Asoke K. Laha
President & MD, Interra IT
The US, one of the largest democracies in the world, is in an election mode. Kick-starting his re-election campaign recently, President Obama orchestrated his plans for making the US economy robust and strong. The upshot of his agenda is to make the brand "Made in USA" strong, appealing and acceptable to the people across the world. The other largest democracy in the world - India - is debating to evolve a proactive manufacturing policy, to herald the nation into the league of developed nations and is committed to give a boost to "Brand India". The Manufacturing Policy to be evolved by the country has witnessed heated debates among politicians, experts and industrialists as to what should be the broad contours of such a policy and how quickly a proactive roadmap can be put in place.
I am a bit intrigued about the rationale of pushing forward aggressively brands of a particular country. Is there any place for country-specific brands in a liberalized world? Could the auto sector in the US, which is showing steady signs of growth in the recent days, claim that the product is entirely developed using indigenous technology, spare parts, raw materials and a host of services that have acted in tandem to position that product in the global arena? Auto components that have gone into the manufacture of a car must have come from India or China; the design of the car must have been developed in Germany; wheels and tyres for the car must have been sourced from France. The software for the central locking system must have been outsourced to an Indian or Israeli company. The paints for the car must have come from Japan. Perhaps, only the assemblage of the car would have taken place at the place of manufacturing. It would have been ideal to name such end-products as global brands.
I feel, among other things, the advent of Information Technology has brought about, in its wake, many radical changes in various facets of human behaviour. Businessmen across the world have realized that indenting raw materials and components from far away places, where it is cheap and found in abundance, is more economical than importing from a contracting party under a regional agreement. At the press of a button, the price tags of the raw materials can be downloaded from any part of the world. Manufacturers in the US and Europe are convinced that client services in their countries are costly and it would be prudent to pass on such services to destinations like India, where they can avail the same services at a grossly reduced rate.
First and foremost, digitization of operations has increased the scalability of the products and operations. Even a medium-scale business unit in the US or Germany has expanded their client base to include consumers in the remotest parts of the world. A customer in India can indent for a product of a company in the US and get customized to his requirements and imported into his country by paying through Internet. At a macro level, enhancement in the quality of life in the host country has had spin-offs in terms of greater movement of people to the developed world for education, leisure travel, etc., bringing in its wake large resources to the home country. I do not know the exact count of sites hosted by the Indian and Chinese companies in the Internet by paying monthly or yearly service charges to the service providers in the West. In the years to come, the ranks of such companies will swell and revenues from such operations will amount to several billion dollars. In countries which allow single or multi-brand retail, customer education is mainly through the net. It is gainsay to say that the least products that are sold through these outlets are mainly sourced from the developed world.
The impact of the Digital Revolution can be assessed from the technology point of view as well. India and China are considered to be technology recipients in most of the times. But they can also be movers and shakers in innovating cheap and workable digital equipment. Not much is being talked about the massive projects being executed by these countries in evolving a high- speed, cheap and appealing PCs and notepads, which can revolutionize the digital world by ensuring access to billions of people across the world.
Let me get back to my theme - the brand game. If such concepts have become hackneyed in the manufacturing, services sector is the cause and effect of such a tectonic change. The sweeping changes that Digital Revolution has scripted across the spectrum of services sector bought about has made national boundaries irrelevant. Agriculture, perhaps, can be an exception, when it comes to physical growing of plants and crops. But here the developed world has the advantage. They are the exporters of these goods to developing world. In countries where multi-brand retail has been opened to FDI, there is free movement of agricultural goods from the developed countries. Import of such goods is allowed in India but with a higher import duty, which may either come down drastically or eliminated altogether in certain goods once the retail sector is opened for FDI.
My take is that, in a globalized arena, development of national brands seems to be an anachronism. There may be a strong content of idealism in that line of thought. But liberal thinking is driven more by idealism and less by pragmatism. We have to decide firmly and clearly, which path should we take.