‘Indians are not good at manufacturing’ - A Crazy Statement
Posted : December 22, 2005 at 9:39 pm [IST]
When the world is busy drawing parallels between India and China at all forum, nuclear engineer-turned-management guru Kenichi Ohmae dismisses it as comparing oranges and apples. The two countries are not competitors, according to the man whom Financial Times has described as ‘Japan’s only management guru.’ Nor do India and China complement each other.
Ohmae explained why India will not succeed in global scale manufacturing and why it’s important to be a one-product company.
“Indians are not good at manufacturing. Even if they do what we tell them to do, they always need to understand why they are doing it that way. They are more inquisitive than the Chinese. Maybe it’s because of their ability to find zero in the numbers. But in manufacturing when you have a successful formula, what you look for is implementation, right? Indians always ask these fundamental questions.”
I think this as a crazy opinion of the Guru taking undue advantage of putting forward a theory based on his eminence and the logic is not correct. Unfortunately, most of the consultants and Guru has just build a brand and following for them with not much of execution to their credit. And Indian manufacturers need not be upset about or take note of his remarks. Neither the Indian policy makers use it as some shield or excuse.
Further, the Guru opines, ‘India is capable of excelling in the service sector. In developed countries, the service sector is 67 per cent of economy, manufacturing is less than 20 per cent while the rest is the primary sector. The Chinese are good at manufacturing, but they have not even begun to compete in the service sector. India in services will have a larger share of the world market, be it hotel management, IT systems development, medical tourism, medical research, design, games or backrooms. There is an endless list of things that India could do. Therefore, it can get a larger share of the global economy.’ Can this be the logic for forgetting manufacturing?
About the severity of competition in services, the Guru remarked, “Competition is mainly from the United States. India’s biggest competitor is going to be the US. The US is currently using India as a sub-contractor. When India finally develops its own capabilities, the US will be its largest competitor. India is still a top student in the sub-contracting class.”
When he was reminded about many Indian enterprises acquiring manufacturing firms in cross-border acquisitions, he (Crossed his heart) and said, “How do you say good luck in Hindi? I wish them good luck.”
The main tasks before the country’s policy makers is to generate millions of jobs every year. Service sector can play its part so an extent. But as Bill gates rightly pointed out during his just concluded visit to India, “India needs growth from companies in many other sectors to create hundreds of millions of job literally. We need competitiveness to reach other sectors.” Microsoft has announced a partnership with the National Manufacturing Competitiveness Council, which strives to improve efficiencies in small and medium-sized enterprises (SMEs), to explore ways to use IT to achieve those objectives. And with its strength in IT, India’s manufacturing sector can not only compete but also can go ahead of China if handled properly.So sometimes, it is better to be deaf to these consultants and Guru. After all they are not accountable for what they say. They go by brand building through followers and promoters.
And whatever is happening on real time basis is proving that. Many manufacturers from developed countries are gradually realizing the role India can play in high-end manufacturing and so are setting their shops in India.
And after the Goldman Sachs forecast that India will be the third-largest economy in the world a generation from now, there is no question that India is seen in a new light-especially when it clocks sustained economic growth of 7.5 per cent. This is buttressed by the successful offshoring that American companies are doing in India, the sense that India may now be a manufacturing success story as well, and of course the links that are fostered by the presence of a strong Indian Diaspora in the US.
And let us look at what Deloitte’s preliminary benchmark findings reveals: “The Indian manufacturing sector has registered gross profits and sales growth rates amounting to double the figures of global manufacturers. Indian manufacturers are enjoying average sales growth of 15 per cent, compared to the 7 per cent of global peers. Gross profits of local manufacturers average 16 per cent as the 8 per cent average of global competitors.”
Just look at telecom sector, in a very short time many manufacturers are committing to invest. Finland’s Nokia and Singapore-based Flextronics have also promised to set up manufacturing plantsThere are others too, companies such as LG, Samsung and Ericsson that will make semiconductors, mobile phones, set-top boxes, personal computers and telecom base stations here. Over the last 18 months, more than 10 MNCs have committed nearly $5 billion to telecom manufacturing in India.
With all this how can you go by what Japan’s only management Guru thinks about India’s manufacturing sector? And so I had written in my early entry on manufacturing-’Surging Manufacturing- A Hope For India’s Tomorrow.’
- Indra
Category: Manufacturing |
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