Our Tryst with GST* – * Conditions apply!!!

GST – The Good and Simple Tax, as our acronym lover PM touted during the launch on 30th June is finally a reality after almost 11 years of intense labour. This along with FDI in retail must count among the most awaited reforms in India by India observers.

So, the advent of a single tax which subsumes, at last count, some 17 different taxes and myriad cesses certainly must count as the single largest Tax reform undertaken in India. Not to forget the application of tax only on value added in the chain. Along with this simplification, the fact that goods from one state can pass thro different states without wait, harassment and accompanying corruption portend a new beginning for trade in our country. In the pre-GST era, logistics and warehousing strategy of companies have been dictated by tax compliance rather than supply chain considerations. In the sense, the number of warehouses and their size would be driven by billing point concerns rather than geographical spread of demand. In the GST era, warehousing will depend on supply and demand equations and not taxation points. And hence like in most developed countries, companies will get to run larger, integrated and fewer of warehouses. Development of more efficient logistics hubs, warehouse consolidation and ensuing FDI will become a reality soon. This is a new dawn for retail, supply chain and logistics industry.

So with all the seemingly obvious benefits of the GST regime, why is it that there is still some cynicism and negativity from different quarters about the move? Why is P. Chidambaram once the prime mover of GST when UPA was in power, cautioning all of us to “Get Set for Turbulence”? The GST in the current form is nowhere close to the one which was originally conceived. Rolling stones probably gather no moss. But a rolling GST gathered whole lot of moss on its way from the wisdom of empowered committees to standing committees to GST council. The current version of GST is a product of what I call “co-operative federal bullying”. The result is instead of the One Nation, One Market, One Tax premise, what we have is One Nation, One Market, One Tax name, 3 Sub Tax names, Multiple Rates, Few Exceptions, Some flexibilities and with an *. * – Conditions apply.

Being part of the GST council, the states in their own wisdom, ensured that we as a country don’t get away with a simplistic tax which may throw many Chartered Accountants out of jobs. However, I understand that without having a set of different GST rates (in some cases different rates for the same category as per user segments) or without excluding items like Petrol, Alcohol, Real estate,.. consensus could never have been built in getting GST off the ground. UPA’s failure to make GST a reality during their regime stems from this. So the choice before the centre was to accept what the states demand and bring about a not so ideal GST or wait endlessly for a few more years may be decades before some major economic crisis forces all concerned to come to an agreement on the ideal GST. From that point of view I agree with the stand taken by the Govt. to bring in GST in its present form with its shortcomings, with a hope of ringing in the changes in the coming years. Kudos are in order hence.

The Congress party which at every opportunity reminded us that the seeds for GST in India were sown by the UPA, however, chose to be petulance personified and boycotted the GST launch. While rubbishing the GST in its present form its main “anGST” against GST was that it is being rushed thro and should be delayed by 3 months till September. We all in India know that in our country whatever may be the preparatory time available, things get accomplished at the last minute. If we get more time, we stretch our deadlines accordingly. That if we have more time, we will be more prepared and can do trial runs before actual roll out,.. exists only in theory. Don’t we see in our Indian weddings, folks tying up some loose ends literally till the baraat arrives and continue to do so as the wedding is in progress?  Finally when the wedding gets over, its smiles all over.  So even after the GST roll out, there will be glitches, teething problems and surprises which I am sure we will find ways and means of getting over. Pushing back by another 3 months is not going to make things any different.

It must be commended that this Govt. stuck to the date of July 1. It would have been very easy for the PM and the Govt. to throw in the towel and put off the launch by a few months. But then, there are other implications. Come Oct. it is the peak festival and hence business season in India. Does It help if the roll out happens when India is in the midst of its biggest Annual economic cycle? Will it help if GST is launched in Jan. in the final quarter of the fiscal year???

The ruling party, the BJP counts traders as its important traditional support base for the party. That the party still decided to go ahead with the tax reform which professes maximum disruptions for this group is a significantly courageous move.  In India economic reforms have always been carried out under duress; when push comes to shove. The heralding of GST must be the 1st major economic reform brought in when not under any kind of stress but just to ease up things for the future. This certainly conjures up the arrival of Acche Din for our country.

Still our penchant for complicating things comes to the fore here as well.  Though the GST collections have to be shared between the state and the centre, could it not have been done at the back using technology rather than coming up with 3 variants like SGST, CGST and IGST??? Does the Anti-profiteering clause make sense? Will not competitive economics eventually drive pricing??

GST is indeed a Good and Simple Tax. So there is nothing like a good or better time to introduce the same. But, we should not forget that this is India and we are Indians. So, conditions apply.

Cash Mukt Bharat!!!

  • The neigbourhood vegetable bhaiyya Yadavji is still going strong negating all predictions that the organized retail will swallow the likes of him. Organised retail didn’t quite swallow him. But he is now a fringe player of that organized retail. I pick up the weekly need of vegetables and fruits. His son who is in his early twenties, quickly totals up the bill in a handheld POS (Point of sale) device and lets me know the amount. He then sends me a request for the payment using his UPI (Unified Payments Interface) App on his smart phone. I approve the same and the payment gets credited to his account.

  • Adi Ganesh Store which was a popular shop in our neighbourhood In Mumbai catering to the typical needs of the South Indians (Read as Filter Coffee powder) is now Adi Ganesh Super market. They now accept payments in credit cards even for purchases under Rs. 100.

  • At the Guruvayurappan Temple nearby, the Hundis for coins and cash have been replaced by plastic card swiping machines where all donations can be made and receipts received.

  • Our family physician DrPurab is still the smiling self and fit as ever. He continues to give his own medicines but one can pay his fees through credit card.

  • The “Old paperwala on call” still comes promptly to collect the old newspapers. He now has a tie up with the Big Bazaar chain of stores and gives Big Bazaar cash cards for the paper taken.

  • Almost all auto rickshaws are now part of some aggregator or other and are accepting payments through mobile wallets.

  • The Domestic help handed over a card which had the details of her bank account number to which she requested the salary be transferred.

  • It looked like that the benefits of JAM (Jan Dhan Yojana/Aadhar/Mobile phone) which had threatened to be just a great theory has become a reality.

I realized that India in Jan 2025 is not the same in more ways than one as it was in 2017 when I left for abroad.  But I am surprised first, impressed next and fascinated finally by the transformation of a country in the area of financial inclusion and the transition to almost a Cash Mukt Bharat in just 8 years!

Almost everybody I talked to credited this transformation to various moves the present BJP Government undertook and in particular the “Demonetisation” of 500 and 1000 Rupee currencies in 2016. I remember that time very well. It was in November of 2016 when the country had just finished its annual quota of bursting crackers for Diwali. On 8th night, it was the turn of the Prime Minister to set off his Diwali bomb. At the stroke of midnight 500 and 1000 Rupee notes lost their legal tender. What followed in the next couple of weeks I now realize had sown the seeds for India almost becoming a Cash Mukt Bharat.

currency

With almost no cash in hand available, the general public had to resort to ways and means to avoid using their left over legal tender and use them only sparingly. People started doing day today shopping of veggies/fruits,.. in super markets instead of the neighbourhood vendor though he sold stuff fresh.  People avoided auto rides by hailing on the roads and resorted to “Ola Autos/Ola Cabs” where they could pay by mobile wallets. Within few days as banks resembled Ration shops of the 80’s India with serpentine lines right from sunrise, vegetable and other vendors started accepting cheques for payment in fear of losing their customers.  Most food establishments who had a minimum limit for accepting credit cards removed such limits. In the hinterland of India is where the impact was colossal. Though a big population was banked under Jan Dhan Yojana, till then they were not banking. The overnight shortage of currency, helplessness in otherwise carrying out day to today lives and finally the threat of losing business permanently pushed many to figure out alternate ways for making and accepting payments and they did. There was utter chaos for few days as the country came to terms with the move but ultimately in the long run, change did happen. In India normally change is slow. But under duress change is swift.

“Can you get up now?” It’s the wife at home waking me up from my nice Sunday afternoon siesta.  “I told you to think of a topic to write for the daughter for tomorrow’s Children’s Day event. Did you think of something??” I had not. But muttered as usual, “Yes”. What’s the topic on?? She asked. And I answered, “My dream India @ 2025!!!”

Long lasting Budget Wishlist!!!

Tomorrow, on the 29th Feb 2016 as the finance minister “rises to present the budget of the Union for the year 2016-17”, he also raises a lot of hopes. In the media in India in the past 1 week or so, it’s been raining wishlists from the budget. As an Aam Admi, I also got tempted to join the bandwagon to submit my own wishlist though I know very well that it’s too late to incorporate even one from this (Wait a minute, may be one can be). But I still go ahead and here’s my list of 10 things which I would like to see change around the budget atleast in my life time.

Here we go:

  1. First up, do away with this archaic “Halwa ceremony” where the FM participates to prepare Halwa in the North Block office along with the staff who are going to be holed up for few weeks in isolation running upto the budget. What’s this Halwa got to do with the budget making? On the other hand, “Halwa Kudukarathu” (Giving Halwa) in Tamil is a euphemism for taking one for a solid ride😁😁! So unless the Govt. actually meant this only every year, they should stop this. And what’s this FM and team posing every year stirring up the Halwa😩
  2. On the day of the Budget, one familiar sight every year you can’t escape is the FM posing with a shining new “Brown Brief case” just as he enters the parliament. To me this brief case symbolizes extreme colonialism which we find it difficult to shrug off. In British parliament also same thing happens to date. (For more on the history of the “Budget Bag” pls click here).  For a country, which boasts itself as an IT behemoth and all that jazz why can’t the FM just walk in with a high capacity pen drive or a lap top instead of this antiquated brief case??? Won’t that be cool?

Budget pic3. And as the FM reads the budget speech, it’s usually from a huge bound document supported by a wooden stand crammed with facts and figures. How will it be if the same is presented as a power point presentation – with slides to the point with graphics? (something we could see in this year’s Economic Survey presented by Arvind Subramanian and team)

4. I don’t know when or who started this trend of sprinkling budget speeches with Shayari??? I do know that FMs like Manmohan Singh, Yashwant Sinha and now Arun Jaitley (Not to mention P.Chidambaram and his Thirukural couplets) get into shayar mode in the course of the budget speech but with limited effect. While it’s good to keep the speech which tends to get boring interspersed with some couplets, poetry,… more often than not it looks thrust upon and not in a flow. As if the British left that also as a rule! Some good self-deprecating humour could be a better option!

5. What is this thumping of the desks by the treasury benches for every outlay announced? It’s now obvious that outlay in itself doesn’t mean anything. Before the FM starts reeling out budgetary allocations, I would like to see the FM starting with the “Outcomes” from the outlays of the top 20 items in the previous year and explain how it benefited the people at large. That will give us some idea as how “our” money has been utilized and for the Govt. an opportunity to boast their report card. This can be followed by the outlays for the next year with clearly expected outcomes from the same.

6. And what is this “ranking” business the media resorts to by the Industry captains immediately after the budget? We have now seen that the devil is in the detailed explanations that surface later. So any ranking without understanding the fuller provisions according to me is an exercise dipped in frivolity.

7. And when is the last time you have seen industry captains giving a thumbs down to the budget?? It is generally a mega thumbs up or atleast a thumbs up with conditions attached. The feedback is always ‘right” and seldom “honest”. So why get into reactions from the Industry which are any way far removed from honesty?

8. Any why do the pink channels get excited and scream about the way the Stock market reacts to the budget?? We have now seen many times in the past that the Stock Market reaction to the budget is knee jerk and not borne out of any proper analysis of the after effects of budget proposals.

9. And why do the pink papers – The Economic Times in particular come out with a blockbuster issue the next day of the budget with the full budget speech and the myriad annexures??? Just upload on the net and leave it to the discerned to access if they need. Saving trees and the environment can just start here!

10. And finally, instead of the FM just making a once a year marathon appearance why not present a review of the budget and the progress made on outlays once every Qtr.? This will help us understand which ministries are performing and will aid PM to separate the wheat from the chaff!

I admit that my wishlist is more on the “method” and not on “matter” and “form” rather than “content”. One of my earlier posts (read here) delved on that a bit. Hopefully we get to hear something sweet in the leap year budget speech tomorrow which will leapfrog our economy. And are not dished out the greasy “Halwa” we Tamilians abhor.

Waking up “Make In India”!!!

In a week from now, Mumbai will host the “Make in India Week” – an event planned to give fillip to one of Modi Sarkar’s flagship program – Make In India. This was aimed at reviving the interest of domestic and MNCs in setting up/expanding manufacturing footprint in India – a sure shot elixir to tackle the unemployment malady and create millions of jobs. When this Govt. kicked off this initiative, one would have expected more cheers than jeers. However the reality was different. Leaving aside the noises from the opposition which anyway criticizes what the ruling Govt. does in India (this is irrespective of who is in power and who is in opposition), the naysayers included reputed economists and thinkers. They were of the view that it was too late for India to board the “Manufacturing” bus. China is already in the driver’s seat being the “factory for the world” and global companies are already heavily invested in China. Also the general view that with increasing automation in the shop floor, you don’t need much of low cost labour for manufacturing. So betting on manufacturing to generate millions of jobs may not be a cool idea any more. The session during the recently concluded World Economic Forum in Davos about “The Fourth Industrial Revolution” powered by Connected devices, 3D printers, Super Smart Robots and the like,… probably put paid to this idea of the critics. So instead of playing the catch up, the cynics’ view was that India should play to its strengths namely “Services” and invest further in developing soft skills to scale up further.

There is probably merit in this argument. However if one analyses the different states of India in terms of the economic condition it is clear that no state can hope to survive and grow by just focusing on services. For a diverse country like India with a huge disparity in income and social strata an even economic growth can be achieved only with a mix of manufacturing, services and agricultural activities. The top states in terms of GDP in India like Maharashtra, Tamil Nadu,.. have a very healthy mix as I noted in one of my earlier posts on “Car manufacturing” in Chennai (Read here). A fourth Industrial Revolution may augur well for developed countries with shrinking population, ever rising wages and diminishing demographic dividend but in India we still need to reap the benefits of the 2nd and 3rd.

So I think that this Govt. is right in pursuing the Make In India initiative particularly at a time when China is facing economic headwinds. The labour in China can no longer be termed cheap with wages ever-increasing to keep pace with the aspirations of the people. Many of the global corporations do not want to put all eggs in one basket that too Made in China😁😁. I know for sure that the Japanese are expanding into Vietnam in a big way for production. So could be other countries like the US, Germany,…,.. soon. So the moot question is are we positioned well to make them Make In India??

logo 2

As the logo of India’s Make In India program demonstrates, there are many cogs in the wheel for a country to be successful in manufacturing that too for the world. Cheap and Skilled labour, Vendor base, Access to cheap raw material, Quality awareness, Access to ports and logistic hubs (particularly for exports), flexible labour laws, Ease of doing business (which applies not just for mfg.) and above all a very efficient infrastructure (Roads, airports, ports, broadband connectivity,..,…) in short a “pro manufacturing eco system”. And for India while all the other cogs could fall in place over time, the biggest challenge is in infrastructure. One would argue that the eco system will be in place when growth picks up and factories are set up. Necessity is the mother of everything you know. For example wasn’t Gurgaon just a “Gaon” before Maruti?? Today it is a recognized Auto mfg. hub. Similarly there are many examples of PSU Units which were set up first which then turned out to be manufacturing hubs in course of time. Goes the argument. No argument can be more specious than this. Maruti was set up at a time when India was a protectionist state where the promoters (in this case the Govt. of India) can patiently wait for more than 10 years for the 1st car to roll out! Same is the case with many PSU units where the overarching mission was upliftment of the society rather than shareholder value or profits! Not in these “QSQT” (Quarter Se Quarter Tak) days!!!😁😁 And in these days of strict WTO regime the Government cannot slap high duties on imported goods to protect the local manufacturers.

So for Make In India to succeed India needs to get the Eco system right first up. While India has a natural advantage in some aspects like availability of not just cheap labour but also skilled, large Engineering pool,.. the road is long for areas like “Ease of doing business” and Infrastructure as I mentioned before. And fortunately the Govt. has rightly recognized these challenges. Its’ for the 1st time that a Govt. website has spotlight on “Ease of Doing Business” like in the Make In India home page, I reckon. See here. It was a pleasant surprise to see the list of initiatives already taken and ones on the way when I clicked on “Ease of Business” tab. And it is also great to see every day in Newspaper one state or the other hosting Investor summits to lure potential investors with Make In India being an important aspect. So while pitching for investments is all right, I think the state Govts. must also focus on getting the infrastructure in place in their respective states which helps not just manufacturing but in general fosters economic activity. Today inspite of higher labour costs if many companies are still outsourcing mfg. to China it is because of their fantastic infrastructure overall which helps to keep indirect costs lower. India’s labour costs is lower but the indirect costs due to poor infrastructure weighs us down.

I think now the world is quite convinced on the intent of the Modi Sarkar to promote Make In India. Now the time has come to morph the intent to reality by focusing on Infrastructure for which the states have to work in tandem with the Centre. That’s what will wake up Make In India and not the raking up of intolerance debate every other morning😩

Make in IndiaToon courtesy: Satish Acharya

“Broken” News!!!

It’s a common belief that “The More the Merrier”. Particularly if you are a consumer. One always gets a better deal if there is choice. The fact that you can exercise your freedom of choice makes marketers to provide a better deal in terms of Quality, Quantity, Value for Money, the works. It is also said that in a crowded market place, brands try to differentiate themselves. Differentiation by way of form, quality, price, positioning in the mind or overall offering and vie for the consumer’s wallet. But in India, there seems to be one product category which defies all these economic fundamentals. Here More is actually Less!!! Even in an overcrowded market place there is hardly any product differentiation. From one brand to another, they only provide good advertisements for “Cloning”. And when the number of players increase the overall quality keeps falling. Irony dies a thousand deaths at our drawing homes every day and night. Yes, welcome to the world of 24*7 News channels in India!!!

breaking news

I belong to what I refer as the Doordarshan generation. A generation which grew up without much choice for anything but stayed contented. During our growing up times, DD was the only source of entertainment as well as visual news. So the 9’o clock prime time news bulletins were indeed bulletins which walked us through the important happenings of the day. The news readers were news readers and not “Anchors”. They were reading news and were not engaged in endless hysterical debates. At our homes, one of our favourite games at the dinner table used to be guessing who will be the newsreader that night – Among people like Minu, Geetanjali Iyer, Rini Khanna, Tejeshwar Singh, Usha Albuquerque, Sunit Tandon, Neethi Ravindran,…,… Blame it on my memory if I missed a few others.  Apart from consuming news, as youngsters we also had the opportunity to imbibe the way they modulated their voice, their English diction and the overall presentation.  Even sans the choice the prime time news bulletin served its purpose effectively of keeping us informed of current affairs in India and abroad.

Now cut to what I call as “Boredarshan” times and rapidly transcending now to “Boordarshan” times!!! Today, in the 24*7 news channel space we are spoilt for choice.  Or are we???

At any point in time, try to exercise that power of your choice. Across all channels invariably prime time news will start and end with debates where the participants across channels will be the same. I guess for the political parties, it is easy to prepare one spokesperson for a topic and make him/her parrot the same arguments across all channels. In any case as he/she moves from one channel to another, he will anyway meet the same counterpart from the opposition as well!!! Not just prime time debates. A new book is hitting the store? Between 2 days you will find the author providing “exclusive” interviews to 10 different channels! (As per English dictionary, the word “Exclusive” in its noun form means ‘an item or story published or broadcast by only one source! So how does showing up in different channels is termed exclusive has been elusive to me).  Come Friday and a new film is being released? You will see the film crew parading from one studio to another in the National Capital Region doing the same silly things in the guise of “Promoting” the film! And somebody emerges as the newsmaker of the day? You could meet her/him in all channels that day. (Except if the newsmaker is Lalit Modi 😃 He only gave interview this time to one channel that too in Montenegro! While the other channels also reached the Adriatic coast he changed his mind and refused to oblige). The questioners sound the same. The questions sound the same. There is a race among channels to get interviews from the newsmakers that very same day. And on weekends the channels dish out similar content like Retro Bollywood stuff, Tech reviews,…

Not just content. If you look at the style – Among anchors and reporters there seems to be no differentiation.  All anchors by and large keep interrupting and do not allow the participants to complete one sentence. As I had penned in my earlier post DA 24*7 (Read here) we find Devil’s Advocates in all hues 24*7 in news channels. Come weekends all the “Star” Devil’s Advocates take a break and leave their fiefdom to their juniors who undergo on the job training to what else – interrupt!!!

Even on form, differentiation seems to be zilch. The template across all channels seems be a crowded screen with too many details populated.

And oflate their own marketing and advertising also look similar. Every channel claims to be No.1 in viewership😲 Damn the devil which is in the “*”!!! And all of the channels cry hoarse against Noise, Sensationalism,… and exactly do that. Day in and Day out!

So what’s going on wrong here? One could blame it on the TRP driven advertising revenue model for the channels. So when one channel with a certain content/style/form gets high TRPs, the others follow the same. But I would blame it on the “TRP model” itself. I am not too sure if the present TRP system captures the preferences of the viewers accurately. For a diverse country like India, I do feel a more heterogeneous viewership capture system is the need of the hour. Lest in the garb of “the Nation wants to know” we will continue to hear more noise and less news – across all channels. And if you still recall  “broken Record” of yore, news will continue to be that – “Broken” News as you switch from one channel to another😞😞

Postscript: Recently I was forwarded this clip on WA. Wonder if we will ever get to see such an interviewer who doesn’t interrupt and an interviewee who doesn’t get flustered and stays calm throughout, in these times in India. Check it out.(https://www.youtube.com/watch?v=_MATAqeiL-4)

Shuddh Desi Maggi!!!

First the disclosures. I am not a big fan of the 2 minute wonder – Maggi Noodles ever to have hit the Indian palate and plate. In all my life, I would have tasted it may be a few times and I detested it every time. Even when mixed with curd as how Bollywood stereotypes we Madrasis to eat even Noodles 😠. I don’t have nostalgic memories either of how Maggi Noodles helped thwart hunger pangs during some mountaineering expedition,… like how some adults professed as part of the Maggi campaign. The daughter though loves it. And wants more of it. Much to the dismay of the mother and the father. I also don’t have any commercial interests going with Nestle nor do I have a Swiss bank account!!!

maggi_650x400_41432133400

But I have a lot of interest in India and the signals it sends across within the country and outside as a place not abhorrent to business.  In the last 2 weeks, we all know how one Pandeyji from UP got his 2 minute fame under the sun after he picked up few Maggi Noodle packs, tested and declared that the contents were out of set limits. Many other states followed and soon Nestle had no choice but to pull their 2000cr (US$300mn) flagship product off the shelves and indeed away from the mouths of many a child and even grownups.  Leaving many a moms feeling surreptitiously happy when they found a way to desist the urge of their offspring citing the ban 😃.

In India, Newton is a much misunderstood man. When it comes to anything foreign, his 3rd law becomes “For every action, there is an unequal and opposite knee jerk reaction”😄 Either we go gaga about something phoren or go suspicious. There’s nothing in between. I am not for a moment questioning the veracity of the ban or arguing that Maggi noodles is above-board.  I am also not taking the oft-repeated line that in India there are so many other food items if tested would flunk all norms. Just that if the same situation would have been handled in a more compassionate way with a perspective view by the authorities, the Indian republic would not be viewed as a banana type!!!

For example, what if the same situation had played out like this:

  • Pandeyji picks up samples of Maggi noodles, tests the same and finds that the contents are beyond norms.
  • He informs the Central agency – Food Safety and Standards Authority of India (FSSAI) about his findings. (Instead of going to the press and banning the same in UP. What if it was just a batch issue??)
  • FSSAI arrange to do its own tests to ascertain the claim and also make a foolproof assessment. And let us assume that they indeed find the lead content above specified limits.
  • FSSAI informs the Food ministry of the same.
  • Food ministry calls the top officials of Nestle India for a meeting and they inform them of the findings. And gives Nestle couple of weeks to do their own assessment and come back.
  • Now its upto Nestle to accept the findings or prove with their own test results that they are in the right.
  • And if indeed Nestle finds that they are in the wrong, the onus is on them to come up with a plan of action to correct the situation. Temporary recall, change of recipe,…,…
  • They work with the FSSAI authorities and change the recipe of the taste maker which is tested and approved as within norms.
  • Nestle does a launch of the Govt. of India Approved ‘Shuddh Desi Maggi” Noodles with an appropriate campaign and continues its business as usual.

Product recalls on account of genuine safety concerns happen world over all the time these days. A more calibrated approach would have allowed the company time to work backwards with their whole supply chain – producers of atta/maida, spices, suppliers of the atta/maida, the factories which produce the noodle, the factories which make the packaging, transporters, whole sales distributors, retailers, kirana shops,..,.. to minimize damage. I just read a news item today that 300 in a company in Moga, Punjab that supplied spices to Nestle India lost their jobs due the ongoing Maggi noodles tangle.  I am certain under the current uncertain situation, many more will follow. Quietly not just Maggi, but the entire category is off the shelves I am told.

Some are of the view that Nestle itself could have handled the situation better. But I thought that by voluntarily agreeing to pull the brand off the shelves without getting into arguments regarding the test methods,.. they did the right thing. Now from here on they could take some lessons from Cadbury – another brand which faced a much worse situation few years ago. The relaunch of the Cadbury Dairy Milk chocolate after the brand faced much ire when worms were found inside the chocolate wrapper is part of marketing case studies in India on the topic of “Recovery Strategy”.  The 2 minute Maggi Noodle must take a 2 months strategic time out and get the formula of their taste maker right not just for my daughter’s palate but also Pandeyji’s.

We have a Prime Minster who is desperately wanting to change the business climate in India and boost investments foreign and Indian. Unfortunately, episodes like the Maggi ban of this kind do not augur well for his intent.

Postscript: A friend told me that the Maggi ban and strangulation of Nestle is our Govt.’s trump card to make the Swiss authorities co-operate and reveal the black money offenders. Wah! “Covert” operations under the Modi regime have gone to a different level I must say😊😊

Image courtesy: NDTV.com

“Chinpressions” – Impressions from another of my China visit – Part 3!!!

It was about 3 years ago that I made my 1st visit to ChinaShanghai and wrote the 1st part of Chinpressions. Read here. In between that and my last visit this week, many more visits to China happened. Ergo, 3 years hence what are my impressions?

The visit this week coincided with Narendra Modi’s another foreign tour – this time to China. So obviously India was in the news. As is the wont these days in our PM’s abroad visits, he was in “Rock star” mode in China as well with local Chinese craving and crowding to take selfies with him. It’s obvious that in the last 1 year Modi has single handedly changed the perception of India for the better outside of India.

I had mentioned that in my last post that Shanghai was devoid of emerging market symptoms like touts at the airports,… I realized now that it’s not the case. There were the touts on arrival at the airport chasing you for taxi/hotels,… just that they were of the “suited and booted” types 😜 😜. Similarly I had the impression that Taxis were on meters always. Well, yes most of the times. But not always. This time much to our chagrin, we realized that beyond 10 p.m the cabbies were upto fleece passengers demanding 4 to 6 times the normal fare!!! While on cabbies, I couldn’t understand why the driver was always enclosed in a cubicle of sorts making it difficult to communicate with him/her even in sign language. (Trying to communicate in English is a horror left unsaid 😦 😦 )

For all the heavy duty infrastructure and the investment led growth strategy Chinese government has been adopting all these years with a fair degree of success, it is now clear that the growth is stuttering.  A 7% growth is being touted as the new normal. Print media is agog with articles questioning if the world’s 2nd largest economy is heading towards a protracted period of subdued growth.  China has now become the latest example to explain the Economics theory of the Middle Income Trap”

It’s clear that despite the pretensions of the Government taking China to being in the league of developed nations, it is still haunted by a few trappings of developing/underdeveloped countries. Which the people are yet to shrug off it appears.

  • Like the locals not caring about courtesy to others and smoking to glory in public washrooms.
  • Like the drivers continuing to smoke while driving in cars inspite of requesting them not to. (Blame the language)
  • Like invariably the noisy scenes you get to see in restaurants when Chinese get together to dine and drink. (Something like we Indians I must say).
  • Like the rounds of bargaining one has to do some times starting with 10% of the quoted price to purchase stuff mostly the imitations at the fake markets hawking branded stuff from I phones to watches to bags to clothes to everything. China’s tryst with IP regime may prove to be its Achilles heel sooner or later. Just couple of days ago while in China I read the news that top brands like Gucci were suing Alibaba the E-Com giant for sale of counterfeits through its marketplace.Like getting to see touts trying to sell I Phones at US$100 around to gullible passengers even inside the Shanghai’s Pudong airport terminal!!! I was surprised to see these guys inside the airports after the Check-in Area moving around looking for their customers!!! (This doesn’t happen in India even)
  • Like being amused to see empty chairs placed in sides of the road meant as parking lots. Something like placing the chair to reserve that lot. Reminded me of our Indian habit of placing towels/kerchiefs,.. in buses to block seats 🙂
  • Like for all the fascinating sights at “The Bund” at Shanghai (Clean, colourful, Hawker free,..,…) the urinals are still the old world style not seen even in towns in India these days.
  • Like finding grills in windows in residential apartments a la India type just that they were more uniform and still not spoiling the elevation of the building unlike in India where grills of all types and sizes spoil the frontage of most buildings.

Most of the above fall in line with the definition of “High Context Culture” as defined by Edward T. Hall in his seminal work – Beyond Culture, I feel. So not surprising.

But, these are just symptoms waiting to disappear soon I guess. Despite the current ills like ever rising labour costs, China continues to be the factory of the world. Global companies don’t have an option but to court the Chinese. Like Apple’s Tim Cook was attempting to do when he was in China last week logging on to “Weibo” – the Chinese microblogging site akin to Twitter. (Modi did the same on his run up to his China visit). The ever increasing aspiring class is a segment of the world’s largest population that just cannot be ignored.  But one thing which continues to amaze me in China even after being the world’s largest populous country is – Where are its people?? For example in Shanghai the world’s most populous city – you don’t get see crowds in the roads, in the malls, in super markets, in train stations,.. So where are they???

Let’s see if that mystery unravels in the next visits.

3 years hence, the impressions are still very good but may be the shine has worn a little bit.

 Postscript: Heard that the PM’s baggage on foreign tours will now have a “Selfie stick” 😜 😜