The ANALyst

Leverage, optimise, synergise

Making Protectionism Work


With a consumer base of 300 million and growing, it is not a stretch to say that the Emerging Economy will be a major economic super power in the coming decades. 300 million affluent consumers with disposable income is a larger market than The Superpower. This is incentive enough for most major manufacturers and service providers to try to establish a presence here and reap the benefits of a massive and largely untapped market.

Hold that thought!

Growth in the EE only started accelerating in the 90s when economic reforms took place, thanks largely to the same person who is at the helm today (then in charge of the country’s purse). While the changes have been dramatic and far reaching, some of the draconian laws still remain. One protectionist law from the socialist era, however, is now doing the country more good than it has ever done before.

There is a law that in essence states, that car manufactures from overseas have to pay a tax of 150% on the base price of the vehicle. This tax is obviously passed on to the consumer, and as a result, the cost of foreign cars here would be more than double that elsewhere. Sounds protectionist? Definitely. Uncompetitive? Perhaps. Silly? Actually, no! Not, if you read the second part of the law Рwhich states that the tax is waived if the cars are assembled and manufactured in the EE.

You see, the EE has already lost the “manufacturing-centre-of-the-world” to the Big Bully to the North East. So while, it can’t become a manufacturing centre for the world, it can ensure some jobs through manufacturing for the domestic market. And who with even half a brain is going to ignore 300mn consumers?

As a result of this law, most major car manufacturers from the Old World, the New World and that country that chases the Sun have setup manufacturing plants in the EE for the domestic market and are now competing with the local brands on an equal footing.

While this has obviously benefitted the everyday car manufacturers, the real jackpot has been hit by the luxury car makers. Luxury car makers set a mammoth price tag (relative to other countries) thanks to the tax law. But thanks to the EE’s large affluent class they were always able to sell a decent number of vehicles. Now, while they are assembling the cars at the EE at a much lower cost and not paying the tax, guess how much the prices of luxury cars have dropped? Zilch!!!

That’s right, the prices are still where they were. But thanks to the upwardly mobile population and a desire for the nouveau riche too flaunt their gains, the luxury car makers are prospering more and more.

We usually frown at protectionist policies, but here’s one law that finally seems to be working.

Advertisements

January 29, 2010 Posted by | Emerging Economy | 1 Comment

The Strange Ways of the Emerging Economy


Every country, every region, every culture in the world is different and to be able to survive and thrive in a globalized economy one has to be able to adapt to and learn the best aspects of these differences in a nimble manner.

I think the above line sums up my learnings from the Emerging Economy so far. Leading a team in the EE has proven to be very different to leading one in my former habitat. What struck me as very odd was a lack of punctuality, a lack of general professionalism towards colleagues and work, an unwillingness to question authority and general chaos. Surely, that can’t be all there is to it. You do not become one of the world’s fastest growing economies by having attributes like the ones mentioned above. What then, is the truth? Is there something I did not see at first? Does something lie beneath?

‘The truth’ is something that I am still discovering. What I have learnt is that yes there is chaos, and a lot of it, but beneath the chaos, the system somehow just works. Let me explain with a typical general example:

Deadline for Project ABC is say 10th of December and the estimated effort altogether is 400 hours over 2 months. If you were to check the status of the progress of the project on the 1st of December, you would be shocked to see that the project is not even 20% complete. When questioned, the team members will give you an ‘it will get done, why on earth are you worried’ kind of look. There is absolutely no sense of urgency whatsoever. Schedule a meeting and I can guarantee, 20% of the team members will not turn up with no explanation given and the rest will be late.

Fast forward to December 8th – the situation now is completely different. The entire team is present, usually closed up in a meeting room with expressions on their faces that you could easily mistake it for a war strategy planning room. The work will continue nonstop until the last minute and 59th second before the deadline. And guess what, by 0 hours and 0 seconds, it will be complete. How? It is something that needs to be seen to be understood. What if unexpected events or challenges turn up? They do, and the methods, innovations and ‘work arounds’ used by the team members to resolve them can only be described in one word – brilliant! Absolutely brilliant!!!

Despite all the chaos, despite the lackadaisical attitude, everything just works. And the quality of the final result is at par with any I have seen anywhere in the world. The innovation used to complete 400 hours worth of work in 48 – unparalleled. The entropy extends far beyond the workplace to every aspect of life in the Emerging Economy – roads are completely broken, road discipline is not followed, yet the traffic flows; police is corrupt, yet crimes are largely contained; facilities and staff at educational institutions are woefully inadequate, yet the Emerging Economy produces the most number of engineers in the world each year; there is no infrastructure, yet the world’s largest (and smallest) corporations are setting up shop here; the cost of labour has increased manifold since outsourcing began, yet the companies haven’t left; the government is pathetic and spineless, yet the country strives forward; there are people living on a dollar a day, yet they have a smile on their faces.

This country fascinates and intrigues me everyday. I have never seen anything like it before. It can be frustrating, annoying, painful, stuffy, chaotic yet it is beautiful and mystical. I would never recommend the Emerging Economy’s style of work anywhere else in the world – it just wouldn’t work. Yet, when I see it here it is amazing. This is what makes the Emerging Economy truly unique.

It is the differences, not just the similarities, that we see in each other that make life beautiful. It is important for us to accept, learn and understand these differences in order to create harmony.

December 2, 2009 Posted by | Emerging Economy, General Rambling, Life | 3 Comments

ANALysis of the Emerging Economy


Perhaps I should clarify that this is an analysis of my company only and not the country as a whole. Before I begin, let me ask you a question:

What if Superman never ever realized he had special powers?

The question above seems to best summarize the situation at my new company (referred to as The Company henceforth). The Company is basically an offshore office of a large global entity, as is common in the Emerging Economy. It was initially setup with the idea of reducing costs – surprise surprise!!!

However, in the years since the office was setup, two important things have happened:

  1. People in the Emerging Economy have picked up vital skills, so much so, that they could replace any of their counterparts in the west. And given that there is no shortage of people here, it means there is no shortage of skills.
  2. People in the west, seeing that a lot of their work can now be done by cheaper resources offshore, have moved away from developing skills in these areas. Which means, fewer skilled people in the west.

These factors combined with the global financial crisis have resulted in the offshore office becoming a key strategic partner of the wider organization – you would think this puts the offshore delivery center in a rather envious and powerful position, doesn’t it!

It does – only, no one here seems to realize the leverage they hold. The idea of taking control does not seem to have occurred as of now. The idea that their position allows them to do truly wonderful things and become something like a power sharing center, just hasn’t occurred. Now don’t get me wrong – I am not suggesting a mutiny or anything silly of that sort – but I am saying that knowing what you are capable of and where you stand not only allows you an advantage compared to the rest of the organization, but also against your competitors. This benefits The Company as a whole.

The other thing that seems to lack here is innovation. Innovation, not in terms of work delivery, but innovation in terms of really designing and coming up with revenue generating opportunities. Somehow, the people here tend to believe that all the thinking must be done at the mothership. Reality check – new ideas don’t necessarily come from the 60 year old veterans but from the young people coming out of college – does not matter where in the world they happen to be located.

Much as I love the Emerging Economy, and I think this place has great potential (for my wallet too), I am a bit frustrated at how little the people here work towards empowering themselves. If only they knew what they could do – the world as we know it would change significantly!

It’s as if Superman hasn’t yet been enlightened!

September 19, 2009 Posted by | Emerging Economy | 6 Comments