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.
