Tuesday, December 1, 2015


I noted the entry of Korean companies into India in this piece from Business World of 1 September 2003.

The amazing Korean success

It is difficult enough for Indians to succeed in India: they are more likely to reach the pinnacles of success in the US or Britain. The number of Indian CEOs and entrepreneurs in the US is legion; the list of Britain’s richest men and women is studded with persons of Indian origin. The reason is not far to seek; those are countries that encourage enterprise and reward ability. Our sophisticated administration sets up obstacles designed to defeat all but the dogged and the desperate. That we have many of both kinds – entrepreneurs and bureaucrats – keeps the country going. But the notoriety of India’s bureaucracy is well earned.
Indians have a lifetime to learn its complexity, and some do at some point in their lifetime learn to cope with it. For foreigners, who come from kinder climes equipped with righteous indignation, it is well nigh impossible. The trunk road of India’s economic history is littered with corpses of foreign enterprises. The flourishing British managing agencies of Calcutta shrivelled under the whimsical rigours of exchange control; by the late sixties they were being sold for a rupee. Some Arabs who got rich in the oil boom of the 1970s tried their hand at investing in India, but soon got scalded and withdrew. Then in the 1980s came the Japanese. Of them, only Suzuki is a success; and the travails it went through are legend. Honda and Kawasaki are emerging from a long period of hibernation. The rest are no longer around to retail their woes.
It is in this context that the success of the Korea companies evokes wonder. They had not only done well; they have, on the whole, done slightly better than their Indian competitors. What is special about them? What makes them the fish that took to the Indian water? Cultural affinity? Experience of a comparable bureaucratic labyrinth? Doggedness? Desperation?
No such extreme description fits; but the range of opportunities open to Koreans was more limited than to their predecessors. The Americans were big; the whole world was their oyster. The Europeans integrated western Europe and created a playground at home. The Japanese got so rich that they could have bought the whole of US for the price of Tokyo. The Koreans came later, and had to choose homes for their investment more carefully.
The timing of their entry into India was also more propitious. They came after industrial licensing made its exit. That meant that they did not have to run to the government every time they wanted to expand, or bring out a new model, or deviate from an approved production plan. They came under a relaxed foreign investment regime. That meant that they did not have to marry an Indian gatekeeper to enter. They were not thwarted if their partner did not have money to expand production. They did not have to haggle about managerial control all the time. They came after import controls on inputs and equipment had largely ended. That meant that they could produce in this country what was cheaper to produce here, and did not have to follow a preconceived plan of import substitution. And cheaper production meant that they had a fighting chance in competition, both in India and abroad. These are conditions for which their predecessors would have given an arm and a leg. Reforms have made a difference. India is now friendlier to enterprise – foreign as well as Indian.
But timing was not everything; the Koreans have also brought with them certain gifts of great value in the Indian environment. Amongst the foremost is the way the Korean companies set their objectives. India is a price-sensitive country, and the Koreans have not neglected the fact. They have derived price targets from the local market; they have aimed to be competitive, not necessarily cheap. But within those price objectives they have achieved reliable quality and sought to be a step ahead in product technology. Their greatest asset has been the trust of the consumer they have gained.
Their next biggest advantage is their nimbleness. They have set up subsidiaries that are large by our standards; but their speed of reaction to market changes, speed of correction of course, speed of execution of strategic initiatives, are enviable. Just how they do it is a bit of a mystery; our management experts have not yet got down to studying the Korean style. But the contrast with the Japanese, for example, is palpable. There is none of the Japanese penchant for bottom-up decision-making, respect for consultation, insistence on consensus. The lines of authority are clearly laid down, and managers are expected to react quickly without having to wait for the organization to prepare itself to follow them.

That said, it cannot be all. Here is a style of management we are all too unfamiliar with. It has something to teach all of us, and not just management experts.