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2006-03-11 India-Pakistan

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Posted by john 2006-03-11 18:49|| || Front Page|| [5 views since 2007-05-07] Top

#1 Hugo Restall is guilty of wishful thinking here. He is basically saying that even though China is far ahead of India in terms of economic growth, India will pull ahead because India's government will make the necessary market-opening changes to India's laws to get this to happen. But these changes haven't happened yet, and it's not clear they ever will.

Inside every Indian isn't an American trying to get out. Indians have a bigger superiority complex than the Chinese - their view is that Indian civilization is so superior that they shouldn't have to appropriate the white man's way of doing things. The Chinese, on the other hand, have a less damaging version of this superiority complex, which simply adopts everything Western, yet continues to claim that the 0.001% of their culture that remains Chinese is responsible for their success.

This openness to Western practices is why a trip to China can be disorienting - a lot of its cities look like brand-spanking new, but more crowded versions of American cities, whereas Indian cities are hard to mistake for anything other than Indian cities. When you go to India, you will see plenty of men and women wearing traditional Indian clothing. You will see no one wearing traditional Chinese clothing in China.

Commentators like Restall don't understand that China is privatizing state-owned companies as fast as it can. The companies still owned by the government are being run as profit-making operations. The reason they haven't been totally privatized is because there are a lot of welfare obligations attached to them - and the government wants these obligations to vanish instead of taking them on as the companies are privatized. But from a political standpoint it would be risky to throw tens of millions of workers off the social safety net provided by their employers. What Restall takes to be political unrest is really fallout from the government gradually privatizing state-owned companies. Those demonstrations are a sign that privatizations are occurring on a gradual but steady basis.

As to why Chinese brands are not busting out into the global marketplace, this is a pretty nutty question. How many Malaysian, Hong Kong, Singaporean, Taiwanese or Korean brands do you know of? And these were the fastest-growing East Asian (and world) economies during the 70's, 80's and the 90's. In fact, how many Indian brands do you know of? Are India's Mittal Steel or Wipro household names in America? Japan is the big megillah - it is the one Asian country whose brands have penetrated markets around the world to the same extent that the big Western countries have. There is only one Japan. China isn't Japan. But if China (or any of the East Asian tigers) isn't going to be the next Japan, India isn't remotely in the running.

This sudden surge of affection for India is, in my view, nuts. India sided with the Japanese war criminals during the Japanese war crimes trials. It sided with the North Koreans and the Chinese during the Korean War. It sided with the Soviets during the Soviet invasion of Afghanistan. India will never become as loyal an ally as even France. The fact is that there are lots of democracies that will not become our friends. India is one. Russia is one. I don't think we should kid ourselves about the value of a good relationship with India - it is at best, a borderline hostile neutral.

Posted by Zhang Fei 2006-03-11 20:09|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2006-03-11 20:09|| Front Page Top

#2 Ummmm .... where to start.

Korean brands are quite plentiful and well known. Hyundai, anyone? Samsung? to name only the first two that come to mind.

Electrical engineers are quite familiar with Taiwanese brands for components and board assemblies, among other things. You aren't buying in that market so you may not be aware of Taiwan's large position there or the reputation of various Taiwanese mfgrs.

Singapore? Let's see ... according to the CIA Factbook, their famous financial services sector represents about 1/2 their economy. Their 'brand names' are the names of the world financial services firms, all of whom have major activities in that small country.

Restall is right to point to the relative maturity and transparency of India's financial markets as an important factor in projecting growth there. And while I have personal experience with the arrogance of some in the Brahmin caste, I also have plenty of experience with immigrants from India who have displayed great energy, focus and flexibility in settling here and building small businesses. Some of the most successful are investing profits back in India.

We'll have to wait and see how things work out, but it's not at all clear to me that China will out perform India economically over the next generation.

Posted by lotp 2006-03-11 20:25|| 2006-03-11 20:25|| Front Page Top

#3 lotp: Hyundai, anyone? Samsung? to name only the first two that come to mind.

Those are the *only* two. And one of them is still vaguely thought of as the Korean Yugo. Name me *one* Indian (and any non-Japanese and non-Korean East Asian) brand known to the average consumer. Bottom line is you cannot, and have written several paragraphs showing that you can't.

Posted by Zhang Fei 2006-03-11 20:40|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2006-03-11 20:40|| Front Page Top

#4 lotp: We'll have to wait and see how things work out, but it's not at all clear to me that China will out perform India economically over the next generation.

You're entitled to your views, but it's not clear at all to foreign investors (as opposed to India-boosters) that India will outperform China over the next generation.

Posted by Zhang Fei 2006-03-11 20:42|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2006-03-11 20:42|| Front Page Top

#5 Well, in my modest way I am an investor and my money is NOT in China, for good reason. I don't claim to be a market whiz, and lately I've been focused on technical research rather than the markets. But my MBA *is* in finance and operations from a top-10 B-school.

It's true that India's exports are not as far advanced, or as consumer-oriented, as China's. But this issue is not where they are right now -- it's where things are headed. And to this MBA China carries a lot more risk than many seem to think.

BTW, my step-father was Chinese, from Beijing. This isn't an issue of cultural chauvanism, it's a recognition of structural issues in economic, legal and social systems.

And, I'm a bit puzzled by your insistence on brand names as a measure of economic output. The big 5 Korean conglomerates are vertically integrated, but do sell the raw inputs to others (as with, for instance, steel). Your metric is unconvincing to me.

And ... do I really have to list all the other Korean brands sold here in the US? A quick google of several consumer electronics categories brings up more than a few additional Korean brands, if you insist that only consumer goods 'count'.

Posted by lotp 2006-03-11 20:54|| 2006-03-11 20:54|| Front Page Top

#6 Food product brands from looking in my kitchen cabinet.

MTR - India
Valcom - Thailand
Yeos - Singapore

And note these are products I buy because of the brand.

Asian consumer brands that spring to mind.

Singapore Airlines
HSBC (even though its now headquartered in the UK)
Acer
LG (very big here in Oz)

Although, I can't think of a single mainland Chinese brand.

Posted by phil_b">phil_b 2006-03-11 20:58|| http://autonomousoperation.blogspot.com/]">[http://autonomousoperation.blogspot.com/] 2006-03-11 20:58|| Front Page Top

#7 Phil - you're down under. The typical American has heard of *none* of these brands.

Posted by Zhang Fei 2006-03-11 21:08|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2006-03-11 21:08|| Front Page Top

#8 ZF, this is silly. For Taiwan brands, you ignore companies like Acer, which just displaced Toshiba as the 3rd largest brand of notebook computers in the world:

Acer has unseated Toshiba as the world's No. 3 notebook brand in Q4 2005, with 66.7% year-on-year growth -- highest among the top-five notebook vendors, according to preliminary data from Gartner Dataquest. Acer notebooks ranked No. 1 in EMEA (Europe, Middle East and Africa), and No. 3 in Asia Pacific with 117.1% growth, the highest among the top-ten vendors.

No well-known Taiwanese brands, my foot.

Note that, unlike the Chinese purchase of IBM's line, Acer's is engineered by THEM. Human capital matters.

China has potential, but it also has many many potential pitfalls going forward.

Posted by lotp 2006-03-11 21:10|| 2006-03-11 21:10|| Front Page Top

#9 TSMC. UMI.

Ever heard of them?

Is BASF a well known brand in America?

Daewoo is probably better known.

ZF's one point that is well taken is that both these countries performance will be determined by domestic constraints more than anything else.

Posted by Nimble Spemble 2006-03-11 21:22|| 2006-03-11 21:22|| Front Page Top

#10 lotp: ZF, this is silly. For Taiwan brands, you ignore companies like Acer, which just displaced Toshiba as the 3rd largest seller of laptop computers in the world. No well-known Taiwanese brands, my foot. Note that, unlike the Chinese purchase of IBM's line, Acer's is engineered by THEM. Human capital matters. China has potential, but it also has many many potential pitfalls going forward.

Acer sells the vast majority of these laptops under somebody else's label. Acer doesn't have a brand name - it has manufacturing facilities.

I think there is a strange underlying assumption here. And this assumption is that China and India are going to catch up to the United States. That is the underlying premise for the assumption that China and India should have well-established brands overseas. The fact of the matter is that China and India have a glide-path towards catching up with Thailand. The brutal reality is that they will probably never catch up to Malaysia, let alone South Korea. China and India should not even be mentioned in the same breath as these United States. China will outpace India. It will not outpace Thailand. And India will never catch up to Thailand.

Posted by Zhang Fei 2006-03-11 21:23|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2006-03-11 21:23|| Front Page Top

#11 Interesting forecast of 17 largest economies in 2050 and winners and losers in that economy.

Posted by Nimble Spemble 2006-03-11 21:36|| 2006-03-11 21:36|| Front Page Top

#12 Acer doesn't have a brand name - it has manufacturing facilities.

Boy, you don't read the computer magazines I read. Acer is a brand name in it's own right. It has been for a good while now. Lots of multipage full color glossy ads.

Here are a few recent reviews of Acer-brand notebooks from PC Magazine. Not exactly an advanced technology / specialist journal - it's pretty much aimed mostly at consumers.

Posted by lotp 2006-03-11 21:44|| 2006-03-11 21:44|| Front Page Top

#13 NS: Interesting forecast of 17 largest economies in 2050 and winners and losers in that economy.

Interesting survey. Kind of weird, in the sense that it projects higher per capita GDP growth rates for India than China over 45 years, yet comes out with a higher 2050 total GDP for China, in spite of the fact that China has a smaller population than India. What I found weird was its projection of 2.4% GDP growth for the US. I think we'll do better than that. Much better.

Nonetheless, these projections are like the weather forecast - partly in the sense that they are garbage - and partly in the sense that they rely on too many political and technological changes that are unknowable at this stage. Besides, if auditors can't even report the past accurately (re Enron), how can they predict the future?

Posted by Zhang Fei 2006-03-11 21:54|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2006-03-11 21:54|| Front Page Top

#14 NS: TSMC. UMI. Ever heard of them? Is BASF a well known brand in America? Daewoo is probably better known. ZF's one point that is well taken is that both these countries performance will be determined by domestic constraints more than anything else.

Apples and oranges. Everybody's heard of BMW, Mercedes, Porsche, Volkwagen and Audi. Hyundai is an also-ran - Daewoo isn't even an also-ran. Dow Chemicals is a lot like BASF, but nobody's heard of a lot of its brand names.

Besides, this is getting silly. Comparing the East Asian tigers to China and India is like comparing a guy in a bespoke suit to hoboes in rags. Korean autoworkers make $10 an hour. Chinese autoworkers make $2 an hour. Chinese wages can grow 10% a year for decades and never match the Korean ones. China and India are decades behind the East Asian tigers. And they will remain far behind for next few decades. The question here is whether China's rags will be better-looking than India's rags. Based on current Indian economic policies, I have little doubt that this will continue to be the case.

Posted by Zhang Fei 2006-03-11 23:16|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2006-03-11 23:16|| Front Page Top

#15 I am pretty inept along the axes of things financial or business. Yet even I have heard of Acer, LG and BASF. I don't know if that helps any of you who actually understand the arguments in this thread. ;-)

Posted by trailing wife 2006-03-11 23:42|| 2006-03-11 23:42|| Front Page Top

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