V C Viswanath

Ultimately it comes down to the choices we make as individuals. We can choose to be part of the problem or choose to be part of the solution.

V C Viswanath, Former Sr. Vice-President and Adviros, JK Group and a leading management consultant attempts to answer some frequently asked questions on globalization

What is Globalization? Why is it inevitable?
Man’s yearning to enrich life by sharing information and exchanging goods and services started from the beginning of human civilization. In the early days the only means of communication and movement was by using the labor of man or animals. It was time-consuming, laborious, costly and risky. With the invention of the railroad, the steamship and the automobile the process became cheaper and faster. In 1876 when Alexander Graham Bell discovered a way for the human voice to conquer distance, it marked the birth of the information age. Since then there has been huge advances in telecommunications, computers, the Internet and miniaturization and modes of transportation. Technology has caused the death of distance and shrunk the world to a global village.

John Naisbitt, the author of Megatrends resides in a remote tiny town (population 1400) 9000 feet above sea level in the Rocky Mountains of Colorado. He writes: “I might seem isolated from a world rushing along at frenzied pace. Yet, as a writer and businessman, I am not. The bustle of Tokyo, rapid fire events in Moscow, and the news from the European capitals of London, Paris and Brussels are no more than an electronic command away. My telephone, my fax, my computer, my radio and my TV transform these distant metropolises into electronic neighbours as close as my good friends down the road here in Telluride.”

Some of the startling predictions he made are already beginning to happen. Telephones, faxes, TVs and PCs will merge into multimedia telecentres which will link households and businesses to a seamless global network of networks. At a speed of trillions of bits of information per second — we will simultaneously send and receive high-resolution images, bursts of computer data and the human voice (automatically translated to and from another language)… Consumers will manage their affairs and entertain themselves — reading newspapers, shopping, trading stocks, paying taxes, calling up, movies, accessing libraries, banking and even voting — all from a telecenter at home. The telephone will be fully freed from cords and personal communication will follow us from home to workplace — and around the world. With a single personal telephone number callers can find us wherever we are …linking individuals to thousands of services from anywhere around the globe.”

More and more people will work through home-based telecentres or neighborhood telecentres instead of commuting to work. "The advantage of doing business anywhere, anytime, through any medium will be possible for the individual entrepreneur and the small company. They will compete on a stronger footing in the global marketplace and the individual will be empowered like never before."

That in a nutshell is globalization. It is inevitable because it is driven by technology, which has enabled a tribal artist in Bihar to find a global market for her creativity and thereby increase her family's income. It has empowered fishermen in a remote village of Tamil Nadu to fetch a better price for their daily catch.

Some say Globalization has made the rich richer and the poor poorer. Is this really so?
Swaminathan S. Aiyar has emphatically refuted this in a recent article. He has brought out some remarkable findings from a brilliant book, Imagine There’s No Country by Dr. Surjit Bhalla, an eminent Indian economist and columnist.

In the two decades from 1980 to 2000 which is regarded as the new era of Globalization, ‘the proportion of poor people in the world has fallen from 44% to 13% and poverty and inequality has dramatically declined.’ “China and India were very poor in 1980, poorer than many countries in Africa. They now have 2.2 billion people, more than one-third of the world’s population and more than half the third world’s population. These two countries have experienced record income growth since 1980... The share of developing countries in the global middle class has risen from 20% in 1960 to 70% in 2000.”

Unfortunately there are some countries, particularly in Africa, where the benefit of Globalization has not reached. Poor governance, continuing ethnic conflicts, severe droughts and the AIDS epidemic are the reasons.

Is not Globalization a threat to developing countries like India?
It is a threat if we don’t change. Speaking with passion at the platinum jubilee of FICCI (December 12, 2002) Arun Shourie spoke of the atmosphere of negatism all around and said, “The only solution to existing Indian ills is a changed mindset among government, industry, business and NGOs among others. We need to introspect as to why other countries could make gains from agreements like the one, which brought about the WTO into existence, while India continued to dither. The world is not going to slow its pace on technological progress. If we don’t move swiftly we will be left behind by others like China.”

Jairam Ramesh sharply contrasts the way India and China respond to challenge: On December 11, 2002 New Delhi hosted a dailogue organized by the ILO, where politicians, NGOs and academics fulminated against globalization. December 11 also marked the first anniversary of China?s accession to the WTO. The Chinese extolled how the WTO is benefiting them. Chinese research institutes invited experts from all over the world including India, to share their perceptions on the impact of China's entry into the WTO. “For a country whose volume of trade is over six times ours, for a country whose economic performance particularly in manufacturing and urban renewal is vastly superior to ours, such an enthusiasm to learn is indeed remarkable,” says Mr. Ramesh.

It is time we realized the enormity and urgency of the challenge and of the opportunity if we can seize it. We can, if we act decisively, leap- frog from economic backwardness to become effective players in the global economy and deliver our people from age-old poverty to prosperity and a better quality of life. Apart from the very obvious inadequacies in our infrastructure what is holding us back are the three C’s of Corruption, Conflicts and Complacency — all of which are curable.

Can Indian companies survive in global competition? Aren’t our companies much smaller in size compared to their foreign competitors?
It is a fact that most of our companies are in poor shape to meet global competition. This is the unfortunate result of forty years of License Raj. Gurcharan Das in his book India Unbound gives some revealing facts why our industries got emasculated.

The Tatas made 119 proposals between 1960 and 1989 to start new business or expand old ones, and all of them ended in the wastebaskets of the bureaucrats.

Aditya Birla, the young dynamic inheritor of the Birla Empire, who had trained at MIT, was so disillusioned with Indian policy that he decided to expand Birla enterprises outside India in Thailand, Malaysia, Indonesia and the Philippines.

Even more damaging than placing the public sector at the commanding heights of the economy were the controls on the private sector. The most bizarre and damaging was the licensing system, which required an entrepreneur to get a license to set up a new unit, to expand it or change the product mix.

Tragically the system ended in thwarting competition, entrepreneurship and growth without achieving any of its social objectives. It fostered monopolies and encouraged uneconomic- scale plants employing second- rate technology in remote, uncompetitive locations... It raised costs, brought delays, arbitrariness and corruption.

The great statesman, C. Rajagopalachari, warned us of these dangers. He was the one who gave the name ‘Permit-License-Raj’ to Nehru’s socialism as early as 1959. He wrote, “Encouraging competition in industry and giving incentives for higher production are good for the public as well as for the private interests.” But nobody listened. He continued to campaign rigorously in Swarajya. In response to Nehru’s question he wrote passionately:

“I want an India where talent and energy can find scope for play without having to cringe and obtain special individual permission from officials and ministers, and where their efforts will be judged by the open market in India and abroad.”

"I want the inefficiency of public management to go where the competitive economy of private management can look after affairs."

"I want the corruptions of the permit-license- raj to go."

"I want the officials appointed to administer laws and policies to be free from pressures of the bosses of the ruling party, and gradually restored back to the standards of fearless honesty which they once maintained."

"I want real equal opportunities for all and no private monopolies created by the permit-license- raj."

"I want the money power of big business to be isolated from politics."

"I want an India where dharma once again rules the hearts of men and not greed."

If the country had heeded the wise advice of Rajaji and followed the path he suggested our economy would be one of the strongest in the world today.

Reliance is perhaps the only Indian company in the private sector, which may qualify to enter the ranks of the top Fortune 500 companies. However, we can take some comfort in the fact that size, although important, is not the critical factor for success. Small size can even be an advantage. We have many examples of small companies outsmarting their much bigger rivals.

Take the case of Zee TV, founded by Subhash Chandra. In 1991 when TV in India was the monopoly of Doordarshan and private broadcasting was prohibited he ventured into this business. Starting with nothing in less than a decade he has built up an entertainment company valued at Rs. 3,90,000 crores in 2000 creating over 25,000 jobs. Among the many odds he faced, was fierce rivalry and competition from the global media mogul Rupert Murdoch.

When Canon, the little camera company entered the business of photocopying, nobody would have expected it to succeed. In 1975 Xerox enjoyed a staggering 93% market share globally. 500 patents guarded its technology. It had worldwide manufacturing facilities backed by an awesome marketing, sales and service organization of 25,000 trained professionals. Photocopying meant Xeroxing. Yet within three decades Canon surpassed Xerox in number of units sold achieving sales revenue in excess of Rs. 3,00,000 crores.

Take the case of Wal-Mart, founded by Sam Walton. When he opened his first merchandise store in a small town in Arkansas in 1962, giants like J. C. Penny, Woolworth and Sears having thousands of outlets all across the US dominated the retailing industry. Yet Wal-Mart has outgrown them all and become not only the biggest but also one of the most admired companies in America. Right from beginning the company's philosophy was: 'Complete dedication to the consumer,' offering good quality products at low prices.

Before the Indian economy was opened up in 1991, a handful of family businesses dominated the scene. They had access to large physical assets. Yet, most of them, barring a few exceptions, have lagged behind after liberalization while smaller players, some of whom are first generation entrepreneurs and professionals with limited resources, have shown true entrepreneurship and made their mark with grit and determination in a variety of industries. Some of the great success stories of our time are: Reliance, Wipro, Infosys, TCS, NIIT, Satyam, Dr. Reddy, Ranbaxy, Zee TV, Transasia, Crest Communications, Armedia, Jet Airways, Orchid, Microland, Polyhydron, S. H. Kelkar & Co., HDFC, Unilazer, MindTree, Global Enterprise, Highdesign, Hero Honda, Sundaram Fasteners, etc.

Apart from the area of Information Technology are there other sectors where India has a comparative advantage? What must we do to take advantage of these opportunities?
There is no doubt that the biggest opportunity for creating jobs, value addition in exports and creation of wealth will increasingly come from the knowledge sectors of the economy like IT, communications, entertainment and biotechnology. But India has inherent strength in agriculture, tourism and even manufacturing if we can quickly overcome the deficiencies in infrastructure.

Mckinsey estimates that IT enabled services could become $50 billion business by 2010 employing up to 2 million Indians. As per Nasscom estimates 23.67 lakh jobs will be created in the IT sector by the end of the new Tenth Five year Plan.

The average growth rate of Indians GDP during the past two decades was only 5.5%. The planning commission has proposed a growth rate of 8% for the new tenth plan. China's GDP has grown at the rate of 10% per annum consecutively for the last 20 years after Deng implemented economic reforms in 1979. As a result China's per capita income is $4250 against India's per capita income of only $2450 in terms of PPP (Purchasing Power Parity). The richer countries of the world have per capita income ranging from $20,000 to $35,000 (in PPP terms).

There's no reason why we cannot achieve a growth of 10% if we have the national will and commitment of all sections of society. India's economy has shown a lot of resilience and strength in recent years. Our domestic savings ratio has gone up from 8 to 9% in 1950-51 to 23% in 2000-01. We have been able to raise by domestic savings in absolute terms of Rs. 4,20,000 crores. By attracting additional foreign investments we can achieve significantly higher growth and banish poverty from our land in the next 15 to 20 years.

Mukesh Ambani, Chairman of Reliance, exhorted industrial leaders and government to aim for 15% growth per annum in the next 20 years to take Indian GDP to 9 Trillion $ from 500 Billion $ now. That is the kind of ambitious goal which will galvanize us into action.

Isn’t the market economy based on greed and competition wasteful? Considering their huge size aren’t MNCs a threat to the world?
Rajaji writing in Swarajya (October 31, 1964) quotes from Prof. F. A. Hayek’s famous book, The Road to Serfdom: “Our freedom of choice in a competitive society rests on the fact that, if one person refuses to satisfy our wishes, we can turn to another. But if we face a monopolist we are at his absolute mercy. And an authority directing the whole economic system of the country would be the most powerful monopolist conceivable…the competitive system is the only system designed to minimize monopoly by decentralizing the power exercised by man over man.”

Rajaji elaborates further, ”The free and profit-motivated competitive economy that Swatantra Party stands for has not only been demonstrated in the world’s past and current history as the best method of creating wealth through human labor, intelligence and capital; it is also the most effective minimizer of concentration of power. Controlled economy is control of people and as a necessary consequence, an extinguisher of human incentive.”

Talking about MNC’s let me quote Swaminathan Aiyar. He gives some startling facts and figures. He writes: “The Soviet Union may be dead, but its old anti-capitalist rhetoric lives on, re-incarnated as anti-globalization. Street agitators at the meetings of the World Bank or WTO still claim that we are being impoverished by the monopolistic power of multinationals. At seminars and debates in Indian colleges, horrors and fear is still expressed about the power of giant corporations whose sales exceed the GNP of entire countries.

How extortionate are these giant corporations really?
To find answers, I look up the April 15, 2002 edition of Fortune magazine, listing details of the 500 biggest US corporations in 2001. It yielded some startling facts: The net profit of the 500 giants was on average just 3.3% of sales. This is a very slim margin. No extortionate profits here.
— No less than 98 of the 500 giants actually suffered a loss.
— The biggest loser was JDS Uniphase, an optical fiber giant. It lost an astounding $56.12 billion in 2001, more than the GDP of many countries.
— Lucent Technologies, long the world’s biggest producer of telecom equipment, lost $16.2 billion.
— Ford, the second biggest automobile company in the world, lost $5.5 billion.
— The biggest gas trading and pipelines company in the world, Enron, went bankrupt.
— You might think the military–industrial complex rules supreme under the Bush administration. But in 2001, Lockheed Martin lost $1.05 billion and Raytheon lost $763 million.
— Motorola, one of the biggest names in the communications and electronic equipment, lost $3.9 billion.
— Corning, the biggest glass-maker, lost $5.5 billion.
— AOL Time Warner, the colossus formed by the merger of AOL (the top internet provider) with Time Warner (one of the biggest media- entertainment giants), lost $4.9 billion.
— The biggest airline in the world, United Airlines lost $2.15 billion. (It filed for bankruptcy in 2002.)
— The biggest producer of Internet routing equipment and superstar of the Stock Market in 2000, Cisco lost $1.01 billion.
— The second biggest producer of personal computers, Gateway, lost $1.03 billion, Compaq lost $ 785 million and Apple Computers lost $25 million.
— International Paper, the biggest paper manufacturer, lost $1.2 billion.
— Amazon, the biggest Internet retailer of books, lost $567 million.

This is only a partial listing of losing giants… Far from being super-dominant, the giants are a threatened species… Because the global market is a competitive one, it allows new comers to constantly challenge and upend established players.

Small nimble companies often fare better than lumbering giants, who find it more difficult to adjust to a world where technology and demand patterns change at lightening speed…

The biggest company in the world today, Wal Mart, got big not by using its muscle to extort monopolistic profits but by providing millions of consumers lowest possible price… So much for the propaganda of anti-capitalists that big corporations are a threat to the world and are out to fleece customers,” concludes Swaminathan Aiyar.

How can we meet the global challenges? What can individuals do?
In the apt words of Bill Clinton, “The great question of this century is whether the age of inter-dependence is going to be good or bad for humanity. The answer depends upon whether we in the wealthy nations spread the benefits and reduce the burdens of the modern world, on whether the poor nations enact the changes necessary to make progress possible, and on whether we all can develop a level of consciousness high enough to understand our obligations and responsibilities to each other. We are all going to have to change. We live in a world where we have torn down walls, collapsed distances and spread information…Those of us who have benefited most must lead the way in making this world without walls a home for us all.”

Dr. Paul Campbell, one of Dr. Buchman’s close associates, addressed this issue in a talk ‘What will the issues of 21st century demand?’ Let me quote him at length in conclusion:

“The people of the 21st century will need more wisdom — a super-mental source of direction. The time-tested experience of man will be recaptured; that wisdom and power, a higher intelligence is available as we listen in silence and carry out the ideas we receive. We will again realize that the divine spirit within us is a sure source of information and direction.

Our greatest sin may be the failure to think with faith – and when we do think to think too small because our faith is small – a sure measure of our self-centeredness.

People will be sought out who know how to free themselves and others from the tyranny of impurity, lying, cheating, stealing, from holding grudges, from negative thinking.

In the 21st century it will be a triumphant world network of such people – battling for radical changes in men and structures, who will turn the future away from chaos and towards a new type of civilization.

Our nations need the wholehearted, single- minded, completely dedicated commitment of inspired minorities. For it is such minorities that can provide our people with leaders who know the strategy, the power and the unity that comes when the will is fully given to co-operate with God in His plan for the world.

These are the qualities of leadership that the issues facing the 21st century demand — the inspired initiatives of leaders and led, adequate to change the thought and life of the globe. In the 21st century this will be seen to be the normal, essential, intelligent way to live.

For the first time in history a change in people and nations worldwide has become essential for even our physical survival; and certainly no less essential for putting together the world of tomorrow.” Ultimately it comes down to the choices we make as individuals. We can choose to be part of the problem or choose to be part of the solution.

‘Be the change, you want to see,’ said Gandhiji. That is the starting. Dr. Buchman’s life and work has clearly shown that anyone regardless of one’s gender, age or status can have an extraordinary role in creating the kind of world we want to have.