the impression
that he has been to Switzerland or Germany. The fact is that visitors see only a tiny
fraction of what is happening there, and come away with a grossly lopsided view. I
have lived and worked with the Chinese, not as a casual customer or supplier, but
as one of them. What I say here is amply corroborated by the enclosures at the end
of this book.
Our young entrepreneurs and executives need to see through the hype surrounding
the outstanding success of China in world markets.
Walk into any department store in the West and you see the shelves sagging with
China-made goods. You will be surprised to know that none of these products are
made by indigenous Chinese companies. In fact, you would be hard-pressed to find a
single homegrown Chinese firm that operates on a global scale and markets its own
products abroad. That is because China’s export-led manufacturing boom is largely
a creation of foreign direct investment (FDI), which effectively serves as a substitute
for domestic entrepreneurship. During the last 20 years, the Chinese economy has
taken off, but few local firms have followed, leaving the country’s private sector with
no world class companies to rival the big multinationals.
China has discouraged or actively undermined local entrepreneurship in favour
of an overwhelmingly FDI-dependent approach. It is only recently that China has
started taking tangible but slow steps towards embracing private entrepreneurship
which is a big departure from the past. China concentrates on producing for export,
and Chinese households are given a chance to consume less than half of what the
country produces—a mere 38 per cent. Consumers are simply not permitted to buy
what they want. The economy completely relies on export demand and investment
as its engines of growth. The fortunes and fancies of western consumers determine
China’s GDP: The more they buy, the better China does.
As I said at the beginning of this chapter, it is China as a nation that is benefiting
and not it’s people, as the industrial production for exports is concentrated in a couple
of special districts which are cut off in many ways from the rest of the economy.
Productive assets in China are held mainly by the government. The largest Chinese
corporates are Public Sector Undertakings (PSUs), which are owned by the government,
and are not widely held publicly owned companies. However, PSU profits do not flow
back to the government, but are held back by them as retained savings.
The bulk of household income in China comes from wages. Pushing down con-
sumption, raising savings to increase investment and then exporting its products
gave China a sharp rise in growth, but now this strategy is increasingly appearing
to be non-sustainable. It is only the two industrial districts that are the showcase of
the nation, the life of the common people outside these districts is still as miserable
and poor as it was under Chairman Mao’s great leap backwards.
The questions international economists are asking are: how will China give political
voice to the public, if at all, along with increasing economic autonomy? There is the
serious problem of instability caused by massive migration to cities and the large
(though decreasing) role of bankrupt, state-owned enterprises that continue to play
a social security-like role in China. But the biggest source of worry is the state of
China’s banking sector, which is technically insolvent. The banking problem is one of
the biggest costs of the delay associated with developing a vibrant, domestic private
sector.
India, on the other hand, is continuing to struggle with making things easier for
multinationals and is building an infrastructure—however slowly—that allows entre-
preneurship and free enterprise to thrive. You will read in appendix three that by
making full use of its resources, India’s long-term outlook may be stronger. True, macro-
economic statistics indeed show China clearly in the lead, but the real issue is not
where China and India are today, but where they will be tomorrow.
The Indian consumer is India’s strength. Indian companies are focused on selling
their products primarily to domestic consumers. Production takes place all over the
country. Even foreign producers come to India, not to set up export units using
cheap labour, but to sell their products to the Indian consumer. Indian households,
in contrast, consume more than two-thirds—68 per cent—of what is produced in
India. Demand comes from millions of people buying goods and services across the
country.
Moreover, the reason behind India’s high domestic consumption is not that house-
holds in India do not save enough for their needs. At 22 per cent of GDP, households
in India save more than Chinese households, who save barely 16 per cent of GDP. The
difference in the levels of consumption lies in the fact that households in India own
most of the country’s productive assets which are land and capital, and the income
from these assets, the profits flow back to households adding to their income.
This brings us to the luxury India has. Given the strength that the economy de-
rives from domestic consumption demand, we need not focus on export demand
in the same way as China. At least we need not keep our currency weak, or devote
resources to special export zones at the cost of building better infrastructure for the
rest of the country.
III: MNCs and Indian Firms

Working for the MNCs
The feedback I have been getting from ex-MBA students who have been working for
the MNCs for some years is interesting. Our youngsters feel that sometimes excessive
control by the parent company is a bother. Multinationals talk about concepts like
thinking global, acting local, but it is often the other way round. It is more like ‘let
the globals think and let the locals act’. Due to this extreme centralisation, our people
here never felt a sense of ownership for the brand. I know many past students who
had the capacity to make good operations persons, but in the jobs they had there was
not much they were doing in terms of thinking. The strategy was decided overseas.
In other words, most MNCs are intrapreneurial back home but not here.
This of course is not strictly true for all global companies. Only multinationals from
the West have a more democratic approach for managing their worldwide subsidiaries.
A point to be noted here is that there is no question of Japanese or Korean companies
here letting local staff even fully understand what is going on leave aside giving them
a chance at higher level decision making.
Multinationals from the West indeed offer a good lifestyle with a reasonable amount
of security. It is a good, clubby kind of atmosphere and what you enjoy most is your
interaction with a bright bunch of people, both professionally and personally. That
certainly gives you a certain degree of learning and maturity.
Rewards, in this instance, are not purely intangible like job satisfaction but visible
like remuneration. In the end, multinational employees get a premium attached, so that
most Indian companies have to shell out handsome packages to wean them away.
Extensive training is another hallmark of multinationals. Multinationals regularly
motivate employees by constant upgradation of their skills through training and job
rotation. They impart a lot of in-house as well as external training. This is one aspect
missing in Indian firms. In the first 10 to 15 years of your career, training is externally
induced. As you move along you get into the self learning mode. You move from an
explicit to a tacit learning stage. In the initial period the stimulus is given to you, but
later you search for your own.
While multinationals impart exemplary training for use in that particular company
or business, one area they miss out on is managing uncertainty.
For ambitious professionals, future growth in a local company is an issue. The av-
enues are fewer. The option is to grow with the organisation, in both new businesses
and geographies. As long as Indian companies can create fresh challenges to satisfy
their spirits, it may well be just the beginning.
The New Economic and Commercial Scenario

In the past, India was isolated and insulated from the rest of the world. Also, the em-
ployment structure in India was mainly small and medium sized family owned en-
terprises, which did not really offer much scope for professional employment or
organisation building.
Now, however, the economic and commercial scenario is changing with the entry of
the much better organised MNCs, but we need to take a hard look at how our firms
are shaping up against the new order.
To illustrate this point, let us look at the organisational infrastructure of some of
the Indian firms in fast moving consumer goods (FMCG) sector and compare these
with some MNCs in the field.
There are indeed many excellent local companies in the business of selling common
household items like toothpastes, soaps and detergents. Companies like Godrej and
Balsara in Bombay, Dabur in Calcutta and so on.
However, their nationwide presence is nothing as compared to that of the multi-
national companies like Hindustan Lever, Colgate, Procter & Gamble and so on. These
MNCs have extensive network of branches and distributors in most of the small towns
even in the remotest parts of the nation. Their organisational infrastructure is highly
intrapreneurial, disciplined and massive. The Indian firms I mentioned before are
indeed excellently managed but their set-ups are markedly different and very much
more regional.
The organisational infrastructure of the MNCs is such that they not only have a vast
network of dealers and stockists all over the country, but also have dozens of contract
manufacturers in many small towns. Sure, our local firms have started doing this
too but not on the scale as the foreigners. I am not sure how many of us know that
the MNCs farm out most of their manufacturing to contract manufacturers—small
local firms who do nothing but produce finished goods from raw materials such as
packing materials, printed cartons, labels, collapsible tubes and so on, supplied by the
MNC. These supplies are generally sourced within short distances from the contract
manufacturer. The contract manufacturers and the packing material suppliers, and
so on are often set up with technical and financial assistance from the MNC. The
quality of the products produced is rigidly monitored by the MNC.
It is clear that this requires immense logistical support and indicates the type of
organisational infrastructure the firm has.
One cannot say that our indigenous firms lack managerial or organisational skills.
Far from it, we have some of the best brains in the world. But our attitude towards
building the intrapreneurial organisational infrastructure is miles apart from that
needed to grow nationwide, leave aside into world class companies.
Fast Moving Consumer Goods

Let us take a hard look at the FMCG market.
As far as professional management is concerned, nobody can deny the massive
changes taking place, and all for the better. The entire professional management scene in
India has had a massive overhaul and boost. But what was the problem with the
well-established Indian household names selling toothpaste and soaps to the Indian
villages and small towns? What are these MNCs bringing in that we did not already
have? What exactly is new about them?
There is no Indian brand equity in Walls, Maggi and so on. Nobody outside the few
well-heeled and well-travelled urban elite knows that these are foreign brands.
These are all new and unknown brands to consumers in smalltowns in India.
There have always been a number of foreign sounding brand names in India.
The majority of the new entrants are not bringing in any remarkable new tech-
nology. The technology they are bringing in was always within reach of the large
Indian business houses. Indian made ice-cream, spectacle frames, breakfast
foods or soups were already using the technology these new entrants are going
to use.
The new ventures are not managed by Westerners. Hardly any expatriates are
being brought in. All the new firms are managed from top to bottom by Indians.
The Indian managers were always there, their considerable skills already avail-
able to our Indian business houses.
Even in the professional fields, our small one-man-show legal, accountancy, man-
agement consultancy, architectural and consulting engineering firms set up
joint ventures with large professional firms and find that they end up providing
the intellect.
Compare Coke/Pepsi with the Thums Up Gang

Here is another example. When we threw out Coke from India, they left behind an
excellent production and distribution network. Everything was in place. It should have
been a simple matter for an Indian organisation to step in and continue to develop
the market under a new brand name.
Instead, what we got instead were a number of small soft drink manufacturers all
over India with the following profiles:
They were small, individually owned, regional companies that wanted to remain
regional only.
Without exception, they were poorly managed family owned firms.
Their contribution to the national economy was nil. They were small companies,
so generally paid no taxes.
The employment opportunities they offered were very low level menial jobs, be-
cause the family or the owners did everything themselves.
There were absolutely no employment opportunities for, say, qualified MBAs.
And of course, the quality standards were quite non-existent.
None of the small fellows had any infrastructure to feed the market beyond, say,
100 miles from its location.
Parle was a big company in Bombay but had no presence in Bengal, Bihar, Orissa
or in Tamil Nadu.
In contrast we now see Coke and Pepsi once again all over India. As one of my MBA
students pointed out after a rural project visit, ‘You get Coke and Pepsi in villages
where you do not even have clean drinking water!’
Their profiles are as follows:
Coke and Pepsi have such a nationwide organisational infrastructure that a bottle
of Coke in Pondicherry would be identical to the one you will buy in Assam. Or
in Singapore, for that matter.
These firms have excellent employment opportunities for all sorts of professionals
at all levels up to the top management positions.
The Indian treasury gets good taxes.
The firms have massive budgets to participate in India’s economic and cultural
life, by sponsoring sporting, cultural and academic events.
Why Stop with One Example?

I can go on and compare the tomato sauce or the fruit juice cordial markets. Before
Nestlé came on the scene, there were excellent Indian firms producing the same quality
products. But it is only Nestlé that has been able to establish a strong nationwide
presence, and hardly a day goes by without their introducing a new product. And re-
member, most of the success is to be attributed to Indian managerial talent that has
always been available to our Indian companies.
The other classic example is one which has been worked at by every journalist in
India: Hindustan Motors vs. Hyundai vs. Maruti, and so on.
What the Indian media did not mention is that Hindustan Motors was working
under no more a protectionist regime than were the Japanese or the Koreans. Japan
and Korea are still the most aggressively protected markets in the world. There are
hardly any MNCs there and they do not import anything but essential raw materials.
But the Japanese and later on the Koreans took advantage of the rigorous protection
in the domestic market to develop into world class players.
The Indians only concentrated on making quick money for themselves, for their
dealers and for their political masters.
True, there are a number of MNC failures too, but that is not the point. The point
is that these newcomers are rapidly eroding the market shares of well-established
Indian firms.
One-Man-Show vs. Organised Corporate Effort

Coming back to the contemporary times, I would like to reiterate what I said before
about MNCs in professional areas.
Let us look at the professional services sector. Indian architects, accountants and
engineers are held in high regard, and are eminently successful all over the world.
This is so only when they are employed in the Western world or small individual pro-
fessional practitioners in Africa, South-east Asia and so on. The practice never spreads
out from the home base and invariably dies out with the individual. True, many mul-
tinationals like Price Waterhouse have many Indians as partners. This does not make
them Indian firms; it only goes to prove the point.
In contrast, all over the Western world, one finds large accountancy, legal, archi-
tectural and consulting practices. These have sometimes hundreds of partners and
many are now strong multinationals. Recently, large professional firms from the newly
emerging Asian Tigers have joined the scene.
I have said this earlier in a different context and I repeat now that many of these
firms are now in India too. These Immensely better organised professional firms are
coming in and taking away the cream of the business.
Professional Firms
Our defeat is not only in the consumer market. It is everywhere. Examples of this
are:
On the domestic front, let us look at the professional services sector. Immensely
better organised professional MNCs, legal, accountancy, management consult-
ancy, architectural and consulting engineering firms are coming in and taking
away the cream of the business. Increasingly, the large multilateral funded pro-
jects are going to them because of their outstanding international credentials.
Our brilliant but poorly organised one-man-shows are no match for the world
class firms. Forget about international credentials, most well-established pro-

fessional firms in Delhi are not known in the South. Indeed, our small firms
happily set up joint ventures with the MNCs or work as subcontractors.
After having built half of the Middle East, we thought that our construction
sector has acquired all the modern high-tech skills. Instead, we find that the
best high-tech construction and infrastructure building jobs at home are going
to MNCs. See any massive overseas funded hotel, resort, condominium, road or
bridge project. It is quite likely that you will see an MNC doing it, mostly from
China. Yet, only a couple of decades ago, it was exclusively an Indian domain. I
have spoken with many of our respected individuals in the construction industry.
They are really worried. As I said earlier, if the MNCs are able to penetrate our
own domestic market so easily, how can we compete with the same fellows for
international contracts?
We are rapidly losing our best brains to the MNCs. The creamy layer of the MBA
and other professional institutions as well as highly experienced managers pre-
fers a job with an MNC.
The last 15 years have seen phenomenal growth of Japanese, Korean and Singapore
Chinese export houses. These firms now have an extensive network of branches in
all the major cities in India as well as all over Asia, Africa, West Indies and South
America. They are rapidly taking away the market for non-traditional exports
from the Indian export houses that have absolutely no network outside India.
The tragedy extends to overseas Indians settled in Africa and South-east Asia.
Last 15 years have also seen phenomenal growth of large Japanese, Korean and
Chinese trading firms who have set up very well-managed supermarkets and
department stores in big cities in the regions as above, in partnership with local
people. They are edging out the small businesses, the grocery and sundry shops
owned by the overseas Indians who are selling out and coming back to India.
I seek to establish that the problem is purely managerial. We need to take a hard
look at how we organise ourselves and how we run our businesses.
True, there are a number of MNC failures too, but that is not the point. The point
is that these newcomers are rapidly eroding the market shares of well-established
Indian firms. What is so unique or great about them?
This does not make them Indian firms; it only goes to prove the point.
The Way We Work

The point is that we Indians do not work well with each other; we are, as a rule,
intensely individualistic people. We perform best when we are our own bosses, and
tend not to build large economic institutions. Of course, we are brilliant, hard working
and loyal but only while working for, or with non-Indians. That is the crucial point.
How do we learn from the MNCs?
It may well be asked, ‘Can we not turn to our NRIs for help?’ Nobody is clear
about what contribution the NRIs can and should make to the Indian economy.
Indeed, overseas Indians make considerable contributions to the economies of many
countries, but the Indian businessmen and traders overseas almost never grow into
large organisations.
Sure there are outstanding exceptions like Laksmi Mittal and Lord Swaraj Paul,
but as a rule our overseas businesses remain petty one-family outfits, some with a
multi-million dollar turnover, splitting as soon as the old man dies. The employment
opportunities they offer to our own people are only at unskilled clerical or menial levels.
Their children who qualify as trained professional managers, financial executives and
so on, in turn become self-employed, or, rise to senior executive positions in the ser-
vice of non-Indians.
It is no use comparing the NRIs with the overseas Chinese and what they are doing
in China. The overseas Chinese are the engines of the outstanding success of the
Asian tigers. They are corporate leaders who have developed and command massive
organisational infrastructure, and so effectively control the economies of many Asian
countries. They are now helping develop China’s economy by using it as a base to
feed their own substantial markets.
The NRIs are professionals and traders who control nothing. Their success depends
upon the success of the West and can bring in only funds and professional skills to
India. They have no captive markets to offer.
As far as the NRI funds are concerned, there is no nationalistic attitude. The NRI
money and skills will go where it always has—anywhere it is secure and offers a better
rate of return. They can even go to Pakistan if it offers better interest. In pragmatic
terms, how and why should India be the country of their choice?
This fact points to an urgent need to change the mindset of our commercial and
professional people. We need to build a strong and resilient growth oriented organ-
isational infrastructure in all walks of commerce and perhaps even in politics.
IV: Our Executives in the New India MNCs

and Our Young Executives
India has changed so much that our children can no longer use our successful entre-
preneurs as role models whose times were different and who succeeded in a very
different India.
What this means for you youngsters is that though we are doing well, there are
others right here in India that are doing far better. And, unless you are fighting fit to
defeat the competition, you will be left behind.
Another thing: More and more MNCs are coming into India and most are doing very
well which naturally means that they need lots of local people. This is where your
problem starts. They offer attractive prospects and can afford to pick and choose the
best, making the competition very tough for you. This is exactly the reason why you
must understand the changes and learn how to sharpen your skills, to compete with
the fellow sitting right next to you in class.
In the context of the modern corporate environment, globalisation has been the bearer not
just of capital but of an immense range of ideas, practices and culture as well. The ways
in which you create value, get things done and achieve your goals have changed. The very
rules of the game have changed enormously.
You do not have to go abroad to meet the world. The best in the world are here. No matter
that you are planning to run your own business, work for an Indian company or an MNC:
You will find that you are up against the best in the world in almost every field.
In the rich countries as well as in countries like Hong Kong and Singapore, the balance
of economic activity is swinging from manufacturing to services.
It is crucial that our entrepreneurs and executives understand, note and take advantage
of what this means as they now need to operate transnationally to a greater extent than
before.
Indigenous Technological Capability

Our economy is moving up the value chain to produce high-tech and high quality goods
and services in tune with the rest of the world. So, we need to consciously develop
our indigenous technological capabilities. Growth cannot be based on emulation and
modification of technologies and ideas developed by others. We have reached the stage
where we are competing head-on with developed nations and the ability to innovate
is critical. I will discuss this at some length in the chapter on innovation.
Having indigenous capabilities will enable us to capture more of the high-end
value in the production process. It will accelerate the process of internalising new
technologies so that we are able to creatively apply and develop them further to create
commercial solutions to meet market needs. At the same time, it will help ensure that
our local companies remain relevant to the world economy and become value-adding
strategic partners to MNCs operating in India.
Growing the External Wing

All that I have been saying can be summarised in a sentence. With our domestic con-
straints and a huge population with a limited purchasing power, Indian companies
will need to learn to venture abroad to expand and ride on growth opportunities be-
yond our national boundaries.
It should be pointed out here that hordes of Indian companies did venture abroad
in the late 1960s, with utterly disastrous results.
Disastrous because only riff-raff firms with no domestic base and absolutely no
organisational ability plunged the nation into a small crisis. The lesson to be learnt
here is that venturing abroad requires a complete and careful assessment of your own
organisational structure and strength. It is stupid to venture into setting up a project
or a base overseas simply because ‘my wife’s brother has just passed his MBA and
needs something to do’. I am personally aware of many Indian joint ventures which
were set up in South-east Asia for this reason.
I said in the chapter on intrapreneurship that our firms first have to become intra-
preneurial, then world class and only then should they think of venturing
overseas.
If you cannot Beat them, Join them

Of course, the most challenging and lucrative job prospects are with the MNCs. World
trade is here, right next door. The entry of foreign entities into India has changed the
competitive environment enormously. The pressures are not only in the marketplace
but also within organisations. Foreigners are here and are growing. These fellows
are highly organised and ruthlessly efficient. The problem in seeking employment
with them and then in working for them is that the rules of the game are confusing.
Everybody follows different rules. The Japanese do not work like, say, the Germans.
And both are very different from the Americans.
For our budding young professionals just coming out of the universities, recruiters
from world class companies do not come to test you for your textbook knowledge. They
are fully aware of what you are and what you have been taught in your institution.
Rather, they want to know what new attitudes you have cultivated, your mindset and if
you are capable of fighting your way through the fast changing business environment
of India. They ask if you are capable of taking their companies to new directions of
growth. Prospective employers are very impressed if the candidates show proficiency
in three things:
1. In-depth knowledge and awareness of the world at large, particularly of our

new trading partners.
2. Attitude towards quality as a way of life.
3. Ability to interact with non-Indians.
Another thing that you must remember is that in India professional success lies
in increasingly becoming social. The more organised the environment in which you
are working, the more important the cultural component becomes. The people who
succeed are often not the cleverest, the best educated or the most talented. True,
individual effort is crucial but in the highly competitive modern life, talent can only be
expressed via relationships with others. It is by understanding the role of relationships
that one can tap one’s inherited and acquired personal resources. I have discussed
this at length in the chapter on soft skills.
Creative Destruction
It is interesting to see how different races deal with competition in the borderless,
globalised world.
The American and European firms grow and swallow up the competition.
The Japanese are obsessed with market share, sometimes to the exclusion of
short-term profits.
The people of Chinese origin, as I have explained already, join hands with their
own people, form formidable networks and do what Confucius has taught
them—destroy the competition.
I have seen what our people do. Time and again, in sector after sector, as soon as
a superior MNC comes on the scene, instead of putting up a fight, they join the MNC
or, pull back, stop manufacturing and start selling the better products the newcomer
offers.
There is another concept that has been discussed by some academicians and is
worthy of note.
I see on the Internet that creative destruction, introduced by the economist Joseph
Schumpeter, describes the process of industrial transformation that accompanies
radical innovation. In Schumpeter’s vision of capitalism, innovative entry by entrepre-
neurs was the force that sustained long-term economic growth, even as it destroyed
the value of established companies that enjoyed some degree of monopoly power.
Companies that once revolutionised and dominated new industries—for example,
Xerox in copiers or Polaroid in instant photography have seen their profits fall and
their dominance vanish as rivals launched improved designs or cut manufacturing
costs (lowering their own costs allows them to charge lower prices to customers, thereby
drawing customers away from less efficient competitors who eventually close their
doors or move into other products where they are able to find a cost advantage).
Creative destruction may also go the other way, pushing an industry to a monopoly
situation. Wal-Mart is a clear example of this, as it is a corporation that increasingly
dominates retail markets by using new inventory-management, marketing and
personnel-management techniques, at the expense of older or smaller companies. How-
ever, this is not a problem for those who support the process of creative destruction
because if Wal-Mart does not keep its prices low, they risk losing their market share to
new competitors. The fact that they must sustain low prices in order to prevent com-
petition is seen as a good thing for consumers.
Also, there is nothing to stop another firm from discovering how to become more
efficient than the monopoly firm which would allow them to charge lower prices than
the latter and erode their market share, and so on.
This Dr Schumpeter writes, is the process of creative destruction. In fact, successful
innovation is normally a source of temporary market power, eroding the profits and
position of old firms, yet ultimately succumbing to the pressure of new inventions
commercialised by competing entrants. Creative destruction is a powerful economic
concept because it can explain many of the dynamics of industrial change: the tran-
sition from a competitive to a monopolistic market, and back again. It has been the
inspiration of endogenous growth theory and also of evolutionary economics.
Unfortunately, for many, mindless and ruthless creative destruction can hurt. Layoffs
of workers with obsolete working skills sometimes signal these new innovations.
Though they allow more workers to be available for more creative and productive
uses, they can cause severe hardship in the short-term.
Manufacturing and Services are Twin Engines of Growth

For my country to become an advanced and globally competitive economy within the
next decade, we must have manufacturing and services as our twin engines of growth.
This strategy would help diversify our dependence beyond any single industry, sector
or market, thereby reducing vulnerability and providing a broader economic base.
Manufacturing should become an integral component of India’s new outward
looking economy, with capabilities in the entire manufacturing value chain beyond
production, from research and development and design to marketing and sales. We
are very weak in this area and unless our manufacturing capacity is upgraded in the
small and medium scale sectors, we can make no progress.
Having said that, it should be noted that manufacturing can never become the
base for India’s growing economy if India remains purely a production base. This is
already changing and we are on the way to positioning ourselves as a critical hub
where MNCs and our own firms use India as a base to manufacture high-tech high-
value-added products and provide manufacturing related services to companies here
and in the region. We are already moving upstream in the value chain to do R&D and
design in some sectors like pharmaceuticals, bio-technology and automobile com-
ponents, and are encouraging overseas firms to have their regional operational head-
quarters here.
For the world’s second largest nation, the quantum of progress on this is slow
and the pace can pick up only in the larger corporate sectors and not in the
small-scale units.
We already have a strong technological capability but are missing a vibrant
entrepreneurial culture that thrives on creativity, nimbleness and good business
sense. Apart from a few outstanding exceptions, our entrepreneurs are mostly
inward looking and intensely individualistic. They like to start small and remain
small, and are not interested in organising themselves into larger institutions.
Though our workforce is already cost-competitive, with world class capabilities
in business management and technology, we are extremely poorly motivated and
fare badly as compared to nearby Asian countries in productivity, innovation
and international market development.
We have to do something about instilling a greater sense of pride, professionalism
and commitment in our workforce and attract, motivate and retain staff in
growing Indian family owned organisations.
Whether we like it or not, foreign MNCs have had a considerable contribution to

make in India’s economic growth. We must continue to attract them and root them
here. Indeed, while MNCs will remain a crucial component of our economy, we should
also strengthen our already successful partnerships with them, because these will
build up domestic capabilities and forge strategic linkages with other regions. This
is the only way our more promising local enterprises could be nurtured into world
class companies.
It is only when we have our own stable of intrapreneurial world class companies
which can compete effectively in the global economy can we increase the depth of our
corporate profile and broaden the economic base for more sustained and resilient
growth.
The Challenges
As I mentioned, the external environment is evolving rapidly. Massive changes in trade,
investment, technology, employment, finance and even ideology are taking place at
a mind-boggling pace. Rapid technological improvements and globalisation and ex-
panding tradability of services across national borders and great distances without
being hampered by the physical movement of people or goods have dramatically altered
production and consumption patterns. Most countries now recognise the benefits, or
rather, the inevitability of economic liberalisation, which has boosted international
trade and across-the-border investments.
The external economic environment which is changing so rapidly is posing sig-
nificant challenges for India. Let us talk about them.
The first challenge is to become competitive amidst intensifying competition

and technological leapfrogging. Here we do not have a level playing field as we
have to overcome a massive negative bias within the country against anything
global. With few exceptions, our corporate leaders just do not have a global
mindset. Also, we face competition from both developed and newly developing
Asian Tigers. The former benefit from a stronger indigenous technological base,
a higher skilled workforce and a long tradition of world trade, while the latter
are endowed with highly dynamic and better organised commercial sectors.
To stay competitive, India has to find, develop and market sustainable ‘niches’
where we can start providing attractive total cost-capability business packages. I
am not talking here about the very low value-added work we are doing in software
sectors. To continue to participate and benefit from growth all around us in Asia, we
need to develop world class capabilities to position India as a strategic partner for
MNCs and other investors.
The second challenge is the shortage of talent and entrepreneurs. On the face
of it, this sounds silly. Shortage of talent and entrepreneurs? Surely I must be
joking! What I mean is that we need people with good business acumen and
enterprising spirit to turn business opportunities into long-term profits. We
need to continue to develop, attract and retain talent, including foreign talent.
The implications for the workforce of the future are immense. Internationally
mobile capital and labour is now traversing the world in search of best returns.
More complex and demanding systems call for more innovative workers. So,
new work processes and skill sets are required.
The third challenge is the need for a paradigm shift in our peoples’ mindset. The
dependency mentality of Indians to look to the Government to solve their
problems and make decisions for them, and their aversion to risk-taking and
change, has to be corrected. We need to adapt and initiate change or else become
obsolete in a rapidly evolving world.
The fourth challenge is to manage our economic restructuring. We should be
able to distinguish the tiny but very much more productive internationally-
oriented sectors from the less productive, domestically-oriented sectors. The
latter consist of an entire spectrum of enterprises from the small village units
to the large business houses. It is critical to manage this dualistic nature of the
India economy. We must continue to encourage restructuring and upgrading of
the internationally-oriented sectors.
True, these global trends do pose significant challenges but they also offer tremen-
dous opportunities for the long-term survival and prosperity of a large opening econ-
omy like India. Our future growth will depend on our ability to enhance existing
strengths and leverage on new opportunities. India needs to position itself to ride on
these trends.
Where do we go from here?

All I can say in this connection is that we should seriously look at some of the very
relevant routes taken by the newly emerging Asian economies and that we should
try to see if there is anything here for us.
1. Among these nations, Taiwan has been most successful in using public research
institutes to promote the diffusion of industrially relevant technologies.
Our research institutes in India are only useful for converting highly
theoretical academicians into practicing bureaucrats.
2. Where Korea differs from other developing countries in promoting big business
was in the discipline that the state exercised over these Chaebols by penalising
poor performances and rewarding only good ones. (Chaebol is a uniquely Korean
business concept. It can roughly be used the way ‘conglomerate’ or a ‘business
group’ or ‘trust’ is used in English.)
Certainly, Korea differs from us in this respect. We already have an excel-
lent system of rewarding our friends and cronies and penalising those who
oppose us.
Nevertheless, the basic idea of ‘contest-based’ resource allocation and
the need to achieve sufficient scale economy remain valid policy concerns for
economies like India seeking to enter a wide range of capital intensive high-tech
industries now dominated by advanced industrialised countries.
3. An important lesson for us is in the instance of Hong Kong moving upwards
from manufacturing to service and now becoming the centre for product
design, marketing, logistics management, technical support, accounting
and administration. I explained before how Hong Kong firms have developed
sophisticated CAD/CAM design and electronic data interchange capabilities that

allow them to quickly turn buyer requirements into design specifications.
Here is something our technocrats can do as we have no shortage of excellent
brain power. An important point to be noted in this regard is that our moving
in this direction requires only private sector initiative without any government
interference.
4. Singapore can best be described as one that emphasises on government induced
facilitation of MNC induced technological learning.
Though we are also moving in this direction, our initiatives here are seriously
hampered by political interference and our apprehensions of what the MNCs
may do to our economy.
Preamble z 161
13
Having a Global Mindset
The Global Marketplace

The world is now rapidly becoming a global marketplace. Just about every aspect of
our lives, from the food we eat, to transportation, energy, clothing, financial services,
household goods and entertainment, is either sourced from or exported to other
countries. Anything a young entrepreneur can think of doing, in any sector, he will
either be buying from, selling to, or servicing an MNC, right here in India.
The new economy of the world today is dominated by intercompany trade and
person-to-person communication across the table. Countries no longer trade; people
and businesses do. Networks, strong in commercial and organisational infrastructure,
are at the core of the new global economy.
Sure you are also thinking in the globalised language. But look deep into yourself and
think again.
If you still have doubts, stay domestic until you are sure that going global is a good de-
cision. Companies with highest rates of success in the overseas markets have cultivated
‘global mindsets’ from the very beginning. When you expand globally, you will do it because
it is best for your company.
If your firm is just getting started or just becoming a regional company, you may need to
concentrate your resources and capital. International expansion can fuel rapid growth and
make demands on your resources that your firm cannot yet handle.
The crunch may not only be financial. You need trained and trusted people and you need
the infrastructure within your organisation.
This chapter is in two sections.
Section I: The global business culture

Section II: Global mindset in the Indian context
If one is living and working in familiar surroundings, one tends not to notice many
things. Say, a person who has lived all his working life in Tamil Nadu, venturing out
only on short trips, gets posted in Assam for a couple of years. He will come back home
and notice things he never noticed before. Well, this has happened to me and
after having lived and worked with people of many races across the world for over
30 years, I am now back home and tend to look at ourselves with a new perspective.
I notice how we do things and compare this to how others do the same thing. If I find
someone else winning, inspite of our doubtless superior intellect and calibre, I ask
myself why.
To me, one of the major barriers to the growth of entrepreneurship in manufacturing
in India and placing our consumer goods on the shelves of the world’s supermarkets,
is the way we work with each other, how we build and nourish organisations and
how we respond when faced with an onslaught of competition.
Our people have to start thinking and doing business differently and new entre-
preneurial styles must evolve in India. It is not only the way new organisations are set
up and developed that needs to be changed: The very business mindset must change
to counter the pressures created by the entry of foreign entities.
z The foreign entities that are here and are taking away large chunks of our do-
mestic and export economy are not only MNCs from the West. The competitive
pressures are coming increasingly from the ruthlessly efficient Korean, Chinese
and of course, the Japanese trading houses.
If our youngsters have to start winning, they need to do two things.

One, look at the mindsets of these nations, understand how they do business, and
hit them with their own techniques like these nations did when they learnt marketing
from the Americans and went and captured their markets.
Two, our youngsters must have a hard look at our own traditional mindset and
understand how we have always done business and where this is taking us.
I: The Global Business Culture

Cut the World in Three Parts
I am going to give you a unique perspective on the difference between how we build
organisations and how others do it. I am going to divide the world in three parts and
give you three faces of entrepreneurial mindset. To understand the new entrepreneurial
styles evolving in India, my presentation would contrast:
Having a Global Mindset z 163
1. The Western entrepreneurial mindset.

2. Our lone-ranger, I-am-the-boss Indian entrepreneurial mindset.
3. The Asian group or networking entrepreneurial mindset.
The Western Entrepreneurial Mindset

In the West, entrepreneurs are known to be intensely individualistic and rarely follow
any set patterns or strategies. Yet, they all have one thing in common. A person in-
variably works towards building a business bigger than himself, making it into an
organisation. In most of the successful enterprises all over the West, an outsider is
hard put to identify the individual behind the success. Who founded Starbucks Coffee,
Blockbuster Video, Walmart, Nokia or Ikea? These are recent household brands and
have rapidly grown into multibillion dollar operations, but can you name an individual
who is the power behind the scenes and is all powerful?
Basically, these entrepreneurs dreamt of transforming a small business into a con-
glomerate, one that eventually would become a powerhouse in the particular sector of
the economy. A key characteristic of these entrepreneurs is that they do not merely
dream of becoming wealthy. The fellow does not mind owning a small chunk of busi-
ness that he built, even compromising some form of control, or whatever it takes to
make the business grow really big.
Western entrepreneurs pursue lives of extremity—extreme ideas and expectations,
extreme workloads, impelled by their dreams and passions. The dream is to make it
big—really big! The entrepreneur dreams of attracting big venture capitalists, and
maybe even launches an Initial Public Offering (IPO) later on. He measures his success
not by the money he is making, but by the market value of his shares and the number
of people he employs.
And for this dream, the entrepreneur is willing to accept significant financial risks
and challenges. Indeed, Western entrepreneurs are willing to make decisions that will
threaten their wealth and their reputations. They understand that entrepreneurship
is about risk.
The important thing to notice is that none of the Western organisations have ever split.
A split does not make sense because as I said above, the organisation is invariably
bigger than the founder. Ask a well-informed management student in India to name a
single organisation in the West, which has ever split.
z Please note that this is not a treatise on how business is run in the West. I am
only making an important point in the context of how we do things in India.
You will understand this in a minute.
Our ‘Lone-Ranger’, I-Am-The-Boss Indian Mindset

It is typical of the Indian entrepreneur that he looks for the freedom and profit that
comes from being on his own. He does not want to operate a large organisation. Instead,
our fellow will build small-size businesses in which he is more comfortable. He will
ignore opportunities for growth and let the business grow only to the extent that he,
or his immediate family members, can personally control it. Sure, there are large busi-
ness houses too, but the overall pattern remains small family owned firms.
I have explained that my profession has been to promote manufacturing in developing
countries and I have personal experience of coming to India with lucrative oppor-
tunities for medium-sized projects in other small countries. In most of the cases, the
overseas firm had international funding and was looking for a technical collaboration.
All that we wanted from the Indian firm was to export know-how, training and semi
processed goods, and to take full technical responsibility for the management till the
locals could be trained to run the show. The question of the Indian partner making
substantial investments did not arise.
I have detailed many examples in this book where the Indian entrepreneur just ig-
nored the opportunity simply because, ‘I have only two sons and they are both in the
US, so I have no one to spare.’
Our entrepreneur values his independence in running the business. The idea of
being his own boss is more important than the size of the company. This kind of a
business owner would rather own a big part of a small company than a small piece
in a big company. Seeking outside investors is not a priority as he is unwilling to re-
linquish any control of his company. He would rather let the business grow slowly,
without the headaches that come from building a significant venture.
He is a freelancer, a lone ranger, a one-man-show. Sure, he is interested in a better
lifestyle and control over his time but at not too much risk. His main weakness is that
he wants to call the shots and have absolute power. Neither is he interested to share
any of this power with any investors or shareholders, nor do they expect it. They too
will have the same mindset and will only be interested in the returns of their money
with the least headache.
z That doesn’t mean our businesses do not grow. Indeed, many become multi-
million operations having a number of employees, but the absolute control rests
with the owner or his immediate family.
A major tragedy of our style of entrepreneurship is that the business remains a

first generation success story and often dies out with the old man. There are very
few examples of businesses where the children and family members have not split
and ruined the company.
Almost the entire domestic owned industrial, trading and service sectors in India
are small, individual or family owned and managed firms who operate in isolation.
There is no cohesive effort towards organisation or institution building.
I can give an example where our management mindset is brought out in stark con-
trast to the Western one.
This mindset extends to every sector of society. Take politics, for example. The polit-
ical structure of every successful nation consists of two or three large political parties
that have never split. For this reason, they can afford to have transparent and legit-
imate sources of funding and have democratic organisational infrastructures.
I do not need to say how this compares with what happens in our nation.
Take the time when the British left India. There were a number of excellent organisations
functioning here then. Three things happened:
One, the pure retailing firms like Whiteways Laidlaw, Army Navy Stores and so on, had
to close down as they merely lived off the colonies by selling European products here. They
could not but die a natural death.
Two, some large firms like Imperial Tobacco Company, Lever Bros, Phillips, Cadburys,
Colgate Palmolive and so on, took locals as shareholders, maintained their managerial
styles and prospered.
Three, many highly profitable and excellently managed firms were completely taken over
by Indians. Not one of them survived.
The Asian Entrepreneurial Mindset

The Asian entrepreneurial mindset is in stark contrast to the two mindsets described
earlier.
To understand what I am going to say, consider a situation: Say, you are working
for a large firm where the annual day, organised purely by the staff, is a prestigious
event. This event can be organised in two ways. One, the management can select an
executive who takes four or five volunteers. Two, the management can leave it to the
staff who can have some volunteers joining hands and forming an informal committee
or a group.
Remember there is no profit motive and no remuneration is involved. People do it
purely for the satisfaction of a job well done. In the first scenario, it would invariably
become a one-man-show. The selected executive would assume the role of a boss and
the contribution of the other volunteers would at best be half-hearted. Each volunteer
would be more concerned with being selected as the boss the next year than doing
a good job this time.
In the other scenario, there would be no boss and the team members would mutually
allocate some part of the work to each person, and the co-operation would be superb.
The result would be better as each person would volunteer for the job he is good at.
The next year the same team would do a better job as each member did only what
he was good at, got experienced and became better at it.
Well, the first scenario is how the management of Indian firms work, and the other
one is what I am calling the Asian entrepreneurial mindset. It is not teamwork but
formation of a network where there is no boss and each member is intensely indi-
vidualistic but works together with other members of the network.
This is the Chinese business culture. I have given some examples of how this works
in chapter 10, and we will again be talking about this at some length in chapter 14.
While talking of the Chinese entrepreneurial mindset, one needs to remember that
we are talking mostly of the overseas Chinese—things in China under an authoritarian
rule and are very different. The Chinese are a network of networks. The enterprises
are all small family owned businesses that stay singularly apart, but work together
all the time.
The family businesses of the Chinese overseas are networks—of companies and
other enterprises, of clans and villages. An outstanding characteristic of the ethnic
Chinese network is that no one is in charge. Individual companies are completely de-
centralised from the whole; yet they are extraordinarily efficient parts of the whole.
These small family owned firms excel at integrating design talent, manufacturing
capacity, production management expertise, marketing and packaging skills, and fi-
nancing to produce products which nobody can compete with. When a crisis arises
or a great opportunity presents itself, they close ranks and co-operate.
Mindsets cannot Change

The essence of what I said here is that no one can or should copy another person’s
mindset. You cannot think and act like I do. You are you and it would be silly to try
to copy the way I do things simply because I am more successful: You must try to
become successful in your own way. The Western people can never do things like the
Asians do and we Indians have to realise that we have been doing things a certain
way for centuries and cannot change overnight.
Let us talk of the way we build our organisations. This has also nothing to do with
whether an organisation is family managed or not. As an example, in the Western
world, only professionally managed firms grow into large organisations. But in the
East, purely family managed Chinese firms exhibit all the signs of a professionally
managed firm and grow, because of their attitude to networking.
In most cases in India, none of the above factors are visible. The organisational in-
frastructure is simply profit motivated. The entire commercial activity is aimed at
tangible profit in short-term, and the only effort is to maximise this profit. Invariably,
the profit is ploughed back into the business only to the extent that results in im-
mediate extra profit.
No thought is given to the set-up growing as an organisation. The owner designs
the managerial set-up more for absolute control and power rather than for growth
inducing strategies. ‘I want the firm to grow only to an extent that I can keep everything
under my own control.’ If the activity is profitable, the surplus is withdrawn for secure
investment in real estate, and so on. The owner has palatial houses and lives in five-
star comfort but the factory and the offices are shabby and ill maintained.
This is one of the points I often raise when talking to the MBA students. I ask them
the meaning of success in life. To most of them, the meaning of success is simply
making a lot of money. I have not met anybody who is determined to work right from
the beginning towards growing into an organisation. I hear a lot of them planning to
‘work for some time and then do something on [their] own.’
Now, take our large firms. India has always been an inwards looking nation and so the
firms here are all inwards looking. They have mind-boggling schemes for doing things
domestically. Compare this with the newly emerging economies like Malaysia and
Singapore that have deep rooted Asian business culture I have described before.
Our firms buying out overseas firms, which is our only overseas foray, is not the
same thing as firms in Asia spreading their wings in Africa, South Pacific, the West
Indies and even South America. The goods produced in these nations are increasingly
getting on the shelves of the world and Malaysian and Singapore firms are taking
up large infrastructure contracts all over the developing world. The tragedy is that
today the best employers for our brilliant civil, mechanical and electrical engineers
are Malaysian firms.
Another point to be noted is that rather than personal or individual, there are strong
social aspects to the success of the enterprises in the Asian nations, aspects that do not
exist anywhere outside the region. Even though the very definition of entrepreneurship
assumes risk-taking, these people have minimised the risk aspects because every idea
or proposal is examined in detail from all possible angles by a number of people.
In Japan, Korea (and recently, Singapore), though they have made remarkable pro-
gress on economic fronts, one would be hard put to name some outstanding entre-
preneurs. The success of every enterprise is the result of a cohesive group effort. True,
this is slow but the results are long lasting.
This is in sharp contrast to what happens in India where, as I have already said, the
fortunes of every major business house begin and end with an individual. It is clear
that this will not change. To catch up with the fast globalising world, we have to evolve
a new way, quite unlike our own way of working.
II: Global Mindset in the Indian Context

First National Mindset, then Global Mindset
I have a friend in New Delhi who is manufacturing superb quality bathroom fittings.
Items like taps, showers and soap holders—Chromium plated brass. He has an ex-
tensive range and is very careful about quality control. His brand is increasingly getting
respected and the business is growing. He has made considerable investment of his
time and money in making a number of trips to nearby South-east Asia and Kenya.
He has been able to get small orders but no foothold in these markets.
What I found surprising was that in India, his market is only in Delhi, Punjab,
Haryana and UP, within a radius of about 400 kms. Also, in some small markets
in Madhya Pradesh and Rajasthan. He has never sold anything in the South or in
Bombay. He makes no secret of the fact that he has never made an attempt to pene-
trate these markets.
He has all sorts of reasons which, considering his tight financial and manpower
resources, seem valid. His competitors in Bombay and Chennai are based there and
service the customers on a personal day-to-day basis. He will have to sell through
agents and stockists and will have all sorts of problems requiring him to make frequent
trips. It is clear that if he wants a reasonable degree of market penetration, he would
need a long-term presence there. This does not fit into his management strategy of
keeping an absolute control over all the operations. So, this is not feasible. Very
correctly, he points out that the Bombay and Chennai firms do not have much of a
market in the north.
All true. But looking at it from another angle, he thinks he will succeed in exporting to far
away overseas markets when he does not have the managerial set-up to handle markets
in his own country. Every entrepreneur in India thinks exports are a breeze.
This is not a stray example, but rather a rule in India. There are countless manu-
facturers who are thinking global before thinking national. Every other manufacturer
will tell you that he sells only in the immediate region and that ‘we are also ex-
porting.’
If you look at it carefully, all that it means is that businessmen from countries like
Nigeria and Tanzania come to India looking for supplies, meet these people and buy
in cash. This is always short-term and the exports fizzle out after a couple of deals.
Invariably, there are problems when the customer has complaints regarding the
shipment. And, we end up having an unhappy customer who swears never to deal
with India again.
First Go Global within your Company

Let us now assume that you have decided to expand your business outside India and
are aggressively seeking expansion into foreign markets. The text book approach of
expanding overseas only after you have reached your maturity in the domestic markets
does not work in a huge market like India. Indeed, one of the reasons for our dismal
export performance is that there is always a lot to do in the domestic market.
Wait. There seems to be a contradiction here. I said before that before you develop
a global mindset, it is a good idea to see if you have a strong national mindset. I said
it is going to be very difficult for some of the well-established and respected firms, say,
in the South, who are completely unknown in Delhi or Punjab, to start thinking global.
The point was that they obviously do not have the organisation, or the resources and
certainly not the mindset even to go national. If you look slightly below the surface of
these firms, you will find an owner or a boss who is a one-man-show. He does every-
thing, decides everything and trusts no one. As an individual, he grows, but his or-
ganisation does not. So, for a firm that wants to aggressively expand overseas, the
managerial set-up has to be professional and there must be experienced senior ex-
ecutives who have decision making leeway.
So, let us go back to assuming that you have decided to expand your business
outside India, which means you already have the attitude of letting professionals
manage the show.
While the thought of entering foreign markets is exciting, optimistic and exhilarating,
it is also overwhelming when you consider the size, complexity and risk of expanding
into global markets. Certainly, when you consider all of the barriers to entry into for-
eign markets, you may become overwhelmed by the thought of whether it is worth
the risk. Also, you should not approach global expansion as an alternative or sideline
to your domestic business. Having a global mindset means realising that the need to
go global lies at the heart of your business.
z Within your firm, the biggest problem that you will face is internal: the inward
looking mindset of your owners/shareholders, management and staff.
True, you will find anybody and everybody willing to take up an assignment overseas
but when you tell them that you are not sending them to New York or London but
to places like Nairobi or Dar es Salaam, they lose interest and try to oppose the
proposal.
You will be told that:
z We have limited resources.

z We can barely handle our domestic business.
z It is too risky.
z We are not making enough money at home in our local market.
z How can we make a profit in foreign markets?
z It will take years for international business to pay back.
z We have never exported any of our products.
z How do we go about this?
z Who in our company can/will handle this effort?
Timing and commitment to globalisation are critical. Similar to a family’s decision

to have another child, there is never an optimum time. You have to make the plans
to expand your business and follow through. On the other hand, should political and
economic conditions of select countries change dramatically, of course it is prudent
to delay your expansion efforts.
Learn to Make Useful Friends

But don’t make the mistake of thinking that the world is as competitive as it can get.
This is only the beginning. Let us look ahead to the next century by looking back
50 years. In 1945, the United States was the only industrialised nation that was
untouched by the devastation of two world wars. American business had no com-
petition. The world was borrowing money from them to buy their products, and they
could set prices and standards based solely on what they felt like. So what did they
do? Sit back and enjoy the monopolies they had like our big business houses did in
the heyday of the license raj? Everybody knows the answer to this. They went out
all over the world and set up joint ventures, joined hands with others and set up
subsidiaries in their countries to capture their markets. And then, dozens of firms
like McDonald, Kentucky Fried Chicken, Pizza Hut, Starbucks and so on, spread-
out all over the world by getting others to invest in and run their branches in their
countries as franchises. They did all this in a big way and made sure the world market
remained in their hands.
Then came the Japanese, followed by the Koreans and the Taiwanese. All ruthlessly
protected their home markets, and went out and conquered the world. That was only
the beginning, because now we are starting to hear from countries who were never
imagined as competitors, countries that were pejoratively labelled ‘ Third World’
countries because they would never ‘measure up’—Mexico, People’s Republic of China,
Malaysia, Thailand and Singapore.
What does this mean for you? What will your business be like when all those
countries will be powerful industrial forces competing for your market share? They
will be hungry for what you have. They will work long hours and, in the beginning,
they will work for less. They will exploit your competitive weaknesses just as the
Japanese exploited the quality gap.
Most senior managers in India understand all too well that if their companies do not
awaken to the global challenge, competitors from outside will surround them and eat
them alive. There is already the price competition in our own domestic markets. Others
can imitate us and do it cheaper. There are companies that add more value. There will
be companies that will innovate around us. Finally, if we stand still, there will be com-
petitors who will lock us out of new customers through single-source relationships.
The competitors might be next door, or they might be halfway around the world.
Armed with the Internet and a telephone, our global competitor will be talking and
proposing to our customer whose workplace is only two blocks from us!
The challenge in today’s marketplace is to beat all other products around the
world in innovation, price, quality, service, sales, marketing and responsiveness. But
few Indian companies have the expertise to address all these areas with world class
leadership results. As such, it is indeed prudent for Indian companies to team up
with outsourcing or alliance partners in other countries that have the competencies
and expertise that they lack. While this has been going on in the inwards direction,
and Indian companies have been forming joint ventures and technical collaborations
here, it is only now that some companies are discovering the power of teaming up
overseas for mutual performance advantages.
I am not talking about Indian firms going to other developing countries and setting
up joint venture manufacturing operations with local partners. This was done in
large numbers in the 1970s and 1980s, with disastrous results. I am talking about
networking with other firms elsewhere to have integrated marketing or manufacturing
operations. I have talked about this in section one of this chapter. The overseas
Chinese are exceptionally good at this and there are hundreds of examples all over
the world.
The advantages are obvious. Companies choose which suppliers have the needed
expertise and resources for a given venture or product line. Selected partners can foster
peer relationships. Working together with overseas partners to solve problems and
explore opportunities for greater achievement becomes easy. This form of business
should not be confused with what is commonly done when firms form consortiums
to bid for large projects, joining together for a market opportunity, dissolving when
the opportunity ceases. What we are talking about is to seek long-term presence in
each other’s territory without the massive investment a branch office or a subsidiary
would need.
It is clear that in the 21st century, companies in India will be operating in much
more open market situations, so those that are unable to adjust their operations to
changing market conditions as fast as their competitors do will lose their market
share, partners, investors and possibly, employees. Remember, the competitor may
not be an Indian company!
Indian companies of the future should be able to quickly change their business
processes and operations without putting undue strain on resources, both at home
and overseas. They must also be able to redesign processes in support of new market
opportunities, supply chain partnerships, product characteristics, organisational
changes or virtual operations.
The only way of doing this is to have friends working with you in other countries.
Do Not Think of Just Going There. You Must be There

Greater interconnectedness of the world business scene implies dynamic growth
and change, so it is no longer enough to go to your market frequently: you must be
there. You must establish your own presence and let the customer know whenever
he needs you that you are nearby.
I will seek to establish how the last 15 years have seen phenomenal growth of
Japanese, Korean and Singapore Chinese export houses. These professional export
houses trade by being there, and have changed the rules of the game. These firms
now have an extensive network of branches in all the major cities of the world. They
have conquered the developing world, by having a presence all over Asia, Africa,
West Indies and South America. In India too, they have learnt to develop a strong
organisational infrastructure which is rapidly taking the market for non-traditional
exports away from the Indian export houses.
When it comes to the very essential network of branches we need all over the world,
forget our large business houses, even the large export houses have almost no
professionally managed network outside India. ‘I have my son in New York and my
cousin in Frankfurt’ seems to be just about it.
Having a presence does not mean the very expensive option of setting up an office
and posting an executive there. Another way of looking at it is that as recently as the
1970s, in the West, it was only the very large corporations that had the resources and
capabilities to grow internationally and they did so primarily by establishing mar-
keting offices or branch plants overseas. So, a large number of multinational firms
made direct investments in other regions. Today, by contrast, new transportation and
communications technologies allow even the smallest firms to build partnerships with
foreign producers and entrepreneurs to set up foreign bases to service the distant
markets. This is the way smaller to mid size firms in the West and in South-east Asia
are currently exploring ways and means of expanding their businesses in the global
marketplace.
It is a sad fact of life that our very large business houses are all inward looking and
do not consider exports as a suitable activity for them to be in. In India even today
most foreign business development efforts by our firms are a result of a casual or
‘knee jerk reaction’ to what they read in the press or media on nearby countries and
what fantastic markets they offer to all sorts of goods.
Coming to the point I started with, firms which have been able to develop a deep
rooted national mindset and which have a strong presence in most parts of the
country are the ones who are likely to be successful as professional export houses,
exporting items outside the run-of-the-mill items like readymade garments and
leather goods.
True, unlike the large multinational firms which generally have hefty research
budgets for international market research which is critical to market entry in foreign
markets, our smaller firms have limited financial and human resources and cannot
afford to take significant risks in the global marketplace. This simply means that the
nature and extent of homework we must do before entering into a new market is more
critical. You must do your homework and research not only on other markets and
cultures but also on the driving forces of these markets and cultures.
One point I need to repeat here is that we do have big export houses which can only
be called ‘petty traders with a multi-million dollar turnover’. In their attitude towards
professionalism, in organisational structure and in commitment to earning long-term
goodwill, they remain small time traders. Not forgetting that we are competing in most
of the export markets with excellently organised firms from South-east Asia, which
have an incredible degree of professionalism.
So, let us assume you are a firm which has nationwide operations and has already
a strong national mindset. You may be a manufacturing, or a trading, or a services
firm. If you are a large business house, you are probably all of these.
The next step is to decide that you want to have a long-term interest in developing
the export markets. This can, or rather should, be a project by itself. So, you must
start thinking of having a presence outside India. As I said, you cannot simply hire
a suitable executive, set up an exports division and go hunting for orders. You must
determine to be a global player.
Remember, once you enter a foreign market with your products or services, you
have to stay there. Companies that have entered a market, withdrawn and then tried
to enter again have not only had a very hard time regaining any market position but
also earned negative goodwill.
International markets, particularly in the developing world, are like elephants— they
do not forget anything. If you are not ready to make the kind of commitment necessary,
you should rethink your globalisation efforts.
I must also admit that getting this sort of a commitment in India is easier said
than done. Given our strong inward looking mindset, people around you will come up
with hundreds of reasons and excuses to avoid doing this. You will need all the will
power you can muster to resist every step, more so because most of the reasons given
are very valid.
Of course, expanding globally is very risky. But if your firm had an operation in,
say, Delhi, expanding domestically by having additional units in Hyderabad and
Coimbatore was risky too! If you could manage this, you already have a national
mindset, and you certainly can expand your business in international markets.
Certainly you are overwhelmed at the thought of globalising your firm. My own
experience in the developing world has shown that there are no short cuts and no
strategies or action plans that carry a sure fire guarantee. This is understandable as
we live in a complex and fast-paced world, but you must be clear about what you want
to do. Along with courage, you must develop the stomach for international political
risk and long-term results. Going global entails immense amount of research and
a lot of midnight oil burnt in planning. With some cost-efficient preliminary market
research, you should be able to develop a workable strategy. We will talk about this
later on.
Inward Venture Partnering

It is essential for future Indian companies to be able to quickly change their business
processes without putting undue strain on operations. And they must be able to
redesign processes in support of new market opportunities, supply chain partnerships,
product characteristics, organisational changes or virtual operations.
As such, it is prudent for Indian companies to team up with outsourcing or alliance

partners that have the competencies and expertise that they lack. We should learn a
lesson from Malaysia and Thailand where more and more companies are discovering
the power of teaming up with overseas firms for mutual performance advantages.
Selected partners can foster peer relationships and work together to solve problems
and explore opportunities for greater achievement. This form of business can even be
based on partnership fluidity: companies joining together for a market opportunity
and dissolving when the opportunity ceases.
In the 21st century, companies that are unable to adjust their operations to chan-
ging market conditions as fast as their competitors will lose their market share, part-
ners, investors and possibly, valuable employees.
I say employees, because today’s youth in India is educated in a global economy.
Firms that can offer international experience are very attractive to young university
graduates. As our economy becomes more global, with global financial markets, tele-
communications, transportation systems, firms that lack a global presence will be a
strategic disadvantage in the job market.
Learn from Successful Nations

The spectacular results of international business competitiveness are evident among
firms from the United States, Europe and Japan, which moved away quickly from
simple foreign trade activities to foreign direct investments and then to competitive
links across all continents of the world. Their efforts in creating multinational firms
have been outstandingly successful.
We will very briefly discuss the various aspects to gaining, maintaining and sus-
taining competitive advantage. These are academic and text book aspects and are
taught in most business schools under the topics of international marketing and
management. I am detailing below some points that I think are crucial for any Indian
firm evaluating the prospects of going global. These are commonsense and are based
on my own experience and on what I have seen others do. You can read more about
these on the Internet.
The following points are, in a very brief outline, on how countries, management,
and organisational issues affect international business. If all are investigated and im-
plemented successfully, executives can go about the business of creating a global
business network for their firms.
So the first point: How do international firms gain competitive advantage on the
global arena? Well, every nation is unique and has it is own language, culture, history,
economy and political system. It is different from its neighbours, friends and allies. All
of these make the United States different from Mexico, France different from Germany,
Japan different from Korea, and so on. Therefore, the CEOs of the international firms
direct their executives to seek information and feedback on hundreds of questions.
What do they find in each country? Can they use their core skills to export to, or invest
in each country? And, will they be able to overcome the entry barriers raised by local
firms in their home markets? Only if the risks are acceptable, skills are transferable
and barriers are surmountable international business takes place. Let us talk about
this in some detail.
z Choosing Market Opportunities: Because international business crosses many

national frontiers, executives must deal with political, currency and cultural
risks. Their task is to avoid high-risk countries, find high-growth market seg-
ments in low-risk countries, and capture significant market share in all mass
consumer markets of the world. Given that Japanese executives prefer a longer
time horizon for gaining market share and becoming profitable than the American
executives, the former see less risk and more opportunities than the latter.
z Fitting Core Skills: Not every product, manufacturing system, marketing strat-
egy and organisational technique crosses national boundaries with ease. Some
countries show a great deal of similarity in their ability to absorb new technolo-
gies and the willingness to copy consumer preferences established elsewhere in
the world; others do not. Given that customers worldwide prefer Japanese tech-
nology incorporated within an international (sometimes referred to as Western
or American) lifestyle, executives across the globe must get new products out
more quickly and commit themselves to foreign market development in all parts
of the world.
z Overcoming Barriers: Incumbent firms use their home market advantages (such
as scale economies, learning curve, links with distributors, and so on) to keep
out foreign contestants. The latter must overcome these entry barriers through
new technologies, products, services and markets. Through a combination of
technological competition and home market protectionism, Japanese executives
have emerged as active players in international business. This is a wholly new
lens through which American and European business executives must learn to
view international business.
So, this was regarding the entry. Then, how do international firms from these nations
maintain competitive advantage? Many manage entry into overseas markets with only
a minimum of difficulty. They learn to deal with the reality of domestic firms that have
fully depreciated plants, strong links with local wholesalers and significant market
shares. Nevertheless, new foreign competitors face several disadvantages. First, their
sunk costs are not depreciated; second, their forward pricing strategies are racking
up losses instead of profits and third, their local competitors are doing everything
possible legally to keep them from gaining significant market share. Therefore, foreign
firms must find least expensive offshore products, seek customers with the highest
discretionary income and create valuable new products and services.
Let us look at these strategies:
z Sourcing: Executives look for raw materials, parts and components and finished
goods from low-cost areas of the world. They want products with high export
sales potential that meet the technological and lifestyle expectations of customers
abroad. Their task is to adapt international products to national, regional and
local markets. In the past, American mass market and European high-class prod-
ucts built strong market segments throughout the world. Today, products from
Japan and other Asian countries are capturing market share with the expectation
that Japanese executives have something to say about the long-term development
of international business.
z Selecting Customers: Executives seek to improve the quality of demand by going

after customers with high incomes, refined tastes and preferences for expensive
goods. Executives seek out goods from countries whose reputation is good in the
eyes of customers. This country-of-origin affect is one of the several cues that
convince customers of quality. Today, high-performance cars from Germany, and
low-, medium- and high-priced cars from Japan have excellent ratings, where-
as cars from the United States have fair or poor ratings. The key to long-term
development of international business is to pitch products with the right price,
quality and service to the most appropriate customer, niche, and market seg-
ment irrespective of national boundaries or differences in language, culture
and history.
z Creating Value: Executives acquire brands, trademarks and other intellectual
property to create value for their firms. They measure the actual movement of
the brand-name products through the channel of distribution, and they develop
promotional campaigns to pull products faster from the manufacturer to the
customer. Today, valuable American and European brands are for sale to those
who have the cash: the Japanese, Koreans and other East Asians. The key to
long-term development of international business is to create new brands, service
marks, and other forms of intellectual property so that value is enhanced for
customers everywhere in the world.
Finally, how do international firms sustain competitive advantage? Information is

the lubricant of organisations and helps the executives to decide on which markets to
enter, how many and at what pace to finance market expansion. To make an expansion
strategy work requires capital, human resources and other assets to be leveraged to
their fullest, with an eye on the detail of national differences worldwide.
Some more thoughts on these:
z Using Information: Organisations use production, marketing and financial in-

formation to determine how management should go about its job in international
business. Sometimes information is kept internally within the multinational firm,
whereas at other times information is used as the carrot to induce other firms
to join in licensing deals and joint venture partnerships. Also, information is
used to scan many markets and then decide which of these are similar enough
so that the cost of additional market penetration is not prohibitive.
z Positioning Assets: After decisions are made concerning concentration versus
diversification, then executives position capital, human and other assets. All
expansion strategies require executives to make a host of predictions about the
chances for success, for example: sales response functions, industry growth
rates, competitive lead times, spillover effects, costs of product and promotional
adaptation, distribution expenses, costs of managerial control and the loss of
revenue due to external constraints. The task of executives is to leverage their
assets to outperform their sales quotas so that the whole company grows inter-
nationally.
z Understanding National Differences: Information and data are no good without
executives who have a feel for the real local, regional and national differences
among countries. Some of these are specific to one language or cultural group
(for example, the respect for the King and the royal family among the Thais).
Others transcend cultural groups and bind peoples into nations (for example,
the Maple leaf of Canada, or the Stars and Stripes of the United States). Still
others cut across nations and bind market segments worldwide (for example, the
Union Jack of Great Britain as a symbol of quality on Reebok running shoes).
These competitive connections among countries turn projections into inter-
national marketing plans that are integrated into a worldwide corporate strategy
for enhancing the firm’s international business. Knowledge of the detail of
national differences is the all important information that executives must know
and utilise.
Preamble z 177
14
Understanding the Overseas Indians
I have said it repeatedly and I am saying it again that it is India’s young men and
women who are at the centre of the knowledge revolution that has swept the globe.
However, so far, on the ground, Indian businesses are creating new paradigms by
only making India a world class sourcing base, a hub of global service and, to some
extent, manufacturing activities. For us, globalisation is about MNCs coming here and
Foreign Direct Investment (FDI), it is all inwards. We have encouraged the world to
get unleashed into our country and it is here to take advantage of our superb brain
power for IT and of course our huge markets for consumer goods.
The other side of the coin is that the last 25 years have seen a remarkable change
in the attitude of our Indian entrepreneurs. During this period a new generation of
Indians has taken over. They are tech savvy, knowledge savvy, having an urge to excel
and eager to go global. They represent a new confident and resurgent India, an India
where people are willing to go that extra mile to create a global enterprise.
For keeping the promise of making our presence felt in the world’s markets, our young entre-
preneurs need help. The very obvious source of this help would be the Indians who are
already well settled overseas.
And, this is where we face a serious problem!
I am going to do some plain speaking here. I am not a politician and do not say things only
to make you feel good. If there are hard, unpleasant facts that have to be faced, so be it.
Let us face the situation in a positive manner: I will tell you the facts and discuss where
we go from here.
The very unpleasant fact remains that, far from providing us a base for us to start going
global, the overseas Indians are a bottleneck.
The world is watching with excitement the emergence of this new economic superpower.
It is clearly in the hands of the young Indian entrepreneur, the new powerhouses, to
make our presence felt. The youngsters know what is expected of them and also that
now is the time to deliver.
On the face of it, it looks silly to mention our NRIs or overseas Indians as a bottle-
neck.
Wherever I go to India and meet young people, I notice that they have a common
impression that Indians do well when they go overseas. This impression needs to be
corrected, because when our young people talk of Indians overseas, they only mean IT
professionals in the US. Not many people know that there are over 25 million persons
of Indian origin living outside the country. In the countries where they live, they are
called ethnic Indians. From Fiji to Singapore, Malaysia, Africa and all the way to
South America, there are many countries that have a sizeable percentage of ethnic
Indians. Forget the Lakshmi Mittals and Swaraj Pauls, who are indeed outstanding
exceptions, but the vast majority of our people are not doing well.
I will tell you some surprising things about Indians in the developing world, which
is the best target market for our goods. The Indians in these countries are mostly
professionals and traders who are each-man-for-himself and are known for their
internal bickering and disunity. So, they have no clout and no captive markets to offer.
Their success depends upon the success of the host countries.
Some time ago, I attended a seminar organised by The Export Credit Corporation
of India (ECCI) where Mr G.M. Ganapathy, the then DGM of the ECCI spoke about
the risk of dealing with overseas Indians.
He said that ECCI has identified as many as 2,000 ‘negative buyers’ mostly from the
developed countries, who have a consistent track record of bad dealings with Indian
exporters.
Most of the negative buyers identified were traders of Indian origin settled in coun-
tries like the USA, UK and Germany.
He said that while steps have been taken to create awareness among the exporters
in this regard and though the corporation had the details of bad buyers, it could not
release the list as there were legal complications.
Since these rogue traders were Indians, they were fully aware of the weaknesses
in the system. They easily exploited the exporters because the Indian exporters did
not have a legal recourse. The Indian exporter is at the mercy of the buyer because
of the prevalent practice of under invoicing. While the Indian exporters were forced to
adopt a ‘casual approach’, their counterparts in other Asian countries did not have
any such restraints, were alerted by their watchdog bodies and did not deal with the
overseas Indians.
The net result is that Indians, both as the exporters and the importers, lost out.
The problem is that when a budding entrepreneur from India makes the first contact
in any country, invariably it is with the local people of Indian origin, if there are any.
And the matter ends there, as this precludes direct contact and dealings with other
ethnic people in the particular country. Particularly in countries like South Africa,
Kenya, Thailand, Malaysia and Singapore, the local Indian generally does not have
the capacity, or the organisation or even the inclination to develop the market for a
new product. He will, at best, import what he needs for his own set-up. But the real
tragedy is that he will never say so. He will never introduce a visitor to a suitable
local party and stand back.
Understanding the Overseas Indians z 179
I am getting ahead of myself. Let me start from the beginning. I will be using the
term ‘diaspora’ in this chapter, and I will tell you what is meant by this term in the
context of what I am talking about.
The Approach
I need to refine my definition of the scope of this chapter.
I would like to talk about an entire spectrum of our people who are living outside
India. As I said, in the countries where they live, they are called ethnic Indians. On one
hand, one has people who left our nation even before it was called India, and went to
places which are now called Sri Lanka, Malaysia, Singapore, Fiji, all over Africa and
as far as South America, and on the other there are the recent emigrants, our young-
sters who go mainly to the US for education and stay back.
Indeed, we call the Indian diaspora by many names. We have NRIs, Overseas Indians,
Non-Resident-Indians and People of Indian Origin. The last, ‘People of Indian Origin’
is a term which has been coined recently and is taken to cover all the above. This
presents a complex picture.
It is only recently that our people living outside India have started meaning some-
thing to the nation, but not much data and information is available on them. Some
excellent purely academic socio-economic studies are being carried out to find out who,
where and what they are. In the forefront is an institution called the India International
Centre (IIC) in Delhi. They have organised a number of seminars and conclaves on
the Indian Diaspora. This is a subject of many on-going research studies.
I am going to look at the Indian Diaspora, spread-out all over the world in general,
and in Asia in particular, from four angles.
Our People Living Overseas

After explaining what is meant by this unusual term, Diaspora, I would discuss the
nomenclature our social scientists have given to various categories of our people living
overseas, how many of them are out there and what history tells us about how they
happened to be wherever they are.
I would discuss, at some length, the status they enjoy in the countries where they
live.
Economic Clout
I have lived and worked in many nations which were ruled by the whites. The whites
were never more than a tiny fraction of the population, yet they could manage to rule
with an iron hand.
I have also lived and worked in the South-east Asian nations where the Chinese
constitute a small minority but have enormous economic clout.
I have always wondered why Indians, in spite of having a substantial presence in
many nations across the world, and in some cases a majority, never had any sort of a
clout. The dissolution of a democratically elected government, as in Fiji, for no other
reason than that it was headed by a person of Indian origin, even in a country where
Indians predominate, points towards their fragile position. I need to ask myself the
question why the discriminatory and blatantly racist mechanisms, which others can
easily deploy to keep Indians subjugated, work only against us.
Overseas Chinese and Overseas Indians

I would address very sensitive issue of what India can and should do for the Indian
Diaspora. While doing this, I would also talk of what sort of a contribution the Diaspora
may be able to make to their country of origin. I will be contrasting the economic sta-
tus, the business attitudes and the social interaction of the overseas Chinese with
that of the overseas Indians. Here, I will highlight from my personal experiences, one
aspect in particular:
The overseas Chinese in Asia are making an enormous contribution to the economic
development of mainland China. But, as loyal citizens of other nations, they do not call
China ‘home’ and, in times of racial crisis, do not expect mainland China to come to
their assistance.
In contrast, the overseas Indians, are not making any contribution to the economic
development of India, do not even talk well of their mother country, yet are extremely
bitter when India does not come to their aid.
The Future of Overseas Indians

On a positive note, I do not agree with the realms that have been written about the
manner in which the overseas Indians isolate themselves in air tight pockets and do
not mix and interact with the locals. While this is true, it is a pity that this is mostly
written by Indian journalists and always with a negative connotation.
I would discuss, again with examples from my own experience, that we are better
at mixing and interacting than many other immigrant communities all over the world.
I would seek to establish that all immigrant communities indeed isolate themselves
as a defensive mechanism. So what if the Indians do it too?
So where do we go from here? The future of Indians in the Diaspora revolves upon
many modalities of thought and action. I will address these issues at some length.
Indeed, the future of our young entrepreneurs venturing overseas and making use
of our own people in these countries will depend upon these.
Our People Living Overseas

Diaspora
This is a word which has only recently come into common use by the Indian media
after people living outside India have started meaning something to the nation. This
is a Greek word and originally referred to the forced dispersion of Jews among the
Gentiles between the 8th and 6th century BC. At that time, it described Greek and
Armenian dispersion. Now, it is loosely used to describe any transnational community.
So Indian Diaspora means Indians living outside India for any reason.
There might still remain questions about whether the term Diaspora can be ap-
plied to Indians overseas. The word ‘Diaspora’ was first employed only with respect to
the Jewish people and then also only to convey the idea of forced dispersal and frag-
mentation. There was a strong presumed relationship between the diasporic comm-
unity and the land which they left. There was always the possibility of return to what
we may term ‘motherland’ or ‘home’.
In the modern world, the conditions that make for a diasporic community have ad-
mittedly become complex, and the presumed link between the Diasporic community
and the motherland has all but disappeared. It thus appears perfectly reasonable to
speak of an Indian Diaspora, as it does of the Chinese Diaspora, the African Diaspora,
the Palestinian Diaspora, and of course the Jewish Diaspora.
The Indian Diaspora

For the purpose of discussion here, I will split the Indian Diaspora into four classes.
Overseas Indians
The term ‘overseas Indians’ has different meanings in different contexts. It is generally
employed to designate both the people who hold an Indian passport and who are
working or temporarily living overseas, and people of Indian origin who have taken
the citizenship of the host country and have therefore attained a distinct political
status in the country of their settlement.
For the purpose of this discussion, the term ‘Overseas Indians’ refers to people
who left India some generations ago and have settled in UK, USA, Canada as well
as in Malaysia, Singapore, Fiji, East and South Africa and South America. They are
predominantly traders and small time businessmen, with the younger generation
getting educated and becoming professionals.
This represented a distinct phase in the history of Indian emigration. Most of them
emigrated as indentured labourers during the British colonial period under the assisted
emigration scheme when the British took Indian labour to raise sugar plantations
in countries like South Africa, Mauritius, Trinidad, Jamaica, Guyana and Fiji, and
rubber plantations in Malaya. Unlike the NRIs, these people are now local citizens,
well within the legal fabric of the country of their domicile and have full voting rights.
As such, their links with India are not political but purely family and sentimental.
India is their ancestral and cultural home. They keep alive their linkage with India
through emotional, not political, bonds because they do not consider themselves as
Indians but as people of Indian descent.
Non-Resident-Indians (NRIs)
The term NRI refers to highly qualified and skilled people who are recent migrants and
are working mainly in USA and Canada as professionals.
In other words, Non-Resident-Indians (NRIs) are those who had emigrated volun-
tarily during the post-independence period for an indefinite period of stay in foreign
countries. Despite their absence from India, many are Indian citizens because they
continue to hold the Indian passport. The status they enjoy in the country of their settle-
ment is thus that of an alien. True, many have taken citizenship of the host country
but for all practical purposes they remain Indians and their ties to the home country
remain strong.
It is this knowledge-based group, largely drawn from the ‘privilegentsia’ and based
mostly in North America that is the focus of all our media attention. This is the
group that has surplus funds to invest in India and are the target of all promotional
efforts.
People of Indian Origin

This term has acquired very different connotations in the recent past and has now
two meanings as discussed before.
Export of Manpower
The export of unskilled and semi skilled manpower to the Middle East is not relevant
to this discussion because their stay outside the country is short-term and there is
no question of their having any economic status outside India. This group comprises
of workers in Saudi Arabia, UAE, Oman, Kuwait, Bahrain, Qatar and other West
Asian countries.
Our people are called by different names in different countries. In East Africa,
Uganda, Kenya and Tanzania, we are called ‘Asians’, which clubs us with Pakistanis,
Bangladeshis and Sri Lankans.
In North and South American countries, the term ‘East Indians’ is used to mean
people from Pakistan, Sri Lanka and Bangladesh and all those South Asian descendants
(predominantly Indians) who had migrated from West Indies, Fiji, South Africa and
East Africa. This is to differentiate us from the West Indians, that is indigenous black
people of the West Indies.
How Indian is the Diaspora?

What is the Indian Diaspora, and what makes it Indian?
I was in Trinidad when former President Late Dr Shankar Dayal Sharma paid an
official visit to the Republic of Trinidad and Tobago. Later the University of the West
Indies at St Augustine, Trinidad, hosted a major 10-day conference on the Indian
Diaspora worldwide. President Sharma’s trip coincided with the unprecedented deci-
sion by the Government of Trinidad to proclaim 30 May a permanent national holiday,
as the ‘Indian Arrival Day’. It seems that, 150 years ago, a ship carrying 217 Indians
had set anchor on 30 May in Port of Spain, thereby inaugurating a new chapter in
the history of Trinidad, the Caribbean and indeed the Indian Diaspora.
It was unusual that a holiday, and one which concerns Indians, should have received
prominent attention on Indian news discussions and the media. Had such a holiday
been proclaimed in the United States, the event would have been celebrated in India
as an acknowledgement, howsoever belated, of the achievement of Indians, and of
the ‘arrival’ of India upon the world stage as a considerable economic and military
power. But Trinidad, and indeed a greater part of the non-Western world, is of little
interest to middle class Indians, and few people in India are aware that Indians have
been settled in Trinidad, Guyana, Surinam, Mauritius, Fiji, Malaysia and a host of
other countries for a much longer period than they have been in the West.
Historically Indians are not reputed to be very outgoing and mobile. India is a
continent of deeply rooted people. Indians do not just own the ground beneath their
feet; our lives are so overwhelmingly tied to the land that it owns us too. Therefore we
can understand the orthodox Hindu tradition that goes so far as to warn that anyone
who crosses the ocean instantly loses caste. However, these strong strictures against
travelling overseas that are said to be found in the ancient Shastras, make the so-
called Indian diaspora, which have taken Indian communities and their descendants
from their overpopulous country across the world in every direction and as far as Fiji,
the most improbable of phenomena.
The presence of Indians abroad can be attested to from the days of remote antiquity.
Early Indian migration, such as to Ceylon and South-east Asia, owed its origins to
the impulse of Buddhist missionaries and the well-known Hindu kingdoms of South-
east Asia in the medieval period continued to attract labour and craftsmen from India.
Long before the Mediterranean trading routes were established in the early modern
period, the Indian Ocean trading system facilitated the migration of Indians to the
east coast of Africa, South-east Asia and the area that is now encompassed under
the term Middle East.
Diverse streams of the Indian population have fed into the Indian Diaspora in the
20th century: while a professional elite found its way to the United States, Australia
and other nations of the ‘developed’ West, the labouring poor were recruited to build
the shattered economies of Britain, Holland and Germany in the aftermath of World
War II. Another strand of this working class has been providing for some years its
muscle power and much more to the Sheikhdoms of the Middle East.
If there is an Indian Diaspora, we must logically inquire what makes it ‘Indian’.
What is common between Hong Kong South Asian Muslims, Indo–Trinidadians,
Punjabi Americans, Canadian Sikhs (or Sikh Canadians), Hindi-speaking Mauritians,

Tamilian Guadeloupeans and the twice or thrice migrants, such as Indians from East
Africa who moved to Britain and from there making their way to Canada, Australia,
or the US?
This question can reasonably be asked for the myriad number of people residing
in India itself, but the question of the ‘Indianness’ of Indians acquires a particular
poignancy overseas, as Indians abroad are presumed to shed their regional, linguistic
and ethnic identities in deference to the more general identity of being an Indian. It is
arguable that one is more easily an Indian abroad than in India; the category of ‘Indian’
is not contested abroad as it is in India. This is perhaps all the more remarkable,
when one considers that the ‘Indianness’ of the Indian Diaspora is not as evident or
even visible, as the distinctly Chinese characteristics of the Chinese Diaspora or the
Islamic features of the Arab Diaspora.
Hindi does not bind together Diasporic Indians in the manner in which Chinese
holds together the Chinese Diaspora; nor does Hinduism play in the Indian Diaspora a
prominent role as compared to that of Islam within, if one could speak of such a thing,
the Islamic Diaspora. Thus, in Mauritius, the national language remains a French
Creole, though Hindi is the language of the preponderant portion of the numerically
dominant Indian community.
Nevertheless, if one unequivocally speaks of an Indian Diaspora, it is because
other forces have emerged to cement the widely disparate elements from the Indian
subcontinent into an ‘Indian’ community. One can point, for example, towards Indian
cinema and food. Popular Hindi films provide a considerable element of commonalty
to Indian communities, even among those where Hindi is not spoken. This fact pays
a profound homage to the Hindi films’ rootedness in the deep mythic structures of
Indian civilisation. Across the globe, popular Hindi films command an extraordinary
allegiance from Indians.
Finally, as far as food is concerned, one beholds with amazement how Mughlai
food has become the cuisine of India, entirely synonymous with Indian food. The
same surely cannot be said of the cuisines of Gujarat, Andhra and Kerala, or even
of the popular snack food, iddlis and dosas of South India. In the Indian Diaspora,
the plurality of India is condemned to disappear, even as the most esoteric traditions
are given a fresh burst of life.
How Many of Us are Out There?

Well, nobody really knows. There is a considerable statistical bewilderment about the
exact number of Indians of all categories living overseas. The usual difficulties en-
countered in any attempt to estimate their total population are many. In some coun-
tries censuses are not taken regularly and the census figures are often ‘adjusted’.
As such, collecting a reliable cross-national data regarding the overseas Indians is
a difficult task. Further, in several countries Indians are too small in number to be
considered for separate enumeration and in many others they are classified under a
monolithic category and computed with one or more minority groups.
Above all, there is a high risk involved in relying on the Indian government’s own
estimates. All these difficulties suggest that almost all population estimates of the
Indians overseas are unreliable.
Notwithstanding the aforementioned, it may come as a surprise to some that People
of Indian Origin are a majority in many countries and the single largest group in
many others. Examples are:
1. Mauritius (68 per cent).

2. Guyana (51 per cent).
3. Fiji (about 50 per cent—the single largest ethnic group).
4. Surinam (37 per cent).
5. Trinidad and Tobago is different from most other states—all its people form
minorities. Indians are the second largest group (40 per cent).
6. Indians’ position is third or fourth in the population ranking:
z In Malaysia (9 per cent)
z Singapore (6.4 per cent)
z Sri Lanka (5.5 per cent)
7. We also form an important group in French Guyana (12 per cent).
Any detailed discussion on the Indians in the countries mentioned above is outside
the scope of this discussion. We are essentially looking at the Indians in Asia and the
only countries which have a sizeable percentage of people of Indian origin are Malaysia
and Singapore. Thailand has strong religious and cultural links with India which are
generations old but unfortunately we have no presence there worth talking about.
The Indians there are mostly what I have defined earlier as Non-Resident-Indians.
Indians in Malaysia
Let us now go to Malaysia and meet her people. Then we will be able to better under-
stand the plight of the Indians there.
Cultures have been meeting and mixing in what was known as Malaya since
the very beginning of its history. More than 1,500 years ago a Malay kingdom in
Bujang Valley welcomed traders from China and India. With the arrival of gold and
silk, Buddhism and Hinduism also came to Malaysia. Also, Arab traders arrived in
Malacca and brought with them the principles and practices of Islam. By the time the
Portuguese arrived in Malaysia, the empire that they encountered was more cosmo-
politan than their own. Malaysia’s cultural mosaic is marked by many different cul-
tures, but several, in particular, have had lasting influence on the country. Chief among
these is the ancient Malay culture and those of Malaysia’s two most prominent trading
partners throughout history—the Chinese and the Indians.
The Malays are Malaysia’s largest ethnic group, accounting for over half the popu-
lation and the national language. Before the Muslims came there were a number of
indigenous tribes. Almost all of them have embraced Islam and merged with the im-
migrants. Now they form a group called ‘bumiputera,’ which translates in Hindi as
‘sons of the soil’. Now, they are all called Malays. All Malays are Muslims, though
Islam here has a more moderate and progressive face—far less extreme than in the
Middle East. Traditional Malay culture always centred around the kampung, or village,
though the present government has policies in place to urbanise them and to bring
them into the mainstream of national life.
The Chinese traded with Malaysia for centuries, then settled in large numbers dur-
ing the 19th century when word of riches in the Nanyang, or ‘South Seas’, spread
across China. Though perhaps a stereotype, the Chinese have always been regarded
as the foundation of Malaysia’s economy, having succeeded in most enterprises.
When they first arrived, however, Chinese often worked the most gruelling jobs like
tin mining and railway construction. Most Chinese retain strong ties to their ancestral
homeland. Today, they form about 35 per cent of the population.
Indians had been visiting Malaya for over 2,000 years, but did not settle en masse
until the 19th century. Most came from South India, fleeing a poor economy. Arriving in
Malaya, many worked as rubber tappers, while others worked on building the railway
and the roads. Some who were a little educated worked as junior administrators and
small businessmen. Today about 10 per cent of Malaysia is Indian. Our culture, intact
with its exquisite Hindu temples, cuisine and colourful garments, is visible throughout
the land. I can say without the risk of contradiction that one can get a better iddli
dosa in the Chettiar restaurants in Kuala Lumpur than in Chennai.
An example of Malaysia’s extraordinary cultural exchange is the Malay wedding
ceremony, which incorporates elements of the Hindu traditions of southern India; the
bride and groom dress in gorgeous brocades, sit in state, and feed each other yellow
rice with hands painted with henna. Muslims have adapted the Chinese custom of
giving little red packets of money at festivals to their own needs; the packets given
on Muslim holidays are green and have Arab writing on them. You can go from a
Malaysian kampung to a rubber plantation worked by Indians to Penang’s Chinese
kongsi and feel you’ve travelled through three nations. But in cities like Kuala Lumpur,
you’ll find everyone in a grand melange.
Though Indians lived and still continue to live under conditions of appalling poverty
in many places of the world where they were first taken as indentured labour, a
number of remarkable transformations were effected in Malaysia over two or three
generations. Through sheer perseverance, labour and thrift, and most significantly by
a calculated withdrawal into their culture, in which they found forces of sustenance,
some Indians successfully laboured to give their children and grandchildren better
economic futures, and they in time came to capture a big chunk of the professional
fields like medicine, law and accountancy. This was just as true in South Africa,
Kenya and Uganda, as it was in Malaysia.
Malaysian Indians have always kept a low profile in Malaysia. These migrant
workers, majority of them Tamils from south India, have got used to being forgotten
in official discourse, which focuses mainly on the two largest groups: the politically
dominant ethnic Malays, who make up about half the population and the better or-
ganised and economically better off ethnic Chinese. Indian professionals do have a
visible presence on the social circuit but nil impact on the corporate or political world.
There is far too much divisiveness to make any sort of an impact.
The larger Indian trading houses are confined to mostly the textile trade and these
too have been losing ground to the better organised Chinese. Invariably, as the chil-
dren get educated and get into their own professions, the family business which was
organised as a one man show dies out.
This dismal position is directly related to poor organisation of the Indian community.
The Chinese and now the Malays have social leadership which is the foundation for
keeping the communities together and to make them put up a solid united front. The
Indians are grossly disunited and completely unorganised.
Finally, the question should be legitimately asked: what is the future of the Indians
in Malaysia? Factional struggle and disunity have been major setbacks for the Indian
community. Since its inception in 1946, fight for power, petty politicking and mud-
slinging have been the major attributes of the Malaysian Indian Congress (MIC). The
open and bitter rivalry between all the top leaders brings no laurels either to the MIC
or to the Indian community. What is more, self-help measures initiated by the MIC to
uplift the community, with lot of fanfare, have not led to any sort of results.
The Indian community in Malaysia is at the crossroads today. If the present situation
is allowed to drift, it will do serious damage to the future of the community. If the
present hardships are to be overcome, the Indian community must sink its differences
and work together. The smallness of the Indian community and its present vulnerable
position makes such a team effort all the more imperative.
Indians in Thailand
Though the Indian culture has been a part of the Thai landscape for centuries, one finds
we are often misunderstood and sometimes disliked and resented. True, the official
religion is Buddhism and the local script is based on Pali, the Sanskrit script and
the former capital was Ayudhya and the present king is King Rama IV. Nevertheless,
it does indicate how little Thais understand a group of people who have been living
among them for years. The Thais are not to be blamed for this. It is the Indians who
live in airtight compartments and do not make any efforts to be noticed.
Like in Malaysia where there is a predominance of Tamils, the spectrum of Indian
communities in Thailand is not too broad. They are mostly Punjabis (Sikhs, Hindus
and Muslims,) who mostly run flourishing textile businesses. Many have branched into
other business areas of manufacturing, real estate or fast food chains. Their offspring
have entered other professions—medicine, finance and government service. The other
large community is from Uttar Pradesh, and these people mostly work as watchmen
at factories and warehouses, doing part-time trade as petty moneylenders.
Going back into history, there are traces of Indian cultural influence which can be
found in the Brahmin ceremonies, and there are records going back to about AD 1350
when King Uthong invited Brahmins from Varanasi to institute proper ceremonies,
which are still performed today. History records that in the early centuries of the
last millennium, trade and travel to Siam, as it was known then and to other areas
in South-east Asia flourished with the seafarers from Cholla and Kalinga. There are
records of elephants being exported from Siam to Hindustan, which in turn exported
to Siam cloth, gold, silver and gemstones. Scholars, skilled craftsmen, monks and
priests often accompanied traders, and it was through trade routes that religion,
political systems, astrology and other Indian influences were brought to Thailand.
Some Chinese annals indicate that the first Thai Kingdom, Nanchao, used an alphabet
of Indian origin and identified itself with India rather than with China. The peculiar
thing about the Thai language is that it is a tonal language like the Chinese, but is
written in a script of Sanskrit or Pali origin.
In the present times, like in nearby Malaysia, the Indians have been able to main-
tain their own cultural heritage. But that is not a plus point. It is a characteristic
of the Indians in Thailand, like overseas Indians in many countries, that they keep
to themselves and do not assimilate any other culture. I will talk about this in the
next paragraph that by itself, this is not a bad thing. Many immigrant communities
do this. But the real tragedy is that even among themselves, there is nothing but div-
isiveness and disunity. Take a small community like the Sikhs. There are three dis-
tinct sects which have their own places of worship and each remains in water tight
compartments. Forget about intermixing with the other Indian people, they rarely
have social or cultural exchanges with other Indians. The businesses owned by the
Indians remain small and isolated.
Indians in Fiji
Though Fiji is outside the geographical scope of this discussion, I feel it a good idea
to have a quick look at our brothers in Fiji as this has relevance to the section where
I will discuss the future of the Indian Diaspora.
Fiji and neighbouring Tonga were first visited by a white man called A.J. Tasmaan
in 1642. The British annexed the group of islands called Fiji in 1874 and the Imperial
Government started to send Indians to Fiji as indentured labourers. The first Indian
workers, mostly from Bihar and Uttar Pradesh arrived in Fiji in 1879. About 60,000
Indians came before the indenture system ended. The indentured term was for five
years and labourers signed to work five and a half days a week, nine hours a day. Then
if they remained 10 years in the colony, the government helped them to go back to
their mother country. Most of the migrants, some of whom were married and brought
their families were between the ages of 20 and 30. They were born into castes which
knew the meaning of manual labour. They thought that Fiji was a promised land of
opportunities where they could make their fortune, but life was hard. It was difficult
to maintain any sort of privacy in the environment of the cramped coolie lines. There
was illness, murder, suicide and overwork, but most of them chose to remain in Fiji.
The colonial government encouraged them to stay and employers welcomed their
labour. Fiji was a more comfortable country than their mother country, and having
an income was also nice for them.
Indians who settled in Fiji were rewarded with economic success. The population
of Indians increased year by year until it outnumbered the indigenous Fijian population
in the 1940s. However, in 1990s Fijians once again became the majority as Indians
had started to emigrate to Australia and New Zealand.
In Fiji, the unity between Indian families or relatives is very strong. It’s quite a
natural thing because their ancestors came to Fiji from a far away homeland and
had to struggle to make their lives better. So, if one in the family who had a job and
earned money, he shared it with the rest. If there were two in the family who were
earning, that family could live in ease and comfort. I need to make it clear that this
unity is purely a protective mechanism and remains within the family: No two Indian
families would see eye to eye on any issue. This is also one of the reasons why the
youngsters in the better off families, often do not have jobs and do not feel keenly the
necessity of working. They can live and eat comfortably.
Of course many Fijian-Indians have important positions in the government, are
doctors, teachers and in other professions, but the main activity is trading, which
offers very little employment opportunities for their own people.
About one-third of Indian houses I visited do not have electricity. These were houses
along the highways, near the bigger towns, so I am sure the houses in the interior
would be even less likely to have power. This is not a story about extremely poor
families. It is about the ordinary families. However, it seems that they do not mind
these inconveniences.
Just as in India, there are several religions among Fijian-Indians and even for a
small community, they strongly discriminate among themselves. The majority is Hindu
and the next greatest number is Muslim. Then, there are few Sikhs, Christians and
so on. As for Fijians, most are Christian. The rigid caste system of the Hindus has
somewhat broken down among Fijian-Indians. Probably the cramped conditions on
the ships which their ancestors came in, travelling for months, made it impossible to
observe all the rules of caste especially those related to eating. In addition, it was very
hard to keep the rigid system in their community life in Fiji. However, Hindus and
Muslims go to different schools and keep apart. One thing a visitor notes in Fiji is
that the Indians go out of their way showing their disunity and divisiveness to every-
body. There are as many as 180 associations representing various communities and
cliques and they are always at loggerheads.
Economic Clout
The Status of the Indian Diaspora
It is an understatement to say that all is not well with the Indian diaspora. The journey
of Indians all over the world is though one of the great sagas of our time, it is replete
with misadventures—starting from Burma in 1948, to Idi Amin’s vicious expulsion
of the Ugandan Asians, the tensions between the black and Indian populations of
Trinidad and South Africa, ‘Paki-bashing’ in Britain, the tough treatment of Indian
workers in Gulf states, and now Fiji. Of course these hard-working migrants and
their descendants have a single-minded dedication to bettering their families’ lot. But
because they are harder working, their success is resented by others. Somehow this
admirable trait comes across as reprehensible.
I have talked about this at some length while discussing some of the Asian countries
and Fiji. It is true in most other developing countries. The resident Indian population
has acquired something of a reputation for exploiting the indigenous people, for having
cornered trade and business and for being possessed of a greedy disposition. True,
wherever the Indians were able to establish themselves, they became indispensable
principal arteries of trade as shopkeepers to the nation, but they exposed themselves
to the charge that they did so with the intention of enhancing their own interests
and prosperity.
These charges could scarcely justify the cruel and brutal treatment meted out to
the Indians first in Burma, and then in such places as Uganda, from where Idi Amin
effected their wholesale and immediate removal, or Kenya, from where their eviction
was only slightly less callous. In Uganda, where Indians had first been brought by
the British to labour on railway lines, the charge that Indians were taking away from
the black men their livelihood and not contributing to the national coffers either was
writ large on the political agenda of black nationalists. Indians were sacrificed, in
both countries, to black nationalist politics.
Migrants do not remain visitors forever. In the end, their new land owns them as
once their old land did, and they have a right to own it too.
India and Overseas Indians

What I have said here is nothing recent. The position of Indians overseas has al-
ways been precarious. This problem was underlined soon after Burma attained its
independence in 1948. Indians were prominent property owners and significant in
business and trading circles; their property was appropriated by the state, their
possessions confiscated and many Indians were exiled.
When the Indian community appealed to Nehru for assistance, he took the stand
that this was a matter between them and the Burmese state and that India was un-
able to intervene in the internal affairs of a foreign state; moreover, Indians who had
been settled overseas were to reconcile themselves to the fact that having abjured
Indian citizenship, they had no substantial claims on India. This has, in effect, been
the position of successive Indian governments to this day. Though India certainly is
a reasonably major player on the world scene, there is no gainsaying that the Indian
government might not attempt to use its influence to protect the lives and interests
of those who, though they may not be Indian citizens, are Indians in ancestry.
However tempting it might be for the Indian government to intervene to protect
the interests of diasporic Indians who are foreign nationals, the brute fact remains
that India can do little more than indicate its displeasure with the allegedly offending
party.
I will seek to establish below that even this ‘indication of displeasure’ itself con-
siderably damages the status of the Indians left behind in those nations.
I repeat that diasporic Indians cannot and, more important, should not look to the
Indian government for even reasonable succour and assistance: Whatever the strength
of the emotional and cultural ties between them and the ‘motherland’, their centre of
being lies elsewhere. The question of what India can do for people of Indian ancestry
abroad, need never be asked.
It is a different matter when Indians have gone as labourers on short-term work
permits. These people are Indian citizens. This is the case with, for example Indian
migration to the Middle East. The Indian government is duty bound to lodge, whenever
necessary, protests over their ill-treatment, or to otherwise act to protect their lives
and property. In the days subsequent to Kuwait’s invasion of Iraq in 1990 and before
the beginning of the war between Iraq and the US in 1991, the Indian government
took upon itself the mammoth task of evacuating the greater part of the Middle East’s
Indian population. It did so at the request of a panic-stricken people who could claim
their Indian citizenship as a passport to safety. That most of these Indians have
returned to the Gulf is another story.
Asking NRIs to Help

Hardly a day goes by without some politician or the other ‘going overseas to invite the
NRIs’. For overseas, read mostly USA. Of course, we know what overseas trips by our
politicians mean, but the declared reason is that the overseas Chinese are helping
build China, so why cannot the NRIs do the same for India?
I seek to establish that the contribution the overseas Chinese, that is the Chinese
living in Taiwan, Singapore, Malaysia and of course, USA have made towards massive
growth of the Chinese economy is in stark contrast to what the overseas Indians can
do for India.
The overseas Chinese have economic clout in many countries and they go to China
to get goods produced for their own captive markets.
Indians have neither captive markets anywhere nor can they get anything specially
made in India for themselves. Indeed, it will take a full discussion to establish that
far from being of any help, the overseas Indians have, albeit unwittingly, become a
barrier to our exports. As I said above, our Eximbank publishes a long blacklist warn-
ing us against dealing with many importers in other countries. These are mostly
overseas Indians.
Overseas Chinese and the Overseas Indians

Let us Look at the Overseas Chinese
In this section, I will discuss the economic performance of the overseas Chinese only
in the context of comparing them with the overseas Indians. A full discussion on the
mindsets of the overseas Chinese follows in chapter 15.
We have had a good look at who the overseas Indians are, and how they are par-
ticipating in the economy of the mother country. Well, now we contrast this with what
the overseas Chinese are and what they are doing in China.
All my life, I have lived and worked with Indians in many countries. Based on my
own experience in employing overseas Indians and in dealing with them, I will say
two things: One, we are known all over the world for our outstanding brilliance and
two, for our appalling internal rifts and divisiveness. Others, particularly the Chinese,
who are not so clever but always work together as a cohesive body are defeating us
almost everywhere.
Let me explain. Everyone talks of the remarkable success of our people in the
Silicon Valley. I have discussed this in some detail in chapter 3. Here is a tragedy.
True, the people who are making the most outstanding contribution to the Silicon
Valley are the Indians, but the people who are getting the maximum benefit of it are
the Chinese. You will read that there are far more Chinese owned and managed firms
there than Indian ones. The former are better managed and are far more profitable.
Again, I think the reason is mainly that Chinese work well with each other and no
Indian, given a choice, would like to work for another Indian.
Before going into this, I would like to mention that economic reforms started in
China about 20 years ago. Since then, the country has received enormous amounts of
foreign investment. About three-fourths of this is estimated to have come from the
overseas Chinese, a vast prosperous community numbering about 55 million. The
overseas Chinese presence is in all over the South-east and East Asia—Taiwan, Hong
Kong, Indo-China, Thailand, Singapore, Malaysia, Indonesia and of course, the US and
Canada. Estimates say about two-thirds of Chinese mainland exports are from the
investments made by the overseas Chinese to markets controlled by themselves. These
investments are everywhere: manufacturing, service and infrastructure projects.
These projects are making a direct contribution to the growth of employment in
mainland China.
If one goes by the massive amount of money going into China, clearly, the overseas
Chinese are richer and have greater investible surplus than the overseas Indian. This
is true, because the Chinese have a massive economic clout in most of the countries I
named above and control large chunks of the Asian economy. Contrast this with the
total picture of Indians living overseas and not only with the IT professionals in USA.
We are, largely speaking, either in retail trade or salaried employees or professionals.
There is no economic clout anywhere and no real possibility of promoting any manu-
facturing, service or infrastructure project in India.
I also seek to establish that the emotional ties of the non-resident Chinese to the
mother country are far more enduring, durable and deep than they are for the overseas
Indian.
Can the Indians do this for India?

I do not have an answer to this. We are a nation of intensely individualistic people
where everyone is for himself and we tend not to build large and strong commercial
organisations. Do not get me wrong. The Chinese are individualistic too and the only
concern a Chinaman has is for himself, his family and his company—in that order.
z Whatever a Chinese businessman does in China is not for love of his motherland.
If tomorrow, say, Vietnam becomes more attractive to do business in, the Chinese
will shift there in a moment.
But in the case of Indian businessmen, everyone has to be the boss. Be it in India,
Kenya, UK or USA, an Indian organisation is allowed to grow only to the extent that the
owner can personally control it. If he does not have children or they are not interested
in the business, the business dies out with the old man. I have seen countless cases
of this in India and in Indian owned businesses in many countries. The business
remains small. The result is that the small Indian businesses offer very little scope
for employment of professionals. The educated children of the Indian businessmen in
all countries which have a sizeable population of Indians, in countries like Malaysia,
Singapore, Kenya and South Africa, and so on look for employment to people of other
races.
So there is no question of our disorganised overseas Indians coming to India and
promoting large manufacturing, service, tourism or infrastructure projects.
The exception is, of course, the recent phenomena of the IT projects. All that they
can do is bring in short-term money. In the modern globalised scenario, no big project
can be promoted in India without a captive tie-up with an established world class
entity.
The Future of Overseas Indians

Isolation of Immigrant Communities
The citizenship laws of many nations are designed to help in the quick merging and
intermixing of immigrant people once they take local citizenship. As an example, it
is a little known fact that the citizenship laws of Thailand and Indonesia insist on
deleting your original identity when you become a citizen. If my son gets American
citizenship, his name, religion and beliefs remain exactly the same. Not so in these
two nations. In Thailand one has to accept the nation’s official religion, Buddhism,
while retaining one’s own beliefs and traditions. Also, one’s name changes. Every one
becoming a Thai citizen has to take a Thai name making it impossible to identify a
person’s original race or religion by name. Another factor is that everybody speaks
the same language. There are different dialects, but script and the language is same.
I have been to my Indian friend’s homes where I could not talk to the children. They
only spoke Thai. One thing I have noticed here though is that the Chinese children
fluently speak their mother tongue too, but the Indians abandon theirs.
The same is the case in Indonesia but here only the name changes to a first name
only, the religion and beliefs remaining untouched. In Indonesia people of all races
and origins are known by their first names only—Suharto, Sukarno, Hartono and so
on. In modern times, people have added a surname or an additional first name for
convenience. Here too everybody speaks the same language. And again, the Chinese
children fluently speak their mother tongue, and the Indians have abandoned theirs.
The result is that there is an automatic intermixing of all races and creeds in
Thailand and Indonesia. It is almost impossible for an outsider to know if a person is
Chinese, Indian or native born. True, the differences are there, but the intermingling
is considerably greater. Since the children grow up in a homogeneous society,
freely mixing with other children, they acquire common food and cultural habits and
attitudes.
This is in sharp contrast to next door Malaysia and Singapore where the Indians,
the Chinese and the Malays have distinctly different identities, different lifestyles
and they speak their own languages.
As far as the Asian Indians are concerned, only the Muslims and the Christians
have intermingled to such an extent that they are almost unidentifiable.
An Outsider is an Outsider, Always

One point to be taken note of is that all immigrant communities all over the world tend
to isolate themselves. Every social scientist has a different theory of why this is so, but
it seems to be some sort of a defensive mechanism. A new family migrating anywhere
prefers to look for accommodation within their own community or nearby.
This is true within India too. The Marwaris in Bengal and the Punjabis in Tamil Nadu
have very little social or cultural contact with the locals even when they are born
there and speak the local language fluently.
The fault lies as much with the locals as with the outsiders. It is how the locals
treat the ‘outsiders’. A Bihari family living in Bengal for generations, speaking the
local language never becomes ‘one of us’. There are many Punjabis and Marwaris
living in Tamil Nadu, or Bengal, or Assam for generations and it is the same case: An
outsider is an outsider always, everywhere.
Nevertheless, the fact of Indians keeping to themselves and not intermingling with
the locals is nothing as compared to the substantial population of people of Japanese
origin living in Peru, South America. They send their children to their own schools,
shop at their own supermarkets and one would rarely find ‘outsiders’ at their weddings
or social functions. The same goes for the sizeable population of Koreans living in
places like Los Angeles.
However, one community which takes the top slot in keeping strictly to themselves
all over the world are the Jews. They do not intermingle with anybody, anywhere and
do not welcome any sort of a contact with outsiders. It is a known fact in most
American cities that if a crime is committed inside a Jewish community, the local
police find it very difficult to investigate it. It is to be noted that there is very little one
can read about the social, cultural or family problems of the Jews. Even the details
of their rituals and lifestyle are not known to the world at large and are not matters
for public discussion. It is to the credit of the Jewish journalists who are careful
not to write too much about their people in the press. It is unlike the case of India,
where anything that degrades India in the eyes of the world is invariably written by
an Indian journalist.
The Future of Indian Diaspora

So where do we go from here? The future of the Indian Diaspora revolves upon many
modalities of thought and action. I have a few points to highlight.
1. Respect your Ancestry

Nobody will respect you if you do not respect yourself. President Kennedy was
an American but was also intensely proud of his Irish blood and ancestry.
Other Americans noticed this, appreciated it and respected him for it. I have
lived and worked with overseas Indians in many nations and know them well.
I have never heard any of our brothers speak with pride of his Indian blood
or ancestry. Rather, running down India and anything Indian, mainly in front
of people of other races, gives them enormous delight. Everybody gives wide
publicity to the horror stories of their last visit to India. Indeed, this does not
bring us respect. I have noticed that people of other races are very careful while
talking about themselves in front of others.
2. Respect and Honour your Citizenship
Here is a paradox. On the one hand we have a tendency to run down India and
everything Indian. On the other, without exception, the overseas Indians who
have long ago abjured their Indian citizenship are very loud in proclaiming that
they hope to go back home one day. This doubly ruins their prospects in their
host nations. Sure, the native citizens of those nations are not happy with this
open display of crass disloyalty and we see the results every day.
I will illustrate this with an example from our own nation. There was a
sizeable Chinese population in Calcutta till mid-1960s. They were by and large
peace loving people, minding their own business, and were of no problem to
anybody. While they were Indian citizens, they lived in airtight communities
and made no secret of their dreams of one day going back home to China. They
made absolutely no effort to enter the mainstream of Indian life and made it
clear that they were Indian in passport only. Well, I was living in Calcutta
at the time and had Chinese carpenters working for me and was very happy
with them. During the Indo-Chinese war of 1962, I developed an instant dislike
for them though these people had absolutely nothing to do with the war. All of
us suddenly did not want them and made things very difficult for them. They
had to leave India. They were not accepted back by China so they went initially
to Bangladesh and thence to Thailand, and so on.
The same is the case with our brothers overseas. The recent crisis in Fiji
made it abundantly clear yet again that very few Fijian-Indians consider Fiji as
their motherland. This was the root cause of the problem in the first place. For
them their motherland is still India, the country their ancestors left a couple of
100 years ago, a country they have never even visited. When reporters of the
website http://www.indiainfo.com visited the chat room at www.fiji-online.com,
they found the room crowded with Indians who had left Fiji and who found yet
another reason for screaming abuses at India: this time, for not coming to their
rescue. They were holding on to a dream that India is theirs, they are Indians
first. They suddenly realised that this dream was false.
This is the sad story of all overseas Indians. People who are Indians only
in ancestry and are citizens of another nation, asking India for help is highly
damaging to their own stay in those nations. Further, it is a tragedy that the
people who have run away are the loudest in running down both India and
the nation they ran away from, leaving the people who were left behind to face
the nasty music.
3. Help the Mother Nation

I have lived and worked with the overseas Chinese in many Asian nations.
These people earn solid respect when others see them making enormous con-
tributions to the economic development of mainland China, but they do not
consider China their home. I have personal experience of the Chinese Malay
racial riots in Malaysia in 1969 and again the recent riots against the Chinese
in Indonesia. No Chinese expected mainland China to come to their assistance,
even on a diplomatic level.
By contrast, for the Indians, it is a purely one-sided story. Nobody dare ask
our overseas brothers what they are doing for their so-called motherland. As
I said earlier, the overseas Indians are not making any contribution to the
economic development of India. True, this is because they are traders and
professionals who have no economic clout anywhere and just cannot participate
in India’s economic development. I have already established that they cannot
even help in India’s export. True, they make cash remittances. There is a
difference between sending money home and making cash deposits. The real
remittances come from our own people working overseas on short contracts.
Overseas Indians make deposits and these are on the basis of the best rate of
return. I know Indians who would as readily deposit their money in Pakistan
for better returns. Yet, as I mentioned, they are extremely bitter when India
does not come to their aid.
4. Learn from others
All over the world we have immigrant communities. Let us look at some of these
people and try to see how they managed to do well wherever they went.
(a) The British: Let’s look at how and why the British people came to India and
subsequently took over the whole world. I will seek to establish that the
strong and well-established corporate organisational infrastructure they
had at home was the foundation on which the British Empire grew. True,
the British people came and conquered India mainly because of our own
weaknesses and faults. That is not the aspect I am talking about. If one
looks at the British conquest from a British point of view and a purely
managerial and organisational point of view, one is amazed at the amount
of infrastructure and commercial organisation the British had even in the
17th century. They had to have a solid base back home to have successfully
established such a large trading empire in India.
They could not have set up their trading and subsequently the political
empire if they did not have a well-established banking and financial system,
a legal system, postal services, company laws and regulations, and some
large, efficiently managed private companies in every field of enterprise.
Remember, this is the early 17th century we are talking about.
A very important point to note is that each and every Englishman who
came here did not come as an individual. He came in as a team member, an
integral part of the British Empire. And everything the British did in India
was to the benefit of England as a nation and not for any individual. The
individuals who came here were not particularly clever, rather the reverse,
but they had the skill of setting us Indians against each other and making
us work for them. It is indeed, a credit to their style of management that
the Indians who fought for them were better soldiers than those who fought
for the local princes.
They ended up having the whole world working for them to the benefit
of England. There was mind-boggling rise in the standard of living of the
common people of Britain. There was never an armed invasion by the British.
Like the Indians in many countries, they also came here only as traders. Not
a single armed battalion was sent from England. Not a single navy vessel.
Their success is entirely due to the massive amount of organisational back-up
back home and to the economic, and political institutions they built wherever
they went.
Can we do this?
(b) The Japanese in Peru: In Fiji there was a Prime Minister who was not a
native. He was thrown out only because he was Indian. In Peru, there was
a Prime Minister who was also not a native. But he was respected only be-
cause he was Japanese.
I would like to repeat two points I mentioned above which are strong nega-
tive points for Indians, yet the same points become strong positive points
for the Japanese in Peru.
The first I have already mentioned: ‘The Indians keeping to themselves and
not intermingling with the locals is nothing as compared to the substantial
population of people of Japanese origin living in Peru, South America. They
send their children to their own schools, shop at their own supermarkets and
one would rarely find “outsiders” at their weddings or social functions’.
The second: ‘ The resident Indian population has acquired something
of a reputation for exploiting the indigenous people, for having cornered
the trade and business and for being possessed of a greedy disposition.
True, wherever the Indians were able to establish themselves, they became
indispensable as the principal arteries of trade, as shopkeepers to the nation,
but they opened themselves to the charge that they had done so with no
other thought than of enhancing their own interests and prosperity’.
This is exactly the situation of the Japanese in Peru, but they are respected
for it! For a simple reason: Overseas Indians run small enterprises and
are such poor employers that even their own children have to look up to
others for jobs. By contrast, the Japanese have built strong commercial and
economic institutions in Peru and are the largest employers in the nation.
Everybody who has a good job is sure to be working for the Japanese.
In the world over the locals want Indians to leave. In Peru, the locals want
the Japanese to stay!
Can we do this?
(c) The Chinese in Asia: I have lived and worked with the Chinese for many
years and I am impressed with the immense unity they show when faced
with a problem. I remember, many years ago in Malaysia, a large MNC in
the tobacco business raised the prices of premium brands of cigarettes just
before the Chinese New Year. The Chinese took this as an insult, because
they have a strong tradition of offering cigarettes to visitors during the New
Year celebrations. The visitor politely takes it and pockets it, and maybe
throws it away later. Though the executives who decided to raise the prices
were Chinese and they explained that the timing was a mere coincidence,
the Chinese people in Malaysia and the neighbouring countries boycotted
all the products of the MNC. There were no protests, demonstrations,
bus burnings and so on. I read nothing in the local press, but the boycott
was complete and devastating. The MNC took many years to recover its
business.
Can we do this?
It is for Indians in the diaspora to forge links between themselves, to enter into
coalitions with other minorities and marginalised people, and more significantly,
to formulate for themselves a moral, sensitive and democratic politics.
Diasporic Indians must attempt a reconciliation with other communities in
the nations they live in. Only then, can India benefit from their resources and
skills.
Preamble z 199
15
Understanding the Overseas Chinese
A word of explanation before I go further:

Why ‘overseas Chinese’ and not simply ‘Chinese’? Also, why should we bother about
the Chinese, overseas or otherwise, in a book on Entrepreneurial skills?
Well, the first point: I have made the distinction earlier that there is nothing we have
to learn from China, but a lot to learn from the Chinese. The distinction may not always
be clear. So I need to add that it is not China as a nation, nor the Chinese in China,
but the overseas Chinese that are the driving force behind such incredible advances
Chinese economy has made. I will come to this point later on in this chapter.
I do not have to comment on the second question of why we should concern our-
selves with the overseas Chinese, because I have discussed this repeatedly in the
earlier chapters. I will again seek to establish that in all fields, all over the world, the
overseas Chinese have done far better than our people.
In many nations, the Chinese immigrants are commanding a powerful position in the
local economy while the local Indian immigrants have made themselves irrelevant.
I will be talking how, in particular, about the Chinese in two nations, Thailand and
Indonesia because they are there in small numbers and they not only wield immense
economic power, way out of proportion to their numbers, but also have remarkably
integrated into the indigenous population.
z I have said it repeatedly that if we have to compete and win, we need a deep
insight into their mindsets, about how they live and conduct business, and their
attitude to earning their livelihood. It is only then that our youth can prepare
itself before venturing out in the wide world.
I have discussed the overseas Indians in chapter 14 and in this chapter I am going
to take a hard look at what makes the Chinese tick and contrast it with how our
people behave under similar circumstances.
Definitions
Ethnic Chinese
There are many nations like Cambodia, Vietnam, Malaysia, Indonesia, Brunei, Thailand,
Peru, Brazil, South Africa, Myanmar, Singapore and Philippines where the people of
Chinese descent are in a minority, are citizens and have full voting rights. For the
purpose of discussion I will use the term ‘ethnic Chinese’ for these people. In addition,
there are many Asian nations like Singapore, Taiwan, Macau and the former British
colony of Hong Kong, which are actually called Chinese nations.
For the purpose of my discussions here, I will lump together all the people of Chinese
descent living in all these countries are under ‘overseas Chinese’. This, I repeat, is
only for convenience.
Ethnic Indians
Similarly, I will use the term ethnic Indians to refer to people of Indian origin who are
citizens of, or, permanent residents of Malaysia, Singapore, Kenya and South Africa. I
have already explained in chapter 14 that the term NRI refers to a completely different
category of Indians, and is not relevant to the discussion here.
The idea is to compare the behaviour of people when living ‘away from home’.
The context is a continuation of what we discussed in chapter 14, that the ethnic
Chinese are responsible for the massive export growth of mainland China but the
ethnic Indians have been able to do no such thing for India. Indeed, the Chinese are
now making successful inroads into the domestic markets of India too.
z Another strong reason for writing this is to explain why our visitors often get cold
responses from the Chinese in South-east Asia when seeking appointments.
The Chinese Diaspora

Many countries produced travellers, but generally in a limited range of modes—the
Romans conquered, the Venetians traded and conquered, the British conquered and
traded, the Spanish and the Portuguese only conquered but hardly traded.
Annexing a new territory to the parent body is what is known as colonisation. The
Chinese have also planted such colonies. South China was not a part of China. It was
only when huge masses of the people had to flee the foreign invaders that what is
now known as ‘the new territories’ became a part of China.
I have discussed in chapter 14 that the word Diaspora conventionally applies to
the Jews because they were expelled from their own country by a foreign power.
Understanding the Overseas Chinese z 201
The similarities with the Chinese end there. The Jews settled overseas and stayed there.
They were however, not so starkly driven overseas as were the Chinese and yet the
vast majority of them stayed put in their own sovereign country.
Before, during and after the days of the British conquest, Indians also left and took
abode in many lands in fairly large numbers, but were happy to become second-class
citizens and made no conquests. (See chapter 14 for a detailed discussion on this.)
Every historian has a different view on why this was so, but the fact remains that
this was indeed so.
The precursor wave of the Chinese going overseas started during the late Ming
dynasty, in the form of Ming loyalists who settled in what are now called Indo-China
and Taiwan. This should not be taken to mean that everyone who ventured across the
waves was running away from the invaders. A fair few went because they managed
to see the opportunities abroad. Quite a few managed to get a strong foothold, in
South-east Asia to begin with and further afield later on. As is usual among Asians,
they encouraged family and neighbours to shift and eventually built up the classic
system whereby a family would have two homes, one in its adopted country and
another in China.
Younger brothers and cousins would be sent for to help set up and run the family
business; successful merchants would travel home to marry, show off outrageously
and bring with them a bride; subsequent sons would be sent ‘home’ for ‘proper’ edu-
cation; all aspired eventually to be buried with their ancestors.
Today, the young and dynamic nation called Singapore owes much of its basic ideology
to Chinese traditions, with the population being over 70 per cent ethnic Chinese.
Confucianism is taught in schools.
Chinese Business Culture

Let’s look at some aspects of the Chinese business culture as a contrast to the Western
(American) and the Indian business culture discussed earlier, and explore how the
former is manifesting itself in entrepreneurship and in the management of businesses
by the ethnic Chinese.
Remember, my discussion is limited to business aspects only and my intention is
not, of course, to discriminate against or to belittle any other aspect of Indian culture.
In other aspects of culture, we are closer to the Chinese than to the Westerners.
It is an interesting fact that the Chinese business organisation has so strongly
retained its original basic character in spite of open economics in nations where the
overseas Chinese are in place, and in spite of potential influences by MNCs and
trans-global connections.
To be the boss, autonomy is a dominant driving force in Chinese entrepreneurship.
But this driving force seems to be more vigorous and widespread in, say, Hong Kong
than in Singapore. The former is fostering what may be called entrepreneurial cap-
italism while the latter is championing managerial capitalism.
Guanxi
This is a nice sounding Mandarin word which is pronounced exactly as it is written.
It reminds me of the sound of a large gong in a temple. Guanxi describes the basic
dynamic in personalised networks of influence. It is very difficult to translate it and
can roughly mean ‘relationships’, ‘common bonds’, or ‘connections’. None of these
are adequate as they do not sufficiently reflect the wide cultural implications that
Guanxi describes.
I have already given some very interesting examples of Guanxi-in-action in chapter 10.
It will be a good idea to take a quick look at these.
Guanxi is a central concept in Chinese society and describes, in part, a personal
connection between two people in which one is able to prevail upon another to perform
a favour or service, or be prevailed upon. The two people need not be of equal social
status. It could also be a network of contacts, which an individual can call upon when
something needs to be done, and through which he or she can exert influence on
behalf of another. It can also describe a state of general understanding between two
people: ‘He/she is aware of my wants/needs and will take them into account when
deciding his/her course of future actions which could concern me’.
I would roughly call it a human version of the Internet, because the Chinese business
environment can be best described as a series of interlocked networks. This is a key
element of Chinese business. The distinctive feature of the overseas Chinese model
has never been the individual firm, but a network of them.
This is Guanxi. It is a very complex concept and I would suggest that you read more
about this on the Internet. Hundreds of books and papers have been written on it,
but it takes a lifetime for a non-Chinese to master the concept.
True, everywhere in the business world you need contacts, but if you magnify their
importance many times, you understand Guanxi. Every Chinese society in Asia is
built around relationships, around a unique sense of trust. In the West, there is busi-
ness first, then sometimes comes the trust and the networking; in Asia, there is net-
working first, then starts the business. ‘I will start dealing with you only after you
become my friend’.
An important aspect of this networking is the mentality or the attitude of the people
involved. All the parties need the patience, the motivation, the training and tools in
conflict resolution. How do we agree to disagree? How do we agree to solve our pro-
blems together? For example, do we agree to trust each other’s intentions regarding
the unwritten partnership regardless of the depth of the disagreement? Guanxi has
to be in your blood or it will not work.
Guanxi is based on mutual obligations. In an extended family, members are in a
mutual obligation to help one another. For instance, a wealthy member helps a poor
one. Also, in business organisations, it is common for members of a family to use their
family connections to try to obtain jobs or other benefits. The overseas Chinese found
that dialect, kinship or common origin in a clan or a village gave a more sure footing
of trust to a business deal conducted even at a great distance. In fact, the overseas
Chinese power rests on a kind of an underground network. Regional identity is im-
portant to a Chinese everywhere in the world. Same-native-place ties can play a
crucial role.
Please understand that there is a vast difference between networking and teamwork.
Teamwork simply means a group of people working together as one body. A sports
team, a debating team or a sales team works together on a special task. All people
working as one and under one leader. There is nothing like this in networking. In the
concept that I am explaining here, generally there is no leader. As I said, it is almost
like the Internet where there is no central computer.
There appears to be a contradiction here. I said the typical Chinese firm is run
and controlled by one autocratic boss at the top. So why did I say that there is no
leader?
Both are true. All over Asia, we see how small, intensely independent, family
owned firms work with each other. Independent family owned firms specialising in
different fields of design, manufacturing, marketing and finance build instant net-
works whenever an opportunity arises to produce products that nobody can compete
with.
This is typical of all overseas Chinese.
z An important aspect of the failure of Indian firms is that the Indian firms are all
small, independent units, each working on its own and happy to remain small
and isolated. To us, if growth requires giving up or sharing absolute control we
rather not have it. Though the Chinese businesses also stay singularly apart,
when an opportunity presents itself, they close ranks and co-operate.
Familism
Family is not only the bedrock of Chinese society; but also that of the Chinese business.
A Chinese firm is almost always a family firm. Chinese tradition puts the rights of the
group ahead of those of any individual. In Asian cultures, individuals have a very deep
attachment and sense of belonging to ethnic groups, and Chinese like the Japanese,
and very unlike the Indians, score very low in individualism.
One reason why the Chinese family system is so important is that it provides se-
curity in an insecure world. For the Chinese who left their homeland (often forced out)
and tried to settle abroad, environments were not always easy. If we exclude Hong Kong,
Macau and Taiwan, where the people are not strictly overseas Chinese, society was
often outright hostile. As a consequence, strong family self-interest is rampant in
many of these societies. Perhaps not surprisingly, in Singapore, there are strong de-
clarations by the government supporting social responsibility of the businessman
towards family, and so on.
z Peter Drucker said that ‘the secret of modern Japan consists in Japan’s ability to
make a family out of a modern corporation’. The secret of Chinese management
may well consist in the ability of the Chinese to make the family into a modern
corporation.
z Comparing Japanese and Chinese managements, I can also say that Japanese
style of management may be described as ‘head office oriented’, while Chinese
style management may be characterised as ‘grandpa oriented’.
It should be noted that a ‘family’ may here include the people from the same ethnic
background and even birthplace. Kinship terms (like ‘uncle’ and ‘aunt’) are widely but
loosely used in social interaction, even if not genealogically related. Overseas Chinese
have built up their strength, among other factors, on an unusual ethnic solidarity.
We may even call it clannishness.
How about European Family Businesses?

‘Family run businesses’ is of course not the monopoly of the Chinese. There are
many studies which show that family businesses dominate in the economies of many
countries.
Jonathan Boswell in his excellently researched book The Rise and Decline of Small
Firms, 1973 (You can read it on the Internet), said that the boards of nearly two out
of three medium sized British manufacturing enterprises (25–500 employees) were
family dominated. He also estimated that 80 to 90 per cent of all Dutch businesses
are family owned. Comparable findings have reported that ‘family farm products ac-
counted for two-thirds of the value of farm products sold in the US’.
There are similar studies for rural agricultural and industrial enterprises in
India.
However, the ‘family’ in a Chinese ‘family firm’ is something deeper than in most
other cases. There is, for instance, a much stricter borderline between family and
non-family (or non-ethnic) members both in attitude and behaviour. Also, growth
in Chinese business is commonly done not by expanding the same firm too far (and
possibly losing the family control), but by mushrooming another family unit, run by
a relative.
For the new Chinese family member, starting a business is relatively easy. First,
the former employer gives his or her blessing for the new venture, and indeed often
encourages and assists the employee financially to become established. Second,
businesspeople from within the ethnic network provide facilities and credit. In cul-
tural terms, this opens doors which are locked for others. This sense of family loyalty
and mutual responsibility is reflected in the fact that most shares of large Chinese
Indonesian companies are owned only by the families of Chinese Indonesian business
magnates.
z I would contrast this with the overseas Indian families where business invariably
splits and is often destroyed when the old man dies and the children fight to split
the estate. The Indian owned businesses in South-east Asia are characterised
by infighting and bickering. Not only businesses, but also the Indian political
parties in these countries have been split many times.
Hong Kong Chinese Success Story

For the success of the overseas Chinese, one needs to start with the story of Hong
Kong. It was manufacturing that made built Hong Kong’s fortune. When more than
one million refugees from the Communists’ victory in China’s civil war flooded over
the border in 1949, the British colonial authorities had to do something to keep them
alive and to keep Hong Kong afloat. Cheap land for building factories, and public
housing, were the answer. Helped by the networking talents of entrepreneurs who
had fled from the mainland, the rescue operation worked. By the early 1950s, Hong
Kong was supplying the world with T-shirts, plastic flowers and flip-flop sandals. The
big industry was textiles, but handbags, toys, watches and shoes also poured out of
tiny sweatshops for export to America and Europe.
Then the Chinese government took a historic decision which changed the fortunes
of the entire overseas Chinese community.
In 1978, China opened up some of its coastal regions, including the area on Hong Kong’s
border, to foreign investors. Suddenly, Hong Kong’s Chinese businessmen had a new
supply of cheap labour and new land for building factories. Most of the light manu-
facturing that used to take place in Hong Kong crossed the border into China. Today,
over 5 million mainland Chinese are employed in factories owned by Hong Kong
businesses.
Much of the businesses which began in Hong Kong and then moved over the border
into mainland China now have to think of migrating even farther afield. The continuing
search for cheaper labour is not the only reason for this Diaspora.
There are some disadvantages in selling things made in China through Hong Kong.
Anybody exporting anything from China has to live with the risk that one day Congress
in Washington will take away China’s most-favoured-nation trade status, which allows
easy access to the huge American market. So some manufacturers have started to
move on from China and put at least some of their production into countries where
they can hope to disguise its Chinese origins.
Comparing Indians and Chinese in Indonesia and Thailand

I would particularly like to talk about the Chinese in Indonesia and Thailand where
they are in small numbers but wield immense economic power which is out of pro-
portion to their numbers.
Ethnic Chinese constitute a small proportion of the Indonesian population, number-
ing no more than 5 million, or about 3 per cent of the population. This figure includes
Indonesia-born Chinese, and those Indonesians who were actually born in China.
The ethnic Chinese in Thailand are about 18 per cent of the population.
Ethnic Chinese in Indonesia, as also in Thailand, have demonstrated a remarkable
talent for integrating into the broader community. This is very unlike the ethnic
Indians in all areas of South-east Asia. Indians live in tight close-knit communities
and do not mix socially with the other races. I need to add that the Indians of different
language groups do not even try to live near each other and mix socially only with
each other.
It is true that at different times various administrations and governments have en-
couraged the Chinese community to intermix with the other races, to the extent that
ethnic Chinese in Indonesia and Thailand have local names, speak only local languages
and send their children to same schools. For a number of reasons, many ordinary
Chinese in these nations have had little or no contact with mainland China, with an
estimated 90 per cent of all ethnic Chinese born in the nations where they live. This
group is not then simply Chinese living in, say, Indonesia, but rather Indonesians
of Chinese ethnicity.
As I said above, historically, the people of mainland China have been very successful
in trade. Unlike other Asian trading people such as Indians and Arabs, the Chinese
have dominated commerce in Asia because they have a knack of building extensive
international trading networks. Whether it is because of social, cultural, demographic
or political reasons, the Chinese are famous for their mercantile acumen and economic
power. They have in fact dominated business across South-east Asia for centuries.
The Chinese in Indonesia are a small minority but a very well-established minority.
Small communities existed throughout the Indonesian archipelago long before Dutch
colonisation. They learned to appreciate the fundamentals of commerce and trade,
and how to avoid making mistakes committed by others.
Characteristics of Ethnic Chinese

Most ethnic Chinese in Indonesia and Thailand live in urban areas and are involved in
what can only be loosely called ‘business.’ This is not to say that all are entrepreneurs.
Indeed, one finds ethnic Chinese, in all walks of life, as wage earners, professionals,
civil servants, army officers and so on. Nevertheless, it is important to realise that
although this group makes up no more than 3 per cent of the total population in coun-
tries like Indonesia, they control approximately 80 per cent of all private business.
Their activities encompass almost every sector of the Indonesian economy. Wealthy
Chinese Indonesian capitalists have for many years enjoyed the enthusiastic patronage
of Indonesia’s most powerful men and women.
This is in contrast to the Indians in countries like Malaysia and Singapore where
they are about 12 per cent of the population but have no tangible control over anything.
Even in countries like Fiji, where Indians are about 45 per cent and completely run
the economy, they have no tangible control over anything.
The size of a particular Chinese business can vary as much as the goods and ser-
vices in which it trades. Individual concerns range from small family firms to the
corporate empires. For anybody intending to conduct business anywhere in the Asia
Pacific, it is difficult to avoid this highly successful group. This is the reason I am
encouraging our people to take a hard look at them and appreciate their distinctive
business culture. This can be an enormous advantage to those wanting to export to
these nations.
For the Chinese everywhere, networking builds trust: Guanxi, as explained above.
This is a fundamental principle of conducting business with the ethnic Chinese com-
munity. A trustworthy associate will find it easy to obtain concessions. Moreover, the
advantage of gaining trust of a partner or associate is that often investment capital
can be raised very easily and repaid after the enterprise is established.
I have already explained the networking concept of the Chinese above. I have seen
that this is very much more so in Indonesia and in Thailand. A network is often the
spontaneous creation of an informal business group to seize an opportunity. This group

centres its activities on mutual objectives and is formalised merely by a gentleman’s
agreement. There are many such groups operating within the Chinese community,
frequently competing with each other in other activities.
The important question is, how does the non-Chinese businessperson gain access
to these networks in these countries?
Network groups often use the services of a common, always Chinese, accounting
firm, corporate lawyer or business consultant. There are many such professional firms
in Indonesia and Thailand. The boss of a particular company often organises this type
of professional assistance. Each accounting firm, lawyer or consultant co-operates
within several different networks at the same time. The assistance of these professional
firms makes breaking into a network possible, and accelerates the building of mutual
trust.
The importance of trust can be further seen in the fact that ethnic Chinese prefer
to deal with reliable people rather than through formal business systems.
A very important point to note is that a visiting Indian businessman often finds an
unpenetrable wall in front of him when seeking an appointment with ethnic Chinese
in Malaysia and Singapore. This is because there were Indians before him who did
not bother about what sort of goodwill were they leaving behind.
The Chinese talk to each other about such people much to the disadvantage of
the newcomers.
Chinese Management Style

In a Chinese company, the formal organisational structure is often similar to the Western
model. However, it is the management practice which differs from similar models in
the West. It is characterised by what appears to be a distribution of authority through
various departmental managers with almost no clear delegation of authority. Instead
the ‘system’ is characterised by a ‘one-person show’. For example, the managing
director, who is usually the head of the family, gives commands, oversees and controls
departmental managers without conforming to the formal management structure.
Again, one reason for this is that the Chinese trust people rather than systems.
This patriarchal approach is very common and successful.
The manner in which the ethnic Chinese conduct business, while distinctive, is not
as secretive as some believe. Business people use a simple principle of being what
I would call creative imitators. They readily adopt the successful methods of others
and adapt them to their own requirements. They have a very sharp eye for good ideas.
Simply, they are not restricted by political dogma, philosophy or method. They are
impressed by, and use, whatever method works best.
Never Say Never

Another way in which ethnic Chinese have been successful is that they almost never
say they cannot do something. When asked if they have the organisational or technical
ability to provide a service or manufacture a specialised item they will always give
the same answer—Yes. This is despite the fact that they may not have the capacity
to do so at the time.
This is true of the Indian businessmen also. Everybody thinks they can do anything.
But here the difference comes in. A Westerner may refuse to accept an offer on rational
grounds, seeing his own limitations. He will see that he cannot do it and so refuse. I
have seen that Indian businessmen are in the habit of making a commitment without
seriously thinking about it, ‘Of course I can do it, it is so simple!’ And once things
go seriously wrong, as expected, quietly walk out and never be seen again. We never
ever bother about what it does to our goodwill and how this will affect the prospects
of those who follow.
For the ethnic Chinese, the humiliation associated with failure to fulfil a commit-
ment will cause him to ‘lose face’ because this can almost be fatal; it enforces his or
her own resolve to achieve success. I have seen many cases where the Chinese busi-
nessperson embraces the project as a personal challenge.
The ability to fulfil these commitments is often tied up with the concept of ‘credit
worth’. Again, this is developed through a business network. This phenomenon en-
compasses an international ‘brotherhood’ of Chinese people, people from the same
clan or a dialect group. Membership is based on trust and reliability. If you can prove
to your business associates that you have these qualities, then you are welcome into
their network, and they will see to it that you do not fail your commitments.
Another thing to remember is that the Chinese have the cultural capacity to meet
any specification you want. This deserves further explanation.
In some Western countries, take-away fish and chips are very popular. One day a
man went into a fish and chips shop and tried to place an order for something which
was not on the menu. Ordinarily, fish is fried in crumbs or batter, but this order was
for fried fish without crumbs or batter. The customer was unable to find a shop which
could fill this order: it is outside certain cultural and cognitive terms of reference.
Apparently no one orders fish like this, perhaps because it is difficult to determine
the price, or that there is extra work involved, or the order is unbelievable, or perhaps
the store owner felt that the man might not know what he wanted himself.
Again, an example comes to mind. Some years ago, a small German car maker
wanted a special hand tool kit to be fitted into the boot of every car they sold. I came to
India and contacted a number of hand tool manufacturers. Each has almost the entire
range that we were looking for, the quality was satisfactory, but there were some
additional things the firm had to do. They had to design and supply a special box in
which the kit could be fitted, they had to procure some items that were outside their
normal range of production and they had to improve the finish of each item.
I could not find any firm willing to take full responsibility. The order went to
a Malaysian Chinese firm. The Chinese businessperson gladly accepted such an
order.
The same principle is applied to everything the Chinese do. In the absence of formal
procedure anything is possible.
Relationship Building
For a business visitor to any of the Asian countries, it is essential to remember that busi-
ness negotiations take a lot longer with the ethnic Chinese than they do in the
West.
It is common for all Chinese to invest a great deal of time in getting to know their
business associates before they settle contracts, and it is culturally appropriate that
most of these discussions take place over dinner or later into the evening. Because of
this, the best time to make an appointment to see the ‘big boss’ is after the so-called
office hours.
Many Westerners are failing to take advantage of the enormous business oppor-
tunities that exist in Asia, because they tend to contract their time: they start and
finish their business meetings according to strict and predetermined timetables.
Remember, if an agreement is not achieved within what you regard as a reasonable
period of time, you should not try to end the meeting. Be patient, keep going. Continue
talking until you get an invitation for dinner. That is an important first step. You
continue before, during and after dinner.
The Chinese are Here Too

In 1962, China took India by surprise when its soldiers crossed the Himalayas, overran
the Indian outposts and moved through the hurriedly mobilised defense columns.
We did not learn any lesson from that because China still believes in surprise and
scale. Only the battle is now being fought in the marketplace.
The Indian industry is getting a storm alert, caused by an enormous increase in
Chinese imports in the last few years. This time the advance army of the Chinese
invasion was made up of products like cigarette lighters, electrical components and
toys. From attacking the low-end of the Indian market in the early 1990s, the Chinese
have now begun raising their sight.
For Chinese, please read overseas Chinese, because as I explained, it is mostly the
overseas Chinese who have gone into China and set up superb manufacturing cap-
acities using equipment and technology which is obsolete (and useless) elsewhere, but
excellently suited to the hordes of low skilled and low wage Chinese workers.
They are knocking at India’s gate with a range of consumer durables. The products
do not have the brand aristocracy of American labels, or the marketing chutzpah of
the Japanese, but they can give goose pimples to domestic producers because of the
ridiculously low prices.
The Chinese challenge is not just the market opening kind. It is real. The value of
China’s export of electronic components to India has shot up unbelievably. If you
dismantle an Indian TV set, you will see ‘Made in China’ labels on dozens of parts.
These labels are embedded not only in CTVs but behind the ‘mouse’ being clicked
to write this, in the hard disc of the computer, or within the compressor of the air
conditioner.
The Chinese companies are obviously orchestrated on one hand by the Chinese gov-
ernment which fully owns all the new entrants to India, and on the other by the over-
seas Chinese entrepreneurs from Singapore and Taiwan who bring in the technology
and take away the output.
India has become a market of choice for the Chinese. India is now the focus market,
because of her trade liberalisation and steady economic growth. The consistent lowering
of the tariff wall has made it possible for the Chinese companies to bring many items
even in completely built-up forms and sell in India after paying the import duty.
China’s globalisation efforts, sponsored by overseas Chinese, have obviously re-
sulted from the same cycle that Japan and South Korea went through in the past—of
domestic demand push leading to capacity expansion so large that only low-cost sub-
sidised export could save the assembly lines from rusting. The only difference is that
the production capacities in China are too large even by the standards of its Asian
neighbours.
This should worry particularly the Indian appliance makers, many of whom have
begun vertically integrating themselves, making all components under one shed. Still,
they play on small volumes and cannot match the price from China, even after paying
customs duty.
Preamble z 211
16
Understanding the Koreans
I will slightly modify the question I asked at the beginning of the last chapter and I
will repeat it in the next chapter when I talk of understanding the Japanese. Why
should Indians bother about the Chinese, the Koreans and the Japanese in a book
on entrepreneurial skills? How does this matter to us? And, if we are talking of the
wide world, is it not equally important for our children to understand the Americans
and the Europeans?
First, about the West. The coverage of international news, news about the region
outside the Indian subcontinent by the Indian press is overwhelmingly tilted towards
the politics of the US and towards the countries that are of particular interest to the
US. Entire pages are devoted to syndicated columns from Washington and London that
are nothing but hard-core political analysis, with a sprinkling of some popular
management subjects.
Thus, the exposure that average young Indian professionals—MBA and engineer-
ing graduates, get either through text books, books on popular management, news-
magazines, or TV programmes, is again overwhelmingly tilted towards the West.
So now, we thoroughly know and understand the West: we know how they live and
work; how they run their businesses and their attitudes towards work; in short, we
have a deep insight into their mindsets.
But how about the East? Do we need to understand their business culture and mind-
set too? Does anyone talk about this?
Look around yourself. Look at the brands that are taking away the market from our
own well-established brands. The fiercest challenge to our home grown firms comes,
not from the West but from the East—the Japanese, the Koreans and the Chinese. The
challenge is not so much from the products they make. It is more from the ruthless
efficiency of their large trading houses. They are increasingly setting up offices and
factories in India, not only benefitting from our huge domestic markets, but also ex-
porting Indian products to third countries, hitting our exporters right at home.
The modernisation of Asia—economically, politically, and culturally—is by far the most im-
portant event taking place in the world today.
The true force behind this modernisation is a force which is ruthless and immensely sophis-
ticated but very secretive and invisible to most: It is the mindset of the Asian people.
It has been my contention that it will not be possible for us to deal with and maybe
compete with the people from the East unless we understand their mindsets and
develop our strategies accordingly.
It should be remembered that all the Asian business firms do their homework before
coming and setting up base in India. They take pains to understand our mindsets
and base their business and managerial strategies in India on this. It has been seen
time and again that these strategies are considerably different from those they use in,
say, the Middle East.
z It is high time we made some efforts to penetrate and benefit from their incredible
networks. Indeed, there is a market for many of our products in many Asian
countries if only we understand how to reach it.
So back to the Korean mindset and what this has to do with their corporate
scenario.
Korea and Globalisation

I explained that our attitude towards globalisation has been that of letting the world
come here and take advantage of our superb brainpower and immense markets. The
Korean (and the Japanese) attitude has been the exact reverse.
It is by now no secret that Korea’s globalisation level is one of the lowest among
major nations in the world. Korea, although often described as the Land of Morning
Calm, is still viewed by many outsiders as the Hermit Kingdom, a country that is tightly
shut for the outsiders.
For many years foreigners have been complaining that they cannot conduct business
easily in Korea because of many barriers in trade, capital movement, foreign exchange,
stock market, labour market and so on. Not only that, they are also critical about
‘the Korean way of doing business’ which is far different from, and far short of, the
global standards.
Of course it is the un-open, un-globalised economic environment mindset of the
Koreans, including political leaders and government bureaucrats, that judges a some-
thing as wrong if it is different from what they have been doing traditionally. It is
the kind of mindset that does not allow Toyota cars to roll on the streets of Seoul.
Understanding the Koreans z 213
A Quick Comparison
Before taking a close look at Korea, it would be good to set a background by making
a short comparison with ourselves.
1. It remains a fact that we have had one of the most stable governments in the
entire developing world. But, we seem to be very fond of blaming the government
for all the shortcomings in our economic performance, and then, if that does
not hold water, blame the politicians and the corruption. Lastly, we can always
blame the British!
By contrast, while Korea has never had a stable and powerful government, it has
made mind-boggling progress in world markets. Business leaders driven by the
onslaught of their overseas economic success have largely determined government
policies and placed Korea on the world map.
2. Our earlier governments implemented various policies of import substitution and
protecting the domestic markets. But, having a protected market, or a closed
economy, by itself does not lead to damaging the economy. Almost every emerg-
ing economy has tried to protect the fledgling domestic producers.
I have said above that no domestic market has been more jealously and ri-
gorously protected than those in Japan, Korea and also, to some extent Taiwan.
Much like in India, Korea follows rigid protectionist policies where foreign in-
vestment is still strictly forbidden. The Korean people have an inherent dislike
of anything foreign, so a number of tariff and non-tariff barriers are in place
on all imports, except for much needed raw materials. This makes imports of
finished items into these countries next to impossible, and nobody can even
sell a screwdriver to the Koreans.
In the case of Korea, this lead to an enormous export thrust and the establishment
of many world class companies. The result of similar protectionist policies in India
was an unmitigated disaster.
3. Look at our economic history. We have never been aggressive exporters. Import
substitution as a strategy for industrial development is nothing new. It has
always been there in the Indian mindset many decades before independence. It
was certainly not the brain child of our founding fathers, though they are solidly
blamed for it. Prof. Mahalanobis and possibly Pandit Nehru merely developed
the centuries old Indian mindset into our first comprehensive master plan.
In contrast, the people of Asia have been historically very successful in trade.
Unlike the Indians, the Chinese, the Koreans and the Japanese have always
dominated commerce in Asia because they have a knack of building extensive
international trading networks. Scholars will always argue if this is because of
social, cultural, demographic or political factors, but these people are famous
for their mercantile acumen and economic power. They have in fact dominated
business across South-east Asia for centuries.
A Little Historical Background

The Koreans, an ethnically cohesive and linguistically united people, formed over a
thousand years, a unified, independent kingdom until the Japanese annexation of 1910.
After Japan’s defeat in 1945 Korea was divided into Soviet and American zones of
occupation and then in 1948 into two hostile republics. North Korea’s invasion of the
south in 1950 led to three years of war, in which the UN supported the south and
China the north. The two sides were left glaring at each other across a ceasefire line
not far from the 38th parallel, which marked the original US and Soviet zones.
South Korea gave priority to education and made owner-occupation by smallholders
the basis of land tenure. In 1962 a military government, seeking an engine for growth
in a country with few natural resources, initiated a strategy of export-oriented indus-
trialisation. It depended on South Korea’s two major assets: Cheap but well-educated
labour; and the skill of building extensive international trading networks. The next
quarter century was one that barely interrupted boom, with Gross National Product
(GNP) growth averaging 8.8 per cent a year. Positive agricultural policies maintained
self-sufficiency in food grains, with some of the world’ highest rice yields.
South Korea at the beginning of the 1990s was in a state of transition. In domestic
politics, it was moving slowly from military dictatorship to a more democratic system.
In the context of international relations, erstwhile communist countries had moved
towards recognition of South Korea and even North Korea had relaxed its hostility
sufficiently to agree to ‘talks about talks’. In economic terms, the question is not that
of whether South Korea will leave developing country status behind and will join the
Organisation for Economic Co-operation and Development (OECD), but when.
South Korea on the World Market

Lending credence to the view that South Korea may well be the country to lead an
Asian economic recovery, ratings agency Fitch-IBC raised the country’s debt rating
from ‘junk bond status’ to one level behind ‘investment status’ in late 1998. Moody’s
and Standard and Poors also acclaimed the progress in developing a debt accord be-
tween South Korea and international bankers and they too are revising their ratings.
Yet, as always in South Korea, the behaviour of the Chaebol, the major Korean con-
glomerates that dominate Korean international business will determine to a large
extent the country’s revival.
z Quite unlike the large Indian corporates, the major Korean conglomerates have
concentrated on expansion rather than profit, assisted by a close relationship
with government.
The Korean route to manufacturing upgrading was by deliberately promoting huge,

high-tech conglomerates in the private sector and to leave it to them to spearhead
export development.
The top four, Samsung, Hyundai, Daewoo and Lucky Goldstar, all with management
portfolio strengths, were exposed in the Asian currency crisis, not so long ago, due
to expansionary acquisitions which in a climate of never ending Asian growth made
sense.
These are high-tech conglomerate enterprises of sufficiently large-scale and have
followed the classic Korean Chaebol model of expansion through horizontal diversi-
fication in product space and vertical integration in process space.
In the early stage of development of ‘strategic’ industries in Korea, the Korean gov-
ernment deliberately encouraged the growth of large-scale Chaebols as an instrument
to bring about the economy of scale in capital intensive industries that were deemed
‘strategic’.
Attitudes Towards Each Other

z Central to the growth of the Chaebols, is the Korean attitude towards co-operating
with each other. I have not been able to find similar traditions in the Indian folk
or cultural literature, where society demands mutual help or assistance. True,
helping others is considered as a good thing in India, but nobody has said that
it is mandatory.
There is a lot of published literature on the Internet on Korean social values systems,
some of it because it has had such a profound influence on the nation’s economic
success. There is a lot of literature that refers to the influence of three major sources,
namely:
1. Confucian thought imported from China,

2. The Patriarchal system of large joint or extended families, and
3. The collective community system.
First, the heritage of Confucian thought is still deeply rooted in the social values of
Korean people. Confucianism emphasises virtuous human character in terms of gen-
erosity (ren), righteousness (yi), etiquette (li), wisdom (zhi) and trust (xin). It also ad-
vises people to take the middle path (zhong yong) in dealing with tasks or problems,
avoiding extreme measures.
In the folk culture of Korean communities, there were three kinds of what can be
called social or community co-operative customs: Kye, Dure and Pumatshi.
Kye refers to the association for mutual help for ceremonial occasions such as
marriage and funerals, or for financial needs, or just for friendly goodwill. The Kye is still
widely practiced even in urban areas, especially among schoolmates, members of the
same workplaces and even among those with same hobbies. Both Dure and Pumatshi
are like manpower banks created through co-operative effort for serving mutual needs
in farming activities.
The effect of such customs and folk culture has been to foster group unity and co-
operative spirit. Together with group orientation, the Koreans have traditionally been
very conscious of reputation and face-saving in terms of social role and status in the
community. A person is judged usually by his/her overall character or personality,
not by manifest ability and/or short-term achievements.
This Confucian heritage is believed to influence the criteria for both evaluation and
recruitment of personnel in the business organisation. As a result, in matters of re-
cruitment and promotion, the quality of personnel is judged largely in terms of overall
character and personality and not necessarily by specialisation or ability.
How Does all This Matter to Us?

Throughout this book, it has been my contention that it will not be possible for us to deal
with and maybe compete with others unless we understand their mindsets and develop
our strategies accordingly. It should be remembered that this is what the Koreans
do before they come here. They do their homework before coming to India. They take
pains to understand our mindsets.
So let us come back to the Korean mindset and to what this has to do with their
corporate scenario.
It is true that there has always been the problem of nepotism, believed to be de-
rived from the patriarchal large family system. Korean society, like many others, is
characterised by the extended large family system, where the majority of members live
together, including both grandparents and members of married brothers’ families.
The extended family system is patriarchal in that it emphasises the principles of strict
hierarchical order and Confucian filial piety in father-son relationships.
However, the same tradition has resulted in the establishment of strong corporate
entities or Chaebols because in the patriarchal family system, children are expected
to be obedient to their parents and to pay them respect. In return, the father, as the
chief of the family, is expected to be benevolent to family members by caring for their
welfare.
Thus, large patriarchal families are authoritarian, with strict hierarchical orientation
and at the same time benevolent paternalism in organisational life. Because large fam-
ilies were traditionally cohesive and self-sufficient ‘in-groups’ with a common destiny,
their social values and interpersonal relationships get translated into corporate loyalty
and dedication.
Another aspect where the Indian and the Korean people differ is in value orientations.
While in India, we are generally highly individualistic, in Korea they are oriented to
group or collective thinking. This is said to be attributable to the characteristics of
their traditional rural communities.
Like many other societies, Korea consisted of typical agrarian rural communities
which were relatively closed and self-sufficient, requiring co-operative effort among
community members for production, consumption and also for various social events.
A very important point to be noted about the Koreans, again in sharp contrast to
us, is that they have a ‘this-worldly’ thinking. Though they follow different religions,
including Buddhism, one thing common to all Koreans is their wish to attain worldly
success in this life rather than bliss in the after-life. Having experienced conditions of
destitution until recent times, wealth and fame have become their life goals. Koreans
are materialistic in orientation with strong motivation to achieve success here and
now. This is immediately evident when one sees the ruthless and almost inhuman
efficiency of their dealings with other people in India.
I said ruthless efficiency. I may as well call it a callous and often hostile attitude to-
wards the others. This is among the more obvious and important characteristics that
result from their emotion centred mindset: Extraordinary goodwill, co-operation, and
hospitality towards family, clan members and close friends, and as I said, a callous,
often hostile attitude towards the others.
Now a Quick Comparison of Corporate Cultures

I have talked before about the attitudes of the people and how this is reflected in the
way business is done. Now, let me talk about corporate culture itself. I see an im-
portant difference between Indian business houses and the Korean ones.
1. First, corporate culture in India is highly individualistic: one man show, the-
boss-decides-everything sort of a thing.
z On the other hand, corporate culture in Korea is group based or collectivistic

with emphasis on order and harmony among group members.
2. As a result, work preferences and evaluation systems vary sharply. Workers

in India tend to prefer specific work assignments on an individual basis and
expect to be evaluated and rewarded in terms of individual achievement.
z Workers in Korea feel more comfortable with teamwork assignments and a

reward system based on seniority.
3. Indian management in the larger firms is task centred, and specialised division
of labour is emphasised.
z In Korea this is more person centred, rooted in personal trust because of

family connections. In general, both managers and employees tend to regard
the work organisation as an extension of the family.
4. Morality in Korea has been traditionally based on Confucian concepts of ‘virtue’

rather than universal principles. Confucian relationships—the family, clan,
hometown, tie, school tie and company ties (generally in that order), come
before everything else.
z In the Western management style and thinking we follow in India, this is often
irrational and unethical because it ignores the very foundation of rational
behaviour. It ignores universal rules of conduct that transcend personal
feelings and personal relations.
I come back to what I said about the Korean way of respect to older members. Within
companies, particularly among management and white-collar workers, seniority is gen-
erally equated with rank and authority and demands strict conformity to a minutely
prescribed protocol. Having said that, I find Koreans are usually more amenable to
adopting Western concepts than the Japanese or Chinese. One finds a wider variety
of management philosophies and techniques in Korea.
Employees expect companies to be paternalistic. It is a serious breach of social and
business etiquette, to put a young person in charge of older people which invariably
causes endless problems.
Obviously there is some merit in the purely Korean way of conducting personal
and business affairs, as evidenced by a number of Korean companies that are now
among the world’s leading enterprises. The challenge in facing any enterprise wishing
to deal with the Koreans is to achieve a balance between Western and traditional
Korean behavioural patterns—a merging of the best of the two systems.
Hints on Doing Business

I have discussed the Korean attitude towards each other which has resulted in building
world class companies. Now, let us talk about going to Korea to do business, or, as
is increasingly becoming the case, dealing with Korean firms here in India.
1. For the Koreans business is a personal affair, very much like it is for us in India.
The product, the profit and everything else take a backseat when it comes to
personal relations. We bend backwards when dealing with a friend. If you do
not or cannot establish good personal relations with a large network of people,
it is either difficult or impossible to do business with the Koreans.
2. Personal relations and contacts, combined with a high sense of honour and
trust are the primary foundations of Korean business ethics. Written contracts
among Koreans are rare. Most business arrangements are based on verbal
agreements. As a result of this system, Koreans spend a significant amount of
time expanding and nurturing their personal contacts because their business
depends on maintaining these relationships. Executives wanting to succeed with
the Koreans must adapt to this system to a substantial degree.
3. It is essential that our business people programme this kind of activity (and
expenditure) into the time frame of their plans and expectations. The more
foreigners try to rush a decision or activity, particularly before the correct
personal relationships have been established, the slower the process will be
and it is more likely their efforts will fail.
4. I have talked to many Indian businessmen who believe that the right product
and price is all they need and that they can easily sell to or buy from any
Korean company. This is a wrong attitude. You are not going to get anywhere
in Korea until you establish the necessary human relations. This includes ap-
proaching the company in the ‘correct manner’, that is through an acceptable
introduction and on the appropriate level.
5. In India, if you have the ear of the top man of a company, everything will be
honky-dory. The first mistake many foreign business people make in their
approach while doing business in Korea is believing that meeting the president of
a company and getting the president’s approval and co-operation means smooth
sailing from then on. In most cases, the managers—lower, middle and upper,
who actually run the company will resent being bypassed and will be less
than co-operative, sometimes to the extent that the foreign proposal never
gets off the ground.
6. If you have a direct introduction, of course it is all right to meet the president,
but you must also meet and establish a satisfactory relationship with the
various managers, treating them with the same respect and concern that you
extend to the president. This also applies to companies that are still in the
hands of founders who appear to make all the decisions.
7. Because human relations are so important in doing business with Korean
companies, it is vital that you keep up to date on personnel and personal
changes within companies. The character personality of a Korean company is
as changeable as the ties and emotions of the people who make up the organ-
isation. It is therefore necessary to treat the relationship as a personal one,
requiring regular maintenance.
8. To deal with a Korean company, it is essential to understand the personal
relationships between managers on all levels, especially the relationships be-
tween individual managers and directors, or the president. Personal ties
such as kinship, the same school, the same birthplace, or marriage often
take precedence over job seniority, rank, or other factors and may have a sig-
nificant influence on who actually runs a company and how it is run. A clear
understanding of these ties is often necessary to identify the real decision
maker in a Korean company.
9. Getting all this information may sound difficult but it is really not so. Remem-
ber, the Koreans want to do business and they have departments to facilitate
the dealings with foreigners.
10. Although Koreans now readily sign contracts with foreign companies, the
contracts are invariably interpreted personally rather than in the legal sense
and they are no better than the personal relationship that exists between the two
parties. If the relationship is not constantly renewed and reinforced, the con-
tract becomes just a piece of paper. It is therefore very important for the Indian
business owner going to conduct business in Korea to be personally involved

in all stages of the process of setting up the operation.
11. If you are dealing with the Government, the bureaucrats in Korea are perhaps
even more sensitive to the social and business status of people who approach
them. It is especially important that the foreign company dealing with them
be aware of this. Sending in a young, low status person is definitely not the
way to go.
Preamble z 221
17
Understanding the Japanese
In my previous chapters on the Chinese and the Koreans, I have addressed the question
of why I am talking in great length about these people in a book on entrepreneurial
skills. After having discussed the Chinese and the Koreans, we now go on to the
third: The Japanese.
I seek to establish that the Japanese are the most difficult and at the same time the most
promising people for the Indians to deal with.
True, considerations of price and quality do not come into the picture if they do not wish to
buy. Yet, to keep their industries competitive, they are scouring the world for cheaper inputs
of raw materials, components and offshore manufacturing.
More importantly, they only go in for long-term relations. It does take time to get in, but
once in, it is for life and you find yourself being upgraded constantly.
Of all the people I have lived and worked with, I would place the Japanese right
at the top for being intensely proud and nationalistic. For them, everything that is
Japanese is sacred. So, just after their humiliating defeat in the war, the first thing
they wanted to do was to teach the Americans a lesson.
They took great pains to understand the American mindset and business culture.
They went deep into the American psyche and understood how they lived and worked,
how they built organisations and their attitude to entrepreneurship.
They learnt the American style of marketing from them and hit them with what
they had learnt and ever since, have been conquering their markets.
Sure, the Americans wanted to do the same. They went to Japan and learnt their
highly innovative manufacturing and management techniques, but, they had to stop
there as the latter would not let them take a peek into their traditions, culture and
attitudes. Japan is as closed a society as the Americans are open.
It is only after China and Korea came onto the scene that the Western people
started understanding and writing about the teachings of Confucius upon which these
nations are built.
Even today, there is no inward effect of globalisation on the Japanese economy
and the market remains completely impervious to all types of finished products: They
only import raw materials.
I have often noticed that one can deal with the Japanese for years and yet under-
stand nothing about them. I have met a number of Indian businessmen who have
been to Japan umpteen times and claim to be authorities on how the Japanese think
and work.
Yet, they are stunned when suddenly, for no apparent reason, the supplier shifts
his agency to someone else. Our people find that if they play the fool with one supplier
in Japan, no competing supplier will deal with them, but on their part, they change
agents and dealers without batting an eyelid. No one can understand how they do
this or why.
They are a Different People

There may be many reasons for this. According to me, they keep doing their homework
and know things about you that you thought nobody knew. But on your part, you
know nothing about them. They are not like us or like anyone else in the world!
Before talking about understanding the Japanese, I will talk about some of my own
experiences which would form the backdrop of what comes later.
The Japanese attitude towards self discipline never ceases to amaze me.
z I was in a friend’s office late on a Friday evening. This is rare as outsiders are
never permitted inside an office: They are required to wait in a small conference
room and the executive comes out to meet them. But my case was different as
I was a member of their team. There were a couple of desks in the large office
but many people were not at their desks.
I saw an old lady going from desk to desk, pulling open the top drawer, putting
an envelop there, taking some sort of a seal from the drawer, stamping a sheet
of paper she was carrying and moving off to the next desk.
My friend saw a questioning look on my face and explained that she was putting
the wage packet with cash in it, in the drawers. Everyone has a distinctive ivory
seal which she was using for stamping the receipt. Even if the person was nearby,
she would not wait for him.
Amazing! I do not think this can happen anywhere else in the world!
z You can be visiting Japan and your hosts are walking you to your hotel, after a
night out on the town, at 3:00 am. The streets are completely deserted but they
never cross the street against the traffic light.
z I have seen many Japanese friends of mine coming home from a long trip over-
seas and instead of going straight home to their families, they check into a hotel
Understanding the Japanese z 223
for sleeping off the jet lag in order to be fresh and ready for office the next day.
They go home the following day.
Another Personal Experience

When a new factory is being set-up, the overseas firm that supplies the equipment
generally sends engineers and/or technicians to help install the machinery. There are
a lot of jobs, such as plumbing, electrification, foundation and so on which have to
be carried out by local contractors as per specifications provided, supervised by the
overseas people. It has been my experience of many projects in Asia and Africa that
people sent by European and Australian firms generally tell you what needs to be
done or corrected but actually work only on the installation and commissioning
aspects which require their specialised skills. True, they work with their own hands
too, but only where needed. I have found that they do have a thorough knowledge of
the working of the whole plant and can indeed be of help in various situations.
Indian engineers are far more hardworking and work with all the local contractors
but have a very narrow spectrum of knowledge. A technician sent to commission and
run a machine generally is very good at running the machine but is of no help in the
installation of the electrical or the hydraulic system. He makes it clear that he is a
machine operator and for anything else, one should ask the head office.
The Japanese are unique. They treat the functionality of the Japanese equipment
as if their life depended on it. They seem to know the answers to every problem and
get deeply involved in all aspects of the installation.
One point of contrast here is the paper work the Japanese bring with them. It is
more detailed than what the others bring. A huge amount of reference sheets, charts
and manuals. My experience of the Indians is particularly bad as we tend to not have
too much of paperwork to carry.
A follow-through of this is that the Japanese make meticulous records of everything,
but everything. I have not seen anybody else, least of all the Indians, making notes
of everything that happened. Without doubt, these records add to their knowledge
when installing a similar machine in another location.
Now to the example I was talking about.
We were setting up a project to manufacture super enamelled copper wires in Malaysia.
The plant was second-hand Japanese. There were two technicians sent to commission
the plant. The plant was designed for continuous non-stop operation but since we
were having problems, during the trial we were not even running a single shift.
I would pick up the technicians from their hotel at 6:30 every morning and took
them back, after work, in the evening. Gradually they got the plant running longer
hours and one fine day I was suddenly told that we will try to run non-stop, three
shifts.
I quickly made arrangements for the workers to reorganise themselves and waited
for the technicians to go back to the hotel, but they kept on working till late at night.
We all got very tired and it was only around midnight that I dropped them to the
hotel. I was thoroughly exhausted. I had hardly hit the bed when I got a call from
the factory.
‘The Japanese are already back at work!’ It seems they simply took a long hot shower,
had something to eat and took a taxi back to work!
I was stunned. They had started work at 6:30 am yesterday and now it was about
3:00 am!
True, I have seen others working non-stop in an emergency, but this was hardly
an emergency! It was a normal routine start-up of a plant! In all my working life, I
have not come across dedication of this sort.
Japan and Korea

These two countries, located on the eastern side of Asia are societies who have had
countless interactions over thousands of years. Both Japan and South Korea are
close to each other in location, yet they are markedly different in terms of lifestyle and
business culture. They are both hard working and ambitious people who continually
seek to compete in the world economy.
Both are amazing countries each with a fascinating and interesting way of life. The
cultural heritages of each of the two lands have given the people in those places a
rich and interesting way of life, but here the similarity ends.
Entrepreneurial activities are a way of life and highly encouraged in South Korean
society. It is the exact opposite form of encouragement that the cultural surroundings
in Japan use to educate their youth.
These differences in the education process are what have set South Korea far ahead
in the level of entrepreneurship as compared to Japan.
As I said at the beginning of this chapter, a question may well be asked: Why bother about
comparing these two nations?
Well, by far the largest group of manufacturing and trading firms that have entered India
during the last decade or so are from these nations and they offer the best potential for our
budding entrepreneurs to set up high-tech manufacturing facilities to feed them.
At first glance these nations may appear to be similar: Both are Buddhist and also live on
the teachings of the Chinese sage Confucius, but there the similarity ends.
It would be disastrous for our youngsters to lump them together when planning out
strategies for dealing with them.
Total Entrepreneurial Activity and Annual Economic Growth

There are major differences between the two countries in the level of entrepreneurial
activity that goes on there. We need to understand what this means, because it may
come as a shock to many of my readers that Japan is quite at the bottom of Total
Entrepreneurial Activity (TEA) amongst the world’s leading nations. TEA index is
based on a number of factors, but is mainly the percentage of working population
employed by new enterprises.
According to the Global Entrepreneurship Monitor, (see Appendix 5) the levels of

entrepreneurship vary sharply between major countries and account for significant
differences in economic growth. The study revealed that, among the many factors
that contribute to entrepreneurship, perhaps the most critical is a set of social and
cultural values, along with appropriate social, economic and political institutions that
legitimatise and encourage the pursuit of entrepreneurial opportunity.
You will see in Appendix 5 that in 2000–2001, Japan recorded one of the lowest
rates of Total Entrepreneurial Activity (TEA). Japan was 1.9 per cent against the world
average of 9.6 per cent and the Asian average of 3.4 per cent (for the same period,
India was 19.4 per cent). This simply means that there are few new enterprises in
Japan.
The slow growth of new venture creation in Japan can be attributed to numerous
variables including the conventional Japanese business culture, lifetime employment,
the seniority system, labour unions inside companies, tight regulatory policies of the
government and the group-oriented, risk-adverse orientation of the population.
Piecemeal changes occurring in Japan have made only limited improvements in the
infrastructure to support entrepreneurship. The Japanese government’s monetary
changes designed to support new start-up companies have not succeeded.
In Japan, entrepreneurs face many difficulties when starting their own ventures.
Some of these difficulties include receiving loans from banks, the pressures of deflation,
weak domestic demand and tough competition within the country. In Japan, personal
guarantees are required for small business loans. There is a high rate of suicide among
Japanese men who fail to repay personal guarantees. The reasons for these suicides
are the humiliation when business fails and the need to use life insurance funds to pay
off debts so that the banks do not harass friends and relatives who have given their
guarantees for the loans/debts. This shows their cultural desire to ‘save face’. Most
Japanese entrepreneurs belong to the immediate post-war era. The newer generation
has not at all fully adapted to the idea of entrepreneurship.
Another problem that stunts the growth of entrepreneurs is the lack of knowledge.
Many Japanese entrepreneurs do not have the knowledge, training or motivation to
start their own businesses. Classes are being started where those interested in entre-
preneurial activity may enrol. These classes have given rise to the idea of what is
known as ‘weekend entrepreneurship’, when people with regular, salaried jobs use
their talents and hobbies for profitable ventures on weekends.
Japan is a country that at first glance, may appear to be similar to South Korea,
but has a very different culture and this is the reason it is listed as one with the
lowest entrepreneurial activity in the world.
I will seek to establish that key differences in education, family culture and gov-
ernment infrastructure have created the divide in the level of entrepreneurial activity
within the two countries.
Education
The difference between the two societies and the resultant lack of entrepreneurial
activity level that goes on in Japan is also a direct reflection of the culture instilled
in the Japanese through their education process.
The Japanese youth are taught that they must follow the rigorous education pro-
cess till the end of high school. After high school they must pass a series of tests to
determine whether they will be welcomed into the college of their choice—more likely
their parent’s choice. The high school graduate of the Japanese scholastic system
reach a level of knowledge that is comparable with a college undergraduate in the
United States. Should the student enter college, he will be there for the next four years
and spend what the Japanese refer to as the party years.
What usually took place, prior to the Japanese economic crash of the early 1990’s
was that the entire graduating class of a particular college would each join a particular
company as the class of that year. The graduates specialised in that particular field
and were employed by large corporations like Honda, Sony and Toyota amongst
many others. Each company guaranteed a lifetime employment and the executives
countered this by putting in long hours. The entire focus of the executives would be
on building up their company over their years of service.
However, after the economic troubles Japan experienced, the lifetime employment
scheme was not feasible for the large corporations. There are only a few very new
educational programmes in Japan focusing on entrepreneurship and from what I have
seen, the programmes are very text bookish and formulaic. They teach entrepreneurship
but are not doing a very good job at promoting entrepreneurial spirit.
Compare this to South Korea where universities are dedicated to teaching entre-
preneurship and promoting the entrepreneurial spirit for students of any age. South
Korea struggled with the same economic crisis and labour issues at its large cor-
porations as the Japanese, so they chose to provide entrepreneurial education to
talented displaced workers.
There are two more concerns. The first is about the supply side. When I give a talk
in Japan to 300 plus students, I often ask how many students are interested in forming
their own company. Only one or two students raise their hands. The lack of interest
is confirmed by many labour force surveys which find that not more than 1 per cent
of the population is interested in forming a company of their own.
The second concern is about the demand side. With a technical degree you can
get a job but with an entrepreneurship degree you cannot. The educational programmes
are teaching entrepreneurs but not preparing the market to accept start-up com-
panies.
Family Culture
It is evident that the South Korean society was keenly interested in creating a new
environment. They already had a culture and society that encouraged people to break
away from large corporations and build their own businesses. So they took advantage
of the growth opportunities in the country after the Asian Currency crisis that gripped
much of Asia beginning July 1997. (Indonesia, South Korea and Thailand were the
countries most affected by the crisis.)
Due to the deep rooted Japanese diligence in not diverting from the education system
and still trusting in the system of working for these corporations, Japan’s culture still
does not encourage its youth to work towards building an individual self-sufficient
business from scratch. I have personally seen many examples of this in Japan. One
of my friends tells a story about how he tried to hire a 45-year-old Japanese man
into his company and was turned down because the man’s father did not trust him
with working for a small company.
Japan still relies on what works. For now the system is not completely broken, so
their logic is: Why change it?
Indian and Japanese Value Systems

The very fact that Japanese culture and work environments are typically Japanese
and the Indian culture and work environments are Indian with a strong Western in-
fluence, makes a comparison of Japanese and Indian value systems very interesting.
Even though the two countries are Asian, their historical backgrounds, cultures and
people are certainly very different.
The idea is to identify and appreciate these differences and to work towards de-
veloping one’s own strategies of dealing with the Japanese.
1. Comparing Management Education Systems

Reading the above, one realises that we need to make some changes to our or-
ganisation system and our work ethic. However, change cannot be initiated in
the system from the time of entry in a commercial organisation. It has to start
much earlier: Through the management education system.
Let us try to appreciate the sharp difference between the Japanese and
the Indian management education system. In Japan, students use basically
Japanese books which help them understand their own management styles
and their own work environment; secondary to this is information about other
management styles, mainly that of America. The situation is just the reverse in
India, where the education system is American and/or European in content and
methodology. The basic books are about American or European management
styles. Of course this is changing now, but still very few education centres have
detailed studies or information about anything Indian. In short, in the Indian
context, a truly Indian system never got the opportunity to emerge and grow.
2. Comparing Childhood Influences
Japanese understand the power and benefit of being group-oriented very early
in life. The rigorous way in which Japanese society deals with nonconform-
ity starts in early childhood. Rather than encouraging expressions of individu-
ality, Japanese parents and teachers reinforce the primacy of the group and
chastise those who stand out. While they might not literally use the hammer,
they enforce a web-centred social order where the individual needs are sub-
sumed by the groups with extensive moral and social obligations recognised
up and down the hierarchy.
The ideal is individual self-sacrifice and conformity with the group. If we take
a closer look at the average Japanese and her/his beliefs, we also find that
from early childhood, the Japanese are taught to be socially correct. There is
also an emphasis on building and maintaining relationships over long periods
of time. The stress laid on being socially correct leads to respect for the elderly
and for seniors. The relationship of sempai (senior) and cohai (junior) is further
strengthened in school and the university. Most of the activities at this stage are
group activities. Sometimes the seniors, after graduating from the university,
assist their juniors during the most demanding of times in a Japanese student’s
life—job hunting.
What makes as Indian’s situation different from that of the Japanese? In
India also there is an immense emphasis on the sanctity of social relationships.
However, lessons of social correctness are received only at home from parents
and family members. Outside the home, an individual fails to appreciate the
advantages of social correctness because, for example, there are no constructive,
meaningful and prominent senior–junior relationships visible in the student’s
life. There are very few group activities where a student would be exposed to
working in a group. Also, due to the huge population and the ever increasing
competition in every field of life, the average Indian cannot but become in-
dividualistic. When it comes to making a decision, an Indian normally takes an
individualistic decision rather than conform to the wishes of the group.
3. Comparing Company Politics
In Indian organisations, there is an atmosphere of high internal competitiveness
and there is always the possibility of the status quo being disturbed for the
least reason. This is what I would call internal politics. The lack of senior–junior
relationships also means that there is no reason why an individual should not
eye a senior’s position once he/she is capable enough. There are no sentiments
attached to the senior as in the case of the Japanese. Insensitivity or lack of
concern toward others often leads to tensions avoidable in a group-oriented
system like that of the Japanese. Thus, situations in Indian organisations are
more volatile.
This is further aggravated by the arrival of the new generation of educated,
competitive, career conscious managers proficient in using the new techno-
logical tools. They are also aware of their rights as industrial workers. Being
individualistic in approach, they are not shy in demanding what they think is
due to them.
Under similar circumstances, the Japanese would not demand their rights
as it would be socially incorrect behaviour. For an Indian, however, there is no
way out. As most companies are not sensitive enough, individuals are forced to
protect their interests and fight for their rights. Job security in organisations
also becomes a right which, once ensured, acts as a demotivator.
It is tragic but true that not all senior–junior relationships in Indian organ-
isations remain positive and conducive to work. More often than not, this
relationship degenerates into manipulation and ingratiation with politics
everywhere.
4. Comparing the Status of Engineers
It is a fact that most organisations in India have a tendency to seek out man-
agement graduates and place them above electrical, mechanical, civil or chemical
engineers. In India, except for the IT professionals, engineers are ‘second class
citizens’ in an organisation, comparatively poorly paid and neglected. In such

an environment most engineers turn to management schools for ensuring
better living standards and higher status in the organisation and in society.
The Indian system produces managers who only believe in ‘managing people’
and not in ‘assisting’ them.
Organisations in India have so far failed to give engineers the place due to
them in the hierarchy and treating them on par with the managers. This has
resulted in the deterioration and degradation of the technical base as engineers
have either left the country or turned into managers.
This does not happen in Japan. An engineer is the most respected person in
organisation and the society. Managers as such are an invisible class. Everyone
is a manager whose job is to assist fellow workers. A detailed study in Business
Week, (October 1994) found that their workforce is smarter than anywhere
else in the world. They have been masters of innovation, even though the West
tends to call them ‘imitators’, and still continue to be the leaders. This is partly
because of their investment in technicians and engineers.
The success of Japan has been due to heavy investment in technical and
vocational education and in courses in engineering. Only selected universities
offer MBA courses, and the investment in ‘making’ a manager is low.
Dealing with the Japanese

If you are looking forward to dealing with the Japanese both in India and Japan,
and want to have better relations, you first need a better understanding of how the
Japanese think and perceive you. There are a lot of key items you should be aware of.
Some you may like and others you may not. That of course, is fine—you are entitled
to your own views, no matter what anybody says. But like it or not, you will have to
deal with some of the cultural and behavioural aspects. If you can recognise and deal
with the differences in Japanese attitudes, you will adapt faster, do better business
and have a more positive experience working with them.
Here are a few basic characteristics of Japanese culture and behaviour that our
people will encounter. There are many reactions and attitudes that Japanese give off —
many of them we would ordinarily not pick up on.
Japan has a lot of positive traits; also a lot of negative ones. You’ll find Japan
captivating, bewildering, enchanting, enraging, humorous and also frustrating, ruthless,
uptight, uncooperative—sometimes all at the same time.
I will try to centre more on the negative aspects than the positive ones since these
are what make it more difficult for our people. The idea is to show you something of
what is meant by ‘culture shock’. I wish to make it clear that I am not counting the
number of good traits vs. the bad ones.
1. Uchi-Soto (‘Us and Them’)

This is one of the first things you will notice about the Japanese. The Japanese
have been raised to think of themselves as part of a group and their group is
always dealing with other groups. This has many aspects—internationally it

is ‘We Japanese’ vs. everyone else (more on that later), but in schools, com-
panies, sections of companies and so on, there are many groups and sub-
groups—and not always in perfect harmony and co-operation as it may look
on the surface.
Dealing with the Japanese on a one-to-one basis usually comes very easy
to us Indians, but dealing with them as a group can be a different matter al-
together. And no matter how nice you are, or how good your Japanese is, you
will always be treated as an outsider. In fact the literal meaning of gaijin is
outsider. Many Westerners see the Japanese as aloof, shy and always walking
on eggshells. There is a lot of truth in that—Japanese are extremely sensitive
to what others might think of them and are very hesitant to do something new,
different or independent.
Being ostracised is one of the worst things that can happen to a Japanese,
who is raised to be part of a group and depends on others. Therefore, when
making requests, it often takes more time since the person asked usually
consults others in the group to reach a consensus. It also might interfere with
what your goals are. While typically we start so many sentences with ‘I’, the
Japanese ‘I’ usually means ‘with the approval of the group’.
Uchi-soto has another important trait—there are hardly any strikes in Japan
ever. Is it because Japanese labour management relations are better? Partly, yes.
But in Japan there are almost no major political unions. Each large corporation
has its own union and they feel no bond with other company unions even if
they are doing the same work. In one sense, the company union is almost a
puppet, led by a management executive. But in another, everyone in a Japanese
company knows that in order to succeed they need to act together and being
profitable in the long run is the only way to guarantee employment. You do not
see a lot of friction between labour and management in Japanese firms—one
reason is that the workers often cave in since they know a profitable company
eventually benefits them.
2. The Gaijin Complex
How Japanese view the non-Japanese is always a subject of debate. Often there
is a mixture of admiration, suspicion and most often a lot of nervousness about
dealing with someone who does not look or act like them.
The term ‘gaijin’ according to the dictionary means foreigner or alien. In
practice however, it always means ‘white person’. Japanese use a lot of dis-
crimination—Chinese and Koreans are usually referred to by their nationality,
not as ‘gaijin’, unless speaking in legal terms.
The term ‘gaijin’ is not in itself pejorative (though it can be used that way),
but when one Japanese tells another he is doing something like a foreigner it
is a strong put-down. Many Japanese expats who have lived abroad are viewed
supiciously. If one’s English is ‘too good’, he might be ostracised. Japanese
children who have spent time abroad and can speak English fluently (kikoku
shijo), can be bullied by classmates often.
3. Honne and Tatemae
If one has to understand and deal with the Japanese, it would help if one
understands two very important and not too difficult concepts—Honne and
Tatemae. Honne is the way things are and Tatemae is the way we would like
them to be; or, the reality and the façade; or, the real reason and the pretext;
or the substance and the form; or being direct and being diplomatic. And so
on. Since avoiding conflict and trouble is extremely important in Japan, using
diplomatic language is often used rather than the direct approach. It is said
that in formal situations a direct ‘no’ is avoided and there are a thousand nicer
alternatives—which can be true, but it depends a lot on the situation and the
social status of the parties involved.
In the Japanese language, there are 19 different ways to say ‘no’. Even in a
world increasingly dominated by international, multinational and transnational
corporations, culture still plays an important role in Japanese negotiation.
The Japanese Business Culture

The most difficult nation to sell to is undoubtedly Japan. The Japanese consumer,
till recently, had an intense dislike for anything non-Japanese. Very surprisingly this
also includes foreign words in Japanese language: They have a separate script for
writing foreign words which never get assimilated in the local language. They export
everything to the whole world but buy only what they must: mainly raw materials.
Globalisation has been a boon to them as their ruthless export orientation has
created an enormous trade imbalance with everybody including the most powerful
nation on earth, the Americans. The Americans have been shouting and screaming
for ages with no effect. Japan is said to have lost the World War II to America but
they seem to be winning ever since.
Take the grossly lopsided situation of cars. Japan simply does not want to buy
American cars or spare parts. What the Americans do not seem to realise is that if a
Japanese is seen driving an American car, he would be socially looked down upon.
If one has to try to export to Japan, one has to first understand the Japanese mind-
set. I have already discussed this, but now let us take a quick peek at it’s past.
Remember I said above that the Japanese have an intense dislike for anything non-
Japanese. This has not always been so. They avidly imported the ideas of Confucius
from China; Buddhism came to them from India, via China.
There is indeed an underlying message in what I have said above. Japan has always
been different from the rest of the world and continues, for a variety of reasons, to be so
into the late 20th century. The rest of the world keeps changing, Japan does not.
The past has gone on for too long. The native religion of the Japanese people, Shinto
has always put great value on the loyalty that members of a family owe to each other.
So are the ideas of Confucius. The Japanese soon Shintoised the non-family minded
Buddhism too. All this provided a powerful underpinning for the rules of feudal loyalty
that grew up in Japan as in other countries, during the time when warrior leaders
commanded and protected their peasant followers.
Few dispute that the Japanese have performed an economic miracle since World War
II. In a relatively short time, they have achieved global market leadership in industries
thought to be dominated by impregnable giants from the West. The Japanese today
lead the world in autos, motorcycles, watches, cameras, optical instruments, steel,
shipbuilding, pianos, zippers, radios, television, video recorders, hand calculators
and so on. Japanese firms are currently moving into the number two position in com-
puters and construction equipment and are making strong inroads into the chemical,
pharmaceutical and machine tool industries.
Many theories have been offered to explain Japan’s global success. Some point
to their unique business practices, such as lifetime employment, quality circles,
consensus management and the just-in-time delivery by them. Others point to the
participative supportive role of government policies and subsidies, the existence of
powerful trading companies, and businesses’ easy access to bank financing. Still others
view Japan’s success as based on low wage rates and unfair dumping policies.
One of the main keys to Japan’s performance is its skill in marketing-strategy
formulation and implementation.
z It is indeed a unique situation that the Japanese government and private

companies remarkably work together to identify attractive global markets.
They favour industries that require high skills, high labour intensity and only small
quantities of natural resources: candidates include consumer electronics, cameras,
watches, motorcycles and pharmaceuticals. They prefer product markets that are
in a state of technological evolution and they look for industries where the market
leaders are complacent or under-financed.
The large trading houses make huge investments in sending study teams into the
target country to spend several months evaluating the market and figuring out a
strategy. The teams search for niches to enter that are not satisfied by any current
offering. Sometimes they establish their beachhead with a low-price stripped-down
version of a product, sometimes with a product exhibiting higher quality or new
features or designs. The Japanese proceed to line up good distribution in order to
provide quick service to their customers. A key characteristic of their entry strategy is
to build market share rather than early profits. The Japanese are patient capitalists
who are willing to wait a long time before realising their profits.
Once Japanese firms gain a market foothold, they direct their energies towards
expanding their market share. They rely on product-development and market-
development strategies. They spot new opportunities through market segmentation
and sequence market-development across a number of countries, pushing towards
building a network of world markets and production locations.
z Say, if the Japanese are in the market to buy many things, they will not wait
around for you to come selling to them. They have their own trading firms all
over the world, efficiently on the lookout for products and services Japan needs.
If you have something they can be interested in, they will find ways of contacting
you before you can even think of it.
When you call a Japanese organisation asking for export trade information, you
are already branded as an uninterested person, wanting to waste their time. People
who are seriously keen to do business do not go around asking for addresses.
The Japanese will deal with you through a Japanese trading house or through an
Indian organisation they have been dealing with for some time.
So, the first step is to introduce yourself to someone near your location. You start
by giving them information about yourself which they will check and verify. Then if
they come back and suggest a meeting, you have crossed the first barrier.
As I said, if you have a product or a service which is competitive enough to be of
their interest, most likely they will know about you and make the first contact.
Preamble z 235
Part 4
New Opportunities in Tourism
18
What Part 4 is All About
z Please note the title of Part 4. The subject of discussion is new entrepreneurial
opportunities in the tourism sector. So, whatever discussion is there on tourism,
the Indian economy, handicrafts, our Heritage and so on, is in the context of the
emerging opportunities for our young entrepreneurs. The focus of the discussion
remains entrepreneurship and not tourism by itself.
z I always hear a lot of discussion putting all shortcomings in our performance
squarely on the shoulders of the government. I will seek to establish that the
problem does not have anything to do with the government. On the contrary,
when I compare our bureaucrats with those in many other nations, I find that
our fellows are doing a better job. In any case my talking about this is mean-
ingless. I am sure that the problem is also not with our travel agents, our ho-
teliers, our trade associations and chambers of commerce but with how they
work in isolation and refuse to work with each other. Though they have made
themselves quite ineffective in promoting tourism, I will not talk about them
either. The idea is not to talk about changing the system but for the youngsters,
our future entrepreneurs, to understand how to do their jobs better.
z There is no question of criticising anybody because we are talking management
and not politics. Indeed, we do need to take a hard look at ourselves, at what
we are doing and then carefully observe and analyse what others have done in
similar situations, but this cannot be called criticism. How else are we going to
learn?
A Suggested Strategy
It is a fact that we, the second-biggest nation with the finest brain pool in the world,
are nowhere near the top in the list of preferred destinations as listed in most of the
reputed travel industry surveys. We are being left behind by many newly emerging
countries which are a fraction of our size. They get more tourists and are showing
better rates of increase.
z Our young entrepreneurs need to understand why this is so.
I will use a two pronged strategy that is aimed squarely at young entrepreneurs—our
qualified professionals in tourism and related sectors. What I say is based on what
I have seen of the highly innovative approaches many small countries have taken to
rake in the tourist dollar.
The strategies I will discuss here in this part of the book are:
1. It is not a good idea to plan for more tourists, either foreign or domestic.
It will be a long time before we have the infrastructure to keep pace with any
sizeable growth. Instead, we need to work out strategies to, one, attract a better
class of visitors and have both the foreign and domestic tourists spend more by
enjoying themselves more, and two, to suit the tastes and requirements of a new
breed of young professional tourists that were not there even a decade ago.
The visitors want to do this not merely by looking but also participating. In
the chapters that follow, I will discuss some new and surprising ideas for our
budding entrepreneurs.
2. It is also not a good idea to let the visitors roam around aimlessly.
One, it does not bring in any more money and two, it gives us a bad image.
The bulk of the tourists that come here—and this applies to domestic tourists
even going to other parts of the country, do not travel in organised groups. It
is indeed a tragedy that the people with whom the free roaming visitors come
in contact with—the small hotelier, the auto rickshaw driver or the roadside
shopkeeper have an open attitude of ‘here is my chance for quick money’; not
caring at all about what the visitor will go home and talk about.
As I said, it is bad for our image.

The solution is to do what other small nations have done. Have more and more
tourists taken care of the minute they land at the airport till the time they check in
for their return flight. The idea is to make more and more visitors go back thoroughly
exhausted but exhilarated and deliriously happy. As I said, I have seen many small
countries do this and this is the only way the visitors will come back again and make
their friends come here too.
Read on. I have some new ideas for our budding entrepreneurs.
If we can overlap tourism, preservation, heritage and culture, we can get dividends.
In this part of the book, I will talk about how other countries have done this and see if
we can do it too.
What Part 4 is All About z 239
When done correctly, cultural heritage tourism provides the motivation and the
resources to help preserve the irreplaceable heritage that a community treasures. That
is why quality and authenticity are more important than ever before. High expectations
and increasing competition for the visitors’ time also mean that you have to make
whatever you offer to the visitor come alive.
All too often, our people think that getting involved in tourism means publishing
a brochure or launching a new website. In actual fact, promotion is the final step. I
will explain that before getting to that final step, it is important for our entrepreneurs
to clearly understand exactly what it is that we have and what is it that we want
to share with visitors. Next, it is time to match what you have with what potential
visitors may be looking for and then make the necessary changes to be sure that you
are offering the best visitor experience possible. Only when you are truly ready is the
time to look at marketing.
Cultural heritage tourism is all about the true story of your area. You decide if it
is worth telling. The story of the authentic contributions previous generations have
made to the history, culture, cuisine and archaeology of where you live is the one that
will interest visitors because that is what distinguishes your area from every other
place on earth. It’s authenticity that adds real value and appeal. It is only when you
yourself are convinced that your area is unique and that its special charm is what
will draw visitors, should you give your area the edge.
Another point I will emphasise is that, for doing all this, collaboration is essential
in today’s highly competitive tourism market. Tourists are ready to fly off to another
destination at the drop of a hat. With increasing pressures on local resources, it is
critical to find the fit between the community and tourism to ensure that tourism
efforts are sustainable for the long-term.
In India, what I find heartbreaking is the loss of traditions which are manifested
in the ways we celebrate holidays or feast on ethnic cuisine. The preservation and
perpetuation of traditions is important in telling the story of our people. It is only by
protecting the buildings, landscape or special places and qualities that attract visitors,
can we safeguard our own future.
Who Cannot Do This for US?

This looks like a silly question. You will understand what I mean when I tell you who
cannot take us forward: The very people that are at the forefront of promoting our
tourism. Tragic but true. These are:
1. The tourism industry, the travel agents, the hotels and the tour operators—while
being very good at what they are doing, see their primary role as marketing ready
products. They do not go beyond booking hotel rooms, arranging sightseeing
tours and local travel arrangements.
2. The state, and in some cases, non-governmental organizations (NGOs), look
after the development and maintenance of our major tourist attractions, our
historic, cultural, ethnic and natural resources. In most cases, they manage
these too.
3. The cultural community, the people who can also give the visitors their money’s
worth, is on its own, is grossly underfunded and keeps looking for ways to at-
tract new audiences. Data and information on the websites notwithstanding,
tourists rarely get to know in advance about cultural events and performances
when planning their trips to a specific region of India.
4. Our trade associations and chambers of commerce, who arrange regular meetings,
workshops and conferences to discuss the problem and suggest measures, but
that is that.
I must stress that each of the above group is world class by itself and is doing
a commendable job. No denying that. But the result is just like our sports teams.
Each player is outstanding but the team does not win any international competition.
One of the reasons is that each of the four groups work in isolation and there is no
mechanism for them to co-operate and work with the other groups.
z I need to make it clear that I am not talking of teamwork or mutual co-operation.

I am talking of networking integration where a number of independent entities
join hands and work together for economic benefit with no one being in charge.
I have explained the concept fully in the first three parts of this book and we
will talk about it some more here.
It is a pity that the Indian travel agents in India and overseas prefer to offer superbly planned
fun packages for trips to other nations. Of course, I do not blame them. They are retailers
and can only sell the product that has been given to them.
Also, horror of horrors, when overseas, I have personally been advised by some of our
travel agents there not to visit India during our festival seasons. You think I am joking? Do
read Chapter 23 here and you will share my sense of dejection.
We are brilliant and each of us is doing a superb job, yet we are losing visitors to other
nations. Let us talk about this.
A New Breed of Tourists

I have often met young professional couples, both in India and overseas, when
travelling on my assignments. The strong feedback I get when they talk about their
trips to India as tourists is that the market here is changing far too rapidly for
our tourism people to keep pace.
The driving force behind the creation of an enormous new demand for new type
of tourist facilities is a new breed of tourists: young professional couples. These are
mostly young married couples but many middle aged people too. In India, today’s
professionals are far more affluent than were the earlier generations. Now both
husband and wife are working, they invariably live in a big city like Bangalore or
Hyderabad, and mostly live away from their parents and families. Their lifestyle is
very different from what the earlier generation had and they are creating an incredible
demand for some highly innovative tourist facilities.
The Internet is full of academic and marketing studies that show that the attitudes
and aspirations of today’s young Indians resemble those of Americans a few decades
ago. For Indian tourism trade, the changes in young people’s outlook on life are revo-
lutionary. The country’s younger generation is shedding submissive attitudes and
longs for the good life. While they know that they will have to work hard, they also want
to play hard, so they need everything that goes into making a good life. Multimedia
gizmos and other high end products apart, I will show in the subsequent chapters
that there are a number of new fun ideas that the Indian tourism operators are
ignoring.
z Because today’s young people, with different attitudes, bulging pockets and
limited time off from work, are the key consumers for holiday tourism tomorrow,
these shifts have big implications for the young tourism entrepreneurs entering
the field.
If I have not made myself clear, here is an example. (You will read about this in
the chapters that follow.) Say you are a middle-aged professional couple resident of
USA or anywhere in the West, planning to come here for a short holiday: You are
educated and cultured people, have money, want to enjoy yourselves, but are short
of time. Before coming here you need to carefully plan your trip and do not want to
waste time in experimenting and searching around. They may have some queries: ‘we
are coming to India in the last week of next month, where can we see Ravi Shankar
perform?’, ‘where can we get some special designs of typically Indian handmade paper
invitations cards with dried flower decorations for our son’s wedding?’, ‘can we get
some terracotta lampshades made to our designs?’, ‘where can we have some real
home taste traditional Iddli and dosas with typical chutneys?’, ‘where can we see
some good performances of Manipuri Dances?’
If you are living in India, sure you know someone, whose brother-in-law knows
someone, who can tell you, but if you are out of India, you will surf the net and then
call up a few Indian travel agents and then try the India Tourism office. You will, of
course, draw a blank.
Talking of the Internet, each State Tourism Department has exceptionally well-
designed sites, full of superb photographs and detailed write-ups about what the state
has to offer. All the sites across the country have references to hundreds of package
tours by tour agents. All are almost identical except for the names of the monuments
to be visited. ‘Morning visit to monument A, afternoon relaxing by the poolside, evening
free for going to the local markets, cultural performance after dinner in the hotel,
morning trip to monument B, afternoon relaxing at the beach’, and so on.
At the airport, you are met by a youngster with a clip pad. You are merely a name on
the list. He quickly ticks you off on his clip pad and hands you over to the limousine
driver. He does the same on his clip pad and you are delivered to the hotel, to be met
by another youngster with a clip pad the next morning for a tour of the city.
After one such trip should we expect the visitors, the new breed of visitors, to
come back? Again and again, huh? Where was the chance for you as the visitor to do
something, participate in what the locals were doing, get a feel of the country, enjoy
yourselves and get the sense that you are welcome?
New Breed of Entrepreneurs

Now, back to where I started: What can we do about this? And who can take us
forward?
In this part of the book, I will address the issue of how our young professionals can
take our tourism sector forward from a number of angles, with a number of examples
of how other small nations have successfully done this.
We will also discuss the same thought from the point of view of the mindset and
the work attitude, needed to succeed in the highly competitive tourism and hospitality
sectors, and I will show that in the new world, you can succeed only by working with
each other. And I am not talking about teamwork.
I have repeatedly said it in the earlier chapters of this book that in the past, team-
work meant, ‘Together everyone achieves more.’ In the fast changing business and
corporate environment of today, this term has taken on a completely different mean-
ing. The very concept of teamwork has changed and has become complex. Teamwork
simply meant a group of people working together as one body and under one leader:
a sports team; a debating team or a sales team on a special task. All are people
working as one.
This has changed. Now, teamwork means relationship—relationship between people
and relationship between companies.
So, we will take a look at first the new breed of entrepreneurs that I am talking
about and then some special skills that they need.
The new breed of youngsters coming out of our professional institutions is nothing
like the youngsters of our earlier generations. As recent as 15 to 20 years ago, when
I used to come to India and interact with the management, engineering and tourism
graduates of our prestigious institutions, I found they were overwhelmingly con-
cerned with getting a good job. Their questions were all centred around their concern
for what sort of a job is waiting for them in the outside world. Nobody talked of being
on their own and no one was interested in being an entrepreneur.
Today, I find that the concern for getting a good job has disappeared. Our profes-
sional graduates take it for granted that they will have a good job and will never need
to worry about where the next meal is coming from. A part of their credo is that they
no longer have to make safe bets with big firms to protect their career.
So now, a growing number of young professionals in the tourism trade are rebelling
against big travel and tour operators. They object to the degree of economic and political
power that these corporations wield without making any appreciable contribution to
increasing the tourist potential of our nation.
And on a personal level, they are increasingly choosing not to work for large firms
with strong corporate cultures that do not suit their political beliefs or their character.
Professionals from other fields are attracted to tourism too and they are pushing the
traditional travel firms to change for the better. Hence, attractive alternatives in the
tourist trade are coming up even faster. Thanks to the technology boom that puts tour-
ism customers just a click away, the opportunities to work for a young enterprise, or
start one yourself have multiplied.
As such young entrepreneurial firms grow in number and the pressure for estab-
lished firms to encourage their own youth movements gets stronger.
We are in the middle of a changing of the guard. The young are moving from the
shadows to the spotlight in the workplace, thanks to a convergence of forces that
play to the youth’s strength—technology, the pace of change and the tearing down of
the traditional corporate order.
Now, as I promised at the beginning of this section, I will talk of some special skills
our professionals need. You will see that these are not the type of skills that come
out of any text books, nor are they taught in any college or institution.
Five Mantras for Personal Success

For the benefit of those who are reading this part without having read the entire
book, I will quickly explain some very essential personal skills or mantras that are
particularly useful for our entrepreneurs venturing into tourism. It would be a good
idea to go back and take a quick look at chapters 2 and 3 of this book, where I have
discussed at length some of the personal attitudes and soft skills that I have noticed
in the young entrepreneurs, particularly in the East.
I will explain the six mantras with the easily remembered acronym: P.R.A.I.S.E.
z P stands for Pride. Pride in yourself, in your work, in your profession and in
your country, in that order.
z R stands for Relentless drive for upgradation. By relentless I mean non-stop, un-
remitting and without mercy. By upgradation I mean trying to do better rather
than merely improving.
z A stands for Ask, Ask, Ask. Getting feedback for whatever you do should be your
obsession.
z I stands for Innovation. Think and try out new ideas.
z S stands for Sharpness or Smartness. Be alert and look, observe and analyse—all
the time and everywhere, no matter what you are doing at the moment.
z E stands for Each other. Stop being a lone ranger and learn to work with each
other.
P—Pride in Yourself
While giving you a run through on the six mantras, a thought came to me.
One thing that I noticed in all the developing countries that have been particularly
successful in attracting more and more tourists is the attitude of the local people about
where they live, what they do and how they do it. They make it abundantly clear that
if you are not proud of yourself, no one will respect you—as simple as that.
Well, it may be simple, but do we do this? Walk into the office of any travel agent
in India. Forget about the small towns of India. Even in big cities, look at how clean,
neat and tidy the office is, how are the people dressed, did the owner/manager shave
this morning? Does he come out of his cabin and greet you? Do you get what I mean?
Then tell the counter staff what you would like to do during your trip. See the manner
in which you get the response, and you will really understand what I mean. Remember,
the tourist who is walking into your office is used to a very different attitude and
standards back home. Of course, from the point of view of the travel agent, he is not
likely to see the person who walks into his office ever again: It is a one time deal, so
why bother?
That is exactly my point. This is equally true of the offices of our travel agents over-
seas. We do not respect ourselves and our nation and do not bother about what others
think of us. This attitude is in stark contrast to that of the offices of other foreign
travel agents right next door that are spanking clean and reek of friendly efficiency.
z I need to explain as to why I am telling all this to our young entrepreneurs. Well, I
am upset by the wrong image that the people in the forefront of our tourism
industry are creating in the minds of the visitors. We are not a nation of shabby
and scruffy people. The homes of our people even in the smallest village are
cleaner and aesthetically appealing than the homes of similar people in many
other countries.
It is all a matter of pride; in yourself, in what you do and in your nation.

Talking of our national pride, I find that all visitors to the famous temple town of
Rameswaram in South Tamil Nadu are told and taken with pride by the autorickshaw
fellow to the family home of our former President, Dr. A.P.J. Abdul Kalam who is one
of the best presidents we have had and enjoys immense popularity. But any Indian
taken to see his home cannot but hang his head down in shame. I cannot get myself
to describe the place. Is this one of our national monuments? What do others think
of us when they see it?
Either the visitors should not be permitted there or, for heaven’s sake, let us find
someone who has the rudiments of national pride to do something about the place!
z Before going to the next point, let me conclude by saying that we cannot put
up a front for the tourists unless we, deep in our hearts, really feel proud of
ourselves and our nation.
I will talk some more about this in the last portion of this chapter where I list five
common habits which the overseas people intensely dislike. To us, these are routine
and commonplace, but they have a lot to do with personal dignity and self-respect
that I mentioned above.
R—Relentless Drive for Upgradation

By relentless I mean non-stop, unremitting and without mercy. By upgradation I
mean trying to do better rather than merely improving. Upgradation does not mean
simply improvement. The same as the difference between improving your employment
prospects or upgrading them. Improving means you have more chances of getting a
job, but upgrading makes you aim for a better job.
So, what I am talking about here is pushing yourself in an unremitting and ruthless
manner for doing things better and better: All the time and everywhere. How does one
do this? You are your own teacher. Keep your eyes and ears open and look around
you. Observe things and then analyse. Why is this being done like this? Can I do it
better? And then, if the activity directly concerns you, go ahead and change it for
the better.
This is what I have noticed in the small countries that have been successful in
attracting more tourists than us. If I go with the same tour package to the same des-
tination after a couple of years, I find changes, improvements and tangible efforts
having been made to upgrade whatever was on offer.
z Tourists bother less about how much money you spent on upgradation but
notice and comment upon how much effort you made.
I have noticed this attitude of relentless upgradation particularly in the executives

of the East. These people are trying all the time to do everything better, and it shows in
the products they make and in everything they do. People who regularly do business
in Singapore have noticed that if you go to someone’s office, home or study room after
some months, you find changes. As I said above, the changes by themselves are not
important; the attitude is.
We, in India, are not like that at all. The older generations, even when rich, believe
in simple living and have always been happy with the way things are. Well, simple
living is one thing, not wanting to change is quite another. Why bother to change? My
father did it this way and I will do it the same way. We do not want to change. I repeat.
We are happy with the way things are, and do not want to change. We have plenty of
shops and stores doing excellent business, but over the years, the get-up remains the
same. And we have factories producing what they were making 10 or 20 years ago.
z That was fine for my generation. But if you youngsters do this, you are sunk.
A—Ask, Ask, Ask

It is very typical of us that we consider asking for help, advice, comments and sug-
gestions below our dignity. We decide to do something, go ahead and do it, and rarely
go looking for feedback actively.
Instead, getting feedback for whatever you do should be your obsession. It is crucial
that you find out what people really think, what they have liked, what they have not
liked and what improvements people think you should make. There is no other way
of upgrading yourself. Without grassroots and marketplace feedback to make changes
in whatever you are doing, you are working in the dark.
Do not mistake what I am saying. Remember, listening to feedback is one thing,
doing something about it is quite another. Listen to everyone, get ideas and only then
do what you think is best. There should be no question of trying to please every-
body.
This is, I think, the most critical and difficult of the mantras. Young student volun-
teers carrying five page questionnaires and talking to visitors when they are leaving
will not do. This is a mere waste of time. Sure you will get statistics but nothing con-
crete on which you can modify and base your future strategy.
The idea is to get people to talk freely in a relaxed and comfortable ambience and
that is not at all easy. I have had junior executives of travel firms and even chambers
of commerce in many small countries approach me on the last day of my trip and
request a few minutes of my time over a coffee. Invariably, the executive does not
want to know what I liked. He or she wants to know what I did not like and what I
think should be done about it.
This is never done in India. It is impossible for our tour operators to get any feed-
back from the clipboard carrying youngsters that meet us at the airport where, as I
said above, the visitor is merely number 163 on his list till he leads him/her to the
limousine driver.
I—Innovation
This mantra is almost an extension of what I said above. Go out and actively look for
new ideas. Here again, if you look around you, you will see that we do not innovate;
we do not easily change and are happy doing the things we have been doing. We live
in a country that has been producing the same ambassador car for many decades.
Innovation as an attitude for us is, as I said, not easy.
Now, go and read the chapters that follow. You will see that what I am talking about
is innovation and nothing but innovation. People in different countries have tried
and succeeded using highly innovative ideas, but this certainly does not mean that
we can duplicate any of these ideas here.
You must have the guts to try something new and be prepared for failure too. But,
as I have said repeatedly, if you do your homework meticulously; look at all the options
carefully; seek advice, suggestions and guidance from anyone you can think of; you
indeed reduce the risk of failure.
I have said above that there is an enormous demand for new and innovative ideas in
tourism and the driving force behind its creation is a new breed of consumers: young
professional couples. They are creating an incredible demand for some upmarket tour
packages that were undreamt of even a decade ago.
Young consumers, both Indian and foreign, now demand that you use the latest
technologies and features when planning fun filled holidays for them.
Because today’s professional people, both in India and overseas, and both young
and middle-aged, are the key tourism market of tomorrow, these shifts should have
had big implications for tourism marketing companies and they should have offered
interesting new opportunities to exploit. But are we paying attention? Look at what
various countries have tried successfully.
S—Sharpness or Smartness
Be alert and look, observe and analyse all the time and everywhere, no matter what
you are doing at the moment. Many of you may have liked the concept of upgrading
yourself but would want to know how to do it. My answer is: The only person who can
show you new avenues to upgrade yourself is yourself. You have to be sharp, alert
and observant—all the time and everywhere. See things others miss.
z My mantra for doing this is to ‘Look, Observe, Analyse and then shut up.’
Wait, this is not a misprint. The shut up part is crucial, but before I explain that,
I will mention two things I have noticed in all successful executives of the East. The
first is that these people are very sharp, alert and observant. They notice things others
do not and they do this all the time—no matter where they are; at home, in the work-
place or travelling.
The other thing is that they keep what they notice to themselves. They offer advice,
help and ideas only when asked. This does not mean they are selfish because they
are often involved in social activities and help out where needed. The point is that
they participate but do not interfere.
To you, as future tourism executives, the ‘shut up’ part is also crucial. You will
meet many sharp, alert and observant executives visiting your office or the facilities
you offer. Sure they will notice things. But they do not go around telling you what
they have noticed. No one will ever tell you: ‘Hey! Why are you doing it like this? Why
don’t you try it another way?’ No, never. An executive who goes around poking his
nose into other people’s business, is asking for trouble. People do not take kindly to
being corrected, no matter how well meaning the other person may be.
E—Each Other
My strong message is ‘Stop being a lone ranger and learn to work with each other’.
The days when large companies could afford to have separate departments, each
handling various aspects of tourist activities are gone. Now, small independent firms,
each specialising in a particular part of the job, have to work together as a network.
Sure, I have given many examples in the subsequent chapters, but in India, this is
easier said than done. We are possibly the only country where our internal rifts and
bickering is a trademark. Every family, firm, institution and political party splits and
splits again. We do not work well with each other. Have you ever heard of a company
or a party splitting in Japan, or England, or USA?
Do read what I said at the beginning of the section ‘New breed of entrepreneurs’
earlier. I had discussed this from the point of view of the mindset and the work attitude
needed to succeed in the highly competitive tourism and hospitality sectors, and I
said that in the new world, you can succeed by working with each other and only by
working with each other.
I had explained that I was not talking about teamwork. You will find a lot of interest-
ing comments regarding this in Chapter 15.
Interacting with Foreigners

Now I come to the last section.
I would like to talk about five things, five very common habits which overseas people
intensely dislike when we interact with them. We do not notice these things since for
us, these are routine and commonplace. We do them all the time. These points have a
lot to do with personal dignity and self-respect that I mentioned before. I have noticed
these things because, in the past, I used to come to India often as part of overseas
delegations. So I had ample opportunity to look at our executives through the eyes
of the others and I have also heard others talk about this.
The first point concerns what we talk about in the presence of overseas visitors. Say
there are one or two people from overseas and there are a couple of people from the
Indian host company. Just think about what it is that we talk to each other within
the hearing range of the foreigners.
You will notice that the conversation is rarely directed at getting the foreigners to
talk about themselves. We make little efforts to get casual and informal and to become
friendly with them. We do not make them talk about their families, companies or
countries. Next time this happens please notice carefully. It is my experience that we
would rather talk about our own problems: water problems; electricity shortages;
about the sales tax and excise inspectors who come to our factories, hotels or resorts
and harass us.
Please remember, no customer or supplier is happy dealing with a firm that has
nothing but problems. He may not go to your local competitor. He may simply take
the next flight to Malaysia.
After a few drinks, we criticise our roads, our politicians, the corruption and so
on. We run down our own country. Now remember what I told you above. The Asians
who come here consider their own nations sacred and worship their countries. They
are intensely nationalistic. You cannot criticise Japan in front of the Japanese; you
cannot criticise Korea in front of the Koreans. So, when Indians loudly condemn their
own country they are being critical of our own mother! The foreigners detest this. We
have no business talking ill of ourselves, talking ill of our people, talking ill of our
country in front of the outsiders.
The second point: Try and notice how we talk to our overseas customers, or sup-
pliers about our local competitors. We make less effort in talking about our own hotels,
about our own companies than in running down the competition. Our entire PR effort
often seems to be gossip. Gossip about the personal habits of the owners and the
managers of our competitors and the problems they have had. This creates a very
poor impression in the minds of foreigners.
The third point: We in India have invented a term called ‘export quality’. We take
pride in telling our overseas customers that we will make special efforts to produce
special quality of goods for them, or we will make special arrangements for their cli-
ents. We tell them that what we offer to them will be superior to our normal running
quality. This is ridiculous since nobody is convinced. I have noticed that goods of no
other country in the world, even African nations, carry the label ‘export quality’. The
term export quality to me means that this batch is made with special attention and
I automatically assume that the rest of the production of the factory is third class or
junk. This is just like a hotel advertising ‘clean towels and clean bed sheets’ in the
deluxe rooms. What they are really saying is that the towels and bed sheets in the
other rooms are dirty.
The point I am making is that you need to convince your customers that you have
a tradition of rigorous quality control at all times and that quality is a way of life
with you.
The fourth point is that in our interaction with foreigners, our executives generally
do not take any notes. We think that carrying a small notebook and jotting down
points is a menial task which is better left to the secretaries. We do take notes but
only when we sit down for a meeting. If you notice carefully, you will see that the
Japanese and the Korean visitors take notes all the time. I have talked about this at
some length in chapter 4.
The point to note here is that while talking to visitors, a lot of casual remarks and
comments form an important basis for future information and personal goodwill.
Here is an example: I know a leading businessman from Singapore who has been
to India with me many a times. He has a peculiar habit of drinking whisky with the
Seven-Up soft drink and no ice. He did not like whisky with water; he did not like
whisky with soda, only Seven-Up. I had a sad experience while visiting a particular
company in Delhi for the third time. We were asked out for dinner. Before dinner,
the same executive would invariably ask, ‘What will you have to drink Sir? Can I
offer you a whisky soda? Do you take ice?’ After the third visit just mentioned, my
friend blew up, ‘You bloody idiot, look at the size of the business we give you. How
is it that you do not remember my personal preferences? Obviously, as a person, I
mean nothing to you’.
I have seen this happen time and time again. Please understand when I tell you that
this habit of not taking notes is something the foreigners find extremely distasteful.
You give the impression of being casual, or not being serious. I have seen Indians
visiting establishments overseas, strolling around with their hands in their pockets.
If the fellow wanted to make a note of a particular machine or something, he would
ask for the visiting card from his host and make a jotting at the back of the card!
This is silly.
The last point concerns an extremely distasteful habit. It is a tragedy that a couple
of times, the Indian company loses business because of a simple and yet a routine
habit of ours. Say, for example, we have received visitors at the Chennai airport and
are driving with them to Pondicherry. It is a three-hour drive. There may be three
of us in the car maybe one to two foreigners and the driver. Between Chennai and
Pondicherry, as it is on the highways all over India, there are no public toilets or
clean facilities available.
We are comfortable with answering the call of nature, in the open, on the roadside
by going behind bushes or trees. Nothing wrong with that! But after that we come
back into the car and simply sit down without washing our hands. It is always so
that there are bottles of mineral water in the car. It is very simple to ask each other
to pour some water and wash our hands. The worst part is that the driver does the
same. I have often noticed that at the end of the journey, when our Indian friends
want to shake hands with the foreigners, the foreigners pull their hands back with
an unmasked distaste and prefer to fold hands in our normal ‘Namaste’ fashion.
Preamble z 251
19
New Face of Tourism
In this chapter, we talk about where our Tourism and Hospitality sector stands in
the eyes of the world and where it easily can be.
What we think of ourselves, what we read in our own press does not matter a jot;
it is what others think that makes it crucial. Remember, we are now living in an in-
creasingly competitive world and India is not the only destination people would be
thinking about.
I can say with some pride that our performance in this sector has indeed been re-
markable, but our success does not matter if many others are doing far better. It is a
fact that we, with the finest brain pool in the world, are nowhere near the top of the
list of preferred destinations as listed in most of the reputed travel industry surveys.
We are being left behind by many newly emerging countries that are a fraction of
our size.
Visions of the future and innovative ideas are of course a good starting point, but
at some stage, we need to convert all that into more and more customers who will
pay. This constitutes the target market, and I would say that an almost textbook de-
finition of what constitutes a tourism market is:
[a] set of actual or potential customers for a given set of destinations and activities, who
have a common set of needs or wants, and who reference each other when making a
buying decision.
The last line above is very important and something we never bother about. I can
say without any fear of contradiction that anyone a tourist comes in contact with in
our tourism industry has the attitude that this is a one time contact. ‘I will never see
these people again.’ So, why bother?
Now-a-days, promotion of tourism does not merely comprise beautiful brochures

and well-designed web pages. I have seen superb brochures and colourful write-ups
in travel magazines on awful resorts in West Africa. So, remember the last point of
what I just said.
To me, the most important thing about promoting tourism is a group of friends or a family,
in India or overseas, talking to their friends and asking about their experiences, when plan-
ning their next holiday trip.
Tourists (individuals as well as groups) invariably talk to others before making a holiday
decision.
This is very critical. If we try to understand what people like, give it to them, talk to them,
ask them how we can improve further, they will tell others about it.
Advertising can only get people once to a website or to a destination. It is the word-of-mouth
element and its forcefulness that will get them back again and again.
Every tourism textbook says that tourism is a powerful economic development tool.
It creates jobs, provides new business opportunities and strengthens local economies.
And, the textbooks go on to detail how tourism should be promoted.
It is my contention that promoting tourism on more or less a textbook pattern will
no longer be enough. The market has remarkably changed and so also the profile of
the potential visitors. If our budding entrepreneurs in tourism have to take themselves
and their careers in new directions of growth, they have to take a hard look at what
some of the newly emerging nations around the world are doing. It remains a fact
that many nations a fraction of our size are now attracting many times the number
of tourists we get.
The new mantra is cultural heritage tourism. Some of the developing nations have
caught on to the fact that when cultural heritage tourism development is done right,
while helping to protect a nation’s natural and cultural treasures and improving the
quality of life for residents, it also adds immensely to the enjoyment of the visitors.
If people come and get the feeling of enjoying themselves by participating in some-
thing, they will go home and talk to their friends and the growth-spiral will move re-
lentlessly upwards.
There is ample reference material that shows that linking tourism with heritage and
culture in developing nations can do more for local economies than promoting them
separately. That is the core idea in cultural heritage tourism: save your heritage and
your culture, share them with visitors and reap the economic benefits of tourism.
We Have to Look East

While researching for this book, I must have read something like a hundred books,
journals, and write-ups on all aspects of tourism. If I leave out the leaflets and flyers
promoting India as a destination, I notice three things:
New Face of Tourism z 253
One, I find that there is an enormous amount of superb text book stuff concerned
with the technical and managerial aspects of the tourist and hospitality trade: How to
manage hotels and resorts, how to organise more tourists, and how to make them feel
comfortable, and so on. But there is no discussion specific to India on why more and
more tourists prefer going to tourist locations in tiny nations like Malaysia, Singapore
and of course in Bali (Indonesia) and now Indo-China and Vietnam. If, in physical terms,
India has huge dollops of everything these nations have, plus a lot more, what is it that
our young entrepreneurs need to do to correct the situation?
Two, while the tourist trade associations and others in India are already doing a superb
job, I have not read any discussion about the role of non-tourist trade associations and
chambers of commerce. I will show that these bodies have played a major role in pro-
moting tourism in all the newly emerging nations in the East.
And three, (as I have commented elsewhere in this book), everything I read was over-
whelmingly slanted towards the West and it was mainly the western people that wrote the
books and were speaking on the subject. Sure, our tourist industry is heavily dependent
upon the West, Australia and so on and that is where the money comes from, but the
West has nothing to teach our young entrepreneurs on how to compete with the Eastern
countries that are winning away our tourists.
Here, I think it would be a good idea for the reader to be helped in probing a little
deeper into the mindsets of the tourism entrepreneurs in the East. I am convinced
that for our young entrepreneurs to compete and win in the increasingly tough world,
we have to Look East. There are many lessons that our youngsters have to learn from
the successful people in the East. Those fellows are using an ideology of working with
and trusting each other that is doing wonders. I suggest that you go back and read
what I said earlier in chapter 15 on Guanxi.
Let Us Go on a Holiday
Before going on to some serious discussion, let us go on a short holiday to the
Caribbean.
Long ago, in early 1970s, I was visiting Barbados. It is a small island–nation that
forms a part of the seven-member Organisation of Eastern Caribbean States in the
West Indies.
It is a beautiful sun-drenched tropical island and the tourist arrival in Barbados is
many times its total population. This is the only country I know of where a legendary
cricketer is featured on a currency note. Sir Gary Sobers rose to be the Governor of
this tiny island–nation but the $5 currency note that bears his photograph honours
him only as a cricketer.
A small incident has made me a life-long salesman for this tiny nation.
It was my first visit to the island and this was long before the days of the Internet.
I went through the tourist brochures they had in my hotel room and was fascinated
by some deep underground caves they had. It seems there was also a subterranean
river, and the place was open to tourists on certain days of the week. The brochures
mentioned special guided tours at certain times.
I called the number printed on the leaflet but it was no longer in service, so I called
the directory enquiry.
This was the start of a number of surprises.
My first surprise was when the girl on the other end found that I was a visitor to
Barbados asked me to hold on. My next surprise was when a male voice came on the
line and engaged me in a long conversation about where I was from, how I wanted to
spend my free time and what sort of places I wanted to visit in their country. He told
me about the days of the week when the caves were open to public, the timings of the
conducted tours and the charges. He said the price included a pick up and drop from
my hotel. There was no end to my surprises when he asked me to hold on and told
me that the tour for that afternoon was fully booked and that he could get me a place
on the tour the following day.
Of course, I could not help asking if this was all part of the telephone company’s
services. I got yet another surprise when I was informed that all the calls from visitors
were re-routed to the local chamber of commerce and there was someone on call duty
throughout the day.
The first thing I did the next day was to visit the chamber and was amazed at the
degree of organisation they had. Unlike the picture of the usual chambers of commerce
or trade associations I had in my mind, it was a fully functional corporate office. I
found that the chamber handled the entire spectrum of tourism activities and the Gov-
ernment did not even have a tourist information bureau. One of the executives there
explained that it was the trading community that had a vested interest in the tourist
dollar and so it was left to them to handle all aspects of tourism in the country.
I do not know why we in India cannot work like this.
In this book, I have used a phrase repeatedly: ‘Where we are and where we easily
can be.’
In this chapter, I would particularly like to talk to those of you who are looking
forward to starting your own organisations in the tourism and hospitality sectors.
In chapter 13, while delineating three faces of entrepreneurial mindsets, I have
contrasted the Western, Asian and Indian entrepreneurial mindsets. In that chapter,
I have discussed the Lone-Ranger-Indian mindset where we just do not want to work
with each other and everyone wants to be the boss.
The reader would already have detected that throughout this book runs an under-
current of a single thought: we Indians are not good at working with each other. We
tend not to build strong commercial, professional, political or cultural institutions.
Rather, we are good at splitting them, as each of us wants to be the leader.
First We Go to Goa
Some years ago, I was living in Malaysia and was in Bombay with a small Malaysian
trade delegation. I was the only Indian in the group. Some of the delegates had their
wives with them and, on the spur of the moment, we all decided to go to Goa for a
long weekend. We took the first flight and landed there in the evening without any
hotel-booking.
This was before the era of the Internet and as was my experience in other tourist
destinations, we were all sure there would be a hotel–booking counter at the airport
where we would be able to pick and choose the hotel that suited us best. We were
keen to avoid the five star resorts and wanted more of local colour. After all, we were
to be there only for two days.
Well, I do not know how the airport is now, but in those days Goa did not have
much of an airport. There was no hotel-booking counter but there were a number of
stalls, each run by a different hotel group and having particulars of their own resorts
only. There was no tourist information counter either.
Each person we spoke to had different advice to give us and in the end we decided
to hire a small van, there being seven of us, and go round to the different locations
and see if we could find something that suited us.
Goa is a very spread-out place, plus the van driver took us first to places where he
obviously had ‘contacts’. So, finding a good place was a tiresome exercise and it was
well past midnight when we could settle in dog-tired and quite fed up.
The next day, we hired another van to take us around. We could not get our hands
on any tourist literature and so had very little information to go on. Those days, the
best and possibly the only source of detailed information on Goa was the Lonely Planet
Guide published from USA, but we had not bothered to buy a copy. I am not proud
of the fact that we needed an American guide to tell us where to go and what to do in
the most popular Indian holiday destination. I understand that it is still the case.
For everybody in our group, this was the first trip to India. It was a quick business
trip but we still had two free days at Goa and my colleagues were keen on seeing some-
thing of the Indian culture. It so happened that while we were walking on a beach
one of the ladies in our group saw a poster of a performance by some Indian classical
percussion group that evening. We were all interested but the poster was half torn and
we could not see the location. That was the only poster we could find on the beach so we
made enquiries with the shop-owners around but nobody knew anything. Then
we went to a nearby five star resort. We were told clearly that the resort would have
information of cultural performances on their premises only and that too for their
own guests. We went to another resort and got the same answer. Sure, the staff there
were very friendly and helpful and made a few phone calls but got nowhere. Nobody
really knew whom to call to find out what was going on in Goa. Well, we did not get
to see the performance.
Now We Go to Phuket
Let me tell you about my experience of a place called Phuket in Southern Thailand
a couple of months later. It is a beautiful resort town, much smaller than Goa,
but very much upmarket. When I landed at the small airport, I immediately saw a
tourist information counter managed by one of the local chambers of commerce. I
repeat that it was managed by a local chamber of commerce and not by any government
tourist organisation, tourist resort, hotel or travel group.
I was immediately reminded of what I had seen in Barbados. In chapter 12, when I
discussed the new face of tourism, I have spoken about the local chamber of commerce
handling tourists.
I was amazed at how well-organised they were. They had brochures and schedules
for everything. While I was going through the list of sea-side hotels, I noticed that
the chamber also had a list of private homes that had been approved for accepting
guests on a daily basis. I decided to stay at a small farmhouse on the side of a hill.
Then I noticed a schedule of day-trips to a nearby island of Koh Samui by luxury
boats. There was a brochure that told me all about the place and what to expect on
the trip, so I chose a trip that included lunch at the island. I made my booking and
also booked a seat at a performance of Thai classical dance that evening.
I did all this at the airport, and it took just 15 minutes. I was asked to pay in full
for everything, got proper receipts and tickets and there was no surcharge. I am sure
the chamber got a commission out of what I paid, but I did not mind that. For me, it
was a one-stop payment and no haggling or hassles were needed.
My stay there was one of the most delightful experiences I have had for a long time.
Everything was superbly organised. I would not have commented on this if I had been
in Europe or the US, but this was Asia.
But wait, the best is yet to come. As students of management and tourism, there
is something for you to learn here. You know how we do these things in India. Now
see how others do it.
I found that the tourist boats that ply between Phuket and Koh Samui are something
like our share taxis that ply between major towns in India: There are a number of
points from where the vehicles leave, each vehicle leaving as it fills up. In India, I have
found this very irritating as there is no way I can go for an advance-booking when trav-
elling by share taxi, say, from Delhi to Dehra Dun. Often I wait for a vehicle at one
point and I have no means of knowing if a vehicle is waiting for one more passenger
at another. There is no co-ordination or co-operation of any sort, and everything is
grossly disorganised.
In Phuket, the boats do leave from various piers but in a surprisingly organised
manner and passengers hold confirmed seats. Since I was holding a ticket that had
already been issued according to the boats available, I directly boarded the boat, as
I got to the pier.
I was impressed and wanted to know the name of the organisation that ran these
cruises. I found that there was none. No large firm was involved at all. I asked some
questions and realised what an incredible feat of organisation it was and how many
different entities were working together.
z There are a number of independent cruise–operators that offer different options.

They organise the schedules and the activities but they have neither their own
boats nor any restaurants where we were to have lunch.
z The boats and the restaurants are owned by different people.
z The tickets and the booking are co-ordinated by yet another party.
z A passenger like me has the free option of the trip he likes, can buy the ticket
at any hotel or entry point like the airport and be sure of the departure time,
the schedule and the details of what to expect.
But wait; there is more to come.

As we were going up the ramp to get on board the vessel, I noticed a photographer
standing at the head of the ramp, clicking away and taking pictures of all the pas-
sengers. Some of the passengers smiled and waved at him. I took no notice of this as
I am quite used to being harassed by photographers at all tourist destinations. They
all offer to take your pictures for exorbitant amounts. But what surprised me was
that there was a lone photographer and he did not approach anyone, asked no one’s
permission and did no bargaining.
When our boat returned in the evening, we landed at a different pier. I was surprised
to be greeted by a young fellow as I was coming down the ramp. I saw other passengers
being similarly greeted by other boys. Then I noticed that the fellow was showing
me a beautiful picture of myself coming up the ramp, framed in a very nice ceramic
frame. He did not push it on me. He merely said that if I wanted it, I could have it for
the equivalent of Rs 200. It was an offer I just could not refuse.
On the way back to the farmhouse where I was staying, I sat back and thought
about the immense amount of organisation and co-operation that must have gone into
this simple idea. And, looking at the thousands of tourists who take this trip daily,
the returns from this activity by itself would be mind-boggling.
There had been no jostling and pushing of photographers eager to take our pictures;
only one fellow taking the pictures at each jetty; no one had bothered the passengers
as we boarded; no one had forced anyone to buy the pictures and no one was there
to give a me a dirty look if I had just said ‘sorry’ and walked off.
The World Can but We Cannot? Huh?

When I compare this with the unruly pushing and jostling that the tour guides and the
photographers do at our temples, monuments, resorts and other tourist destinations,
and when I compare the pittance our people earn at the end of the day, I repeat what
I said in the beginning about where our tourism and hospitality sector stands in the
eyes of the world and where it easily can be.
I would suggest that you go back and go through chapter 15 of this book, where I
introduced you to Guanxi, the social philosophy of Confucius detailing how a society
must organise itself and work together for economic benefit.
Well, what you read above was Guanxi in action.
The chambers of commerce and various associations provide the organisational
aspects. They get into the act and the informal network that results is not only
amazing but also highly profitable for everybody. After all, at the end of the day; it
is the trading community that is the ultimate beneficiary of tourism. So it should
be up to them, and not to the government, to see that the tourists keep on coming
again and again.
20
Handicraft Tourism
Tourism means business and business means entrepreneurship. If our young entre-
preneurs have to make a mark for themselves (and for our nation), they have to con-
sider some of the highly innovative ideas that some of the developing nations are
using to draw tourists.
One of the most original ideas that has impressed me a lot is to use the traditional
production of handicrafts to make tourists enjoy themselves more and, of course,
spend more. I have noticed a strong shift from ‘look and see’ towards ‘touch, feel and
do’, whereby handicrafts are used to enable the visitor to come into closer contact with
locals and their way of life. People do look forward to interacting authentically with
the cultural and creative landscape, and then go home and talk about it.
The last part of the above para is very important: ‘and then go home and talk about
it.’ That is what will bring dividends in the form of more and more tourists.
I am not talking about merely selling handicrafts to tourists. Rather, I am talking
about using handicrafts to promote tourism in enabling the tourists to see and ex-
perience the actual production of crafts.
Closely coupled with this is a new approach to cultural heritage tourism, where
the tourists actually see and experience the culture, history and archaeology of local
people; plus village-based tourism, in which tourists share in village life.
I have seen that different nations have tried out different ideas that have had dif-
ferent effects on the local economy and environment. I am particularly fascinated
by the experiments several nations have undertaken on blending handicrafts and
tourism development as an excellent way of simultaneously preserving tradition and
poverty alleviation in rural areas.
I will talk about some very interesting and innovative ideas I have seen, in the
next chapter.
Handicraft Tourism z 259
Though visitors are fascinated by the artisans, I do not think the artisans always
welcome it. They’re busy with their occupation, and they don’t have time to let people
come through and disturb them. The trick for our budding entrepreneurs is to some-
how create a mechanism that would enable visitors to come and see and you would
end up creating customers for life.
Of course, everybody is realising that while the aim is to draw on traditional lifestyle
and culture to increase the value added, sustainability has become the order of the day,
both culturally and with respect to the physical environment. Increasing attention is
now being paid to conservational issues and there is also increasing public awareness
of developing craft villages in harmony with environmental hygiene.
While a discussion on promotion of handicrafts is not my objective, I will seek to
establish that the rural communities do indeed gain economic and other benefits
from such tourist related activities.
One of the major problems that every developing country has faced is the role of
handicraft traders who serve as middlemen. Invariably, these are the people that de-
rive the maximum benefit by lending money and getting the handicraft producers in
their clutches for life.
The craftsman leads a life of abject penury and destitution, which leads him to
discourage his children to take up the generations—old craft, taking the spiral down-
wards towards poorer and poorer quality.
One of the ways of decreasing the influence of the middlemen and increasing the
income of the craftsman is to encourage the handicrafts producers to come in direct
contact with the actual customers: by taking the tourists to them.
Three things happen.
1. Quality improves
The producer understands first hand what the customer needs; gets new ideas
and inputs by talking to the tourists; plus he gets higher prices for custom
made items.
2. Goodwill improves
Tourists get a feeling of personal involvement; participate rather than just
watch; enjoy themselves immensely and talk about their experience when they
get back home.
3. Revenue improves
Tourists spend more as they have more to do.
In this chapter I will be talking about some of my own experiences in some of the
more successful developing nations. Contrast this with what we are doing in India
and the lessons we can draw from these.
Malawi
Let’s go to Malawi first. Here is a superb example of an entrepreneur using traditional
village-based handicrafts to boost the tourist trade as well as his own fortunes.
Local entrepreneurs in Malawi joined in very enthusiastically. The Government of

Malawi just sat back and watched and apart from an occasional pat-on-the-back,
had no role to play.
I have lived and worked in Africa for many years and have been a frequent visitor
to Central Africa. Malawi is a beautiful, land-locked, semi mountainous country in
south-eastern Africa, formerly the British protectorate of Nyasaland. Bounded on
the north by Tanzania, on the east by Lake Nyasa, on the south-east and south by
Mozambique, and on the west by Zambia, it is one of the better-developed countries of
Central Africa. The capital of Malawi is Lilongwe, which lies to the north. The largest
city and the commercial hub is Blantyre, almost at the southern tip. The parliament
sits up in the mountains in a place called Zomba, in the west. Unlike almost all the
countries in that part of the world, Malawi has been strife-free and generations of
Malawians have grown used to a stable government and a peaceful lifestyle.
I have always found it a very fascinating country.
The first time I went to Malawi was in the early 1970s. It was an attractive de-
stination for tourists, particularly from the neighbouring countries. Though Malawi
really had nothing to offer that its neighbours did not have in plenty, it was by far the
most peaceful and tranquil country in the region. There were many beautiful holiday
resorts around Lake Nyasa, the world’s largest inland body of water. There are sandy
beaches but no tides. People came just to lie in the sun and do nothing: in any case
there was nothing to do.
There was almost nothing to shop for except for some really superb Ebony wood-
carvings. Ebony is an exceptionally hard, beautiful and expensive wood found mainly
in the sub-Saharan desert regions of Africa. Its exceptional density makes it not only
very heavy, but also gives it an incomparable and permanent sheen when carved and
polished. The carvings sometimes come as a beautiful mixture of black and brown
but mostly as pure black that is most well known. Each piece has its own special
texture, colour and beauty.
Traditionally, it was West Africa that was home to master carvers of Ebony, but
many tribes all over West and Central Africa also have their own particular tradition of
Ebony carving. People do it mostly as a pastime, using simple hand-tools to produce
some highly traditional but incredible works of art. Over the years, Malawi developed
a solid reputation for some of the best Ebony carvings in Africa.
Walking on the streets in Malawi, I was surprised to see that the carvings that were
world class in design and finish were being sold for peanuts on the footpath of the
big towns. The problem is that Malawi is a land-locked country deep in the heart of
Central Africa and its inaccessibility makes the overseas marketing of the handicrafts
difficult and expensive.
Well, that was the early 1970s. I was there again about 20 years later. I found
the country just about the same but the change I found in the handicraft market
was astonishing. Instead of the footpath sellers, there were regular stores and, in
addition to a far better selection of Ebony carvings, there were Soapstone, Ivory and
other types of wood-carvings. There was not only a quantum leap in the quality and
the finish of the work on sale but the prices had taken a leap too. The range of items
now included small home furniture items.
Of course I was curious and I checked. I was told that some years earlier an English-
man who was in the travel business in London had married a girl from Malawi. The
wedding took place in Malawi and the bride’s family had gifted the young couple a
fabulous dining set made entirely of dark brown Ebony.
Back home, the groom noticed how much of a craze this set became with his friends
and everybody wanted something like it. He got the idea of organising a holiday tour
of Malawi for his friends to go and see where the furniture had been made and to try
to get their own items custom–made.
The bride’s family turned out to be even more enterprising, and they arranged for
the initial group to be accommodated in a tribal village with tribal dances and cultural
shows in the evening.
Out of nothing, a remarkably new approach to cultural tourism or village-based
tourism emerged; the tourists actually saw and experienced the culture, history and
lifestyle of the tribal people. They felt that they were sharing in village life.
I am told that the first group had planned to be in Malawi for five days, but they
stayed there for three weeks!
The group went home and talked about it and surely it was the start of something
highly lucrative for everybody. Slowly, many travel agents started organising such
tours that catered almost exclusively to retired British or European people who took
their friends along for an opportunity of a unique holiday plus getting small furnishing
or decorative items of exceptional value custom–made to their own ideas.
I do not know how this particular tourist activity is doing in Malawi nowadays,
but I see from the published statistics that the tourist profile of Malawi has changed
dramatically during the last few decades.
Let me summarise the lessons for India in this.
1. This is the best example I can give from my own experience where a group of
entrepreneurs have joined hands to cash in on a traditional lifestyle and
culture.
2. It is a spontaneous getting together of disparate entities, from travel agents to
hoteliers to village headmen to craftsmen, plus the local chambers of commerce,
in an informal sort of a network. Nobody was really the leader, the owner, or
the boss, but everyone profited.
3. Value added has been increased, without any substantial investment in in-
frastructure.
4. Again, value added has been increased, without any substantial increase in the
number of tourists. Almost the same number of tourists came, but they enjoyed
themselves more, stayed longer and spent more. It is one thing to see a cultural
performance arranged by the tourism department or a five star hotel in Lilongwe
or Blantyre and quite another to see the school children perform for visitors
in a tribal village.
5. This is sustainable tourism, with a positive impact both on traditional values,
culture and the physical environment.
6. The Government of Malawi had no role to play in this. They merely sat back
and watched. It was an entrepreneurial effort through and through.
Bali
For the budding entrepreneur looking for new avenues of growth in tourism, the richest
source of ideas, experience, caution and inspiration is Southern Bali. Everything that
is worth trying in India has been tried there.
The story of the island of Bali, Indonesia, had a magnificent start but quickly plunged
into ecological and environmental disaster. Bali has always been an enchanting place
for foreigners. Images of rice paddies, beautiful beaches and temples and a fascinating
culture draw tourists from all around the world. The industry did bring many benefits
to the island, but the development occurred too quickly and without proper planning,
causing some serious damage to the island’s environment.
Further, as has been seen in every country, tourism will inevitably have some in-
fluence on the cultural traditions of any host community, and this has also happened
in Bali, even when its culture is considered its strongest asset. We will talk about
how the enterprising Balinese have faced this.
Now the trend is for sustainable tourism, which is a combination of ecotourism
and socially responsible travel. Sustainable tourism has admirable goals, but it is not
always easy to achieve them. This alternative to mass tourism requires managing all
resources so that social, economic and aesthetic needs are met while simultaneously
maintaining cultural integrity and well-being, fundamental ecological processes, bio-
logical diversity and life-support systems.
Social scientists, travel–writers, art specialists, in short an entire spectrum of acad-
emicians have written books after books and have published papers after research
papers on sustainable tourism or ecotourism in Bali. But even more than the environ-
ment, most of the research that has been done on the impact of tourism on Bali has
been on the cultural effects.
The Balinese consider themselves a distinct ethnic group within Indonesia. In Bali,
Hindus make up over 90 per cent of the population, but they are only 2 per cent of
the Indonesian population. Additionally, Hinduism as practiced in Bali is unique. It
is deeply intertwined with art and nature, and is less involved with scripture, law and
belief. It is a blend of Hinduism, Animism, and Chinese ancestor-worship, and thus
it is more concerned with local and ancestral spirits than with the traditional cycles
of rebirth and reincarnation. Temples are associated with a family–house–compound,
ricefields or geographical sites, and each Balinese belongs to a temple through descent,
residence, or ‘some mystical revelation of affiliation’. Culture has always been the
island’s strongest attraction, ranging from the beautiful Hindu temples to the dances
and traditional arts.
The Balinese are also changing. They have accepted new forms and styles of arts
introduced by foreigners. Even though some crafts and ancient dances are dying out,
like tortoise–shell work, bone and horn carvings, and terracotta figures, new arts
are being adopted, such as batik from Java, furniture styles, wood-carvings and
masks.
These developments of course tend to offend many purists, but in addition to the
large research work done on the aspects of culture and ecotourism, the Internet is
full of papers on the huge success of the close relationship between handicrafts and
tourism in Bali. In Bali, crafts and tourism have promoted each other.
However, one aspect that is not talked about much is the Balinese artwork and
tourism clusters story.
I do not think the Balinese villagers have ever heard of Michael Porter, the
strategy–guru from Harvard, but I am sure they can teach him a thing or two. Michael
Porter became famous by suggesting that industry clusters, in which firms compete
against each other locally, tend to be more successful when they compete abroad. The
advantages of being located near each other are that firms include better information
on their competitors and positive externalities such as specialised labour pools. He
cites several famous examples on California Wine Clusters, Silicon Valley IT cluster,
Houston Oil and Gas Cluster and the Boston area biopharmaceuticals clusters.
Getting back to what I called the Balinese artwork and tourism clusters story, the
clusters have long been the backbone of both the tourism and art and craft industry
in southern Bali. There are many tourism clusters where a number of hotels, resorts,
restaurants and shops are located in a close proximity to each other, but there are
also a handful of Balinese villages that are traditionally the centres of production and
marketing and can be called clusters.
1. Tihingan is an industry cluster for the production of Gamelan. Gamelan, which

is almost an orchestra by itself, is the main element of the Indonesian traditional
music. The instruments in a Gamelan are composed of sets of tuned bronze
gongs, gong-chimes, metallophones, drums, one or more flute and bowed and
plucked string instruments. In some village Gamelan, bronze is sometimes
replaced by iron, wood or bamboo.
2. Balinese have made Kapal famous for Sanggah (temple statues).
Balinese have been working for generations to develop handicrafts on the lines that
they do not remain mere commodities, artistic works or the treasures of the country.
They have relentlessly upgraded by close interaction with their customers—the
tourists. And most importantly, they understand the motivations and tastes of the
tourists in order to ensure that product design and development are demand–driven;
to develop new items that the people would actually use in their homes, all the while
keeping the precious authenticity of traditional values in mind.
The existence of local rivalry, specialised labour pools and availability of supplies
within clusters have boosted the competitive advantages of firms. Clusters also tend
to gain specific brand equity as tourists and buyers recognise the quality and price
levels of goods offered by firms in the clusters.
The Balinese saw the potential of using handicrafts to promote ecotourism because
of the cost-effective role that local handicrafts have in the promotion of a destination.
The result is that rural to urban migration has been considerably reduced, the bin-
ding of communities for common economic benefits has increased, plus this has
helped to foster the continuity of local traditions and to preserve cultural heritage
and diversity.
Let me again summarise the lessons we have for India in this:
1. This is also an example where a group of entrepreneurs joined hands to cash

in on an opportunity. The local government of Bali had little role to play in this.
It was completely an entrepreneurial effort.
2. In Malawi it was a spontaneous getting together of disparate entities, from travel

agents to hoteliers to village headmen to craftsmen, plus the local chambers
of commerce, in an informal sort of a network. In Bali, this was driven by the
desperate need to save the dollar earning tourism from its own devastating
effects.
3. Again, just like in Malawi, value added increased, without any substantial in-
vestment in infrastructure.
4. I would strongly emphasise three points.
z One, that the Balinese have developed their own version of sustainable tourism,
and have assimilated new forms and styles of arts introduced by foreigners with-
out moving away from the strong base of their own traditional values, culture
and the physical environment.
z The second point, which is also a remarkable aspect of the entire exercise, is the
complete absence of internal bickering and petty rivalry among the local travel
agents, hotels and the craft producers. Sure there are many competing com-
mercial entities involved, and local rivalry is there too, but there is no jostling, no
undercutting and no touts trying to entice the tourists away from one producer
to another.
z The third point is that the producers knew that the customer, the tourist, was
there for a limited stay only and once anyone committed a delivery day and time,
competing firms got in the act to see that the customer was not let down. This
is an enormous boost to the goodwill.
Handicraft Tourism in India

I am now going to take you on a delightful journey of discovery through a little known
crafts world of India.
While researching for this book, I was keen to see for myself the handicrafts manu-
facturing scene in my country, particularly the not very commonly known or talked
about items. I did indeed find a host of highly traditional items that have very rich
cultural history behind them but are not commonly available in most handicraft
emporia.
The range of items I could have talked about here is quite wide but my focus here
is not handicrafts but what I am calling handicraft tourism as a new opportunity for
our entrepreneurs, so I am only going to talk of production activities that can gen-
erate an interest in both the domestic and foreign tourists going to and meeting the
artisans.
So, I am going to leave out the handicraft or cottage industry activity at village level
which is there in almost every state in India. Taking tourists to see this is village or
rural tourism, and that is outside the scope of my discussion.
I wish to be clearly understood that, as I have explained through the examples
above, handicraft tourism develops and pays dividends only where tourists are keen
to have items custom–made for their homes and have an interest in going and meeting
the actual artisan at work. This is a shift from ‘look and see’ towards ‘touch, feel and
do’, whereby handicrafts are used to get the visitor not merely to come in closer contact
with locals and their way of life, but also enabling the visitor to look forward to taking
back a part of the local culture that would become a part of his own home.
So, going back to my research, I had no problem locating the artisans, as there are
ample published references in academic texts. Moreover, I was travelling to all parts
of the country interacting with MBA and postgraduate engineering students and I
easily made detours whenever possible to wherever these items were made. I went
and met the artisans and got the feel of their lifestyle.
In this journey of a lifetime, on the one hand I was thrilled at the richness of our
cultural wealth, and on the other I was sad at the slow demise of these arts. Wher-
ever I went, I found almost all the craftsmen revealing that they saw no future for
their children learning their ancestral skills. Most of the children of the artisans are
moving away, taking the spiral of quality, creativity and productivity relentlessly
downwards.
I am sorry if I am getting a little emotional here but this is where I look up to our
budding tourism entrepreneurs to step in. I will show that there are endless oppor-
tunities for them to do something new. I will also show that our bureaucracy has no
role to play in whatever direction we go from here.
In this journey, the first stop is our handicraft emporia—you find these in every big
city across the nation. In range and aesthetic appeal, traditional crafts produced in
India are unmatched anywhere and so the emporia selling nothing but handicrafts
are understandably some of the largest in the world. These are invariably a must-visit
item in the itinerary of almost every domestic or foreign tourist.
There are two points I do not think many people are aware of:
1. There is nothing unusual in tourists asking if it is possible to talk directly to

the artisan: It happens all the time. I have had many overseas visitors with me
who have seen an item in a shop and have asked if it is possible to have the
item custom–made to a slightly different size or design. I have also heard many
tourists make the same request. Placing an order with the shop is of no use as
there are some changes that are possible to be made and some cannot and it
is only the artisan who can discuss this. Invariably the shopkeeper shrugs his
shoulders and walks off to attend to the next customer.
2. The entire handicrafts industry is under a very major threat from China. China
is flooding the Indian market with superb quality religious icons, statuettes
and figurines. The entire country now uses Diwali diyas made in China. Illu-
minated and framed pictures of the entire spectrum of deities with beautiful
background animation have replaced the crude versions our artisans were
making. Not only that, China is also selling fake Indian cottage industry craft
products that are impossible to distinguish from the original, at half the
price.
The range of fake items is mind-boggling. Everything from Murshidabad carpets, to

Moradabad brass items to Rajasthani bidri work is available. I would have said that
Indian traders merrily sell these for a greater profit, but this would be partly true. I
know handicraft importers in the US and Europe who have endless problems getting
their supplies from small disorganised producers in India. So China has jumped in
and merely seized the opportunity.
But yes, there is a possible solution to both the aforementioned points. If you have
read what I said about Malawi and Bali, you will be able to guess what I am going to
say next—arrange for the tourists to see the handicraft producers in action and get
double benefit.
In India, however, this is easier said than done.
I will start by looking at by far the most promising example in the country—
Pondicherry.
Pondicherry
Pondicherry is unique. It is at the same time a very successful tourist destination both
for domestic and international tourists, and by far the best of the emerging centres
for crafts in India. World-class crafts, some of which did not exist a few decades ago,
are being produced in and around Pondicherry. There are items being produced here
that are not made or even sold elsewhere in India.
I am talking about the connection between handicrafts and tourism in Pondicherry
because I live here now and can speak from personal experience. I have plenty of
visitors coming here as my guests and one always keeps on meeting people who have
been here earlier.
I am amazed when I find how little the people who have been here many times know
about the immense wealth of creativity that is to be found here. All that the visitors
see is what is sold in the Ashram shops and the handicraft shops. The latter mostly
sell stuff from other states.
What amazes me even more is the interest my visitors show once I take them to
meet the artisans; the way they go and talk to their friends back home; and the way
their friends come here particularly looking forward to getting things made here for
their homes. Everybody wants something made just so.
Let me talk about what is made here.
Papier-Mâché Items
Not many people would be able to locate a generations-old unit, a few kilometres
from the proper town that boasts of a 150 year-old history. The family currently run-
ning the show are still living and working in the ancient house, using techniques
that clearly have been handed down from generation to generation and are possibly
unknown anywhere else in India. I say this because I have never seen any papier-
mâché items in any emporia with anything remotely approaching the intricacy of design
and the delicacy of finish this family produces, plus the range of items seems to be
endless. I am surprised why these items are not available in the shops in Pondicherry.
Whatever the shops do sell are only a few designs of purely religious icons and
figures.
There are two problems with taking visitors there. One, every time I go there they
hardly ever have anything in ready stock. They are always making something different
against specific orders. And two, the charm of visiting a family living and working in
an ancient house disappears as soon as one enters the house and sees the condition
of extreme dilapidation.
Handmade Paper
I see references on the net telling me that the history of handmade paper dates back
to 100 AD, with its origin in China. Other references claim that Indians hold the
credit of having used paper from cellulose fibres much earlier, during 3rd century BC.
The handmade paper industry that had flourished in India during the Mughal era
gradually declined with the establishment of paper mills during the 18th and 19th
centuries.
I am told that the art of handmade paper-making in India was revived under the
inspiration of Mahatma Gandhi. Sri Aurobindo was keen to have this ancient art
revived in Pondicherry and encouraged some French artisans to help set up a unit
on modern lines.
Today, while the handmade paper industry has over 150 units all over the country,
by far the best is the Aurobindo Handmade Paper Factory at Pondicherry. Paper made
here not only has an elegant appeal and exquisite textures and tints of small dried
flowers, leaves, coloured fibre, and so on, it has excellent tensile, bursting, tearing
and double fold strength as compared to mill paper and does not turn brittle due to
aging.
The factory freely encourages visitors to take a look around, but with prior notice.
Handmade Paper Crafts

Closely connected with the Handmade paper industry in Pondicherry, some French
entrepreneurs set up craft units in nearby Auroville where a superb range of items
based entirely on handmade paper are produced. Here pioneering work has also
been done by using dried and pressed natural flowers and leaves to produce unique
and attractive items like greetings cards, lampshades, table mats, coasters, serving
trays and gift boxes. The list and the range of designs also seem to be endless and
one sees new items every day. Over time, as the popularity of these items grew, some
of the artisans who got their initial training in Auroville set up small units in and
around Pondicherry. One thing that I have noticed in these units is that, unlike other
copy-cat units in the rest of the country, the standards of quality and creativity has
been very consistently maintained because of the benchmark standards of the nearby
Auroville unit.
Marbling on Textiles
The art of marble printing, where oil based tints, dyes and paints are floated on water
and the resulting marble-like design picked up on paper or textiles is ages old, and
many countries produce handicrafts using variations of this technique. However, under
the patronage of Sri Aurobindo and The Mother, some French artisans set up a unit
in the city long ago, using highly original materials and methods to produce marbled
sarees, scarves, neckties and handkerchiefs, and so on the like of which are available
nowhere in the world. The marbling works of the Aurobindo Ashram maintains its
exclusivity and makes it a practice not to permit the sale of any items except at its
own showroom in Pondicherry.
I have found that the goodwill this unit enjoys all over the world is immense. I
have gifted neckties, or scarves to my friends overseas and during my next visit to
them I find they have kept the items in their original packing. I am told that if one
takes the item out and starts using it, it becomes a nice piece of cloth, but in the
packing with the brand of the Ashram, it remains a proud possession, the value of
which grows over time.
Miniature Terracotta Figurines

Within walking distance of the papier-mâché unit that I have mentioned is one of
India’s best terracotta figure–maker. Terracotta work is done across the country and
the base relief art work panels of eastern India have a generations-old tradition. I will
be talking of the artisans in Kumartuli in Calcutta below, but the delicacy of design
and the attention to detail here is unique.
This unit, and now many others like it all around Pondicherry, specialise in pro-
ducing miniature figurines of about two to five inches of stunning beauty. True, they
produce larger items too, but their forte seems to be an enormous range of highly
original and intricately designed miniature religious icons and figures. I would add
elephants, horses, goats and a range of animal figures to the list.
Here again, I have a problem taking visitors there, since they hardly ever have any-
thing in ready stock. Like the case of papier-mâché items, I am surprised why the
shops in and around Pondicherry sell only a very limited range of designs and that
too of purely religious icons and figures.
Let us now go to eastern India and meet some clay modellers.
The Clay-Idol-Makers of Kumartuli in Kolkata

I will talk about the Durga Puja festival in another context later on, but here I will
talk about clay-idol-makers who play a central role in this remarkable festival.
There is something in the Bengali ethos that brings much of an economic bonanza,
enlightenment, and faith during Durga Puja to the city of Kolkata every autumn.
I am told that to understand this, one has to be there much before the pujas
begin; witness the artisan at work in Kumartuli and then experience the spirit of
the puja about a fortnight before the drums fade away and the images immersed in
the muddy waters of the river Hooghly, melt into oblivion. There is a frenzy of last
minute activity at Kumartuli just about 20 days before the drums (dhaaks) rend the
air and the festival begins.
Kumartuli, the nerve-centre of the clay idol-makers of West Bengal, is home and
workshop to more than 150 clay-model-makers. Criss-crossed by a maze of narrow
gullies men, women and children alike have to find their way out through these dingy
lanes. Kumartuli, is said to be older than Kolkata.
The term ‘Kumar’ means a potter and ‘tuli’ a locality. Just where history ends
and legend begins no one is quite sure. Kumartuli’s clay-model-makers claim their
descent from people who made images of Durga for Maharaja Krishna Chandra of
Krishnanagar. The power of legend still overwhelms the ordinary visitor. Densely
populated, Kumartuli is a hive of activity from June to the end of January as artisans
get busy making scores of images for the annual autumn festival. A potters’ colony
ever since its inception and a model-makers haven now, it is the home of the finest
clay-artisans in India. Nearly 80 per cent of the community puja images in Kolkata are
made at Kumartuli, some by well-known but the majority by lesser known artisans,
who strive to make something new and innovative every year.
Stone Carving in Orissa

While travelling in Orissa, I spoke to a number of people whom a visiting tourist is
likely to come in direct contact with—people in the hotel trade; travel agents; tourist
taxi operators and touts pretending to be tourist guides at various temples in eastern
India. Everybody talks their head off about the history and geography of the famous
temples we have in Orissa, but I am surprised at how little our people know about
the progeny of the artisans who built the magnificent temples of ‘Parsurameswar’
‘Mukteswar’ ‘Lingaraja’ ‘Jagannatha’ and that wonder in stone, the temple chariot
of the Sun God at Konark.
The direct descendents of these great artisans are working hard even today to keep
alive the sculptural traditions of their forefathers. Their deft hands chisel and carve
exact replicas of the original temple sculptures besides producing a variety of other
items. Unlike sculptors of other places, the Mohapatras of Orissa are at home with
a variety of materials—they handle with equal facility the ultra soft white soapstone,
or the slightly harder greenish chlorite or the still harder pinkish Khandolite.
The trade mark figures they make are the Konark wheel and the Konark horse,
along with the ubiquitous indolent damsels, the lady under the bough of a sal tree,
heavenly beauties playing on different musical instruments copied from the top-most
tier of the Konark temple and the nine deities representing the nine planets. Of course
there are many other purely religious motifs.
In recent times many decorative and utilitarian articles like ashtrays, paperweights,
candle stands and book rests are also made.
When I was posted overseas, every time I visited India, I loved taking a break and
spending some time with these artisans in their rural homes. I felt I was going back
to the times of my ancestors. I remember that I once had a Swedish doctor couple
with me when I was visiting India and we all went to a place called Behrampur in
Orissa. The lady fell in love with the soapstone carvings she saw and wanted to have
a set of three matching dancing figures made to specific sizes, to suit a corner she
had in her home. She wanted the middle one two inches taller than the other two. It
would have been impossible for her to find these in any emporia. We met a number
of artisans and they all had the surname Mohapatra. Since the time was short, three
fellows got together and each made one item of the matching set. The result was re-
markable and I believe that for this couple, and for some of their friends, there is no
other place for a holiday.
Stone carving has always been a major craft of Orissa. As is evident from the in-
numerable archaeological monuments, rock-cut sculptures, caves and temples built
for centuries and embellished with most beautiful and intricately carved statues and
other adornments, the art of carving in stone must have reached distinctive heights of
excellence and got perfected through centuries of disciplined efforts of generations
of artisans.
It is tragic that the traditions that have been proudly carried on from generation
to generation are now dying out.
I will talk more about this later.
Shantiniketan Paintings on Moga Silk

Nandalal Bose was a contemporary of Rabindranath Tagore and was responsible for
developing the teaching of fine arts at the Rabindra Bharati University at Shantiniketan.
He developed a unique style of painting on various media and Mukti Bannerjee took
this further and commercialised the painting on Moga silk as a mass-produced
handicraft.
Today, it would be hard to find a Bengali household in Kokata that does not have
a Shantiniketan style painting on Moga silk.
There are a number of artisans in and around Kolkata who have learnt their craft
from Mukti Bannerjee and are producing unique and attractive items like greetings
cards, lampshades, table mats, coasters, serving trays and gift boxes.
I have often met tourists in shops in Kolkata who see the miniature Moga silk
paintings and ask if they can order custom designed greetings cards, table mats and
such other things. Invariably, the salesman turns away to attend to other customers.
What a pity!
Let me summarise the lessons for our entrepreneurs in this:
z Before saying anything else, let me say once again that no government body has
any role to play in the promotion of tourism by arranging for tourists to visit
handicraft producers. This must be by and large an entrepreneurial effort.
z I have said earlier in this chapter that I have seen in every country where han-
dicraft tourism has paid dividends that it is purely an entrepreneurial effort,
but in our case I have noticed a complete lack of linkages between tour oper-
ators, hotel owners, handicraft villages, trade associations and chambers of
commerce.
z Everyone is a lone ranger, ‘I do this and I am not responsible for what the next
fellow does’, making the entire set-up fragmented and dependent heavily on in-
dividual effort. This is causing us a great damage and I have talked about this
at some length in chapter 13.
z Our entrepreneurs have to understand that much more can be accomplished by
working together rather than by working alone. Read what I have said before.
Learn from the successful handicraft tourism programmes where partners who
may not have worked together in the past participated profitably.
z This may not take the form of a partnership or even a teamwork. Rather it should
be more of a network as I have explained in Parts 1 and 2 of this book. But
working together is essential, not just because it helps develop local support,
but also because handicraft tourism demands resources that no single organ-
isation can supply. Its success depends on the active participation of business
leaders, chambers of commerce, trade associations, operators of tourist sites,
artists and craftspeople, hotel and motel operators and many other people and
groups.
z It will be seen that everyone profits. However, in our case, people care less for
how much they benefit. They care more for what someone else is getting. This
destroys the entrepreneurial spirit.
z Development of handicraft tourism destination plans must include visitor man-
agement strategies in handicraft villages. What is the maximum number of cars
or buses the area can handle? On roads? In parking lots? Can the place ac-
commodate group tours? Do sites accommodate a group of people at once with
amenities such as restrooms, snacks and a seating area?
z It is essential that the entrepreneurs make all stackholders aware of a handicraft
village’s tourism products and potential.
z You may need to design specialised tours for tourists who are particularly in-
terested in handicrafts and traditional methods of production (such as artists,
fine art students and academicians, both domestic and international).
z Many countries have arranged local entertainments (dance, music, street plays,
festivals) as well as local cuisines. These promote local culture and help in income
generation.
z It is important that our entrepreneurs understand that local priorities vary. So
do local capabilities. In other words, local circumstances determine what your
area needs to do and can do in cultural heritage tourism.
z Programmes that succeed in other countries succeeded because they have had
widespread local acceptance and met recognised local needs. They were also
realistic, based on the talents of specific people as well as on specific attractions,
accommodations, and sources of support and enthusiasm.
21
Heritage Tourism
The Focus
The target tourist market I had in mind when I was talking about handicraft tourism
above was mainly foreigners or non-Indians visiting India.
Now, I will talk about what we call Persons of Indian Origin (PIOs) or the Indian
Diaspora. These are people who left India some generations ago and are now living all
across the globe, from Fiji in the South Pacific to Malaysia and Singapore in South-
east Asia to Africa and on to the West Indies and South America. They now number
about 25 million, and form a sizeable proportion of the local population in many
countries.
To many of them, visiting India is the dream of a lifetime and because they have
no emotional attachments to any relatives living here, all they want to do is to visit
the land of their forefathers’ birth, go to places, stories about which they have heard,
and then visit as many temples and monuments as possible.
To this list, I would add the millions of Buddhists from all over Asia who have strong
emotional attachment to the land of Lord Buddha’s birth and in particular, the
Japanese who can be by far the most attractive source of revenue. Before I talk of
heritage tourism, I must make a distinction between pilgrimage, heritage tourism
and festival tourism.
People who come to India on a pilgrimage generally come only for that. They perform
their pujas; do the rituals and visit some specific temples and holy sites. They are not
on a holiday and generally are not out to enjoy themselves. They accept any hardships
Heritage Tourism z 273
they encounter, do not look around, do not notice things, and when they go back
home do not talk about anything else they saw. They are not tourists in any sense.
While researching for this chapter, I saw that there is almost no textbook definition
of the term heritage tourism. There is something called cultural heritage tourism that
the textbooks and sites on the Internet define as ‘travelling to experience the places
and activities that authentically represent the stories and people of the past and present.
It includes historic, cultural and natural resources.’ I call this festival tourism and we
will talk about this in the next chapter.
A heritage trip is quite another thing. People have heard about and read about
the immensely rich heritage we have and they come here to experience it. For these
people, India was a great nation and they come here convinced that it still is. I call this
heritage tourism. These are the people who are here on a different kind of a holiday.
They are, of course, out to get the best out of the trip, but will look at, notice and ex-
perience everything and then go back home and talk about it. Visitors (individuals,
families or groups) always talk to others about the trip. As I have repeatedly said in
the earlier chapters, this word-of-mouth element is very critical. These are the people
who are of interest to our budding entrepreneurs in the tourist trade.
Heritage tourism is the story of the authentic contributions made to the history and culture
of our nation starting from our ancestors in the ancient times and continuing down to our
previous generations in recent past. This is what heritage tourism is all about and what
interests visitors.
But we also need to understand exactly what it is that adds real value and appeal to the
trip and what distinguishes India from every other place on earth.
We need to remind ourselves that today’s heritage tourists, mostly professional couples,
are better travelled and better educated than previous generations of travellers, and they
ex-pect more from their travel experiences—making quality and authenticity more important
than ever before.
Also, because the visitors have plenty of everything except time, these same higher ex-
pectations mean increasing competition for the visitors’ time.
Sure, our nation is unique, and its special charm is what will draw visitors, but
what is it that they are going to talk about when they get back home? I will show that
other nations are using heritage tourism to help preserve the irreplaceable resources
that the tourist of today treasures. What about us?
z I have something to say below that comes from the heart. I am sure it will not
offend you but it will certainly hurt you, as I was deeply hurt when I went through
the experience. And, it will make you think.
After reading what I have to say, you will agree that not every community in India
can have a successful heritage tourism programme. Communities that have lost too
much of their heritage, or not nurtured whatever they had, may not have the appeal
to attract heritage visitors. Having rich cultural or religious heritage is one thing,
treasuring it and nurturing it with pride and effort bordering on devotion is quite
another.
When your historic and/or religious assets are at the heart of your plans to de-
velop tourism, it’s essential to protect them for the long-term. Hearts break when
centuries old, irreplaceable structures are destroyed or damaged beyond repair by

sheer carelessness.
My Chinese Buddhist Friend

Living outside India, I started looking at my country from a new angle and have been
noticing things I would not have if I was living here. I now have some very strong
views about what we in India are doing to our immense heritage. I will talk about
how this was brought home to me with a shock when I visited India with a Chinese
Buddhist friend of mine.
I have known Wong for over 20 years. I was posted to Kuala Lumpur on an as-
signment from one of the UN bodies and he lived in the next flat. He was a Malaysian
Chinese, a Buddhist and an architect by profession. Though our families were very
close and we spent a lot of time together, what brought me emotionally even closer
to him was his overwhelming passion for Hindu Temple architecture in south India.
Two things struck me about his attitude.
One, there was nothing even remotely religious about his passion. He was not a
Hindu, was not interested in any of the Hindu temples in Malaysia, some of which are
indeed magnificent and I doubt he even knew the names of the deities that were wor-
shipped there. For prayers, his family went to the Buddhist temples only.
Two, his attitude went way beyond the interest an architect would take in an ancient
structure. His attitude bordered on reverence for the design and the workmanship.
He had a superb collection of anything that had ever been published on the subject,
and though he had never been to India, he would always say he was jealous of the
people that lived in our great temple towns as they could always go and see and touch
the greatest creation of man.
Long ago, I have myself been to some of the great temples we have in south India,
not for any religious reason but to admire the handiwork of our ancestors. Today we
wax eloquent about the wonders of technology and its applications in different areas
of life, but look at our temples that were built thousands of years ago. We cannot help
wondering at the marvels created with the most fundamental tools at the disposal of
our ancestors. Today we are left wondering at the artistry, engineering and creative
skills that were pooled to create these awesome spiritual abodes.
I have travelled all over the world and have seen many splendid places of worship.
Every race has built them over the centuries. I compare these to our ancient temples
and I notice a remarkable difference. I notice that, in their case, the grandeur is in
the design, construction and in the sheer scale. In our temples, we have these too,
but there is something else. One is stunned by the incredibly intricate carvings and
designs woven into the structure. Every meticulously hand-crafted stone tells the
story of a lifetime of the love, dedication and devotion of the individual craftsmen.
The light-filled interiors make the worshippers feel uplifted and create a mystical
ambience. One does not simply walk out of a temple saying one monument over,
rather its experience lingers to create a mental serenity and aspiring for another
experience.
Well, to come back to what I was saying about my friend Wong. Sorry, if I got a little
carried away just now, but working and living outside one’s own nation makes one
look at things back home with a different eye.
Last year, I was coming to India for some work and persuaded Wong to come with
me. I had never been to the southern part of my country and not only did I look forward
to the experience, but also was proud to be bringing Wong on what promised to be
a trip of a lifetime for him. It was touching to see him brimming with enthusiasm all
the way on the four-hour flight to Chennai then the long drive by road to one of the
largest temples. Wong had no interest in the fantastic countryside we were passing
through, but kept rattling off details of the figures and the carvings of the particular
temple we were going to see.
But I was in for a shock.
I was stunned when we reached the temple. The area immediately surrounding one
of our greatest temples was incredibly filthy. We were uncomfortable when our driver
asked us to leave behind our shoes, and as we entered the courtyard barefooted I felt
sick. I could see that plenty of dogs, cats and cattle had free access everywhere, and
the stone courtyard within the temple had never ever been cleaned.
The entire complex was crowded. There were people sitting around all over the place
and there were three or four long queues of people waiting their turn to enter the
inner sanctum. I saw Wong walk up to the huge main door to the inner courtyard.
It must have been a magnificent wooden and brass carving at one time, but had not
been used or cleaned for ages and was now covered with muck and cobwebs. Wong
took out his handkerchief and he lovingly tried to clean a small portion as if he was
cleaning one of his most precious possessions. I saw that his attitude bordered on
reverence!
The cruelest blow was the large number of cheap and crude plastic signboards
with commercial advertisements that were defacing the main structure of the temple.
Moreover, all over the place we could see that not only have the local artisans done
quite a shabby and sloppy job of making additional sheds, addition and alteration
of the walls and some of the statues etc., but also they have shamelessly left their
names and phone numbers!
Sorry, I take back what I said above. I do not know if Wong noticed this, but for
me, the cruelest blow was yet to come.
What really hurt me was looking at a family of six or seven reasonably decent people,
the lady wearing a very nice and expensive looking red sari and three small children
playing around, all squatting on the dirty stone floor of the outer ‘Prakaram’, eating
something. I know that they were eating the prashadam, the laddoos, the offering they
made to the deity that was then blessed by the Lord. Everybody was oblivious to the
filthy floor they were sitting on because they were obviously enjoying themselves
talking and eating the ‘prashadam’.
What hurt me was that, to me, the ‘prashadam’ is something immensely sacred;
something blessed by the Lord and has to be respected. But I could see the children
and some of the adults carelessly spilling the crumbs all over the place and then
trampling them under the feet!
We walked around some more, but I could see that Wong’s heart was no longer in
it. He looked casually at the intricately carved ceilings that he knew so well but could
hardly be seen for the soot, the cobwebs and the electric wires loosely strung up.
We did not stay long and, on the way back, we were quiet. We did not have anything
to say.
I felt sorry for bringing Wong to my country without first checking about the state
of our great temples.
Then, my mind went back to only a month earlier in Kuala Lumpur when Wong had
said that he was going to a local temple to offer prayers on his grandfather’s birthday,
and my wife and I had joined him. We had never been to a Buddhist temple.
It was a simple structure on a hill on the outskirts of Kuala Lumpur. It was not very
old and built in Thai style. It was simple and yet elegant. What had immediately struck
us was the pristine cleanliness of the large complex. Everything was immaculate. The
wood and aluminium railings on the wide staircases, the glass panes on the doors and
windows, and even the stone floor and drains on the outer courtyard, everything.
We had to leave our shoes outside, but walking on the spotlessly clean polished
stone floors, right into the temple was a pleasure. When we entered the main building,
I was surprised to note that Wong did not go up the main steps, into the main temple,
to offer prayers and pay homage to Lord Buddha. He looked around and started
walking to an office in the basement of the building. As I was wondering what was
going on, we were pleasantly surprised by what followed. It was a surprise that we
would remember for the rest of our lives.
In the office in the basement, an old man was seated at a small table. He was pre-
sumably the clerk. Behind him there was a large blackboard that had a long list of
tasks scheduled for the day. The tasks included clean the drain on the west side;
paint the wall on a particular side; remove the debris on the east side; wash utensils
in the kitchen, and so on. There was a long list of tasks and requests for donations for
specific needs. Wong stood in front of the board, scratched his head, selected ‘cleaning
the drains on the west side’. I was immensely touched by this. Here was a multi-
millionaire, who could pay an army of workers to do the job for him, volunteering to
do the cleaning himself! We also felt this was one of the most sacred tasks we could
do, so I nudged him and he happily added our names in the register. Wong told the
clerk that we would all accept that as the task and perform it for an hour.
The clerk got up and showed us where to go to pick up the brooms, the buckets
and other cleaning stuff.
Sure, every inch of the temple around us spoke of the love, devotion and humility
of the thousands of its devotees.
We, in India, are no less pious, humble and devoted. Then what is wrong?
It took a foreigner to show me how great we Indians were and how we very easily
can be once again!
The Biggest Market? Huh?

Talking of heritage tourism, I said above that the Japanese are by far the most
attractive source of revenue for us. I should add that they are at the same time the
most attractive and the riskiest group. Moreover, they do not go anywhere for purely
religious or heritage reasons. Let me explain.
Everyone knows that Japan is almost entirely Buddhist and they are very devout
people. By rights, India, the land of Lord Buddha’s birth, should have been their most
preferred tourist destination, but instead, as per the published statistics, their current
favourite destinations are South Korea, Taiwan, Thailand, Bali and Hong Kong. India
figures way down in the list. Sure, Bodh Gaya does get some Japanese tourists and
I am told that there are more than a dozen Japanese speaking tourist guides there,
but that is not what the Japanese come all the way for. Invariably they combine the
religious or spiritual aspects of the trip with other aspects and the way we organise
these trips. These ‘other aspects’ are what is missing. You will understand what I
mean in a minute.
Once I was in Taiwan and was at Taipei’s famous Hsing-tian Temple. In the base-
ment there was an underground mall and it hosted an odd collection of closet-sized
rooms.
Inside, under sterile fluorescent lights, perched several young, mostly Japanese,
women on low wooden stools, patiently queuing up and waiting to have their fortunes
told. Each spents $50–150 for a session lasting less than half an hour but they insist
that the predictions and advice—details on marriage, future, children and career ad-
vancement—are worth every penny.
‘These Chinese fortune-tellers are incredibly accurate,’ I have heard the wives and
daughters of many of my Japanese friends say, and the Chinese fortune-tellers say
that ‘that’s a reputation worth cultivating, so of course, most of us speak Japanese.
How else do we explain the fortune to our customers?’
A ‘fortune to be made’ is what most people in the travel industry in Asia have in
mind when talking about Japanese tourists. I have spoken about this to many of my
friends in the tourist trade in India and received only a blank look.
Even with Japan’s lingering economic malaise, a record number of Japanese trav-
ellers—over 25 million in 2006—head abroad. Any reshuffling of midweek public
holidays means an additional eight three-day breaks—and many of these will be
spent on short package trips to elsewhere in Asia.
As I said, current favourite destinations are South Korea, Taiwan, Thailand, Bali in
Indonesia and Hong Kong. Every major hotel there has someone assigned specifically
to provide service to the Japanese. They are a very big market and a completely
focused one. Most Japanese travellers dispense quickly and dutifully with the sights,
religious, spiritual, heritage or simply historical, before heading for the main event—
shopping.
They just want to see, not study. However brief the visit, the spending orgies are
legendary. I have seen in Seoul, backstreet stores in Itaewon selling fake designer
clothes and accessories exclusively to Japanese groups, often from back rooms hidden
behind sliding screens and false walls. The same happens in Patpong in Bangkok
and Petaling Street in Kuala Lumpur.
All over Asia, Japanese tourists are big customers. They come in groups, and they
buy a lot. For them, there’s not much to see in Korea, or in Taiwan, or Hong Kong for
that matter. They are there for shopping or fortune telling.
While Westerners may be outraged to be charged anything but local prices, Japanese
are overjoyed to find that costs, however inflated, are still lower than at home. I have
often read in local travel magazines that while most Western tourists, and Indians,
would be pretty horrified if they were herded into specific shops and pushed to buy
things, the Japanese actually demand it. I have seen it, particularly in Hong Kong
that as soon as the Japanese arrive, we Indians or other hard-bargaining people
are herded out. Sure, when it comes to cheating, scamming and overcharging, the
Japanese really get creamed.
Japanese always travel in groups, and expect their tours to be efficiently and rigidly
organised. They are short of time and want to see and do as much as they can before
heading back home.
Now, a quick look at India. We have no shortage of superb fortune-tellers and
astrologers or, of an incredible variety of roadside shopping areas. Given the fact that
all Japanese coming to Bodh Gaya, have to land at either Kolkata or Delhi, has any-
one seen large groups of Japanese there? Why are they herded straight off to the
pilgrimage areas and quickly shunted out again?
I do not have the answer to that. I am not an expert on travel or tourism and am
merely talking of opportunities for our young entrepreneurs that the bulk of the travel
trade is ignoring.
I need to add a word of warning here too. As profitable as Japanese tourists
may prove to local economies, people who know them have a word of warning—the
Japanese travel market moves in concert, and the tour operators back home are
exceptionally well informed. One or two unpleasant incidents are all that need to
turn them away.
Preamble z 279
22
Gastronomic Tourism
What do you have when you combine tourism with food?—A growing trend, according
to the international travel experts. But try asking this to someone in the travel trade
in India; you would get a blank look, a shrug of the shoulders and a change of topic.
Do people go anywhere just for the food? What a silly question!
Silly or not, international tourism statistics show a distinct trend. There is ample
evidence that an increasing number of emerging economies are featured on the tourist
map for the quality and authenticity of their traditional food and wine, sometimes
even more so than their scenic delights. Local people in an increasing number of
countries are realising the value of their gastronomic heritage.
The common question, particularly after a holiday anywhere is evidently ‘how was
the food?’
Of course there are exceptions. In the past, there were tourists, particularly from
India, for whom a holiday could be anywhere, but the food must be the same as at
home. When I was posted in South-east Asia, I had many relatives, friends, and busi-
ness associates who visited me from India. For these people, who were of the less
adventurous type, the strange flavours and smells of foreign cuisine were usually
enough to have them pining for home food and hankering for familiar tastes. These
people went everywhere and saw and did everything but for food, it was only to an
Indian restaurant or else back to our home cooking.
Even in India, things are now changing. The younger generation, the new emerging
generation of well-heeled, professional couples, is developing a well-trained palate,
and is not satisfied if it isn’t treated to some gastronomic discoveries.
And, here is an emerging opportunity for our young entrepreneurs.
Whether or not the travel tales are tainted by explicit accounts of ‘Delhi-belly’ or the
tantalising memories of exquisite feasts, there’s a common thread. Food has started
playing an important part in the holiday experience of almost everyone, consciously

or unconsciously.
One look at the Internet would tell you that globally, gastronomic tourism is emer-
ging as a form of special interest tourism in which food and wine are the primary
motivating factors for travel to a particular destination. More and more tours are
aimed at appreciating the peculiarities of a country’s cuisine. One need not look far
to see the barrage of marketing campaigns utilising food and wine to entice the high-
yielding gourmet tourist dollar.
Look at it another way. I have said it earlier and I am repeating it here. People do
want to interact authentically with the landscape and one of the best ways of doing
that is through authentic local food. Tourists are looking for a more participatory style
of holiday experience, and catering to their interest in exotic food contributes to their
feel of personal development. They feel they have done something their friends back
home have no idea about. So, back home they show off when talking about this and
feel they have earned social status or ‘cultural capital’.
I see on the various websites that most food and wine tourism marketing shots are
taken with exquisite landscapes as the backdrop. Superb photographs of elaborate
picnics being enjoyed beside picturesque lakes or glasses of chardonnay are sipped as
the sun sets over the vineyard. Like tourism, food is branded by ‘place’ as a marker
of authenticity, not only of the product but also the region’s ‘cultural’ landscape.
While people in the tourism trade around the globe are recognising the potential
of gastronomic tourism as a powerful tool to identify and promote places, regions or
entire countries, in India, the same depth of culinary history does not exist. I will talk
about some of my own experiences and show that there is good potential of using
authentic traditional food and not wine but exotic local non-alcoholic drinks being
used to identify and promote destinations for tourism.
Let Us Go on a ‘Foodie’ Holiday

I will be taking you on a short trip to rural France, to Malaysia and then back to
south India.
But before that, I want you to meet the fellow who is said to have ‘invented’ the
term ‘foodie’. If you look at the 30th Anniversary issue of India Today, dated 3 July
2006, you will find a very interesting guest column by Paul Levy on page 106. He is the
author of the highly successful Official Foodie Handbook series and is internationally
respected as one of the world’s best-known food journalists.
Here is an extract of what he has to say about gastronomic tourism in India in this
guest column as well as in many of his books. He is a frequent visitor to India and
particularly loves South Indian and Gujarati food.
If you ask me the potential for gastronomic tourism in India, I will say it is excellent.
But if you ask me if you can ever have this type of tourism, I will not hurt your feelings
and will try to change the topic.
Gastronomic Tourism z 281
The real problem of visiting India as a food tourist is that it’s almost impossible to
taste the variety of its cuisine-unless you know somebody who will take you to eat in
a private home. I know the difficulties with which this is fraught. There are barriers of
social class to be surmounted, and countless religious and cultural obstacles not just
to enjoying your meal but to be invited to eat at a private home in the first place.
If restaurants in the Indian hotels started serving authentic local dishes of the place
they belong to, India could become one of the hottest destinations for a growing band
of food tourists across the globe. But here we come smack up against the Indian food
paradox: that it is almost impossible for the traveller to sample the best of Indian regional
cuisine in its own region. The real reason? Restaurants rarely provide the food of the
region in which they are located. Tourists in, for example, Kolkata may want to savor and
learn about Bengali food; but tourists do not come to Kolkata in sufficient numbers to
make it possible for any hotel to run a specialised Bengali restaurant just for them. To
keep a hotel restaurant full the year around, there to be a regular, dependable clientele,
and this clientele is just not there. Indian families as a rule do not eat out for the sake
of trying good food: Eating out is for a wedding, a birthday or an office party. In short,
one goes out for an occasion, not just to eat out. I better not talk about the food I have
had when on the rare occasions I have been invited.
To name just one example of a highly successful chain of ethnic restaurants, The
Masala World Company, which owns half a dozen restaurants in London is run by a
very enterprising Indian lady, Camellia Punjabi. Her restaurants, named after different
regions in India, serve the best of the food of their area, using good and genuine recipes
that she had researched herself.
Camellia’s restaurants have the atmosphere that makes the tourist feel two things. One
that he was having an authentic food experience, and second and more important, that
the standard of hygiene was impeccable. It is worries about the latter point that confine
most tourists in India to their star hotel dining rooms and so-called western food.
I have always felt that one’s own traditional recipes, the time honored cooking methods,
and the organisation of the ethic menu to be served at specific occasions and at specific
times, the manner in which the courses are arranged and served, are a part of one’s
precious heritage, a part of one’s own link with one’s ancestors, a part of one’s own
wealth.
If only visitors to India have the opportunity to share in and relish this heritage, like
the experiences one has in the Masala World Company restaurants, India would surely
be the world’s favourite tourist destination.
But I think this is easier said than done.
Meet a French Chef

A long time ago, during one of my first trips out of India, one of my American colleagues
and I were travelling by bus in the southern part of France. Our bus broke down and
the passengers were accommodated for an overnight stay in a wayside inn in a small
village. My friend and I decided not to have the hastily arranged buffet dinner and to
go and try our luck in some other small restaurant in the village.
We found a quaint, little family restaurant where the family lived upstairs. I was
not really familiar with European food, so ordered chicken with some kind of sauce.
When my dish was served, it looked very appetising but I made the mistake of asking
for some mustard.
An old man, obviously the owner and the chef, came to our table. By then I had
already started eating the superbly prepared item, but I still felt that a bit of mustard
would add some zing to it. The old man looked at me when I again asked for mustard,
gave me a small bow and politely took away my plate. All this happened very fast, and
all that I noticed was the grim expression on his face. My friend quickly explained that
the owner was obviously very angry. This was a very traditional part of France, what I
had ordered must have been a traditional recipe, and the owner was understandably
proud of his authentic sauces. My friend pointed to the huge number of visiting cards
and picture postcards stuck to the walls next to our table, and I realised that this
tiny restaurant in a small village did indeed have had an extensive clientele. I looked
and found that people from all over the world had come here and enjoyed the food
and left their cards behind.
While I reminiscensed of reading somewhere that leaving cards behind to show
your appreciation was a quaint custom mostly in Europe, the owner was back in a few
minutes with a plate of ordinary hamburger with plenty of mustard on the side.
My apologies were of no use and the final humiliation was when we were given
the bill only for what my friend had. The old man showed me how intensely proud
he was of his traditions and the recipes of his ancestors, and taught me a lesson I
would not quickly forget.
The same thing can happen if you are in a small family restaurant in Italy and ask
for mustard with your pasta or pizza, or, for that matter, ask for tomato ketchup in
a Japanese or Korean family restaurant.
I repeat what I have said many times earlier: The respect that people have for their
own traditional values gets noticed by visitors. The visitors talk about this when they
get back home, adding immensely to the goodwill of the place visited.
Indian Chefs in Malaysia

Before we go back to India, we would meet some Indians in Malaysia.
I remember when I was living in Malaysia some years ago, the best treat my chil-
dren used to look forward to was a visit to one of the Chettiar messes. I need to ex-
plain that Malaysia has a substantial population of Tamilians that migrated long
ago from India. Of these, the Chettiars are the traditional moneylending class. It is a
custom for these men to leave their families behind in India, bring their own cooks
from there, and have a sort of community living in what are called small Chettiar
messes or hostels.
These are generally double-storied shop-houses where the members have their
businesses on the ground floor front, eat in the back and have living-quarters upstairs.
The cooks the Chettiars brought from India were a class apart and were some of the
best available.
In course of time, some of these messes have earned a wide reputation for their
cuisine and have become popular with the common public, even with non-Tamilians
and serve superb traditional food prepared to time-honoured recipes. I need to ex-
plain that these places are not proper restaurants, have only rudimentary sitting ar-
rangements, and are more like co-operative set-ups owned and managed by a group
of cooks. Though no one has ever advertised these places and there is no mention in
the tourist literature, the reputation keeps spreading purely by word of mouth.
One evening, my wife happened to ask the waiter about a particularly delicious thick
chutney we were having with our dosas, and hesitantly asked for the recipe. Much to
our surprise, three or four cooks from the kitchen next door who heard the request,
immediately mobbed us: they were thrilled by what my wife was asking for.
Their obvious pride in someone taking an interest in their heritage was, indeed,
touching. They invited us to come to the kitchen the next morning and see them ac-
tually making the chutney.
This has been an unforgettable experience. These were simple people. There was
no salesmanship or showing off or anything of the sort. They were people living in a
foreign land, but were immensely proud of their roots, their traditions, and heritage
and anybody taking an interest did them an honour.
People like me just cannot stop talking about them.
Back to South India

I must confess that though I am a north Indian, my stay in Malaysia made me partial
to south Indian food. One of the reasons I decided to retire and settle down in the
South was because of the taste of the iddli, sambhar, dosa, vadai and chutneys we
had at the Chettair messes in Malaysia. This was something we looked forward to in
greater measure back home in India.
We were in for a colossal disappointment. Indians who left India long ago are jeal-
ously guarding their traditions and heritage. We, in India, have got ‘modernised’.
This is tragic.
In India, there are many distinctly identifiable regions and every region has its
own traditional food. Realising that it is not possible to generalise and talk about the
entire country with regard to the opportunities for gastronomic tourism, I am going
to confine my discussion to the South.
The southern part of our country is a major cultural and religious attraction
both for the domestic and international tourists. This is where you not only find the
richest cultural and religious heritage of the country, but also more common people
meticulously following the ancient traditions, rituals and customs in their everyday
lives than possibly in any other region.
But there is a problem here. As Paul Levy said above, it is one thing for the common
people to meticulously follow the ancient traditions, rituals and customs, including
recipes inherited from our ancestors. A visitor getting a chance to get exposed to this
incredible wealth of the nation is quite another thing.
An immense opportunity for the domestic and international tourists to come here,
participate in, share and enjoy something unique, is going waste.
Undoubtedly, I have had good south Indian food in some of the bigger hotels and
restaurants in some of the bigger cities in the South. But the domestic and inter-
national tourists I am talking about here do not spend too much time in the big
cities. The fact remains that almost all the major tourist attractions in the South are
in the smaller towns and cities: Pondicherry, Chidambaram, Madhurai, Tanjavur,
Thiruvananthapuram, Rameswaram and so on. The list goes on and on.
Tourists have no choice but to eat in the smaller hotels and restaurants all over
south India and the quality and variety of food served in these places is atrocious.
All thought of tradition and pride in one’s heritage is abandoned.
I thought that the food one normally gets in the restaurants is routine and so
may not be anything special. But I have attended a number of functions and parties
in these hotels where in spite of the food being specially ordered, was worse. One
gets far better quality, variety and cleanliness in the comparable smaller hotels and
restaurants all over Northern and Western India.
I am neither eulogising the north or the west nor am I pulling down the south. But
I feel deeply hurt after having spoken to many of the hotel and restaurant owners
here.
Reading this you might detect a trace of bitterness. Darn right I am bitter. Remem-
ber, I told you that I decided to settle down in the South as I am particularly proud
of this part of our country. I have repeatedly said that this is where you not only find
our richest cultural and religious heritage, but you see common people meticulously
following the ancient traditions, rituals and customs of our forefathers in their
everyday lives.
But, the very people, the hotel and restaurant owners, who are admirably meticulous
in everything in their everyday lives, are heartlessly callous when it comes to the food
they serve to their customers—the food that is the source of their livelihood.
I spoke to some of the owners of the smaller hotels in the South. Where I expected
some vestiges of the same pride that I saw in the Chettiar cooks of Kuala Lumpur or
the owner-chef of France, I found arrogance, conceit and smugness of the successful
small time businessman. I was clearly told that no one had complained about the
food, which meant that I should mind my own business.
On the brighter side, I have noticed that the menus of all the smaller hotels in
south India have become much modernised and now routinely include many items
from other parts of India, and even from outside India: items like pav-bhaji, poori-
bhaji, chana-masala and even gobi-manchurian.
Excellent. This is to be appreciated as it would have shown steps being taken
towards giving the customers what they want, except for four points I can detail
below. I would be forgiven if I, in my comments below, also talk about food items
from across the country.
Four points:
1. Throughout India we have an incredible variety of traditional soft drinks. Every

community has its own trademark soft drink, all superb and delicious—varieties
of mooru modified to be served as soft drinks in the South; lassi and jaljira in
the North; mango panna from the West; not forgetting the large varieties of the
ubiquitous nimboo pani with salt, sugar, spices and/or soda. When I was living
overseas, I used to look forward to visiting India specially to try these soft drinks
in people’s homes. Now, the dozens of times I have attended private functions
and family dinners in the smaller hotels all over the South, the only soft drink
all the hotels serve is Coke, Pepsi and so on, and sometimes a mixture of bottled
cordials as fruit punch.
2. Again, all over India there is a large variety of traditional chutneys. Every mouth-
watering snack item has its own unique chutney. Since there is no end to the
range of snack items there is no end to the variety of chutneys. Now the sad
part. I have had snacks before dinner at many functions all over the South
and all that I was served with was tomato sauce. Not even the traditional
tomato chutney that we make in different parts of the country, mind you, but
a peculiar version of very bland tomato sauce. I must add that, sometimes I
have had coconut chutney served with vadai that is not even remotely like
the one I have had in peoples’ homes. I am sure the time will come when our
hotels will get modernised even more and start serving iddli, dosas and vadai
with tomato sauce.
3. As I said above, India is unique and the range and variety of sweets, desserts,
traditional ice-creams and kulfis is incredible. I have had far greater variety of
sweets and desserts in people’s homes in India than I have had in any other
part of the world. True, other countries do have their cakes and cookies, but
nobody has anything like the traditional sweets and desserts like we have.
Here again, I apologise. All the hotels, and I mean all, invariably serve plain
Vanilla or Strawberry flavoured ice-creams. Sometimes we do get some gulab
jamun or gajar halva with this so-called ice-cream. Even when some of the
hotels have special biryani or Chettiyar food festivals, the dessert is invariably
the ubiquitous Vanilla ice-cream. I am amazed when a self-respecting hotelier
considers plain ice-cream as a good combination with gulab jamun. Next we
may be having payasam-ice-cream float.
4. The fourth point concerns what we commonly call roti. Here again, the variety is
endless, and every part of India has its own particular version. I would assume
any Indian would know what a naan is, but all that I have had throughout
the South is a unique version that is still called a naan. The irony is that, for
functions and birthday parties and so on, the hotel owners know that they are
serving a buffet and in most cases the guests would stand around and eat. This
means we balance the plate in our left hand, eat with the right, and there is no
possibility of using a knife. I, for one and most of my friends make it a practice
of only taking the rice preparation and ignoring the so-called naans, because
the thin rubbery strip that we are served cold in these hotels is impossible to
tear apart with only two fingers of one hand.
These four points are not criticism. They are bitterness that comes from the depth
of my being. Can I take the liberty of repeating what I had said above? I am sad that
the very people, the hotel and restaurant owners, who are admirably traditional in
everything in their everyday lives, are heartlessly callous, and full of could-not-care-
less attitude when it comes to the food they serve to the visitors to their cities.
Conclusion
I have said that this is not a discussion on tourism and the small hotel owners I
talked about here are really not my concern. I want some of my bitterness to rub off
on to the young entrepreneurs in the tourism trade. They are the people that have
to do something about improving our image in the eyes of the visitors and in doing
this, make a better living for themselves.
Interest in this kind of tourism in India is in its infancy and we are some distance
away from organising any purely gastronomic tours to any part of India. Acquaintance
with, and enjoyment of, different types of our traditional cuisine can happen only
when tourists visit the hotels and restaurants in the smaller cities where traditions
of preparing, serving and consuming food are cherished and valued. Only then our
young entrepreneurs may start thinking about including elements of gastronomic
tourism in regular tour programmes.
Obviously, time is coming that good food would no longer be simply part of a
holiday. As has happened in many countries across the world, it would become the
main reason for travel. The challenge is also to marry food, heritage and landscape
into a total tourism experience that would be authentic and truly reflecting the local
and unique flavours of India.
Our tourism entrepreneurs must also realise the importance of making a promise
and delivering on it, so as not to leave a sour taste in the mouth of the visitor. True,
occasionally I have been to an event or a region where people did things so well, with
such attention to detail and authenticity, that it took my breath away. I don’t have
that experience every day, but that is what our youngsters have to aim for.
I will say right out that if you youngsters do not have pride in yourselves, your
heritage and your traditions, then the tourists will keep on preferring to go to countries
where the people have.
Preamble z 287
23
Festival Tourism
As I have explained in the earlier chapters, the focus of this discussion is on new entre-
preneurial opportunities for our young professionals in various tourist segments, and
not on the subject of tourism itself. Therefore, I am going to talk about only those
aspects of festival tourism that have a potential for our budding entrepreneurs.
It would helpful to begin by defining what tourism textbooks call ‘festival tourism’.
This can encompass an entire spectrum of events. On the one extreme we can have
classical or modern music or dance concerts and on the other we can have purely
religious festivals—and plenty of other types of festivals in between.
The same text books define a holiday as a consumer product, which has increased
in quality, value and variety as the system that delivers it has become more efficient.
Like the entertainment industry, tourism sells an experience, a way for people to
enjoy their free time. The difference is that the entertainment industry delivers an ex-
perience to its customers, whereas the travel industry delivers its customers to an
experience.
All this has one thing in common. The festivals are gaining increasing importance
as marketing tools for tourist entrepreneurs worldwide and in this religious tourism
has arguably played a significant part. I am not calling these tourists pilgrims be-
cause an increasing number of travel agents overseas now offer religious tourism,
pilgrimages, temple and church tours as a part of global culture tours where people
seek more unusual holidays or more varieties within a trip.
While there is no denying that Buddhists and Hindus living outside India consider
India to be the most spiritual country on earth, Saudi Arabia is home to two of the
holiest sites in Islam and Israel and the Palestinian Territories comprise the Holy
Land, important to Christians, Jews and Muslims throughout the world, there are
now emerging a number of forces, alongside faith itself, that are driving the growth of
religious and pilgrimage tourism. There is a strong drive from the new generation of
prosperous consumers for more authentic experience, such as immersing themselves

in the spiritual and cultural traditions associated with specific religions and pilgrimage
sites.
z In the days gone by, there were plenty of people who lacked the necessary con-
fidence and experience but had the desire and the means to see and participate
in special events in exotic places. Tour operators across the world could easily
exploit them by laying out elaborate itineraries. Those days are gone.
z The good news is that this is very much a growing market, but the tough part is
that the tourists are becoming more well-travelled, sophisticated and far better
informed. People are getting increasingly adept at self-packaging their visits
around the international events calendar. The new breed of tourists knows ex-
actly what to expect at a particular event on the other side of the world.
z For our budding entrepreneurs in the tourist trade who want to take an increas-
ing interest in special events tourism, the only thing you can do is to genuinely
deliver value for money. If your clients go back home and talk about you, you
will be amazed at the results.
Songkran in Southern Thailand

I have lived and worked in many developing nations across the world, and have seen
how many emerging economies are very successfully promoting all sorts of festivals
as major tourist draws. They manage to have flights and hotels booked months in
advance. I will give some illustrations here and will explain that the success has not so
much to do with Government planning and is the result of the efforts of entrepreneurs
and entrepreneurial organisations.
There are lessons to be learnt here, as I will contrast this with what we do in India
and how we are squandering away an opportunity to use our delightful festivals to
bring in the money-spending tourists.
I do not know how many of my Indian friends are aware of it, but Europeans,
Americans and most other foreigners are advised by their travel agents to avoid India
during our festival days. This is tragic but true. Of course, the incoming flights are
often full, but this is also the season for hordes of our own overseas Indians visiting
relatives in India. I do not call these people tourists.
I will take you to the East first, then to India and then on to South America.
A few years ago, when I was based in Singapore I needed to go to a place called
Hatyai in Southern Thailand for an urgent meeting. Hatyai is an important tourist
destination, there are many flights from Singapore and I never had a problem getting
a seat. I was surprised, however, when I was told that all the flights were full and the
waiting list was closed. My agent added that there was no possibility of getting a hotel
room there. I was told that this was the time of Songkran, the Thai New Year.
I could not believe what I was hearing. How could there be such a massive influx
of tourists that all the flights and hotels are chockablock full for a mere New Year
celebration?
Festival Tourism z 289
I took the trip by road and arranged to put up with a friend at the University. What
I saw during the three-day festivities turned out to be one of the most memorable
experiences I have had. My friend had a beautifully printed leaflet distributed by
one of the chambers of commerce, detailing what was happening where. I could see
that, without losing any of the solemnity associated with a major social and religious
occasion, the entrepreneurial people of Thailand have converted this traditional
celebration in mid-April that should have been for a day, into a major tourist draw,
stretching out into three or four days.
The leaflet put out by a chamber of commerce, rather than by their tourist promotion
boards, made sense, as, one, the private sector always does a better job and two, this
was obviously the better option to maximise the benefit their members would get.
It is actually a traditional Buddhist new-year celebration and I am told that
the Burmese Buddhists also celebrate the same festival. They call it the Thingyan
festival.
It should be noted that Songkran is nothing like what the north Indians call
‘Shangrand’ or ‘Makar Sankaranti’ or in the South the Brahmins call Shankaranti.
The Thai festival marks the New Year and falls in mid-April. The Indian ones mean
‘transition’ and mark the transition of the sun from the house of Cancer to the Capricorn,
and come in the middle of January. The Thai festival roughly coincides with the
Punjabi New Year, Baisakhi. Thailand is Buddhist and a lot of their traditions are
Indian in origin.
This Thai festival, in style of celebration, is somewhat similar to our celebration of
Holi in north India, but only in origin, tradition and concept.
But the similarity ends there.
During Songkran, the entire nation puts on a festive mantle. An important part of
the festivities is the spraying of clean perfumed water on each other, an act that is
considered auspicious. Thailand is a warm tropical country and being sprayed on and
getting drenched is fun. During the day, everybody seems to be out on the streets. I
saw cars, open vans and pick-up trucks in which entire families drove around spraying
water on anybody they could find. Old and infirm people were sitting on chairs in
open vans with spray pumps in hand. The water was clean and perfumed. I looked at
the people, the hordes of tourists on the streets, and saw that if anybody got sprayed,
they followed the Thai custom of bowing down, gracefully folding their hands, smiling
and nodding thanks—something like our namaste in India, but far more deferential
and respectful. In response, the older people raised their arms in blessing. Initially,
foreigners like us, and especially me, merely smiled and waved, but quickly got the
hang of it. The entire ambience was delightful.
Everyday, the festivities would start mid-afternoon and go on late into the night. In
the evenings, there was a carnival atmosphere. There were street marches, bands and
floats. All the roadside shops were open but there was no one doing any business. I
am told that keeping the doors of the shops and homes open during Songkran was
auspicious. And, there were immensely enjoyable roadside concerts of all sorts and
country fairs. Everywhere one went, one found clean and hassle-free fun and
merrymaking.
The logistics and the organisational skills that went into the effort were mind-
boggling. I now realise that the Thais, starting from the local chambers of commerce
and trade associations, to their overseas tourist offices, have aggressively promoted,
not only this but I am sure many other similar cultural and social festivals. And
they have done this all over the world. The result is hordes of tourists and immense
commercial and economic benefit. No wonder I could not get seats on any flights.
Festivals in India
Now, contrast this with what sort of economic benefit we draw from our festivals.
Please remember that I am talking here only of opportunities that our entrepreneurs
can use as a tourist promotion activity.
First, Holi in north India, the other side of the coin, our Durga Puja in Bengal and
Ganapati festival in western India. As my focus is on festivals that the tourists can
come and join and enjoy I am not going to talk about Diwali and many other similar
festivals that are essentially family ones. True, the entire country puts on a mantle
of fun and gaiety, but it is rather difficult for our entrepreneurs to use these as a
tourist promotion activity.
Old literature tells us that Holi is an important Hindu spring festival and, in northern
and western India it is a harvest festival. It is celebrated on the full moon day of the
Hindu month of Phalguna (February–March) with a great deal of boisterousness and
colour. There are many legends that account for this festival. On this day all the usual
restrictions of colour, caste, creed and age, should be cast aside in the general fun
and merrymaking. Holi is also a time of goodwill when people pay or forgive debts,
make up quarrels, and wish each other good luck.
The celebration of Holi today is nothing of the sort. I can say, without the fear of
contradiction, that Holi is one of the nastiest festivals we have in India. Never mind
the origins of Holi or how our ancestors really celebrated it, today our youth competes
in thinking of the foulest stuff to spray or rub on others. People of other religions and
people in mourning and so on are made special targets for the misery it causes. Even
in decent households, the colours used are indelible textile dyes that leave the skin
red or blue or green for days after the festival. Of course, tourists who know about
what is going to happen, keep away.
We have the other side of the coin too. Like many other festivals in India, both
the Durga Puja celebrations in Bengal and the Ganapati festival in Maharashtra are
powerful social events that mobilise entire communities. The religious fervour, the social
participation, and the solid wholesome family fun cannot be described in words.
Both the festivals have many things in common. They present an immense showcase
of everything that is good in our culture. India’s best talents in art, music, dance and
drama jostle with each other for a chance to perform on street corners for free.
It is impossible for any foreigner to be visiting India at the time not to be overwhelmed
by the ambience. Tourists that are lucky to be here at the time come back again and
again.
Now let us talk of how and what sort of economic benefits we draw from these
festivals. There is no question of our Holi benefiting anyone economically, but the Puja
Festival Tourism z 291
and Ganapati festivals, do indeed result in considerable commercial and economic

benefits.
The point to be noted here is that both the Puja and Ganapati festivals are entirely
organised by hundreds of private set-ups and are funded only by local residents. The
common but unfortunate aspect is that each puja pandal is an independent entity
funded, managed and organised all by itself and only for itself.
There is no effort by any chambers of commerce, trade association or any citizens
group to get any sort of an organisation or system in place such that people can
know what is happening where. No one has ever seen a flyer or a leaflet or even a
mention in the daily newspapers where a visitor can know who is performing where
and at what time.
True, there are immense commercial and economic benefits that do accrue mainly
because of good business the local traders get. The shopkeepers do nothing but merely
sit back and enjoy the results without actually promoting anything.
What is surprising is that at festival times the offices of the local chambers of
commerce and trade associations, that should have been a hive of activity, are closed.
The officials are away to be with their families.
So, as I said, it remains a sad fact that far from our promoting this immense oppor-
tunity, travel agents overseas warn non-Indians against visiting India at this time,
because of the inevitable crowds, traffic jams and the general breakdown of public
services. The immense potential of bringing in hordes of money-spending tourists is
just going waste.
Mardi Gras
Now, let us go to see Mardi Gras.
Mardi Gras (French, meaning ‘fat Tuesday’), is the pre-Lenten festival celebrated
in Roman Catholic countries and communities. In a strict sense, Mardi Gras is cele-
brated by the French as the last of the three days of Shrovetide and is a time of
preparation immediately before Ash Wednesday and the start of the fast of Lent. It
is thus the last opportunity for merrymaking and indulgence in food and drink. In
practice, Mardi Gras is generally celebrated for a full week before Lent. It is marked
by spectacular parades featuring floats, pageants, elaborate costumes, masked balls
and dancing in the streets.
The most famous modern Mardi Gras festivities are those held in New Orleans,
Louisiana and in Rio de Janeiro, Brazil, but the entrepreneurs in many small countries
of the West Indies have taken this up also and made it a fantastic tourist draw.
It is said that the one-week festival of Mardi Gras has transformed the entire econ-
omy of the city of Rio de Janeiro, a large city in southeastern Brazil.
During the weeks that precede the Carnival, the city receives thousands of tourists.
Events include spontaneous street dancing behind popular bands (marching bands
comprised of brass and percussion instruments), formal Carnival balls for nearly every
income level, and several days of Sambadrome parades where the best samba schools
compete in marathon musical and dance presentations along a specially designed

street where thousands of spectators gather to watch the events unfold.
Tourism and entertainment have been made the key aspects of the city’s economic life
and the city is the nation’s top tourist attraction for both Brazilians and foreigners.
That was the good part. I have spoken in a very positive manner about Brazil and the
city of Rio. But everything is far from hunky-dory there. Internationally, it is still the
nation’s best-known city. Though the city has a stunning natural setting between
the mountains and the sea, and although Rio may be Brazil’s most beautiful city,
it is also one of its most troubled with an exceptionally high crime rate. The shanty
towns which house approximately 20 per cent of the city’s residents and are
dangerous, unsanitary and lacking in basic services such as water, sewerage, and,
to a lesser extent, electricity. Police corruption is widespread. There are hazards like
environmental pollution, and the waters of Guanabara Bay are considered too polluted
for safe bathing.
The point I am trying to make is that it is not always the best cities that bring in
the money-spending tourists. People come for good fun and the Mardi Gras carnival
offers it in plenty.
This success would not have been possible but for the immense amount of organ-
isation and promotion, purely by the private entrepreneurs. It is a spontaneous getting
together of disparate entities, from travel agents to hoteliers to dance bands to event
organisers with the local chambers of commerce, in an informal sort of network. No-
body was really the leader, the owner or the boss, but everyone profited.
Detailed literature on the happenings at the Carnival, list of hotels and incidental
travel facilities are available with travel agents all over the world months in
advance.
Preamble z 293
Part 5
And Finally, the Project Plan
Preamble z 295
24
Do Your Homework First
Homework and Attitude
I have said repeatedly throughout this book that you can never do enough homework
before you commence anything. As a budding entrepreneur, you greatly increase your
chances for success—and reduce the chances of falling flat on your face—by analysing
your idea, your market place and your management team before beginning. We will
talk some more about this, but now that we are talking business and you are ready
to go to the critical stage of taking your idea to the marketplace, you need one more
thing—the correct attitude.
In this book, I have been asking you to start by entertaining several new ideas,
some of which you might even find silly or wrong. I call it brainstorming. This is the
reverse of being secretive and playing with all the cards held close to your chest. Talk
to everybody who knows anything about what you want to do, get the feedback and
get all sorts of suggestions and ideas. But just keep an open mind and do not reject
anything on sight.
Think them through. Do whatever homework you need to do and weed out the
really unworkable ideas. You need not apply them all. Choose the ones that apply
best to your situation, and test them with enthusiasm and conviction, but direct all
your actions towards your specific concrete goal. Then, in your mind, try them out.
If an idea works in your mind, it will work for you.
Here, your positive, go-getting attitude is more important than hard facts. It is more
important than the past, education, money, circumstances, failures, successes and
what other people think, say or do. It will make or break your project. The remarkable
thing is you have a choice regarding the attitude you will embrace. Of course, you
cannot change the past. You cannot change the fact that people will act in a certain
way. The only thing you can do is play on the one string you have, and that is your
attitude. There are many management anecdotes and quotes on the Internet that
say that life is 10 per cent what happens to you and 90 per cent how you react to it.
It simply means that you are in charge of your attitudes.
Another thing. We all think in pictures. Check it out. If you have not been to a city
for a while, you might say, ‘I did not recognise your house’. Why is this? It is because
the streets and the neighbourhood changed and we formed our beliefs based on pic-
tures or images we had in our mind. When things do not conform to this picture, we
cannot recognise them. We have this blindness which handicaps us in everything we
do. But the people getting the results have measurably less of this blindness than
most of us. Of course, you must first form a picture of your project in your mind. As
I said above, if an idea works in your mind, it will work for you. If your picture does
not conform to what you expect of it, you are sure to reject it.
I read a very interesting quote on the Internet the other day. It illustrates how we
do certain things based on the picture we form in our minds. Let us say a plank of
wood 10 metres long but only 36 centimetres (about 14 inches) wide is placed on
the ground and you were told a reward would be yours if you walk along its length
with your eyes closed without falling off. You would take this as a relatively simple
challenge. If, however, you were asked to do the same thing with the plank placed be-
tween two structures 100 metres off the ground with nothing in between you would
most likely refuse to even try. Why? Well, the penalty for failure is higher (probable
death rather than hurt pride). Yet, the task has not changed at all; only the picture of
the risk in your mind has.
Factors of the Feasibility Analysis

Whether you plan to expand an existing business for your firm, acquire an existing
business or start a new one on your own, you need to perform some basic economic
feasibility analysis—a preliminary evaluation of your business idea to see if it is worth
pursuing. This is before you go to the next chapter and read the basics of the stages
of a project plan.
Characteristics of all successful entrepreneurial projects show that the personalities
and individual characteristics of the entrepreneurs who start new businesses is the
most important factor of success.
An Individual’s Management Skills

Management skills have become so important that people financing your idea have
begun to revise the way they look at potential new venture deals. Rather than betting
on the ‘horse’ (that is the business idea and the actual business plan), they are now
Do Your Homework First z 297
much more likely to bet on the ‘jockey’ and look for someone who has a history of
successful past entrepreneurial efforts.
These investors have come to realise that a good business plan does not necessarily
make a good project, but a good entrepreneur can, whether the business plan is
optimal or not.
Your Management Team

Your management team, or the one you will assemble, is also extremely important.
Compare the key players in your potential business to the ideals described in your
text books on management and see how many of these characteristics they possess.
Obviously, no one will display all of the qualities, but you need to prepare a worksheet
that can still help you assess your potential for success as an entrepreneur.
Market Assessment
Assessing the market size for a new business is tricky. I will rephrase this to say that it
is very very tough, but is a critical part of your project plan or feasibility analysis. For
a business idea to work, you must be able to show on paper that enough customers
are willing to spend money on your product or service to provide sales revenue that
covers your expenses and, hopefully, earns you a profit. Accordingly, determining
how many potential customers exist might be an essential part of discovering whether
your business idea is going to work. It is a simple truism that every text book talks
about that the first thing consumers usually do when they hear of a new product or
service is compare it to existing alternatives. Customers will buy from a new business
only if they perceive the value provided by that new business to be greater than the
value provided by existing competitors.
Perceived Value is a Judgement

This is again marketing textbook stuff. Consumers compare what they think they
are going to get from your new business to what they think they are getting from ex-
isting businesses. To attract them, you must convince them that you are providing
something better, more convenient, healthier, more durable, cheaper or of a higher
quality at the same price. In short, you must be able to show on paper that you can
create a perception that you have a competitive advantage. This advantage can be
based on many different characteristics—location, a specific product line, technology
or exclusive access to some supplier. No matter what it is, there must be something
about your business that makes it distinctive, different and competitively superior
to the businesses your customers will compare you to.
The last point, which is actually the summation of all that I said above, is that you
must be able to communicate your competitive advantage simply and believably in
your project papers.
It is not enough just to be better—you have to convince potential investors that

you are better.
One of my former colleagues, an Indian from Malaysia, who went back home to
take his family’s traditional business in a new direction of growth always said, ‘It took
me five years to become an overnight success.’
Focus and Frugality

It is almost an axiom that every student of entrepreneurship is taught—any entre-
preneur embarking on a new project must understand the meaning of ‘focus’ and
‘frugality’ in order to succeed. I would reword it to read, ‘focus on frugality’. Though
this has frequently been repeated, I find in India, this advice often seems to fall on
deaf ears.
Ignoring this advice will almost certainly lead to a company’s failure because India
is now a highly competitive market and successful new projects are all about effi-
ciently managing scarce resources to create extraordinary value for investors and
customers. Managing scarcity is what new projects are all about. Not only must a
start-up manage scarce capital, it must also efficiently manage scarce talent, human
resources, knowledge, creativity, and time, to name just a few. It is this scarcity of re-
sources that mandates the business requirement for ‘focus on.’
I would like to differentiate here between the serious entrepreneur and the hordes
of pseudo-entrepreneurs who, as I said in the introduction, are mostly the children
of politicians or their close friends. Attempts to successfully teach ‘focus on frugality’
to such an ‘entrepreneur’ who has just raised that critical first round investment
would always be futile. After that round of financing is completed, it seems that the
typical (doomed) entrepreneur forgets that capital is a scarce resource, and there is
not necessarily more where the last round came from.
Add to that, the ‘loan melas’ of the popularity stunts of our politicians, when loan
capital was momentarily flowing freely to anyone with a business plan (or sometimes
even less than a plan), the message sent to the entrepreneur by the banking community
was loud but confusing and misleading. The free flow of capital misled entrepreneurs
into believing that successful entrepreneurship was about raising capital and then
spending it, rather than managing it. Sure, as it turns out, those who heard and be-
lieved this ‘waste now, there’s more where that came from later’ message, were the
ones who failed.
I repeat that managing scares cash, technology, hard assets, customers, personnel,
highly skilled talent are all the hurdles that a successful start-up must overcome. It
is this right of passage, living with scarcity, that often dictates whether the start-up
business will, by definition, be viable. A start-up that develops a ‘high fat’ diet of cash
and other resources; will find it almost impossible to get through the inevitable lean
times that every developing business must invariably face.
Do Your Homework First z 299
If the secret to a successful start-up were not managing scarce resources, there
would rarely be any successful start-ups.
Is it possible to have too little cash? Obviously the answer is ‘yes’. Many young
entrepreneurs intentionally underestimate their initial cash needs because, if the
cash is coming in as shareholding, they fear they will have to give away too much of
the company too soon. This is the most common mistake new entrepreneurs make,
because if too much money can cause a business coronary for a start-up, too little
money can starve it. Once you run short of money before you reach break-even, you
will have to borrow it at the most outrageous terms and conditions. The lender or the
future shareholder knows that you are in no position to bargain.
So, what is an early stage start-up to do? The answer is, get as much start-up in-
vestment as you can, but manage its spending like it is all you are going to get for a
long time.
So, whether you are starting a business or already running one, learn from the
most common mistakes of others. Manage all of your resources as if they are scarce,
and create the maximum value with them.
Do Get a Move On
Don’t wait to start your planning programme. If you hold back until you are meticul-
ously prepared in every detail for the establishment of magnificent objectives, let us
face it, you will never get started! The important thing is to get your goals and get the
planning machinery under way. You must, of course, be impatient with your plans
and their progress.
But you won’t have anything to refine and improve if you don’t make a beginning.
I will repeat what I said above. Remember, you need to condition your planning
heavily with a thoroughly fortified knowledge of your consumer. Time and again I have
seen that Indian companies have built a product line and then—and only then—
determined who wanted it and how to distribute it. No doubt, this is asking for dis-
aster. Base all your plans directly or indirectly on a well-researched fund of data
about who the consumer is and what, where, when and how he wants a product,
and, above all, why he wants it.
One last point. Many people react warmly and positively to counsel and just the
opposite to advice. What’s the difference? I have worked with lawyers in India who
didn’t know this.They gave advice when counsel was needed and then wondered why
the client relationship did not blossom as anticipated. Distinguishing between the two
terms is easy, but carrying out the concept in practice requires some doing.
Advising is telling the other person what he should do. Counselling is enabling him
to see what he should do, how, and why; it also requires that he feels motivated to
use the counsel. You as the leader must have insight, empathy, perception, warmth,
and wisdom. The adviser needs only intelligence. When seasoned counsel is provided
within a context of consideration for the growth and benefit of the counselee, candour
can seldom be overdone.
You may advise your installation supervisor that a work simplification programme
should be in operation three months from now when the equipment should be ready
for operation. The results of this advice may be uncertain. You may counsel him by
requesting his best thinking on the need for such a programme, getting him to tell
you how and why it should be done as well because you can still modify his proposed
date in light of your greater knowledge of overall requirements.
You gain much, however, both by benefiting from his specialised knowledge and
experience and by letting him identify himself with end results and commitments.
Preamble z 301
25
Stages of a Project Plan
The entire focus of everything an entrepreneur does boils down to money. While in
this part, we will discuss the nitty gritty of preparing an initial project plan, the final
objective is the preparation of simple financial projections.
Why Financial Projections?

One may well ask, why should a non-financial executive, a shop floor manager or a sales
executive, bother about learning financial projections? The bigger firms have financial people
and the smaller ones have external accountants, so why bother?
Today, even in the smaller firms, top managers are becoming much more democratic.
The days when only the boss thought about new ideas and executives merely carried
them out are gone. Managers now know that they do not have time to think of all the
new ideas or be aware of everything happening in the marketplace. They are leaving
all this thinking to junior executives.
Moreover, there is an entirely new breed of junior executives who are filled with a new
energy and nervous expectancy. Be it a marketing executive, a shop floor supervisor,
or a young man wanting to do something on his own, rapid economic development
has not only made India’s youth impatient to acquire a better way of life, but is also
helping them shed the burdens of the past. There is almost an outrageous ambition
and they now want to think in new directions.
However, for a junior executive, to be able to think in new directions is not enough.
They have to think out all the implications of their new ideas. They need to understand
the meaning of business risks and have good business sense so that they can safely
take the firms in new directions of growth. In other words, they have to think like
entrepreneurs, and the first step is to start putting your ideas on paper.
Further, once an executive puts up a new proposal for consideration, be it an idea
for a new product line, a new department, a branch at a new location, or whatever,
the top management would, at some stage or the other, need to commit funds and
manpower to the new idea. So, first they have a million questions and want to see
the bottom line: How much will it cost and over what period of time? How long for the
break-even? And what is the amount they will lose if the idea does not work out?
It is only after the executive clears the first hurdle of answering the million questions
that the investigation of financial viability, profitability, rate of return and payback
period and so on can follow.
All this means homework. But if the executive is not thinking like an entrepreneur,
and does not understand the basics of financial projections, how will he know what
questions to ask himself? Here, no financial expert or accountant can help him. I will
say it straight out that if an executive needs the help of an accountant to start work
on getting the answers, he better not start.
The Approach
As I have explained above, the main objective of this part of the book is to make you
aware of the nitty gritty of financial projections.
I will take you step by step of an actual study to make you understand what is in-
volved in taking the very important first step of an investment decision.
Please note that there are many gross oversimplifications in the discussion here
as the idea is to help a complete novice in matters of finance to understand how to
do his own homework.
In many cases, we need to put the cart before the horse. It is not a good idea to go
out in the market and do your investigations and then start translating your findings
into financial data. If you do not know what sort of data, information and technical
inputs would be needed, how do you go out to do your research in the first place?
So as I said here, first you sit down and work out your own tables on the lines
of the example I am giving here. I am sure you would need to grossly modify these
tables to suit your proposal.
It is important that you should not blindly fill-in-the-blanks of some tables an ac-
countant gives you and say this is your plan. Even if you start with a set of blank
tables your accountant has given you, you should know enough about the subject
to be able to customise these for your project idea.
I will try to give you as much basic knowledge as possible of what is needed so that
you are able to make your own tables. The tables here are your templates.
Stages of a Project Plan z 303
What is a Project Plan?

After having discussed entrepreneurship from all possible angles, you should by now
be ready to start thinking about unleashing your potential on the world at large.
The end objective of every entrepreneurial effort, be it the beginning of a new project
or the taking of an existing business in a new direction of growth, is to see something
on the ground, and the only way of doing this without burning your fingers is to first
develop a detailed project plan. Sure, the actual project when it starts may not be
anything like this plan, but this would be the foundation of whatever comes next.
Some text books call this the implementation scheme and most of the world bodies
like the UN would call it the final action plan. Remember, this is not a feasibility study.
A detailed feasibility study is only a part of the plan. I will show you that there are
a lot of other things too. Before an investment decision can be made and the project
idea starts taking shape on the ground, your idea has to travel many possible stages.
We will talk about these here.
Whatever the nomenclature, the idea is to meticulously investigate and evaluate
all aspects of the project from conception till the stage of actual output.
z Here we will part company from the service industry. Hotel projects, tourism
promotion plans or the setting up of service organisations, as the development of
these entrepreneurial activities is a vastly different subject and needs specialised
planning and evaluation techniques that have been specially designed for these
sectors.
Scope of Discussion
1. From here onwards, in this last part of the book, we will confine our discussion
only to manufacturing projects.
2. This chapter is designed not only to introduce the reader to the skills of making
one’s own basic financial tables, but also as a starting point for doing one’s
own homework for a project proposal.
3. I wish to have it clearly understood that the subject of ‘preparation and eva-
luation of feasibility studies’ which overlaps the disciplines of finance, marketing
and industrial engineering, is a topic by itself and is outside the scope of this
book.
4. The idea is that a budding entrepreneur should understand the basics of doing
his own homework and be able to assess the merits of his own idea without
the help of an accountant.
5. It is only when you have a dummy set of financial tables in front of you that you
can start making a check list of the items you need to think about, investigate
and get detailed data on. Then, of course, you start modifying the tables to suit
your own project idea and start getting specific.
Stages of a Project Plan

Very broadly speaking, a project development cycle comprises the concept, the pre-
investment, the investment and the operational phases. Each of these four major
phases is again divisible into stages, most of which constitute important but very
diverse activities. While a detailed discussion on these is very much outside the scope
of this book, I will make an attempt to give a better understanding of the problems
encountered in carrying out the various tasks under the concept and the pre-
investment phase of industrial projects. As I said above, we would be making some
gross oversimplifications and generalisations as no single pattern can be defined—
industrial activities can take innumerable forms.
Depending on your own academic background, and whether it is a new project
idea or the expansion of an existing commercial enterprise, and, your own mindset
in seeking help and advice from others around you, a project plan would have these
stages. Sure there would be considerable overlap but the stages have to be there in
a strict chronological order.
1. Brain-storming √
2. Opportunity study √
3. Pre-feasibility study √
4. Feasibility study
5. Pre-investment study
6. Financial plan
7. And then you will go on to the project implementation stages where an entire
spectrum of specialists from marketing to finance to engineering and on to the
specific technology fields may need to be brought in.
As explained, we are concerned only with the first three marked stages above, and
these are discussed at some length in the chapters that follow. Once the project idea
clears the pre-feasibility stage and there are fairly dependable indications of a viable
project, the role of the young entrepreneur would get minimised, the investors would
step in and the entire scenario would change.
z It is the investors who would then decide on the nature and extent of participation
by the promoting entrepreneur, and there is an entire spectrum of options he
may be offered. At the one extreme is the option of the investors negotiating the
rights to the entire promotional effort and at the other is the option that the
promoting entrepreneur be handed complete charge of the project.
Then, several parallel activities will take place and even overlap into the succeeding
investment phase. Also, the activities of the various phases would usually be carried
out separately, the reason being that the main person made responsible for carrying
out the feasibility study may not have the qualified manpower at his disposal or the
expertise to conduct studies in all the areas concerned.
Stages of a Project Plan z 305
Once it has been decided to invest, the project idea is no longer a proposal and
becomes a project, and would enter the implementation phase.
This would include a pre-investment study; a detailed financial plan; and the
project implementation stage. For all these an entire spectrum of specialists from
marketing to finance to engineering and to the specific technology fields may need to
be brought in. These are all costly and time-consuming tasks. This phase embraces
the entire period from the decision to invest to the start of commercial production.
It also includes a number of stages including negotiation and contracting, project
design, construction and start-up. Remember the overheads have started and if not
planned properly, this phase may extend over enough time to endanger the potential
profitability of the project.
The primary objective of implementation planning is therefore to determine the
financial implications of the implementation phase with a view to securing sufficient
finance to float the project until and beyond the start of production.
26
Opportunity Study
Brain-storming
Now we enter the stage where the entrepreneur takes his idea to the first stage of
implementation. This is the stage where he takes the first step of putting his ideas
on paper.
z Remember, this is the most important aspect of development of entrepreneurial

skills. I have repeatedly said it earlier and I say it again—you need to get into
the habit of putting every thing down on paper. And, by everything, I mean
everything. It will often happen that you will need to go back, sometime later,
and check on what you did and why you did it.
So, as the first step, put all your random ideas down on paper, in a random man-
ner. If you are sure of only a rough range of items you are going to make and have
not zeroed in on a specific item, do put down all the items you can think of—this is
brain-storming. Then talk to anyone and everyone, pick their brains and collect all the
wildest ideas. Put these down too. Brain-storming again. Remember we have already
discussed that trying to keep your new idea a secret and doing all the thinking by
yourself would be self defeating. Talk freely to as many people as you can find, anyone
who knows something about a particular aspect and get as much input as you can.
No one is going to steal your idea.
The next step. As a trained professional, you have learnt to think and act analytically.
So take all the stuff you have written down and start analysing. Do rough homework
Opportunity Study z 307
and weed out the bad thoughts. Prune and fine-tune the list and the ideas till you
have a workable product mix.
I have been in this line for 35 years and believe me, there is no other way of doing
this.
Put it all on paper

You will not be able to get the required response from your potential investors unless you
spell out your thinking on the strategies you would like to use while developing your project.
And, spelling out means putting every idea you have on paper. Crazy ideas and half baked
theories, everything.
Remember, you are at a stage where you do not yet have the budget needed to go into
detailed investigations. Neither can you call in specific experts to contribute to and to an-
alyse your findings.
What you have up to this stage are your ideas and your initial thinking. It would help if
these were spelled out in detail. As I said, on paper.
Remember, your making a study of success stories in similar projects is a good idea,
but a far better idea is to study the failures. If you understand who failed and why, you are
already half way to convincing the investors.
Keep a record of everything you have found and keep it as your precious archive.
What is an Opportunity Study?

This is the stage where you feel you have an opportunity of doing something and
want to explore the pros and cons of taking this to the next stage of a pre-feasibility
study.
There are many definitions of an opportunity study. Do not confuse this with the
opportunity studies routinely put out by government bodies in developing countries
wanting to attract development to various regions or to specific industrial sectors by
highlighting potential investment opportunities that exist. In developing countries,
where the private business sector is not strong, mere publication of such lists or
studies, however, does not prove sufficient and it always requires more precise data
before specific business interest can be evoked.
For the purpose of our discussion here, I would define an opportunity study as the
study that takes the first step in transforming a project idea into a broad investment
proposition. Since the objective is generally to stimulate investor response, a project
opportunity study must include certain basic information; the mere listing of products
that may have potential for domestic or export manufacture is not sufficient.
Unlike the situation in developed countries, the identification of industrial op-
portunities that can be developed into viable investment projects is a tough job, par-
ticularly in countries like India that have opened up to the world and anything made
here would have to compete with imported products almost without any protections.
Therefore opportunity studies would be rather sketchy in nature and would rely more
on aggregate estimates than on detailed analysis. Cost data would usually be taken
from comparable existing projects and not from quotations of equipment suppliers
and the like.
Such a list, derived from general economic indicators such as past imports, growing
consumer demand or from one of the general opportunity studies relating to areas,
sectors or resources, can serve as a starting point. It is, however, necessary first to be
selective as to the products identified, and second, to incorporate the rough data relating
to each product so that a potential investor can consider whether the possibilities are
attractive enough to proceed to the next stage of project preparation.
Such data and information should always be supplemented with information on
basic policies and procedures that may be relevant to the production of a particular
product.
The end result would be the emergence of a broad investment or project profile that
would be adequate for the purpose of stimulating investor response.
Project Background
You have to briefly describe the project idea in the project/executive summary, and
inasmuch detail as possible in the body of the report.
Then you go on to listing the major project parameters that served you as the
guiding principles during the preparation of this study—product and product mix;
plant capacity; location analysis; market; raw materials; the source of know-how;
the type of manpower needed and its availability, and/or the rough cost estimates of
training the work force, and so on.
You will need to outline the economic, industrial, financial, social and other related
policies that are likely to have an impact on your project idea.
Demand Analysis
The first step you have to take here is to have some basis for your ideas of the size,
structure, and demand characteristics of the product to be manufactured. In almost
all cases a certain amount of primary data would have to be generated since secondary
data in the required detail would not exist or are not yet available. You will not get
much help here and it is only your ingenuity that you have to bank upon.
Other producers of the same or similar products naturally would be reluctant to
divulge information on operational aspects of industry and present consumers would
be reluctant to reveal information on family budgets, personal incomes, buying habits
and preferences.
This reluctance plus the rapid changes in socio-economic living patterns in all parts
of India would render the available historical data irrelevant for your programming.
Opportunity Study z 309
Many products and projects are exceptions to the general rule of always starting
your homework with estimates and analysis of domestic demand. This is particularly
the case with import substitution projects. This means you are trying to introduce a
product that is not domestically produced but imported in large quantities. In this
case, at least at the beginning, the market and demand analysis is easier because
the amount of imports can easily be established from published statistics. This con-
stitutes a good indicative parameter. It is even easier if, as is often the case, the first
entrepreneurs are people who are already importers of such products and so are fairly
well acquainted with existing market conditions.
On the other end of the spectrum, are new projects based on an abundantly avail-
able natural resource. You only have to show that international markets exist and
prices can be competitive.
Product Pricing
One of the most important and at the same time difficult items to estimate in advance
is an optimum selling price you are going to use for your projections. It is often, but
not always, the case that the market may have to be developed through initially
low prices because of the existence of a lower-priced substitute or because of the
element of competition in the same product. In these cases there may be an initial
period when product pricing would not be able either to provide a profit element or
to cover even total production cost. Of course, such product pricing must be limited
to a specific period.
The reaction from competitors producing the same product, or a similar or substi-
tute product is pertinent. A new manufacturing enterprise is naturally resisted,
generally through a reduction in product pricing by competitors. Current product
prices would not then provide an adequate basis for projecting sales income and
the marketing strategy must take into account the nature of the competition and its
likely responses.
The likely consumer response should also be assessed. A substitute product
would probably command a lower price than an imported item because of consumer
preference for imported items or particular brand names. In such cases, if there is
no possibility of protection against imports, a lower product price may have to be
assessed, and the subsequent losses in the initial period provided for.
There is the other side of the coin too. Product pricing may also be considered in
the context of a monopoly or semi-monopoly. In such cases also the implications of
charging unduly high prices need to be assessed. Despite various degrees of control
on industrial production in many developing countries, new projects are inevitably
attracted to production sectors where high profits are being made except in fields
where technology cannot be obtained. Where there are such controls, a monopoly,
or semi-monopoly may not be allowed to develop and, if it occurred, would be short-
lived.
It may, in any case, be more prudent to price a new product at a level that allows
only a reasonable profit to the initial enterprise. The price in these cases must be
kept low enough to discourage other entrants. Too high a price and quick profit, no
matter what the justification, would certainly be inviting more competition.
Preamble z 311
27
Pre-feasibility Study
The Story so Far

Let us summarise where we stand in our discussions.
I have explained that we are concerned only with the first three stages of the pro-
ject. These are:
z Brain-storming
z Opportunity study
z Pre-feasibility study
I have explained these stages earlier and I am calling the pre-feasibility study as
the last step in the discussions because after this, if your proposal again gets a green
signal, it would go on to the stage of the formulation of a techno-economic study, or
what you may call a full-fledged feasibility study.
This would include a pre-investment study, a detailed financial plan, and then the
project implementation stage. This stage is an interdisciplinary task requiring a team
of engineers, economists, social scientists, businessmen with different educational
backgrounds and professional experiences. An entire spectrum of specialists from
marketing to finance to engineering and on to the specific technology fields may need
to be brought in.
A promoting entrepreneur may not have the skills or the resources to carry out all
these tasks, as these are all costly and very time consuming.
During the implementation phase a series of simultaneous and interacting invest-

ment activities take place with different financial implications. To measure them, an
optimum implementation programme and time schedule should have been prepared
and included in the pre-feasibility study.
The Preliminary Assessment

The budding entrepreneur should by now not only have the basic tools needed to
take his project idea to the next stage, but would also have had a positive indication
from the investors after they have seen his opportunity study. Remember, this would
at best be an indication saying that it looks like a good idea and now you will have
to show that your idea would be financially feasible.
The investors could be your own family members, an outside investor, or, in the
case of an executive exploring new avenues, the management of his company.
In any case, the more work done while the project is still on paper, the better the
chances of success.
I have explained in the earlier chapters that a pre-feasibility study should be viewed
as an intermediate stage between a project opportunity study and a detailed feasibility
study, the difference being primarily the detail of the information obtained.
The principal objectives of the pre-feasibility study are to determine the following:
1. On the basis of the information elaborated at the pre-feasibility stage, is the

investment opportunity promising enough for an investment decision to be
taken? Do the parameters suit the requirements of the particular investor or
investor group?
2. Does the project concept justify the cost of preparation of a detailed project
implementation plan by a group of experts?
3. Maybe there are some aspects of the project that are critical to its feasibility
that would necessitate in-depth investigation through functional or support
studies such as market surveys, laboratory tests and pilot plant tests.
4. Would this project lead to other projects being set up? This is important because
in countries like India that are increasingly relying on industrial development
planning, investment studies are not only a tool for investment decisions and
project implementation but also often assist in the identification and selection
of projects in other sectors of the economy. Often broad indicators would emerge
from the planning process and these can form a base on which pre-investment
studies can be undertaken for other specific projects.
5. Did the study undertaken by the entrepreneur take full account of government
policy framework? In countries like India, policy framework always influences
prices and material inputs and outputs, wages and foreign exchange
availability.
Pre-feasibility Study z 313
In other words, it is crucial, particularly at the pre-feasibility stage, to examine,

perhaps broadly, the economic alternatives of market and plant capacity, demand and
market study, sales and marketing strategies, production programme and optimum
plant capacity. Pre-investment activities, including market surveys have to be carried
out accordingly.
Some Pitfalls
I have worked with Indian organisations and investors all across the world and I have
seen that invariably the quality of pre-investment studies prepared by them have not
kept pace with the increasingly more elaborate demands made on them. Developing
countries vary considerably as to their stage of industrial growth and if the studies
follow a standard format, the depth and relevance of the studies would never be of a
sufficiently high level to ensure rational decision making at the successive stages of
the pre-investment process.
Homework and More Homework

Let me put this very simply: You can never do enough homework.
If enough homework had not been done before the project idea was taken up for imple-
mentation, it would certainly lead to misallocation of resources, long gestation periods,
investment cost over-runs, high rates of industrial mortality and/or lopsided growth. In
simple words, you will fail.
And, the most crucial homework is the one that is done at the pre-feasibility stage.
Now that India is globalising and our young entrepreneurs are venturing out across
the seas, they will find that many developing countries have very poor or inadequate
planning. It should be remembered that, in these countries, the need for care and
diligence in such studies is even greater. The inter-relationships between various
inputs and production aspects need to be more specifically defined than in those
where the planning mechanism itself provides adequate information.
My own experience of pre-feasibility studies prepared in developing countries has
not been good.
z I have seen that such studies were frequently motivated and often funded by
equipment sellers or were a part of a turn-key project and the specific problems
and difficulties that were likely to be encountered in the project were not suf-
ficiently addressed.
z In other cases, such studies were largely based on earlier experience with similar
projects in other countries, and then proved inadequate in the prevailing local
conditions.
z The costs of some studies have tended to be disproportionately high compared
with the investment for the projects because there has been over-dependence
on foreign consultants. This has always left gaps in knowledge and experience
of the prevailing local conditions.
z Despite the increase in industrial activities and projects, the structure and format
of pre-feasibility studies tend to be conceptually similar and a single format and
set of blank forms and tables is often applied to a wide spectrum of industrial
projects. Although the determination of viability of a plastic factory producing
household items would be substantially different to that of a plant to produce
packaged food products, or a unit designed to produce simple cosmetics and
detergents, the format of information and data used seems quite similar.
z One of the points rarely, if ever, addressed in any detail in the pre-feasibility
study is clearly to understand how the project idea fits into the framework of
the economic conditions and the general and industrial development of the
country.
z Another point that is rarely addressed in the pre-feasibility study is the identity
of the sponsors together with the reasons for their interest in the project.
Some General Principles

You have to begin with estimates of the sales or revenue that your proposal will gen-
erate. Use these three general principles:
Do not Count on Promises

Many people begin their market survey by asking potential customers, ‘If I made this,
would you buy from me?’ The responses are then used as the basis for generating an
estimate of potential sales. Here lies a problem: It is much easier for consumers to
answer ‘yes’ to a hypothetical question than it is to actually change their behaviour and
buy a new product from a new business or entrepreneur. You have asked a casual
question and have got a casual answer and if you estimate your future sales on the
promises and assurances in a questionnaire, you will frequently discover that the
market is much smaller or not there at all.
Be Conservative
Underestimate your potential sales. It is always easier to live with a higher-than-
expected level of sales than it is to control and cut down your costs when your sales
estimate has proven to be too optimistic.
Make a Range of Sales Estimates

Estimate your potential sales in a number of ways and compare the figures. Try two
or more of the following methods and see how different the results are. You can decide
to be conservative and pick the smallest estimate of the group, or be aggressive and
take an average.
Sales Estimation Methods

This is at the same time the most crucial and the most difficult aspect of the study.
Except for the case where you are setting up a project to feed the requirements of
some specific customers, the more effort you put into this, the better your chances
of success.
Market Survey is an Art that Cannot be Taught

Let no one tell you that there are any hard and fast rules, methods or guidelines for doing
your market survey. Of course, textbooks on marketing are full of advice and suggestions,
but in actual life, I have seen very few of these set formulae work in developing countries.
Instead, I have seen different people get excellent results by completely different methods.
Everything depends upon your mindset, your attitude and your contacts. Of course, the
one thing that is common in all the surveys I have seen is the amount of sheer backbreaking
hard work that had been put in.
There are no short cuts for that.
The critical factor in demand and market analysis is an estimate of the demand
for a specific product during the life span of a proposed project keeping in mind that
the viability of the project is dependent, among other things, on the projected sales or
income. The size of demand, at any given time, is a function of several variable factors
such as the composition of the market, the competition from other sources of supply
of the same product and substitutes, income and price elasticity of demand, market
responses to socio-economic patterns, distributive channels and consumption.
z Again, there is no denying the fact that all the cost elements and projected output
levels should be estimated as accurately as possible, the cost and time involved
in obtaining data are not always justified and it may therefore sometimes be
necessary for the entrepreneur to rely on assumptions. When this is the case,
it should be so stated in the study.
It is may be a good idea to start with the associations of retailers, wholesalers and
other businesses in your product category, because these bodies often keep good
industry-specific statistics on the performance of individual outlets. This data is not
secret and it is not difficult to get rough indications if you can convince the official
about how serious you are about your project. You cannot write or make a phone
call. This can only be done at a personal level.
Then there is always the friendly, person-to-person approach to people in businesses
similar to yours. Questionnaires do not help and are often counter-productive.
Next, calculate your share of the market. To begin with, estimate your share as less
than that of your smallest competitor. No matter how confident you are of yourself
and your project, be sure not to assume you will take over the market, particularly
in the short run.
Since we are talking in general terms, there can be many viable items that would
have only a handful of customers. So, another method of estimating sales for a new
business is based on the number of customers you can attract. Calculate the total
number of customers in your product range, identify how many you think you can
attract, and multiply that number by what you think their average purchases per year
would be. Obviously, the difficult part is determining how many of those customers
would actually shift their business to you.
Look at your competitors in the marketplace and estimate their sales. I have met
many budding entrepreneurs who feel their idea is unique and there have been and
will be no competitors. This has never been true. If you think in a rational manner and
accept that customers did manage somehow before your genius came on the picture,
you need to find out where the customers are getting their present requirements. This
might serve as a reasonable estimate for your own business.
Break-even Analysis
When an entrepreneur works out an idea for a project and puts it before a prospective
investor, the most pertinent questions would be about the break-even point. Every
investor is concerned about this as the project drains out money till this point. The
initial losses do not form part of the manufacturing costs and can only be written off
later on. The picture changes once more money starts coming in than is needed for
the day to day running.
I have explained that this is neither a book on accounting procedures, nor on financial
analysis. Every text book on accounts and costing has chapter after chapter on sophisticated
techniques of doing break-even analysis, so I will explain only the basics in simple non-
academic language.
My purpose of discussing this here is for the entrepreneur to prepare himself for the ques-
tions he is going to be asked before he gets a green signal to go ahead to the implementation
stage.
There are many ways of describing a break-even point. It is in general the point
at which the gains start equalling the losses, or where revenues become equal to ex-
penses. Here onwards, an investment starts generating a positive return. In simple
words, there is no profit made or loss incurred at the break-even point.
It is important to understand that reaching break-even does not mean the start
of earning back the losses occurred in the past, it does not build up any reserve for
future losses and it does not provide a return on your investment. It simply means
that you stop losing money.
Evaluation under Uncertainty

Break-even analysis is not only an excellent tool for the evaluation of your risk under
uncertainty, but also a convenient format where you can spell out these risks in spe-
cific terms for the benefit of the investors.
Uncertainty will always be there. It will always happen that you are not sure of
one variable or the other and so, for an opportunity study and for the pre-feasibility
study, you may have to look at break-even from many angles. In accounting text
books you will read that this sort of uncertainty analysis can be undertaken in three
steps—break-even analysis, sensitivity analysis and probability analysis. Since this
discussion is only concerned with preparation of an opportunity study and then the
pre-feasibility study, we will treat financial analysis only in a complementary way and
combine the discussion on break-even analysis and sensitivity analysis.
Before going into details, let me give you an idea of some of the angles you may
have to look at for your break-even analysis:
Selling Prices
For a project where the proposed selling price cannot be estimated with reasonable
accuracy, you may have to compute a break-even selling price. Break-even price
analysis calculates the price necessary at a given level of production to cover all
costs.
Dealer Discounts
You may sometimes have to fine-tune the above to compute a break-even discount
you can give to your dealers.
Production Volumes
Often you have to do the reverse and do a break-even analysis to calculate the min-
imum volume of output at a given price.
Raw Material Prices

Again, you cannot often be sure of your raw material prices and you may have to
compute a break-even cost of raw materials.
As I said above, on the one hand your forecasts and estimates of demand, produc-
tion and sales are not likely to be exact because of many uncertainties. On the other,
for the same reasons, your assumptions about the production and investment costs,
prices or the lifetime of the project will also not always be correct. The investors
understand this and the more you are specific in detailing the uncertainties, the more
confidence the investor will have in your proposal. It is a part of the homework. An
entrepreneur must clearly identify the variables that could have a decisive influence
on the profitability of the project.
The common reasons for uncertainty are inflation, changes in technology, false
estimation of the rated capacity and the length of the construction and running–in
periods. Not only that, the investment decisions depend upon many political and social
developments, as well as changes in competitive prices and your own productivity.
It is clear that, whichever form the final project proposal takes, its numerous
components will have to be scrutinised with a view to increasing the precision of the
proposal.
When dealing with an investment under conditions of uncertainty, three variables
should particularly be examined—sales revenue, production and investment costs.
A host of individual items enter into these variables, all of which are composed of a
price and a quantity. All these elements have to be taken into account in the form
of foreseeable risks. The project proposal can carry some of these, but there may be
others that it cannot.
z This is probably the most difficult decision to be made during the entire process
of project preparation. The size of allowance provided for this purpose will have
a decisive impact on the profitability of the project and may, in the case of a
marginal proposal, tip the balance against the implementation of the project.
Preamble z 319
28
Explaining the Financial Tables
for Non-financial Executives
(or, Everything You Wanted to Know about Doing
Your Own Projections but were Afraid to Ask!)
Notes
1. This part of the book is designed only to be used as a starting point for non-
financial people to understand the basics of doing one’s own financial pro-
jections and it is hoped that the reader would go on to doing further reading
in appropriate text books.
2. I wish to make it clear that I am explaining these tables in terms of how I, as
a non-financial professional, do my own analysis of an idea. These tables and
my notes should form a backdrop for a budding entrepreneur to do his own
homework to first satisfy himself on the merits of his idea and to prepare himself
for the initial questions he is going to face.
3. I have explained it earlier and wish to have it clearly understood that the subject
of ‘Preparation and Evaluation of Feasibility Studies,’ where the financial tables
form an integral part, is a topic by itself and there are many excellent text books
on the subject. A detailed discussion is outside the scope of this book.
4. I give a lot of importance to the estimation of the break-even point and so I am
also explaining the basics of working this out. It is essential that you pay
attention to this too as this allows you to determine how much minimum turn-
over you must achieve, in terms of sales, to stop losing money. It is till this
point that you have to keep pumping in money. Then you can compare that
with realistic estimates of the sales you might expect. Knowing what it takes to
break-even by itself can give you an idea of whether or not you have a potentially
feasible business idea.
5. The whole idea is that a budding entrepreneur should understand the basics
of doing his own homework and be able to assess the merits of his own idea
without the help of an accountant.
6. Every project is unique and so are every set of projections. And of course, the
question of your blindly copying the format of the projections to do your own
homework does not arise. Do study the format and the manner in which I made
my assumptions and use this as a set of ‘dummy tables’. When you take the first
steps of doing your homework, you generally would not know what questions to
ask yourself and where to begin. The tables would give you some idea of what
sort of ‘blanks’ you would need to ‘fill in’.
Background Note
The financial tables enclosed here are extracts of an actual feasibility study for the
manufacture of mosquito coils in Malawi (Central Africa). I did this study in 1989 on
an assignment from the Industrial Development Unit of the Commonwealth Fund for
Technical Co-operation of the Commonwealth Secretariat, London.
The Secretariat made it a practice to present the financial projections in two parts.
The first, extracted here, was in a simple format that could be understood and used
by not-very-educated entrepreneurs. This part was called the ‘Action Plan for Project
Implementation.’ Then came the other part, the detailed financial analysis for use of
the Banks and others.
It is important to note that the report was prepared in Malawi in 1989, long before
the days of modern computers and printers. I have presented the tables here in their
original format. The currency used is not important, as the figures are illustrative
only. However, the rate of exchange at that time was Kwacha 2.8=US$1.00
If anybody is interested to have a copy of the complete feasibility study, or of other
similar studies, they can contact me via my publishers.
The Focus: Pre-production

The focus of the homework that a budding entrepreneur should do is not how much
profit the project will make or what sort of rate of return is expected, and so on.
Explaining the Financial Tables for Non-financial Executives z 321
This is not a misprint. I mean what I say. Working out the profit or the rate of
return would be left to the financial people if and when your proposal clears the first
hurdle.
From my experience, the most crucial period in the life of a project is the initial
period. This means the pre-production period and then the period when you are in
production but not yet breaking even.
You should be intensely concerned with what happens till the stage of break-even,
because it is till this point that you have to keep pumping in money. And, if anything
happens and the project collapses, no matter when, it is this money that is irretrievably
lost. It follows that this should be your focus because this is the question uppermost
on the mind of the investor too.
So, in preparing your own projections, the matters of your more immediate concerns
are:
z Remember, you need investment basically in three stages.

1. Till you start production;
2. Till you reach break-even; and
3. After the break-even to reach full capacity.
z And, if I may make an oversimplification, there are two types of expenses—One,
the money that goes into fixed and moveable assets. This can, to some extent,
be recovered. Two, the money spent in the pre-production stage and then till
the break-even. These are expenses, and cannot be recovered except by the ac-
counting procedures of writing off against future profits.
z I have explained above that the break-even is important because you may not
be actually making a profit, but at least you stop losing money. This is the point
where your ‘expenses’ stop.
z The investor is less concerned with how much total cash is needed than the
schedule of cash input. He wants to know how much cash is needed in the first
two stages.
z Money needed upfront, before you reach break-even, is far harder to find.
Have Enough Money or Do Not Start

Please take serious note of what I said above.
The most critical aspect of any project planning is the pre-production cost schedule—in
other words, knowing how much money you will need and for what, before you start. Do not
be casual about this and do not make rough, random guesses based on your gut feeling.
Running short of money just as you are ready to start is disastrous. I have seen many
projects come to a standstill for want of small amounts of money needed just at that time.
This money will be very expensive to find and would only be available at exorbitant terms.
The Tables
When preparing your own tables, the more details you put in the better, as you will
know what assumptions you made and would be able to check, correct, adjust and
fine tune the estimates as time goes on.
No matter how much of an authority you are on the subject and how diligently you
did your homework, estimates would always go wrong. Making tight estimates will
work only if you have not only been meticulous down to the finest detail, but have
recorded the basis of your estimates.
You will note in the tables that there is considerable emphasis on the pre-production
period and on the first year of production. Most of the financial projections I have seen
are five- to 10-year projections that start with the first year, and all the pre-production
expenses are analysed and lumped together. This is fine when the project is already
on stream but in the planning and implementation stages, fine-tuning is essential.
You will notice that the first year of production is again analysed on a quarterly
basis. Remember that averaging out the money that you estimate to be coming in
during a particular period against the expenses for the period can again be disastrous
as the money would most likely be needed during the first two quarters and the cash
may start coming in at the end of the period.
Potential Pitfalls
If you have come this far and are prepared to start your small project, it is clear that
you are prepared to work harder for less money but you would certainly be happier
than your counterparts who merely work for someone else. It is all the more essential
that you thoroughly and objectively analyse the financial feasibility of your idea.
Failure to do so can have a tremendous personal cost on finances, relationships,
family ties and/or your status as an executive. Do not hesitate to get all the help you
need and use it.
If your market assessment has lead you to believe that your new business idea has
potential, and you are now going to sit down and start doing your financial tables,
you need to understand and avoid the pitfalls that frequently capture the unwary
young entrepreneur.
Often the most serious involve an incomplete understanding of the financial impli-
cations of your idea. People often underestimate the amount of money needed to begin,
and they do not understand how to allow for working capital. Your working capital
is the money you need to finance your inventory and maybe your finished product
between the time you buy it as raw materials, pay the labourers to assemble it, ship it
to the destination and finally get paid. Most people try to borrow the minimum amount
of money possible and grossly underestimate the working capital. If you borrow short-
term, you may eliminate your ability to generate working capital. Do see the enclosed
tables and see how I have worked out the increasing needs for working capital.
As your output increases, you need more and more working capital and you need
money for this. As simple as that. Unless you can finance the increase in your working
capital, you cannot finance the increase in your production.
The second major pitfall is not sticking to the plan. I have repeatedly shown you
how to anticipate and plan for every aspect of your project but still you will have to
make many tough decisions as you go along. Personnel and sales do not materialise
Explaining the Financial Tables for Non-financial Executives z 323
as expected, the market changes in some unexpected way, or something else happens
that makes your fundamental scenario infeasible. You need to be flexible and carefully
plan ahead, particularly in terms of cash management. If sales change, you need the
courage to change your cost structure to keep pace. It is better to have your cost
chasing your revenue than your revenue chasing your costs.
Young business people frequently underestimate the impact of taxes, benefits and
annual increments for employees. People are going to cost you a lot more than the
actual salary you pay them at end of the month. The longer they work for you, the
more increments they get. I have seen hundreds of projections made by the financial
specialists that provide for a standard wage scale for say, the first five years of the
project.
And, mind you, this has nothing to do with inflation, it is merely a reflection of a
company getting old.
Finally, and most significantly and more horrifyingly, a business can fail because
the market was much greater than anticipated. Management of growth is often a
serious problem. Unless you can find the money to finance the increase in your work-
ing capital, you cannot finance the increase in your production.
Never ever think that increasing business beyond expectations immediately brings
in more cash. There is a very crucial time lag that would need to be funded.
A Smashing Start is Good? Huh?

It is good only if you are not careful, but very very careful with your cash budgeting before
you start.
Small businesses with unexpectedly high growth rates at the start have tremendous cash
flow problems. If your business doubles in one year, most people think that would be the
best thing to happen.
But the truth is, if you have just started up and your business has a small profit margin,
you will discover you are not generating enough money from the doubled sales to maintain
the necessary inventory, both of raw materials and finished products for that high level of
sales.
This can lead to serious problems, inability to meet payroll, sloppy production and
service, plus a variety of the problems that can ultimately destroy your business.
Borrowing money at this stage is enormously expensive and often it comes with
crippling terms. You must carefully manage growth. If possible, grow slowly, or make
sure that you can finance growth so that it will not harm your business.
Pre-production Phase
When estimating manpower requirements, a distinction should be made between the
pre-production and the operational phases.
During the pre-production phase, it may be assumed that manpower require-
ments occur mainly in conjunction with all preparatory measures needed to start the
operational phase. Thus, the managerial staff, supervisors, and some foremen and
specialised machine operators have to be recruited in advance, not only to be trained

but also to attend to the construction of buildings and the installation of equipment
that they will later be operating.
Estimates should be made by category of staff and workers, as well as by function,
applying standard cost estimates to arrive at the labour costs that need to be capital-
ised. The persons required at this phase should be kept to a minimum to maintain
pre-production costs as low as possible.
During the implementation phase a series of simultaneous and interacting invest-
ment activities take place with different financial implications. To measure them, an
optimum implementation programme and time schedule should be prepared and
shown in the feasibility study.
Preamble z 325
29
Sample Financial Tables∗
Table 29.1 Project Implementation Schedule

(Activities are shown as lines, and Events as circles)
Implementation Stages Promotion Pre-production Trial Marketing
Months 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Corporate Aspects
Project evaluation ∗ ∗
Company formation O
Managerial staff ∗ ∗
selection
Bank finance ∗ ∗ ∗
application
Licences, Exemptions ∗ ∗ ∗ ∗
and so on
(Table 29.1 continued)
∗The variations are very minor and are the result of the computer rounding off to the first place of decimal.
The problem here is that any corrections to any figure would result in ALL the figures in ALL the subsequent
tables needing to be corrected as the closing figure of one column is the opening one for the next one.
I think this would seriously effect your schedules.
In any case the tables are only dummy models. I suggest that we leave the tables as they are and modify
the text on page 320 as follows:
It is important to note that the report was prepared in Malawi in 1989, long before the days modern
computers and printers became commonly available. Though I have presented the tables here in their
original format with the figures rounded off to the first place of decimal, you need to treat these as no
more than rough templates for you to design own homework.
The currency used is also not important, as the figures are illustrative only. However, if you are interested,
the rate of exchange at that time was Kwacha 2.8 = US$1.00.
(Activities are shown as lines, and Events as circles)

Implementation Stages Promotion Pre-production Trial Marketing
Months 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Planning Aspects
Sampling/test ∗ ∗ ∗ ∗ ∗
marketing
Selection of plant O
Layout and blueprints ∗ ∗
Selection of ancillaries ∗ ∗
Overseas training ∗ ∗ ∗
Sourcing of imported ∗ ∗
materials
Sourcing of local ∗ ∗ ∗
materials
Implementation Aspects
Equity contribution O O O O
Expatriates arrive O
Selection of local staff ∗ ∗ ∗
Electricals/Civil works ∗ ∗ ∗ ∗ ∗
Plant installation ∗ ∗
Local ancillaries ∗ ∗ ∗
Pre-Production Aspects
Local materials ∗ ∗
purchase
Trial production ∗ ∗
Test/full marketing ∗ ∗ ∗ ∗
Table 29.2 Sales and Output Analysis

Operation/Shifts Year 1, Single Shift Double Shift
Years/Quarters Q1 Q2 Q3 Q4 Year 2 Year 3 Year 4 Year 5
1. Sales Computation:
Sales in Quantity (1,000 Cases of 120 Boxes Each)
(a) Local sales 0.5 1.0 1.2 2.0 8.0 10.0 10.0 10.0
(b) Exports 0.0 0.0 0.0 0.0 2.0 5.0 8.0 8.0
TOTAL 0.5 1.0 1.2 2.0 10.0 15.0 18.0 18.0
Sales in Value (Kwacha 1000)
Selling prices
@ K per Box
(a) Local sales 0.83 50 100 120 199 797 996 996 996
(b) Exports 0.78 0 0 0 0 187 468 749 749
TOTAL 50 100 120 199 984 1,464 1,745 1,745
2. Output Computation:
Output in Quantity (1,000 Cases)
Total sales 0.5 1.0 1.2 2.0 10.0 15.0 18.0 18.0
less Opening stocks 0.0 0.2 0.3 0.4 0.7 0.8 1.3 1.5
add Closing stocks 0.2 0.3 0.4 0.7 0.8 1.3 1.5 1.5
TOTAL OUTPUT 0.7 1.2 1.3 2.3 10.2 15.4 18.3 18.0
Table 29.3 Raw Material Consumption Analysis
– In Quantity (× Tonnes) And Value (× Kwacha 1,000)
Year 1, Single Shift Double Shift
Operation/Shifts
1. Quantity Computation:
Imported Raw Materials (in kgs)
Consumption Per Box (in gms)
(a) Esbiothrin 80EC 0.18 14 25 27 48 214 324 383 378
(b) Sodium Benzoate 0.26 21 36 40 71 317 481 569 562
(c) Perfume 0.10 8 14 15 27 122 185 219 216
(d) Malachite Green 0.52 42 73 79 141 634 962 1,139 1,123
TOTAL: 84 148 160 287 1,287 1,952 2,310 2,279
Local Raw Materials (in tonnes)
Consumption Per Box (in gms)
(e) Alpha Starch 6.50 1 1 1 2 8 12 14 14
(f) Burning Aids 95.00 8 13 14 26 116 176 208 205
(g) Wood Fillers 17.44 1 2 3 5 21 32 38 38
TOTAL: 10 17 18 32 145 220 260 257
2. Value Computation: (Kwacha 1,000)
Landed Cost
(a) Esbiothrin 80EC @K 326.0 per kg 5 8 9 16 70 106 125 123
(b) Sodium Benzoate @K 8.4 per kg 0 0 0 1 3 4 5 5
(c) Perfume @K 45.0 per kg 0 1 1 1 5 8 10 10
(d) Malachite Green @K 36.0 per kg 1 3 3 5 23 35 41 40
(e) Alpha Starch @K 2.7 per kg 1 2 3 5 21 32 38 38
(f) Burning Aids @K 2.5 per kg 19 33 36 65 290 439 520 513
(g) Wood Fillers @K 2.0 per kg 3 5 5 9 43 65 76 75
TOTAL: 30 52 57 101 454 689 816 804
Preamble
z
327
328
z
Table 29.4 Recruitment Schedule and Manpower Costs

(Inclusive of a 5% annual increment)
Installation & Single Shift
Operation/Shifts Pre-production Year 1 Double Shift
Years/Quarters Q0 Q0 Q1 Q2 Q3 Q4 Year 2 Year 3 Year 4 Year 5
Manpower (in Numbers)
Factory Manager 1 1 1 1 1 1 1 1 1 1
Shift Foreman – – – – – – 1 2 2 2
Unleashing Your Entrepreneurial Potential
Maintenence Mechanic 1 1 1 1 1 1 1 1 1 1
Machine Operators – 1 2 2 3 3 5 6 6 6
Helpers/Packers – – 4 6 8 10 12 15 15 15
Storekeeper – – 1 1 1 1 1 1 1 1
Accounts Clerk – – 1 1 1 1 1 1 1 1
TOTAL EMPLOYED 2 3 10 12 15 17 22 27 27 27
Wage Bill × Kwacha 1,000
Starting wages
Supervisory staff (per month)
Factory Manager K 2,000 6.0 6.0 6.0 6.0 6.0 6.0 25.2 26.5 27.8 29.2
Shift Foreman K 500 0.0 0.0 0.0 0.0 0.0 0.0 6.0 12.3 12.9 13.6
Maintenence Mechanic K 500 1.5 1.5 1.5 1.5 1.5 1.5 6.3 6.6 6.9 7.3
Direct Labour
Machine Operators K 150 0.0 0.5 0.9 0.9 1.4 1.4 9.0 11.3 11.8 12.4
Helpers/Packers K 75 0.0 0.0 0.9 1.4 1.8 2.3 10.8 14.0 14.7 15.5
Administrative Staff
Storekeeper K 150 0.0 0.0 0.5 0.5 0.5 0.5 1.8 1.9 2.0 2.1
Accounts Clerk K 125 0.0 0.0 0.4 0.4 0.4 0.4 1.5 1.6 1.7 1.7
TOTAL WAGE BILL 7.5 8.0 10.1 10.6 11.5 11.9 60.6 74.1 77.8 81.7
Sample Financial Tables z 329
Table 29.5 Working Capital Estimates

(All figures in Kwacha 1,000)

Items
Norms
Inventory (Days)
Imported Items 180 17 17 25 40 50 76 76 76
Local Items 60 20 20 29 47 59 89 89 89
Packing Materials 180 25 25 38 60 75 113 113 113
Finished Goods 30 17 33 40 66 82 122 145 145
Debtors 30 17 33 40 40 66 83 83 83
Contingency Cash 3 10 10 10 10 10 10 10
Deduct:
Bills Payable 30 8 14 15 26 29 45 53 52
Net Working Capital: 90 124 167 237 313 448 464 464
Increase in Working 90 34 43 70 76 135 15 1
Capital:
Table 29.6 Schedule of Fixed Assets Purchase

Installation & Single Shift
Pre-production Year 1 Double Shift
Operation/Shifts
Years/Quarters Q0 Q0 Q1 Q2 Q3 Q4 Year 2 Year 3 Year 4 Year 5
Fixed Assets Purchased
(a) Building 40.0 40.0 0.0 0.0 0.0 0.0 47.0 30.0 0.0 0.0
(b) Civil Works 0.0 5.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
(c) Plant and 200.0 188.0 0.0 0.0 0.0 0.0 21.0 0.0 0.0 0.0
Equipment
(d) Dryers and 0.0 7.0 0.0 0.0 0.0 0.0 7.0 0.0 0.0 0.0
Conveyors
(e) Electricals 5.0 5.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
(f) Racks and 0.0 6.0 0.0 2.0 0.0 1.0 14.0 14.0 0.0 0.0
Trolleys, etc.
TOTAL 245.0 251.0 0.0 2.0 0.0 1.0 89.0 44.0 0.0 0.0
Table 29.7 Profitability Projections (Kwacha 1,000 )

Revenue
Local Sales 50.0 100.0 120.0 199.0 797.0 996.0 996.0 996.0
Export Sales 0.0 0.0 0.0 0.0 187.0 468.0 749.0 749.0
TOTAL : 50.0 100.0 120.0 199.0 984.0 1,464.0 1,745.0 1,745.0
Expenditure
Main Raw Materials 30.0 52.0 57.0 101.0 454.0 689.0 816.0 804.0
Packing Materials,etc. 8.0 15.0 18.0 30.0 150.0 225.0 270.0 270.0

Fuel Oil 1.0 2.0 2.0 2.0 8.0 10.0 10.0 10.0
Power 1.0 1.0 1.0 1.0 5.0 6.0 6.0 6.0
Direct Labour Wages 2.0 2.0 3.0 4.0 20.0 25.0 27.0 28.0
Repairs and Maintenence 0.0 0.0 0.0 0.0 2.0 2.0 3.0 4.0
SUB-TOTAL : 41.0 72.0 81.0 138.0 639.0 957.0 1,131.0 1,122.0
ADD: Opening Stock Finished 0.0 17.0 33.0 40.0 66.0 82.0 122.0 145.0
Goods
LESS: Closing Stock Finished –17.0 –33.0 –40.0 –66.0 –82.0 –122.0 –145.0 –145.0
Goods
Inventory-adjusted Cost 24.0 56.0 74.0 111.0 624.0 917.0 1,108.0 1,122.0
Supervisory Wages 8.0 8.0 8.0 8.0 38.0 45.0 48.0 50.0
Administrative Wages 1.0 1.0 1.0 1.0 3.0 3.0 4.0 4.0
Sales Promotion & Advertising 5.0 5.0 5.0 5.0 20.0 20.0 10.0 5.0
Rental & Rates 2.0 2.0 2.0 2.0 8.0 8.0 8.0 8.0
Administrative Overheads 2.0 2.0 2.0 2.0 10.0 10.0 10.0 10.0
TOTAL OPERATING COST 42.0 73.0 91.0 129.0 702.0 1,004.0 1,187.0 1,199.0
Accounting Depreciation 11.0 11.0 11.0 11.0 54.0 58.0 58.0 58.0
Interest Charges 23.0 25.0 27.0 28.0 111.0 88.0 45.0 32.0
– – – – – – – –
TOTAL COST OF PRODUCTION 76.0 109.0 129.0 168.0 868.0 1,150.0 1,291.0 1,290.0
PROFIT BEFORE TAX –26.0 –9.0 –10.0 31.0 116.0 314.0 454.0 455.0
Table 29.8 Cash Flow
(All figures in Kwacha 1,000)
Pre- Single Shift
Operation/Shifts production Year 1 Double Shift
Years/Quarters Q0 Q1 Q2 Q3 Q4 Year 2 Year 3 Year 4 Year 5
1. Sources of Funds:
Operational Profit – –26.0 –9.0 –10.0 31.0 116.0 314.0 454.0 455.0
Accounting Depreciation – 11.0 11.0 11.0 11.0 54.0 58.0 58.0 58.0
Equity Funds 150.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Term Loan 350.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Overdraft 108.0 44.0 35.0 41.0 29.0 0.0 0.0 0.0 0.0
TOTAL: 608.0 29.0 37.0 42.0 71.0 170.0 372.0 513.0 513.0
2. Disposition of Funds:
Land and Building 80.0 0.0 0.0 0.0 0.0 47.0 30.0 0.0 0.0
Civil Works 5.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Plant and Equipment 388.0 0.0 0.0 0.0 0.0 21.0 0.0 0.0 0.0
Dryers and Conveyors 7.0 0.0 0.0 0.0 0.0 7.0 0.0 0.0 0.0
Electricals 10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Racks and Trolleys, etc. 6.0 0.0 2.0 0.0 1.0 14.0 14.0 0.0 0.0
Installation and Start-up 10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Pre-operation Expenses 26.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Promotional Expenses 5.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Working Capital Increase 61.0 28.0 34.0 43.0 70.0 76.0 135.0 15.0 1.0
Contingency 10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Repayment: Term Loan 0.0 0.0 0.0 0.0 0.0 0.0 35.0 70.0 70.0
Repayment: Overdraft 0.0 0.0 0.0 0.0 0.0 5.0 94.0 158.0 0.0
Taxation 0.0 0.0 0.0 0.0 0.0 0.0 65.0 243.0 245.0
TOTAL: 608.0 28.0 36.0 43.0 71.0 170.0 373.0 486.0 316.0
3. Surplus/Deficit for the Period: 0.0 0.0 0.0 0.0 0.0 1.0 0.0 27.0 197.0
4. Closing Cash Balance: 0.0 0.0 0.0 0.0 0.0 0.0 0.0 27.0 224.0
Preamble
z
331
Appendix 1
Can India Overtake China?
Harvard Business School: Working Knowledge

for Business Leaders
Authors: Yasheng Huang and Tarun Khanna
Dr Yasheng Huang is an associate professor at the Sloan School of Management

at the Massachusetts Institute of Technology.
Dr Tarun Khanna is a professor at Harvard Business School.
Publication: Foreign Policy

Date: July–August 2003
URL: http://www.foreignpolicy.com/story/story.php?storyID=13774
What is the fastest route to economic development? Welcome foreign direct invest-
ment (FDI), says China, and most policy experts agree. But a comparison with long-
time laggard India suggests that FDI is not the only path to prosperity. Indeed, India’s
homegrown entrepreneurs may give it a long-term advantage over a China hamstrung
by inefficient banks and capital markets.
Walk into any Wal-Mart and you won’t be surprised to see the shelves sagging with
Chinese-made goods—everything from shoes and garments to toys and electronics.
But the ubiquitous ‘Made in China’ label obscures an important point—few of these
products are made by indigenous Chinese companies. In fact, you would be hard-
pressed to find a single homegrown Chinese firm that operates on a global scale and
markets its own products abroad.
That is because China’s export-led manufacturing boom is largely a creation of
foreign direct investment (FDI), which effectively serves as a substitute for domestic
entrepreneurship. During the last 20 years, the Chinese economy has taken off, but
few local firms have followed, leaving the country’s private sector with no world-class
companies to rival the big multinationals.
India has not attracted anywhere near the amount of FDI that China has. In part,
this disparity reflects the confidence international investors have in China’s prospects
and their scepticism about India’s commitment to free-market reforms. But the FDI
Can India Overtake China? z 333
gap is also a tale of two Diasporas. China has a large and wealthy Diaspora that has
long been eager to help the motherland, and its money has been warmly received.
By contrast, the Indian Diaspora was, at least until recently, resented for its success
and much less willing to invest back home. New Delhi took a dim view of Indians who
had gone abroad, and of foreign investment generally and instead provided a more
nurturing environment for domestic entrepreneurs.
In the process, India has managed to spawn a number of companies that now
compete internationally with the best that Europe and the United States have to
offer. Moreover, many of these firms are in the most cutting-edge, knowledge-based
industries—software giants Infosys and Wipro and pharmaceutical and biotechnology
powerhouses Ranbaxy and Dr Reddy’s Labs, to name just a few. Last year, the Forbes
200, an annual ranking of the world’s best small companies, included 13 Indian firms
but just four from mainland China.
India has also developed much stronger infrastructure to support private enter-
prise. Its capital markets operate with greater efficiency and transparency than do
China’s. Its legal system, while not without substantial flaws, is considerably more
advanced.
China and India are the world’s next major powers. They also offer competing models
of development. It has long been an article of faith that China is on the faster track,
and the economic data bear this out. The ‘Hindu rate of growth’, a pejorative phrase
referring to India’s inability to match its economic growth with its population growth,
may be a thing of the past, but when it comes to gross domestic product (GDP) figures
and other headline numbers, India is still no match for China (Table A.1.1).
However, the statistics tell only part of the story—the macroeconomic story. At the
micro level, things look quite different. There, India displays every bit as much dyna-
mism as China. Indeed, by relying primarily on organic growth, India is making fuller
use of its resources and has chosen a path that may well deliver more sustainable
progress than China’s FDI-driven approach. ‘Can India surpass China?’ is no longer
a silly question, and, if it turns out that India has indeed made the wiser bet, the
implications—for China’s future growth and for how policy experts think about eco-
nomic development generally—could be enormous.
The Stifling State

The fact that India is increasingly building from the ground up while China is still
pursuing a top-down approach reflects their contrasting political systems—India is a
democracy, and China is not. But the different strategies are also a function of his-
tory. China’s Communist Party came to power in 1949 intent on eradicating private
ownership, which it quickly did. Although the country is now in its third decade of
free-market reforms, it continues to struggle with the legacy of that period—witness
the controversy surrounding the recent decision to officially allow capitalists to join the
Communist Party.
India, on the other hand, developed a softer brand of socialism, Fabian socialism,
which aimed not to destroy capitalism but merely to mitigate the social ills it caused.
It was considered essential that the public sector occupy the economy’s ‘commanding
Table A.1.1 Competing Giants

China India
Population (2002) 1.28 billion 1.05 billion
Population growth rate per cent (2002) 0.87 1.51
Infant mortality per 1,000 live births (2002) 27 61
Average annual real GDP growth rate per cent (1990–2000) 9.6 5.5
Foreign direct investment (2001) $44.2 billion $3.4 billion
Population in poverty (2002) 10 per cent 25 per cent
Labour force (1999) 706 million 406 million
Fixed line and mobile phones per 1,000 people (2001) 247.7 43.8
Size of diaspora 55 million 20 million
Sources: CIA World Factbook 2002, The Economist Pocket World in Figures, World Development Indicators
CD-ROM Financial Times.
heights,’ to use a phrase coined by Russian revolutionary Vladimir Lenin but popu-
larised by India’s first prime minister, Jawaharlal Nehru. However, that did not prevent
entrepreneurship from flourishing where the long arm of the state could not reach.
Developments at the microeconomic level in China reflect these historical and ideo-
logical differences. China has been far bolder with external reforms but has imposed
substantial legal and regulatory constraints on indigenous, private firms. In fact, only
four years ago, domestic companies were finally granted the same constitutional pro-
tections that foreign businesses have enjoyed since the early 1980s. As of the late 1990s,
according to the International Finance Corporation, more than two dozen industries,
including some of the most important and lucrative sectors of the economy—banking,
telecommunications, highways and railroads—were still off-limits to private local
companies.
These restrictions were designed not to keep Chinese entrepreneurs from competing
with foreigners but to prevent private domestic businesses from challenging China’s
state-owned enterprises (SOEs). Some progress has been made in reforming the
bloated, inefficient SOEs during the last 20 years, but Beijing is still not willing to re-
linquish its control over the largest ones, such as China Telecom.
Instead, the government has ferociously protected them from competition. In the
1990s, numerous Chinese entrepreneurs tried, and failed, to circumvent the restric-
tions placed on their activities. Some registered their firms as nominal SOEs (all the
capital came from private sources, and the companies were privately managed), only
to find themselves ensnared in title disputes when financially strapped government
agencies sought to seize their assets. More than a few promising businesses have been
destroyed this way.
This bias against homegrown firms is widely acknowledged. A report issued in 2000
by the Chinese Academy of Social Sciences concluded that, ‘Because of long-standing
prejudices and mistaken beliefs, private and individual enterprises have a lower pol-
itical status and are discriminated against in numerous policies and regulations. The
legal, policy and market environment is unfair and inconsistent.’ Foreign investors have
been among the biggest beneficiaries of the constraints placed on local private busi-
nesses. One indication of the large payoffs they have reaped on the back of China’s
phenomenal growth. In 1992, the income accruing to foreign investors with equity
stakes in Chinese firms was only $5.3 billion; today it totals more than $22 billion.
(This money does not necessarily leave the country; it is often reinvested in China.)
The Mogul is the Hero

For democratic, postcolonial India, allowing foreign investors huge profits at the ex-
pense of indigenous firms is simply unfeasible. Recall, for instance, the controversy
that erupted a decade ago when the Enron Corporation made a deal with the state of
Maharashtra to build a $2.9 billion power plant there. The project proceeded, but only
after several years of acrimonious debate over foreign investment and its role in
India’s development.
While China has created obstacles for its entrepreneurs, India has been making life
easier for local businesses. During the last decade, New Delhi has backed away from
micromanaging the economy. True, privatisation is proceeding at a glacial pace, but
the government has ceded its monopoly over long-distance phone service; some tariffs
have been cut; bureaucracy has been trimmed a bit; and a number of industries have
been opened to private investment, including investment from abroad.
As a consequence, entrepreneurship and free enterprise are flourishing. A measure
of the progress—in a recent survey of leading Asian companies by the Far Eastern
Economic Review (FEER), India registered a higher average score than any other coun-
try in the region, including China (the survey polled over 2,500 executives and pro-
fessionals in a dozen countries; respondents were asked to rate companies on a scale
of one to seven for overall leadership performance). Indeed, only two Chinese firms had
scores high enough to qualify for India’s top 10 list. Tellingly, all of the Indian firms
were wholly private initiatives, while most of the Chinese companies had significant
state involvement.
Some of the leading Indian firms are true start-ups, notably Infosys, which topped
FEER’s survey. Others are offshoots of old-line companies. Sundaram Motors, for in-
stance, a leading manufacturer of automotive components and a principal supplier to
General Motors, is part of the T.V. Sundaram group, a century-old south Indian busi-
ness group.
Not only is entrepreneurship thriving in India; entrepreneurs there have become
folk heroes. Nehru would surely be appalled at the adulation the Indian public now
showers on captains of industry. For instance, Narayana Murthy, the 56-year-old
founder of Infosys, is often compared to Microsoft’s Bill Gates and has become a re-
vered figure.
These success stories never would have happened if India lacked the infrastruc-
ture needed to support Murthy and other would-be moguls. But democracy, a tradition
of entrepreneurship, and a decent legal system have given India the underpinnings
necessary for free enterprise to flourish. Although India’s courts are notoriously inef-
ficient, they at least comprise a functioning independent judiciary. Property rights
are not fully secure, but the protection of private ownership is certainly far stronger
than in China. The rule of law, a legacy of British rule, generally prevails.
These traditions and institutions have proved an excellent springboard for the emer-
gence and evolution of India’s capital markets. Distortions are still commonplace, but
the stock and bond markets generally allow firms with solid prospects and reputations
to obtain the capital they need to grow. In a World Bank study published last year,
only 52 per cent of the Indian firms surveyed reported problems obtaining capital,
versus 80 per cent of the Chinese companies polled. As a result, the Indian firms
relied much less on internally generated finances—only 27 per cent of their funding
came through operating profits, versus 57 per cent for the Chinese firms.
Corporate governance has improved dramatically, thanks in no small part to Murthy,
who has made Infosys a paragon of honest accounting and an example for other firms.
In a survey of 25 emerging market economies conducted in 2000 by Credit Lyonnais
Securities Asia, India ranked sixth in corporate governance, China 19th. The advent
of an investor class, coupled with the fact that capital providers, such as development
banks, are themselves increasingly subject to market forces, has only bolstered the ef-
ficiency and credibility of India’s markets. Apart from providing the regulatory frame-
work, the Indian government has taken a back seat to the private sector.
In China, by contrast, bureaucrats remain the gatekeepers, tightly controlling cap-
ital allocation and severely restricting the ability of private companies to obtain stock
market listings and access the money they need to grow. Indeed, Beijing has used the
financial markets mainly as a way of keeping the SOEs afloat. These policies have
produced enormous distortions while preventing China’s markets from gaining depth
and maturity. (It is widely claimed that China’s stock markets have a total capit-
alisation in excess of $400 billion, but factoring out non-tradeable shares owned by
the government or by government-owned companies reduces the valuation to just
around $150 billion.) Compounding the problem are poor corporate governance and
the absence of an independent judiciary.
Dollars and Diasporas

If India has so clearly surpassed China at the grassroots level, why is India’s super-
iority not reflected in the numbers? Why is the gap in GDP and other benchmarks
still so wide? It is worth recalling that India’s economic reforms only began in earnest
in 1991, more than a decade after China began liberalising. In addition to the late
start, India has had to make do with a national savings rate half that of China’s and
90 per cent less FDI. Moreover, India is a sprawling, messy democracy driven by eth-
nic and religious tensions, and it has also had a longstanding, volatile dispute with
Pakistan over Kashmir. China, on the other hand, has enjoyed two decades of relative
tranquility; apart from Tiananmen Square, it has been able to focus almost exclusively
on economic development.
That India’s annual growth rate is only around 20 per cent lower than China’s is,
then, a remarkable achievement. And, of course, whether the data for China are ac-
curate is an open question. The speed with which India is catching up is due to its own
efficient deployment of capital and China’s inefficiency, symbolised by all the money
that has been frittered away on SOEs. And China’s misallocation of resources is likely
to become a big drag on the economy in the years ahead.
In the early 1990s, when China was registering double-digit growth rates, Beijing
invested massively in the state sector. Most of the investments were not commercially
viable, leaving the banking sector with a huge number of nonperforming loans—possibly
totalling as much as 50 per cent of bank assets. At some point, the capitalisation costs
of these loans will have to be absorbed, either through write-downs (which means
depositors bear the cost) or recapitalisation of the banks by the government, which
diverts money from other, more productive uses. This could well limit China’s future
growth trajectory.
India’s banks may not be models of financial probity, but they have not made
mistakes on nearly the same scale. According to a recent study by the management
consulting firm Ernst & Young, about 15 per cent of banking assets in India were non-
performing as of 2001. India’s economy is thus anchored on more solid footing.
The real issue, of course, is not where China and India are today but where they
will be tomorrow. The answer will be determined in large measure by how well both
countries utilise their resources, and on this score, India is doing a superior job. Is
it pursuing a better road to development than China? We won’t know the answer for
many years. However, some evidence indicates that India’s ground-up approach may
indeed be wiser and the evidence, ironically, comes from within China itself.
Consider the contrasting strategies of Jiangsu and Zhejiang, two coastal provinces
that were at similar levels of economic development when China’s reforms began.
Jiangsu has relied largely on FDI to fuel its growth. Zhejiang, by contrast, has placed
heavier emphasis on indigenous entrepreneurs and organic development. During the
last two decades, Zhejiang’s economy has grown at an annual rate of about 1 per
cent faster than Jiangsu’s. Twenty years ago, Zhejiang was the poorer of the two
provinces; now it is unquestionably more prosperous. India may soon have the best
of both worlds—it looks poised to reap significantly more FDI in the coming years
than it has attracted to date. After decades of keeping the Indian Diaspora at arm’s
length, New Delhi is now embracing it. In some circles, it used to be jokingly said that
NRI, an acronym applied to members of the Diaspora, stood for ‘not required Indians’.
Now, the term is back to meaning just ‘non-resident Indian’. The change in attitude
was officially signalled earlier this year when the government held a conference on the
Diaspora that a number of prominent NRIs attended.
China’s success in attracting FDI is partly a historical accident—it has a wealthy
Diaspora. During the 1990s, more than half of China’s FDI came from overseas Chinese
sources. The money appears to have had at least one unintended consequence—The
billions of dollars that came from Hong Kong, Macao and Taiwan may have inad-
vertently helped Beijing postpone politically difficult internal reforms. For instance,
because foreign investors were acquiring assets from loss-making companies, the
government was able to drag its feet on privatisation.
Until now, the Indian Diaspora has accounted for less than 10 per cent of the for-
eign money flowing to India. With the welcome mat now laid out, direct investment
from Non-Resident-Indians is likely to increase. And while the Indian Diaspora may
not be able to match the Chinese Diaspora as ‘hard’ capital goes, Indians abroad
have substantially more intellectual capital to contribute, which could prove even
more valuable.
The Indian Diaspora has famously distinguished itself in knowledge-based
industries, nowhere more so than in Silicon Valley. Now, India’s brightening prospects,
as well as the changing attitude vis-à-vis those who have gone abroad, are luring many
Non-Resident-Indian engineers and scientists home and are enticing many expatri-
ate business people to open their wallets. With the help of its Diaspora, China has won
the race to be the world’s factory. With the help of its Diaspora, India could become the
world’s technology lab.
China and India have pursued radically different development strategies. India is
not outperforming China overall, but it is doing better in certain key areas. That suc-
cess may enable it to catch up with and perhaps even overtake China. Should that
prove to be the case, it will not only demonstrate the importance of homegrown entre-
preneurship to long-term economic development; it will also show the limits of the
FDI-dependent approach China is pursuing.
Appendix 2
Who’s Got Performance?
Investor Alert: India’s Companies Beat China’s

BUSINESS WEEK, (A McGraw-Hill Publication) 22/29 August 2005, By James Mehring
When it comes to economic growth between these two up–and–coming powerhouses,

China is outpacing India by a mile. But take a look at how Chinese companies perform
relative to Indian businesses and the results look quite different.
A Business Week analysis of financial data from Standard & Poor’s Compustat
shows Indian corporations are getting more bang for their rupee. A look at over 340
publicly listed companies from 1999 through 2003 (many Indian companies have yet
to release their complete 2004 reports) reveals that Indian businesses have, with a few
exceptions, outperformed their Chinese counterparts on return on equity (ROE) and
return on invested capital (ROIC).
Indian companies perform better across various industry groups because they face
greater market pressures. Despite plenty of government regulation, India is by and
large a well-functioning market economy. This leads businesses to focus more on pro-
fits and performance. When it comes to free markets, China is a work in progress.
China’s government has big stakes in most publicly listed companies, so managers
must be mindful of government agendas, such as employment, says Joydeep Mukherji,
a director, in the Sovereign Ratings Group at Standard & Poor’s.
The two countries also differ greatly when it comes to financing. ‘It is quite difficult to
get capital in India,’ says Marcus Rosgen, regional head of equity research at Citigroup
(C) in Hong Kong. In India, firms raise a larger share of capital in equity markets, so
private investors play a key role in allocating capital and place an emphasis on ROE.
In China, the financing situation is quite the opposite. A notoriously high savings
rate and large sums of foreign direct investment are keeping the cost of financing
low for businesses.
The glut of capital in China is fuelling excess capacity. A low-cost of capital reduces the
financial hurdle to start a new business or open a factory. The problem is compounded
by the fact that Chinese manufacturing is concentrated in low-end production. The
resulting price competition reduces profitability. And since most of China’s major banks
are state-owned, there is little emphasis on maximising returns.
Progress is being made in China. There is a noticeable difference in ROE and ROIC
between companies listed in the more internationally exposed Hong Kong stock
market—the so-called Red Chips—and those listed solely on mainland exchanges. In
2003, the 25 Red Chip stocks had a ROE of 14.8 per cent, versus 12.9 per cent for
mainland listed companies. In terms of ROIC, Red Chips produced an 11.6 per cent
return, compared with 9.7 per cent for mainland outfits.
What is more, China is moving faster than India to improve its infrastructure. Un-
less India quickens the pace to improve energy production and distribution, as well
as its transportation systems, the country risks stunting the growth potential of the
economy and its own companies.
Appendix 3
Indian Business vs. Chinese
Return On Equity (%) Return On Investment (%)

2003 2002 1999–2001 2003 2002 1999–2001
Autos and Components
China 17.4 –2.1 6.6 14.2 –1.9 5.6
India 20.6 21.9 13.0 12.8 14.8 8.6
Capital Goods
China 8.1 6.0 3.8 6.3 4.6 2.9
India 17.2 10.6 7.0 12.4 6.9 4.3
Consumer Durables and Apparel
China 7.2 1.4 1.9 5.9 1.3 1.8
India 6.9 11.1 6.7 3.7 6.2 3.6
Energy
China 17.6 13.7 15.7 13.9 10.3 11.3
India 21.4 23.6 15.2 15.3 16.0 10.0
Food, Beverage and Tobacco
China 10.6 8.7 5.9 8.8 7.0 4.7
India 26.6 21.2 22.5 23.6 16.1 17.4
Materials
China 13.5 4.8 3.1 10.5 3.7 2.5
India 22.2 7.2 2.6 11.9 3.1 1.2
Pharmaceuticals and Biotech
China 9.8 9.0 8.5 8.2 8.3 7.6
India 29.1 24.6 18.8 23.9 21.0 15.6
Software and Services
China 6.5 12.3 4.9 6.4 12.0 4.8
India 27.3 16.8 24.9 25.9 16.2 23.0
Telecommunication Services
China 15.2 14.0 15.6 10.9 10.2 11.5
India 9.7 10.8 19.4 9.7 10.8 16.1
Source: Business Week, Standard and Poor’s Compustat.
Appendix 4
Global Entrepreneurship Monitor 2005
(http://www.gemconsortium.org/)
‘Entrepreneurs in middle income countries are beginning to catch up to their counter-

parts in richer economies by tapping into technologies unavailable to them just a year
ago,’ according to the Seventh Annual Global Entrepreneurship Monitor (GEM) 2005.
This study of entrepreneurship and economic growth has been conducted every year
since 1998 by Babson College, London, The London Business School, The Kauffman
Center for Entrepreneurial Leadership and Ernst & Young (UK), and is the largest
annual measure of entrepreneurial activity worldwide, compiled by more than 150
scholars from 35 countries.
Total Entrepreneurial Activity (TEA) index is based on a number of factors, but is
mainly expressed as the percentage of the working population engaged in new firms,
(firms less than 42 months old).
GEM 2005 also found that entrepreneurs with ‘innovative’ businesses drive higher
growth rates of GDP per capita. Additionally, middle income countries tend to start more
businesses than high income countries. Yet ‘quantity’ of start-ups does not necessarily
translate into ‘established’ businesses.
‘This year’s GEM report gives us a clear understanding of the importance of free
markets to the livelihood of an entrepreneurial society,’ said Maria Minniti, Associate
Professor of Economics and Entrepreneurship, Babson College, and GEM Research
Director. ‘In all countries, regardless of living standards, governments need to remove
barriers to competition, promote fiscal responsibility and ensure transparency of the
law and a clear legal framework for property rights and regulatory oversights.’
‘Open global markets are also vital to continued entrepreneurial growth,’ said Pro-
fessor Michael Hay, Deputy Dean of London Business School. ‘Trade restrictions tend
to penalise entrepreneurs more than other groups due to the nature of their enter-
prises. Liberalised world markets also allow for the free flow between nations of pre-
viously unavailable financial capital.’
Middle income countries are tapping into new technologies. Both early-stage and
established business owners in middle-income countries are using technologies
unavailable to them a year ago. Starting at a lower level, they have more room and op-
portunities to upgrade than entrepreneurs in high-income countries. ‘Innovative’
entrepreneurs drive economic growth. Middle income countries with higher levels
Global Entrepreneurship Monitor 2005 z 343
of innovative entrepreneurship demonstrate higher growth rates of GDP per capita.

Early-stage entrepreneurs claim more often to offer innovative products than
established entrepreneurs. Still, findings show that innovation is relatively rare in
all countries.
Middle income countries tend to start more businesses than high income countries.
For the first time, GEM 2005 divides 35 countries into middle and high income clusters;
findings show a strong variation across clusters both in frequency and quality of
entrepreneurial activity. Middle income nations such as Venezuela (25 per cent) and
Thailand (20.7 per cent) outperformed high income countries like Japan (2.2 per cent)
and Belgium (3.9 per cent) in early-stage entrepreneurial activity.
High rates of early-stage entrepreneurship do not necessarily translate into high
rates of established business ownership.
Japan for example scores very low in early-stage entrepreneurial activity but ranks in
the middle group of countries for established businesses. Early-stage entrepreneurs
in high income countries are more likely to become established business owners than
the more numerous early-stage entrepreneurs in middle income countries. Success is
best among ‘opportunity-driven entrepreneurs’, who have lower failure rates among
early-stage businesses.
In general, countries with healthy and diversified labour markets or stronger safety
nets in terms of social welfare provisions can be more selective in the kinds of busi-
nesses they choose to start …. and have higher ratios of opportunity to necessity-
driven motivation.
An Extract from the Global Entrepreneurship Monitor Report

Entrepreneurship in India:
1. Indian Total Entrepreneurial Activity for 2003 = 17.9% (Table A.4.1)

2. World Average TEA = 9.6%
3. Asian Average TEA = 3.4%
India is the fifth largest economy in the world and has the third largest GDP in the
entire continent of Asia. It is also the second largest among emerging nations. The liber-
alisation of the economy in the 1990s has paved the way for a huge number of people
to become entrepreneurs.
Over the years India and China have followed opposing strategies for development.
While China’s growth has been fuelled by the heavy dose of foreign direct investment,
India has followed a much more organic method and has concentrated more on the
development of the institutions that support private enterprise by building a stronger
infrastructure to support it.
Its corporate and legal systems operate with greater efficiency and transparency
than do China’s. The Government has encouraged entrepreneurship by providing train-
ing and also the facilities to succeed, particularly in the rural areas.
One style of innovation that really works in a country as large and diverse as India,
is grassroots innovation: this includes inventions for a milieu that is quintessentially
Indian. Moreover, in India, the post-liberalisation and globalisation era has brought
with it a growing middle class—roughly estimated to be 250 million—and rising
disposable incomes. This presents a huge potential, which if tapped can be a veritable
gold mine.
Entrepreneurs can make the best of this by catering to various demands of this seg-
ment. India, with its abundant supply of talent in IT, management and R&D, has
become the hot bed of outsourcing of services from all parts of the globe where com-
panies can reduce their costs, but not their quality (if the foreign company chooses
the right Indian partner).
Table A.4.1 Total Entrepreneurial Activity (TEA) Ranked By Country

Average Average
Country (percentage) Country (percentage)
Peru 40.3 Norway 8.1
Uganda 31.6 Latvia 6.6
Venezuela 26.2 Israel 6.6
Ecuador 27.2 United Kingdom 6.3
Thailand 19.8 France 5.7
Jordan 18.3 Greece 6.2
Jamaica 17.0 Singapore 6.5
India 17.9 South Africa 5.3
Chile 13.7 Denmark 5.1
New Zealand 16.2 Spain 5.5
South Korea 14.5 Netherlands 4.8
Iceland 13.6 Germany 5.0
Brazil 12.4 Finland 4.7
Australia 12.2 Italy 4.3
Argentina 11.2 Hungary 3.1
Mexico 9.2 Taiwan 4.3
China 12.9 Portugal 4.0
United States 11.9 Sweden 3.9
Canada 9.1 Austria 5.3
Poland 8.8 Belgium 3.7
Ireland 7.7 Hong Kong 3.0
Switzerland 6.7 Japan 1.9
Appendix 5
The Global
Competitiveness
Report 2006–2007
(Released by the World
Economic Forum
on 26 September 2006)
(http://www.weforum.org/en/initiatives/index.htm)
http://www.weforum.org/en/initiatives/gcp/Buy online/
index.htm
This annual study is a valuable tool for shaping economic policy and guiding invest-
ment decisions. It is one of the leading monitors of the competitive condition of econo-
mies worldwide. Produced in collaboration with leading academics and a global
network of 122 Partner Institutes, The Global Competitiveness Report has expanded its
coverage and now assesses 125 economies. The report is unique in that the method-
ology combines publicly available data with survey data that captures the perceptions
and observations of business leaders in a given country.
Switzerland, Finland and Sweden are the world’s most competitive economies, and
Denmark, Singapore, the United States, Japan, Germany, the Netherlands and the
United Kingdom complete the top 10 list, but the United States shows the most pro-
nounced drop, falling from first to sixth.
The rankings are drawn from a combination of publicly available hard data and the
results of the Executive Opinion Survey, a comprehensive annual survey conducted
by the World Economic Forum, together with its network of Partner Institutes (leading
research institutes and business organisations) in the countries covered by the
Report. This year, over 11,000 business leaders were polled in a record 125 econo-
mies worldwide.
The top rankings of Switzerland and the Nordic countries show that good institutions
and competent macroeconomic management, coupled with world-class educational
attainment and a focus on technology and innovation, are a successful strategy for
boosting competitiveness in an increasingly complex global economy.
Augusto Lopez-Claros, Chief Economist; Director, Global Competitiveness Network
The world economy is not a zero-sum game. Many nations can improve their prosperity
if they can improve productivity. The central challenge in economic development, then,
is how to create the conditions for rapid and sustained productivity growth.
Michael E. Porter, Bishop William Lawrence University Professor, Harvard Business
School
The process of growth is complex. The Growth Competitiveness Index is an attempt to

capture this complexity by modelling growth as a complicated combination of factors
that matter differently for different countries.
Xavier Sala-í-Martin, Professor, Economics Department, Columbia University
Extract from the Preface

By Professor Schwab
It is against a backdrop of burgeoning global imbalances, the collapse of the Doha
Round of trade negotiations and the revival of protectionist tendencies which are com-
bining to create an atmosphere that highlights the precariousness of global economic
growth prospects, that the World Economic Forum is bringing the latest edition of The
Global Competitiveness Report. With the growing complexity of the global economy,
the Report is a contribution to enhancing our understanding of the key factors which
determine economic growth, and explain why some countries are much more suc-
cessful than others in raising income levels and opportunities for their respective
populations. By providing detailed assessments of the economic conditions of nations
worldwide, the Report offers policymakers and business leaders an important tool
in the formulation of improved economic policies and institutional reforms.
Table A.5.1 Global Competitiveness Index 2006 and 2005 (Listing of Top 50 Nations Only)
2006 2005 2006 2005
Country/Economy Rank Rank Change Country/Economy Rank Rank Change
Switzerland 1 4 3 Estonia 25 26 1
Finland 2 2 0 Malaysia 26 25 –1
Sweden 3 7 4 Chile 27 27 0
Denmark 4 3 –1 Spain 28 28 0
Singapore 5 5 0 Czech Republic 29 29 0
United States 6 1 –5 Tunisia 30 37 7
Japan 7 10 3 Barbados 31 – –
Germany 8 6 –2 United Arab Emirates 32 32 0
Netherlands 9 11 2 Slovenia 33 30 –3
United Kingdom 10 9 –1 Portugal 34 31 –3
Hong Kong SAR 11 14 3 Thailand 35 33 –2
Norway 12 17 5 Latvia 36 39 3
Taiwan, China 13 8 –5 Slovak Republic 37 36 –1
Iceland 14 16 2 Qatar 38 46 8
(Table A.5.1 continued)
The Global Competitiveness Report 2006–2007 z 347
(Table A.5.1 continued)
2006 2005 2006 2005

Country/Economy Rank Rank Change Country/Economy Rank Rank Change
Israel 15 23 8 Malta 39 44 5
Canada 16 13 –3 Lithuania 40 34 –6
Austria 17 15 –2 Hungary 41 35 –6
France 18 12 –6 Italy 42 38 –4
Australia 19 18 –1 Kuwait 44 49 5
Belgium 20 20 0 South Africa 45 40 –5
Ireland 21 21 0 Cyprus 46 41 –5
Luxembourg 22 24 2 Greece 47 47 0
New Zealand 23 22 –1 Poland 48 43 –5
Korea, Rep. 24 19 –5 Bahrain 49 50 1
India 43 45 –2 Indonesia 50 69 19
Source: Global Competitiveness Report, 2006–2007.
Appendix 6
International Trade WORLD TRADE
ORGANIZATION
Statistics 2000
(http://www.wto.org/english/res_e/statis_e/statis_e.htm)
This report provides comprehensive, comparable and up-to-date statistics on trade in

merchandise and commercial services for an assessment of world trade flows by coun-
try, region and main product groups or service categories. It is produced every year
by a team of statisticians from the Statistics Division of the WTO in collaboration
with the Economic Research and Analysis Division.
The following table (Table A.6.1) is an extract showing the merchandise trade of
the top 40 trading nations of the world. India is at 32nd position as an exporter and
at 26th as an importer. We are the world’s second biggest nation but our share of
the world’s imports is only 0.8 per cent and we export only 0.6 per cent of what the
world exports.
Sure, it is not that we are not doing well, but others are doing far better!
Table A.6.1 Top 40 Importers and Exporters in the World Merchandise Trade
Billion Dollars and Percentages
Exporters Importers
Rank Value Share % Change Rank Value Share % Change
1 United States 695.2 12.4 2 1 United States 1,059.0 18.0 12
2 Germany 541.5 9.6 –0 2 Germany 472.5 8.0 0
3 Japan 419.4 7.5 8 3 United Kingdom 320.3 5.4 2
4 France 300.4 5.3 –2 4 Japan 311.3 5.3 11
5 United Kingdom 269.0 4.8 –1 5 France 290.1 4.9 0
6 Canada 238.4 4.2 11 6 Canada 220.2 3.7 7
7 Italy 230.6 4.1 –6 7 Italy 216.9 3.7 –1
8 Netherlands 200.4 3.6 –0 8 Netherlands 187.6 3.2 0
9 China 195.2 3.5 6 9 Hong Kong 180.7 3.1 –3
10 Belgium 176.3 3.1 – 10 China 165.8 2.8 –21
11 Hong Kong 174.4 3.1 –0 11 Belgium 160.9 2.7 –
12 Korea, Rep. of 144.7 2.6 9 12 Mexico 148.7 2.5 14
13 Mexico 136.7 2.4 16 13 Spain 144.8 2.5 9
14 Taipei, Chinese 121.6 2.2 10 14 Korea, Rep. of 119.8 2.0 28
(Table A.6.1 continued )

International Trade Statistics 2000 z 349
(Table A.6.1 continued )
Exporters Importers
Rank Value Share % Change Rank Value Share % Change
15 Singapore 114.7 2.0 4 15 Singapore 111.1 1.9 9
16 Spain 110.1 2.0 1 16 Taipei, Chinese 110.7 1.9 18
17 Sweden 84.9 1.5 0 17 Switzerland 79.9 1.4 5
18 Malaysia 84.5 1.5 15 18 Australia 69.1 1.2 –0
19 Switzerland 80.4 1.4 2 19 Austria 68.8 1.2 7
20 Russian Fed. 74.3 1.3 0 20 Sweden 68.5 1.2 1
21 Ireland 70.4 1.3 9 21 Malaysia 65.0 1.1 –
22 Austria 63.5 1.1 1 22 Brazil 51.7 0.9 11
23 Thailand 58.4 1.0 7 23 Thailand 50.3 0.9 –15
24 Australia 56.1 1.0 0 24 Ireland 46.4 0.8 17
25 Saudi Arabia 50.5 0.9 27 25 Poland 45.9 0.8 4
26 Denmark 49.0 0.9 2 26 India 44.6 0.8 –2
27 Indonesia 48.7 0.9 –0 27 Denmark 44.3 0.8 4
28 Brazil 48.0 0.9 –6 28 Russian Fed. 41.1 0.7 –4
29 Norway 44.9 0.8 13 29 Turkey 40.4 0.7 –30
30 Finland 41.7 0.7 –3 30 Portugal 38.6 0.7 –12
31 Philippines 36.7 0.7 24 31 Norway 34.0 0.6 1
32 India 36.6 0.6 9 32 Israel 33.2 0.6 –6
33 UAE 29.5 0.5 15 33 Philippines 32.5 0.6 13
34 Poland 27.4 0.5 –3 34 Finland 31.5 0.5 3
35 Czech Rep. 26.9 0.5 2 35 Greece 30.2 0.5 –3
36 South Africa 26.7 0.5 1 36 UAE 28.9 0.5 5
37 Turkey 26.0 0.5 –4 37 Czech Rep. 28.8 0.5 6
38 Israel 25.8 0.5 12 38 Saudi Arabia 28.0 0.5 0
39 Hungary 25.0 0.4 9 39 Hungary 28.0 0.5 –7
40 Portugal 23.9 0.4 –4 40 South Africa 26.7 0.5 9
Source: International Trade Statistics 2000.
Index z 351
Index
American MNCs, 144 Diaspora, 179

Asian countries, government in, 127 origin of, 181
Asian entrepreneurs, mindset of, 24–28, 165–66 dilemma, of young professionals, over behaviour
Korean entrepreneurs, mindset of, 26–28 in workplace, 47
Malaysian entrepreneurs, mindset of, 24–26 domestic consumption, in India, 147
attitude, 73. See also Professional life, attitude
towards. East Indians, 182
Aurobindo Handmade Paper Factory (Pondicherry), economic liberalisation, 143
267 elegance, stages of, 129
emerging entity(ies)
banking sector, in China, 112 international media on, 4
brainstorming, of entrepreneur, 306–07 employment scenario, change in, 52
business culture, 141 entrepreneurial skill(s)
of Chinese people, 201 impact of West on Indian, 15
of Japanese people, 231–33 mantras for learning, 57–66
business idea, preliminary evaluation of entrepreneur(s), 19–21, 225, 242–43
assessment of market, 297 break-even analysis by, 316
management skills, of individual, 296–97 change in Indian, 15–16
evaluation under uncertainty by, 317–18
career(s) financial projection, of plan, 301–02
changing of, 45–46 in India, 1
management of, 46–47 change in attitude of, 177
Chaebols, 215 mindset of, 14–15
China, globalisation in, 145–47 meaning of, 12, 13
Chinese diaspora, 200–01 need of, 9, 12. See also presentation skills, for
Chinese immigrants, hold over local economy, 199 entrepreneurs.
Chinese origin, people of, 7 stagnation of careers of, 73–74. See also writing
Clay idol maker, in Kolkata, 268–69. See also skills, for entrepreneurs.
Handicraft tourism, in India entrepreneurship, 3, 11
Coconut water idea, in India, 114 definition in India, 12
Confucianism, 7 mantras for, 34–37
emphasis of, 215 ethics, in workplace, 48
teachings of, 75 Ethnic Chinese, 200
consumer items manufacturing, mindset for, characteristics of, 206–07
106–09 in Indonesia, 205
‘contest-based’ resource allocation, 159 Ethnic Indians, 179, 200
corporate culture, 74 executives, in new India, 153
in India, 217–18 ECCI (Export Credit Corporation of India), 178
in Korea, 217–18 export of Chinese electronic items, in India, 209–10
origin of, 141
corporate scenario, in India, 95 Familism, 203–04
cultural heritage tourism, 239, 273 FMCG (fast moving consumer goods) sector, 148
customers, from overseas, 119 fellowship, 41
festivals, in India, 290–91 See Vertical integration.

Festival tourism, 287–92 intrapreneurship, 110–11
Fiji, Indian community in, 188–89 Indian intrapreneurial company, benchmarking
folk culture, of Korean community, 215–16 for, 87
FDI (Foreign Direct Investment), 135, 173, 177 definition of, 81
meaning of, 137 see Partnership approach and intrapreneurship,
foreign firm(s), strategy, 174–75 84
foreign importer(s) problem, in India, 96 use of young, 83–84
Gastronomic tourism, 279–86 Japanese, 227–29

GDP, in India, 9, 147 attitude towards self discipline, 222–23
globalisation business culture, 231–33
in China (see China, globalisation in) dealing with, 229–31
definition of, 137 economy, impact of globalisation on, 222
India, globalisation in, 145 MNCs, 144
Korea and globalisation, 212
global mindset, of Indian people, 167–76 Korea, 211–20
global services trading, growth in, 144 see Corporate culture, in Korea
GNP (Gross National Product), 214 effect of internet, on social values of, 215
Guanxi, 119–20, 202–03 firms in India, 218–19
see Folk culture, of Korean community, 215
Handicraft tourism, 258–59 and globalisation, 212
in India, 264–68 Korean entrepreneurs, mindset of, 26–28
handmade paper crafts, in Pondicherry, 267
heritage tourism, 273–78 Lala company, 14, 137
home market protectionism, 174 leadership skill(s), 91
Hong Kong, development of, 160 new face of, 92
horizontal integration, in firms, 104–05 long-term employability, in Indian companies, 96
loyalty, 98
immigrant capital and labour, role of, 22 definition of, 94
India new face in India, 95
corporate culture in, 142
economic challenges for, 158–59 Malaysian entrepreneurs, mindset of, 24–26
globalisation in, 145–47 MIC (Malaysian Indian Congress), 187
and Korea, 213–14 management style, of Chinese people, 207–09
tourism trade associations in, 253 managerial competence, of India, 122
IIC (India International Centre), 179 managers, in India, 93
Indian chefs, in Malaysia, 282–83 manufacturing entrepreneurship, 100–01
Indian companies, essential feature for, 172–73 manufacturing sector
Indian community, in Malaysia, 185–87 importance, 157
Indian diaspora, 180, 181, 183–84 success in India, 9, 10
future of, 194–98 manufacturing strategy, of small enterprise,
status of, 189–90 111–14
Indian economy, 9 marbling on textiles, in Pondicherry, 268
IITs (Indian Institutes of Technology), 23 marketing
Indian intrapreneurial company, benchmarking Japanese expertise on, 8
for, 87–88 menial job(s)
Indian Ocean trading system, 183 vs. skilled job(s), 9
Indian origin, people of, 185 MIC. See MIC (Malaysian Indian Congress)
Indonesian people, comparison with Indian and MNCs (Multinational Companies), 14, 85–87, 137
Chinese people, 205–06 business culture and, 142
Integration, in firms, types of, 104–06 in India, 10, 92
See Horizontal integration. contribution of, 157–58
See Networking integration. and Indian firms
Index z 353
FMCG (fast moving consumer goods), 149 SLURP, 57–61

new economic and commercial scenario, Social fabric, of competitiveness, origin of, 145
148–49 Socialism, 127
working for MNCs, 147–48 social skill(s)
learning of, 43–45
negotiating skill(s), new face in India, 93–94
meaning of, 39–40
networking integration, in firms, 105, 240
social stigma, power of, 5–6
NGOs (non-governmental organizations), 239
for mind boggling, 7
NRIs (Non-Resident-Indians ), 72, 182
Songkran, in Southern Thailand, 288–90
Opportunity study, 307–08 Southern Bali, tourism in, 262–64
analysis of demand, 308–09 South Korea
background of project, 308 education process in, 224–26
pricing of product, 309–10 family culture in, 226–27
OECD (Organisation for Economic Co-operation on world market, 214–15
and Development), 214 Soviet model of development, 123
our talks, with Indian people, characteristics, 116 Stone carving, in Orissa, 269–70. See also Handicraft
Overseas Indians tourism, in India
future of, 180, 194 sustainable tourism, 261
immigrant communities, isolation of, 193–94
and India, 190–91 TEA, 61–66
meaning of, 181 team spirit, new face of, 92
and overseas Chinese, 191–92 teamwork, meaning of, 91, 203
Overseas people, interaction with, 248–50 Thailand
Indian community in, 187–88
Paki-bashing, in Britain, 189
partnership approach and intrapreneurship, 84 comparison with Thailand people, 205–06
personal success, 243–48 tourism
PIOs (Persons of Indian Origin), 272 meaning of, 258
petty trader(s), 172 promotion of, 251
pre-feasibility study, of project in Southern Bali (see Southern Bali, tourism in)
by an entrepreneur, 311–13 trade, in India, 241
presentation skills, for entrepreneurs, 55–56 TEA (Total Entrepreneurial Activity), 224–25
professional life, attitude towards, 74–77 traders, from Indian origin, 178
professional women, in India, 102
Project plan, 303 UNIDO (United Nations Industrial Development
stages of, 304–05 Organization), 123
public research institutes, in Taiwan, 159 urbanisation, 9
PSUs (Public Sector Undertakings), 145
vertical integration, in firms, 105
ROADS, 28–33
sales estimation, methods for, 315–16 Western countries, new markets in, 99–100
service economy, 143 Western entrepreneurial, mindset, 163–65
Shantiniketan paintings, on Moga silk, 270–71. See world economy, changes in, 143
also Handicraft tourism, in India writing skills, for entrepreneurs, 54–55
shoddiness
as policy, 123–24 young entrepreneur(s), 28
attitude towards, 67 in India, 238
Silicon Valley big companies, rebelling against, 18–19
immigrant engineers from, 22 demand for new technology, 101
role of, 24
About the Author
Raghu Nandan is a specialist consultant on Industrial Development. He has done

a number of assignments with the Commonwealth Fund for Technical Co-operation
(CFTC) of the Commonwealth Secretariat, London, for projects all over the developing
world. He was an industrial development advisor to the seven-member Organisation
of Eastern Caribbean Countries, West Indies. He was the Regional Representative for
Asia for Government of Malta.
Presently, the author is one of the founding Directors of Specialised Projects
International (UK) Ltd., a multinational consultancy organisation operating out of
Great Britain.
Raghu Nandan has been visiting faculty for professional courses in several univer-
sities in South-east Asia, Africa and South Pacific.

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Preamble z i

Copyright © Raghu Nandan, 2009

First published in 2009 by

SAGE Publications Inc

SAGE Publications Ltd

SAGE Publications Asia-Pacific Pte Ltd

Library of Congress Cataloging-in-Publication Data Available

ISBN: 978-81-7829-908-2 (Pb)

I dedicate this book to

PART 1: Your Personal Skills

1. The New Face of Our Nation 3

PART 2: Your Intrapreneurial Skills

PART 3: You, the Globalised Entrepreneur

12. Our Rapidly Globalising Nation 135

PART 4: New Opportunities in Tourism

18. What Part 4 is All About 237

22 Gastronomic Tourism 279

PART 5: And Finally, the Project Plan

24. Do Your Homework First 295

1. Can India Overtake China? 332

Are Our Domestic Firms Internationally Competitive?

A Remarkable Show in Davos? So What?

How the World Looks at Us

1. Indians are only interested in India.

Our Inward Looking Attitude

Who has Read Chanakya (Kautilya)?

These are our children to whom

Before we talk about the personal aspects of entrepreneurship, we need to have a

1. In this book I talk to three kinds of youngsters:

z Young professionals wanting to go on their own.

2. My focus is to help you develop your entrepreneurial skills.

The New Face of Our Nation

The Power of Social Stigma

I have made three points above:

1. Family traditions of a particular community are not built overnight.

Our Competitors are Brought up on a very Different Diet

The ‘Teachings of Confucius’ is a Chinese ethical and philosophical system and is

Does Anyone Talk to us about this?

Menial vs Skilled Jobs

The Way Ahead

Entrepreneurship in the Indian Context

z Entrepreneurship is the process of creating wealth by bringing together a unique

(a) Someone who wants to do something on his/her own, or

Indian Entrepreneurial Mindset

The New India

That, my readers, is the focus of this chapter:

I am dividing this chapter in four sections:

I: The New Breed of Our Entrepreneurs

Rebelling against Big Companies

A Small Wet Blanket

z From this point onwards, my readers would detect a strong undercurrent of a

II: Let us Go to the US

z I would strongly suggest to my readers to read some of her publications and

1. The maximum contribution of brainpower to the Silicon Valley is by the Indians,

Some extracts and some comments:

Table 3.1 1998 Sales and Employment of Silicon Valley High-Technology

III: The Mindset of the Asian Entrepreneurs

There is a common saying in Malaysia:

The Korean Entrepreneurial Mindset

z Do read this section carefully as there are many lessons to be learnt.

Asian Executive Mindset

1. R—Relentless drive for upgradation.

R—Relentless Drive for Upgradation

And remember, a relentless drive for upgradation should be a matter of attitude. It