INDIAN COMPANIES AND SERVICES

THE SERVICE OF BLIND IMITATION

Indian companies must avoid the errors in the West's models for managing services

V S Mahesh

Business Standard, April 7, 2012

The last few centuries have seen the Western economies record phenomenal growth even as India slid from being the largest contributor to world GDP in 1500 to accounting for a fraction of one per cent in 1947. By the time the Industrial Revolution peaked in the 19th century, Western business enterprises had become the undisputed leaders in the production, distribution and marketing of products. Mass production, automation and computerisation were the internal strengths on which success was built.

An Indian born and brought up in an impoverished country could not be faulted for assuming that the only way to succeed was to follow Western ways. Corporate India led the drift Westwards. Along the way, we appear to have lost the self-confidence to create and use home-grown approaches to the management of organisations – and economies – without discarding the strengths of Western models.

(...) [artículo aquí]

THE SLOW RISE OF CHINA

CHINA'S SUPERPOWER CORONATION IS STILL SOME WAY OFF

Hu Yifan

China Daily, April 6, 2012

In the aftermath of the global financial crisis, and in the course of the continuing European sovereign debt crisis, large developed economies have struggled to regain growth momentum, while China has continued to grow at a robust pace. This has led to speculation of a concurrent decline of the developed countries and the rise of China changing the power structure of the international system. Recent events have thrust China, still in the process of developing its economy, into the spotlight as a superpower.

While few are likely to contest that China is on the rise, the question of whether or not it is already a fully-fledged superpower today is a fair question. In my view, China is indeed a superpower on the rise, with vast amounts of still untapped potential for further growth, but it is not quite there yet. However, China reaching its full potential is far from guaranteed. Despite its undeniable scale and resources, important economic, institutional, social, and diplomatic issues need to be dealt with, and the country still needs time to deal with its transition from a developing country to a real superpower.

Over the past three decades China's growth has been a wonder to behold. Since economic reforms in 1978 it has experienced unprecedented growth. Over the past 32 years the annual growth rate has averaged 10.02 percent. At the end of last year nominal GDP was about 23 times its value in 1980. Additionally, China managed to maintain robust growth through the global financial crisis of 2007-09, while many economies suffered significant economic malaise if not outright recession. While high GDP is undeniable, GDP per capita is low, exports are high but low-value- added, foreign exchange reserves are high but with little diversity, the fiscal position is strong but welfare is weak, oil is consumed in high amounts and inefficiently, and the capital market is rising, with many initial public offerings.

(...)  [artículo aquí]

CHINA’S CONSUMPTION

IS CHINA STUCK IN A CATCH-22 LIKE SITUATION?

Rediff, April 5, 2012

A significant part of China's growth has been an illusion. China's headline growth of eight to 10 per cent has been driven by new lending averaging around 30 to 40 per cent of GDP. Given that, up to 25 per cent of these loans may prove to be non-performing, amounting to losses of six to 10 per cent of GDP. If these losses are deducted, then Chinese growth is much lower.

Unfortunately, China now faces significant problems in maintaining its high-growth strategy, especially given the weakness in its major export markets. As early as 2009, Premier Wen Jiabao admitted that the "stabilisation and recovery of the Chinese economy are not yet steady, solid and balanced".

China needs to boost domestic consumption. The world hopes that China can become a significant source of global demand, replacing the US as the world's consumer of last resort.

Consumption totals 35 to 40 per cent of China's GDP, a decrease from over 50 per cent in 1980. Even by the thrifty standards of Asia, Chinese consumption is low. Japan, India, Taiwan and Thailand are at 55 to 60 per cent, while South Korea and Malaysia are 45 to 50 per cent.

American consumption is around 65 to 70 per cent of GDP. In contrast, Chinese fixed investment is around 46 per cent of GDP, an increase of 12 per cent over the last decade.

At a comparable stage of economic development, fixed investment in Japan and South Korea was 10 to 20 per cent of GDP lower than China.

(...) [artículo aquí]

CHINA’S DOMESTIC IMBALANCE

CHINA BESET BY INTERNAL IMBALANCE

Martin Wolf

The Irish Times, April 4, 2012

ECONOMIC COMMENT: CHINA’S ECONOMY is changing. Indeed, it has to change, as I argued two weeks ago. The good news is the scale of the external rebalancing. The bad news is that this is at the cost of larger internal imbalances.

China’s balance of payments has been on a rollercoaster. Thus, between 2003 and 2007, the current account surplus rose from 2.8 per cent to 10.1 per cent of gross domestic product. The surplus then fell sharply, to 2.9 per cent, by 2011. Over the same period, the share of exports and imports in GDP exploded upwards and then fell once again.

In orthodox theory, the level of current account surpluses and deficits reflect voluntary decisions to save and invest – countries with surplus savings, such as China, export capital while countries with a deficit import it. Surplus countries enjoy a higher return on savings; deficit countries enjoy a lower cost of investment. Everything is for the best in the best of all possible worlds. It seems peculiar that a poor country exports capital to rich ones, as China has done, but there is no reason, in this view, to question the wisdom of the underlying choices.

Unfortunately, this Panglossian view is hardly plausible after the repeated shocks in international finance over the past three decades, which culminated with the crisis in high-income countries that broke out in 2007.

The US, in particular, proved incapable of using its capital inflows wisely – they financed fiscal deficits and the construction of unneeded houses. Of course, the US is largely to blame for such a sad outcome, as are other capital importers. But large external deficits also have a contractionary impact on demand. This did not seem to matter when the latter was strong. It matters a great deal now, when it is weak.

(...) [artículo aquí]

THE BRICS AND THE DOLLAR

IFR COMMENT: BRICS BID TO BASH THE BUCK

Talk of a BRICS development bank is a convenient front for China’s bid to promote its own currency as an alternative to the dollar. Both concepts, however, are flawed, says IFR Asia’s Jonathan Rogers.

Jonathan Rogers

International Finance Review, April 3, 2012

The fourth meeting of the BRIC nations drew to a close last Thursday in New Dehli with the usual back-slapping and self-congratulation that accompanies such events once the cocktail glasses have been drained and the limo drivers summoned.

Now enlarged to include South Africa as a fifth initial, it can’t have been lost on any of the attendees that the acronym first dreamed up in 2001 by Goldman Sachs’ then head of research Jim O’Neill (if he’d copyrighted the term and got a royalty from every BRIC conference organised since then, he’d be laughing) has lost some of its sex appeal.

China has dropped its growth target this year to 7.5% and faces a deteriorating demographic that may soon make the days of 10% GDP growth seem like a distant memory. In the meantime, India’s growth has sagged to just over 6% and a host of fiscal and political woes are threatening to squeeze it further.

(,,,) [artículo aquí]

SUU KYI’S VICTORY

SUU KYI HOPES VICTORY IS DAWN OF NEW ERA

Todd Pitman and Aye Aye Win (AP)

Time, April 2, 2012

(RANGOON, BURMA) Aung San Suu Kyi claimed victory Monday in Burma's historic by-election, saying she hoped it would mark the beginning of a new era for the long-repressed country.

Suu Kyi spoke to thousands of cheering supporters who gathered outside her opposition party headquarters a day after her party declared she had won a parliamentary seat in the closely watched vote.

The Election Commission has not yet confirmed the results, but government officials have commented on Suu Kyi's victory and the people of Burma have reacted with jubilation.

"The success we are having is the success of the people," Suu Kyi said, as a sea of supporters chanted her name and thrust their hands into the air to flash "V" for victory signs.

"It is not so much our triumph as a triumph of the people who have decided that they have to be involved in the political process in this country," she said. "We hope this will be the beginning of a new era."

If confirmed, Suu Kyi will take public office for the first time and lead a small bloc of lawmakers from her opposition National League for Democracy in Burma's military-dominated Parliament.

(...) [artículo aquí]

MYANMAR IN ASIA

MYANMAR PLAYING A NEW ROLE IN ASIA

Jaswant Singh (author of "Jinnah: India - Partition - Independence")

The Philadelphia Inquirer, April 1, 2012

Isolated and impoverished by decades of international sanctions, Myanmar (Burma) has emerged in recent months as both a beacon of hope and a potential new Asian flashpoint.

With Nobel laureate Aung San Suu Kyi freed from two decades of house arrest to campaign vigorously for a seat in parliament in the special election to be held Sunday, Burma's commitment to rejoining the international community appears to be genuine. But this opening has other consequences, most importantly setting the stage for a new "great game" of strategic competition.

No one should be surprised that Burma is a locus of interest for great powers.

Burma's strategic importance reflects, first and foremost, its geographic location between India, China, Thailand, and Southeast Asia. Ringed in the north by the southern ridges of the Himalayas, to the east by foothills of dense teak forests, and to the west and south by the Bay of Bengal and Indian Ocean, Burma's geography has always shaped the country's history and politics.

(...) [artículo aquí]