THE BUSINESS INTERVIEW - HIRU BIJLANI
The Sunday Observer, September 1-7, 1996

'The ultimate concept of global is one which locates anywhere and performs any business on the basis of optimisation'.

He is the guru of globalisation. He has been a management consultant for over 11 years in the areas of international business, training and placements besides feasibility studies. He is HIRU BIJLANI, vice-president of the Institute of Management Consultants of India, and president of Zenith Global Consultants, a consultancy that provides the unnecessary expertise to make an international venture successful, focussing on new areas like management training, placements, strategic planning, information systems and joint venture felicitation.

Bijlani is confident that joint ventures will fail in India. According to him, joint ventures in India are a result of emotionally driven desire, the excitement of having a partner instead of an objective, rational evaluation. What is not understood is that joint ventures are between people, who are the core of the organisation.

Their difference in philosophy and management styles results in conflicts which consequently lead to failure.

In conversation with ANAMIKA RATH, Bijlani spoke of various aspects of globalisation and joint ventures in the context of the Indian economy. Excerpts :

Do you think joint ventures are essential in India ?

Of course. Because we need foreign capital and companies. In the form of joint ventures, there is more marriage of ideas and ways of working. It is a learning process. At times, the foreign company might dominate but then it does not matter because they are brining in technology, capital. All are transmitted to the people.

Then why are joint ventures falling apart ?

Companies like Procter & Gamble and Godrej are falling apart because of lack of synergy. Even Indian companies are falling apart like BBLIL and Kwality. It is basically a conflict of business philosophy.

How do you define the term globalisation in the context of an Indian company ?

To understand globalisation, if one tries to focus on it in terms of changes taking place and with reference to the specific Indian context, then it would be defined in the focussed manner as being what is happening in India and comparing it with the global economy as opposed to the Indian economy being the past an isolated economy.

Now that will lead us to various issues. At the macro level, for instance, actions taken by the government, the opening of the economy, and allowing foreign investment, opening sectors which were reserved, delicensing and so on. Again, they are natural factors which are a result of technology and growth of global economy.

Then there are micro forces which are emerging from the macro forces - like foreign companies coming in, making investments in the stock market. So globalisation is all these changes taking place that are through deliberate acts of government resulting in a convergence of economies, global and Indian technologies.

So what does a company need - as prerequisites in attitude or infrastructure - before it can go global ?

Foreign companies are looking for a conducive environment which enable them to operate conveniently. This will again lead to macro factors like government regulations, bureaucratic impediments in terms of legislation, judicial system and the ability to invest freely.

And then the support they get locally in terms of infrastructure to function effectively. So that will be in terms of ports, roads, transport system, water, electric facilities. These will facilitate them to effectively do business in the country.

What is the difference today between say an American company extending operations to the east and an Indian company reaching out to the world ?

Each country setting up companies in other countries has the same fundamental reason, to reap profits and increase market share. But the strategic reason and approach would vary depending on where you come from.

An American company coming to India is looking at opportunities that are based on its strengths which are generally led by technology and capital. So they are using those strengths to expand their share in developing countries. And hence they would look at issues which would be related to the setting the government provides.

But an Indian company going global depends on which direction it goes. For instance, if it is going to the west, then it depends on those strengths which they have and on which the Indian company can capitalise - like skilled manpower that is cost effective. So it is mostly knowledge and manpower related strengths which Indian companies will use.

An Indian company will not have surplus of capital to be used in capital intensive projects. Service sector industries like hotels and restaurants are likely to come up in the western world. Some high tech companies might set up joint ventures in the west to give them a base to draw technology.

If Indian companies are looking at the developing world, they would look at market size, population and economic stability.

What are the laws and regulations retarding the globalisation of Indian companies? What new laws or regulations need to be in place to make such an exercise more worthwhile for the Indian corporate sector ?

In the past it was very difficult for Indian companies to go global because the government has rigid, elaborate and time taking legislations. Now, though it is opened, there is still some rigidity.

Indian companies do not have that much capital to set up companies abroad. Lack of familiarity with that kind of operation also hampers globalisation. Developed countries have evolved from a local to international to multinational to global level. Here that experience is lacking.

But it is evolutionary in nature and hence will pick up soon.

Do you feel companies can take undue advantage of double taxation avoidance laws in their globalisation plans? For instance, a lot of India Funds set up by Indian asset management companies are based in Mauritius to avoid paying tax in India. Isn't that cheating the Indian exchequer ?

It is making it attractive to invest. It is the same as if the government has reduced taxes in India. They are getting the advantage of getting the money relatively tax-free or at lower rates by routing investment through that structure.

In other words, double taxation is giving investors into India Funds returns that have less tax. So it brings money and services that purpose of capital inflow but gives the people who are bringing money through this structure as advantage.

Even western countries take advantage of these tax laws. It is that advantage which is increasing investment. It is facilitating foreign investment. It is a blessing for investors through these routes and facilitates more NRI investment or foreign companies investing through this route and therefore putting the Indian investor at a comparative disadvantage because he is paying higher taxes.

In your experience, what kind of companies go global? Ana what form does globalisation takes?

Internationally countries which go global are those which have operated multinationally. So they go from domestic to international to multinational to global. The ultimate concept of global is one which locates anywhere and performs any part of the business on the basis of opimisation.

As far as Indian companies are concerned, some like the Aditya Birla Group have gone out. Others like Tatas, Indian Hotels are following the same route.

How does India as a country benefit from globalisation ?

In terms of Indian people and economy, the economic growth rate accelerates because of infusion of capital and technology. At the macro level for companies, they learn more in terms of technology, helping them to upgrade quality, reduce prices.

Companies gain, people gain and the country gains at the macro level.

 
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