Gravity Magazine_Final - Great Lakes

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CHINESE CONNECTION 23 Across the Great Wall As Indian manufacturers foray across the Great Wall in their efforts to expand businesses, the economies of scope and scale from operating in China continue to yield rich dividends. The Chinese economy carries on its success story. But, is there anything behind this perceived growth, is there that quintessential ‘balance’? We find it out from Mr. A. Natarajan, Vice President, Sundaram Fasteners (Zheijang) Limited, as he speaks to Abhinav Mittal and Nikunj Agarwal (students, PGPM Class of 2006) from Great Lakes. Sundaram Fasteners is known to be a cost efficient and operationally excellent company. Given that, what was your main objective of setting up a base in China? Our decision was purely based on market opportunities, not costs. We could foresee the might of India and China four years back. Most automobile manufacturers, American or European, began moving to China and this threw up a huge market potential. There is a huge domestic market as well and the future of automobile and related industries appears bright. Sundaram Fasteners decided to move there to be a part of the booming economy. Also, there is nothing like ‘being in the market place’, the experience is unique and it eliminated lots of myths based out of India with regard to doing business in China. What were the assumptions and beliefs with which you entered China? To what extent did they hold true? This is a very easy question but very difficult to answer. Before taking such a step, we considered business numbers on potential buyers. But coming to running a business, one can’t really anticipate or plan till one embarks on it. We were sure that the market can be captured, but the problem was that we thought it to be easy. But there we found that we have to build relationships, they have to visit you, understand you, and it is a long process. (Abhinav says “Guan Xi?”) . Guan Xi is doing, first step is you have to understand. They will not believe you initially. We did not anticipate that it will take us so long. It was mainly with regard to the timeline that our assumptions got deviated. So, we had to change our marketing strategy to the extent of concentrating points with regard to time. Do you think there is disproportionate support and encouragement given by the Chinese Government to different types of industries, or is it evenly spread across? When the Chinese started their reforms, they were not specific about any industry. However, there has been some classification subsequently. They have preferential categories I, II and III, ranging from ‘most welcome’ to ‘not welcome’. Whatever relates to technology and results in its infusion is given most preference under Category I. Also, there are certain industries where the Chinese resist divesting their control. Does there seem to be any discrimination in the approach of the Chinese authorities with regard to the origin of investors or industrialists? No, they do not differentiate as such among foreign investors. As long as what one brings in benefits China, they are most willing to extend their support and coordination. Would you say that there are large scale diversities and deficiencies in skill sets of the labour force in China?
Management, per se, is a new phenomenon in China. There is a dearth of high quality managerial skills, and coupled with the need for ability to communicate in English, this problem intensifies. Getting a good manager with adequate knowledge is tough. This gives immense opportunities to management institutions like Great Lakes to try and leverage upon their strengths. The Chinese focus more on physical activity than mental activity. That is a difference between the West and China. Second largest economy in the world in terms of GDP on Purchasing Power Parity, and 85th on the Human Development Index (HDI). Does this indicate that China is growing or surging ahead in true sense? There are definite differences in quality of life across regions. Cities like Shanghai are amazing in every sense, yet the central and western regions lack similar development. Then, even in developed cities, there is high air pollution and water pollution. So, there are areas of concern and the Chinese are conscious of it. Another aspect of questions on balanced growth in China relates to personal freedom. People are not allowed to have a second child. Is such a curb the right path to growth? Yes, there are punitive implications of having more than one child, they make people pay more taxes, could deny them housing loans or even break their houses. This does appear extreme in its own sense. But now this has also created some amount of aversion among the Chinese towards a second child. It is not necessarily out of fear of punishment, but out of own will, the resultant financial burdens and the likes. The one child norm also in some way adversely affects the attitude of the next generation as they do not get to know much about sharing and responsibilities. But another potential problem this rule could lead to in few decades is a paucity of enough people in the working age group. Moreover, there are other forms of curbs too, like freedom of speech, right or access to information, freedom of press, etc. which are not signs of a developed society. Is Chinese growth just east-costal growth? How would you view the imbalance across regions? See you can understand what China is today is all from twenty five years of growth. In such time they can’t have growth all over, given the mammoth size of their country, which is almost thrice that of India. You need to start somewhere. So they concentrated on the three deltas - Pearl River, Yangtze River and Yellow River. But now, the Government is encouraging development in other regions by means incentives and benefits. They are conscious about the imbalances but it will not be an easy going. Upcoming Beijing Olympics is creating a lot of fanfare. How much of its benefits do you think will spiral down to an average Chinese? To a great extent! Olympic Games are creating substantial infrastructure. This leads to high demand and employment in industries like steel and cement, among others. And they, in turn, mostly employ people from the low income groups. Moreover, lot of labour migration too is happening as there is vast demand in and around Beijing. Further, Olympics brings in loads of tourists, which again benefits the class of people working in hospitality, transportation, entertainment, tourist services, etc. Effectively, Chinese Government is spending huge sums for the Olympics, and its benefits will accrue down to the people ultimately. Lastly, what are the key lessons that India learn from China to have a balanced growth? Clarity - Be clear with what we want to achieve. Today we talk about everything. But India needs to understand the key areas they need to concentrate and have a growth map instead of doing things in bits and pieces in every sphere. Walk the Talk – I feel we talk a lot and do a little. That may be because of accountability is not spelt out, measures of performance are not clearly defined. Speed – Decision-making in China is very fast, possible because of the structure of their polity and also the willingness. But India is very slow on acting, and mostly a lot of time is wasted in pointless debates to satisfy the petty interests. Focus – They Chinese are much focused. If there is anything they want to do, they will do and would not allow stumbling blocks to stand in their way. This kind of a focus is a desperate need of the hour for India specially. India needs to learn to have a clear cut target, break it down into deliverables and attach the deliverables to accountability. Only then it can be ensured that things happen and reach the desired ends given the ‘system’ that we have as a bottleneck. Mr. Natarajan led the initiative of Sundaram Fasteners in China when they started operations in 2004. He has been with the company since 1982. A B.Tech graduate from IIT-Madras, Mr. Natarajan pursued his MBA from OUBS, UK and has served as the Chairman of CII, Pondicherry Chapter. CHINESE CONNECTION 24
Page 1 and 2: GREAT LAKES INSTITUTE OF MANAGEMENT
Page 3 and 4: From the Editor’s Desk… Chief E
Page 5 and 6: Note from Dr. Abid Hussain I am del
Page 7 and 8: Events @Great Lakes o L'Attitude 13
Page 9 and 10: Thus Democracy, Development and Dec
Page 11 and 12: findings of the study conducted by
Page 13 and 14: on the past experience or leadershi
Page 15 and 16: outside news, due to various reason
Page 17 and 18: I am sure the Vision itself will no
Page 19 and 20: India is a vast nation of diversity
Page 21 and 22: celebrated the successes of several
Page 23 and 24: 'Crouching tiger, hidden dragon', i
Page 25 and 26: India is fast losing its competitiv
Page 27 and 28: Find your passion and just do it, b
Page 29: aligned to the customer's business
Page 33 and 34: talk, there were a lot of bright ey
Page 35 and 36: this just create a pool of 'modern-
Page 37 and 38: Organizing Human Capital Dr. Hayagr
Page 39 and 40: Behavior of Organizations, The Chal
Page 41 and 42: Launch of Second Batch of Executive
Page 43 and 44: NOVEMBER DECEMBER JANUARY FEBRUARY
Page 45 and 46: Eureka! More Fortune! On first thou
Page 47 and 48: Bala can ignite passion and think o
Page 49 and 50: there is nothing called bad or good
Page 51 and 52: Making of the Gravity Gravity, as i

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