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| Differences Between China And India - Our Perspectives |
Dilip Gadkar
08/20/2008
This past weekend was an Indo-China weekend - it features India's independence day and the Olympics in China. So, this weekend is probably the most appropriate time to discuss China and India.
The American Media, especially the Financial Media, loves to use "Chindia" as a catch-all phrase. Why are food prices so high? Why are oil prices so high? Why is global growth so strong? Why will the global economy avoid recessions? Why has the US turned from being a price-maker to a price-taker? The answer to all such questions, according to the Media, is "Chindia".
Yet, China and India are totally different in almost every respect. We look at some of these differences in this article and feature five segments:
1. The Role of the Two Governments
2. Perspectives of a Chinese Strategist on India
3. The Differences between Chinese and Indian Societies
4. Can India succeed in this manner?
5. The Future
1. The Role of the Two Governments
The immediate and stark example is the performance of the two Governments in Olympic sports. This week, India is celebrating the fact Abhinav Bindra won India's first ever individual gold medal; yes the first gold medal ever won by a citizen of a country of one billion people in 61 years after its independence. In contrast, China is on the verge of winning the largest number of gold medals in the 2008 Olympics.
This contrast is not accidental; it highlights the difference between the Chinese Government and the Indian Government.
As the Soviet Union and East Germany demonstrated many years ago, success of a country in Olympics can come from a serious and intense commitment of the Government of that country. Several years ago, the Chinese Government decided that success at Olympics was an issue of national pride. The Chinese Government devoted significant resources to build a world class infrastructure for Olympic competition. The results can be seen in the 2008 Olympics.
On the other hand, the Indian Government simply pays lip service to the idea of Olympic success. Any effort they devote to it is pitifully small and incompetent.
India is a people-oriented society. What succeeds in India is what the people want. Frankly, Olympic sports are simply popular in India. On the other hand, look at what Indian society has done with Cricket, it's passion. Indian success in Cricket has come from the people of India and not from the Indian Government.
This is equally true of Bollywood, the focus of our blog. Today, Bollywood is considered to be the world's most global entertainment franchise and major Hollywood stars like Will Smith and Snoop Dogg are trying hard to enter the Bollwyood scene. Bollywood Studios are now funding major Hollywood talent such as Spielberg and Brad Pitt (see our articles - "Bollywood provides cash to George Clooney, Brad Pitt, Tom Hanks & Jim Carrey" - May 24 and " Reliance ADA Group & Spielberg's Dreamworks Near Deal" - June 21).
Bollywood is just one facet of India's entertainment industry. The South Indian film industry is actually bigger and more successful than Bollywood. The various regional cinema industries are also proving to be substantial competition to Bollywood.
But, the success of Bollywood and, the Indian entertainment industry in general, has come DESPITE the Indian Government. In fact, as Bollywood was building its stature, the Indian Government and its Anglophile Bureaucrats looked down upon what they called the cheap, mass-appeal of Bollywood. Even today, much of the English-language press in India still looks down upon Bollywood (see our articles "New York Times vs. Times of India" - May 10 & "New York Times vs. Washington Post - II" - August 2).
Frankly, Indian society should be thankful that the Indian Government does not try to do much. Because, wherever the Indian Government has devoted its commitment and resources to an effort, it has failed miserably. Look at the history of the various state-owned and state-operated Indian public sector enterprises. Virtually all of them became white elephants, loss-laden companies with huge, bloated payrolls that survived only due to the largess of Indian Government.
The difference between the two governments can also be observed by watching the Chinese and Indian diplomats on TV. Chinese Embassy and Consulate officials do an excellent job on TV both in terms of expertise and media savvy whereas Indian Diplomats and Consulate officials tend to be wooden, boring and devoid of any confidence.
To be fair, this could be because the power in India rests with elected politicians and not with appointed officials. In contrast, in China, the power lies in the executive branch which is appointed.
So perhaps, we should compare Chinese diplomats with Indian politicians. Then, India does match up very well. Just look at the performance of Kamal Nath (India's Commerce and Industry Minister) at the Doha Round of Trade Talks and his masterful performance on American and European TV after the failure of the talks.
You would think that the Indian Foreign Service would make modern media training mandatory for its consular staff. But that would mean a commitment and a plan of action by the Indian Government. Heaven forbid! That would be a sacrilege!
2. Perspectives of a Chinese Strategist on India
The renaissance of Indian manufacturing and more broadly of the Indian corporate sector began during the depth of the 2001-2002 slowdown. The Indian corporate sector decided at that time that they were going to become world-class companies despite their Government. The results of this transformation are striking and form the basis of the tremendous performance of the Indian stock market.
A Chinese Strategist at a global top-tier Investment Bank visited India for the first time a couple of years ago. His reactions and thoughts are illuminating.
He wrote, "Being a Chinese who has taken infrastructure readiness as default for a long time, I was shocked to see how under-built India is in terms of basic infrastructure, despite its high reputation as a leading emerging market and demanding valuation. And because of that, I was genuinely even more impressed to see how Indian entrepreneurs managed to grow corporate value in such a tough environment."
He went on "...what the Chinese companies have been enjoying at almost no cost - infrastructure - remains a luxury for most Indian Companies....What I saw in successful Indian entrepreneurs - franchise focus, innovation, and capital efficiency - are the exact keys that I was looking for to unlock the potential value of Corporate China....."
His conclusions were addressed to the Chinese corporate sector, "If Indian entrepreneurs can build great corporate value with the underdeveloped infrastructure and limited government help, Chinese entrepreneurs should not complain about their challenges today - such as overcapacity and cost inflation."
To be fair, the Indian Government has begun to pay greater attention to infrastructure, both economic and military. The previous government built major highways linking the four large metro areas, Mumbai, Delhi, Kolkatta and Chennai. The current Government has begun paying serious attention to India's military infrastructure needs, though it pales in comparison with China's.
3. The Differences between Chinese and Indian Societies
The differences between China and India begin at very core level of the two societies.
To the best of our knowledge, China has one pre-dominant race, the Han Chinese. The ethnic minorities in China are small, disjointed and tend to live on the boundaries of China. The Han-Chinese culture is the predominant culture in China. As a result, the Chinese Government represents a rule of the majority.
In contrast, India has over 300 different ethnic and racial groups. Every religion in the World is represented in India. Every state of India has a different language, a different culture and its own mix of religions. Over 61% of Indian population is officially classified as a "minority", according to the Wall Street Journal. As result, the Indian Government represents the rule of the minorities.
Note: As an aside, we have remarked before that, to us, America has increasingly begun to resemble India. So we were struck by an article in the New York Times on August 14 titled "In a Generation, Minorities May Be the U.S. Majority". As another indication of resemblance, self-proclaimed "culture warriors" like Bill O'Reilly can be found in every Indian state.
This contrast shows up in the political systems and the attitude of the two Governments.
The path to the top of Chinese Government seems to be determined by who proves to be the strongest leader, who can govern. In a "survival of the fittest" pattern, the strongest leaders rise to the top of the leadership pyramid. The current president, Hu Jin Tao points with pride to his iron-handed rule in Tibet. The Chinese leadership have proved to be strong leaders in both military and economic terms. The Chinese reforms began in the early 1970s, and the Chinese economy has exploded in growth for the last 3 decades.
In contrast, the Indian political system is made up of compromises between disparate and often warring interest groups and communities. In this system, the people who reach the top are people who are deemed acceptable to all the groups, the people who are content to govern by accommodation. They are the perfect compromisers who often succeed by doing very little. People with strong personality or vision do not make it to the top in the Indian system.
This is why, in the last 60 years, India has not produced a strong Prime Minister except Indira Gandhi. But, remember Mrs. Gandhi was initially chosen because the older leadership thought she was the demure, amenable, young daughter of Nehru. In reality, she turned out to be a terrific tactical leader and an intensely patriotic, quintessentially strong leader. Mrs. Gandhi gave India an enormous strategic victory, the separation of Bangladesh from Pakistan. Unfortunately, she proved to be an awfully incompetent financial leader. When she took over India, the Indian economy was ahead of South Korea's. During the 25 years of her and her son's rule, the Indian economy regressed terribly until India became nearly bankrupt in 1990.
4. Can India succeed in this manner?
Given this sad tale, one can wonder how India manages to survive, let alone become strong. But, India has always managed to win the long race.
India is the only country in today's world whose culture enjoys a continuous history. The literary heritage, the language, the societal, cultural and religious ethos of today's India is the same as it was 5,000 years ago. The epics Ramayan and Maha-Bharat are alive and vibrant in today's India and in the hearts & minds of all Indians, regardless of income and ethnicity. So are the various traditions that developed during the 5,000 year history. It is instructive to remember that America was discovered because Columbus was trying to find a western sea route to India from Spain.
Look at the great civilizations of the past, Egypt, Mesopotamia, Greece, China and compare their state today with that of today's India. Egypt and Iraq show no traces of their glorious past. Greece remembers Homer's Iliad and Odyssey but these epics can hardly be deemed to be alive in today's Greece. China comes closest to India in this respect. But even China cannot look back all the way to its beginning. The respected figures in China are still Confucius and Sun Tsu, relatively modern figures.
There has to be something very intrinsic in India's core that enables this long term success.
To understand the challenges of India, look at Europe. India is more like the continent of Europe than any single country. Europe consists of states with different but related languages, most of which come from a single mother language. The ethnicities are different but related. The cultures, the languages and the people of Germany, France, Italy and Spain are different but related at its core. This is exactly what India is.
But, unlike Europe, India is one society and one country. Indeed, it has been so for the past 5,000 years. The successful Indian political structure has traditionally been a strong centralized sovereign with locally administered, semi-autonomous suzerain states. This was the structure that was successful 5,000 years ago in the days of Ramayan and Maha-Bharat. This was the structure re-established by Chanakya around 300 BCE and re-established again during the Gupta dynasty (320-550 AD). It is the structure that is in existence today.
Indian society is phenomenal at assimilating external influences and people. Deng Xiaoping exhorted China in 1971 "let a thousand flowers bloom". No Indian leader ever needs to say that. Tens of thousands of flowers as well as as thorns bloom in India and wither. The successful live on and thrive while the unsuccessful wither. This is why, through out Indian history, different states and different ethnic groups have become dominant during different periods. In all of this change, the core of India remains and succeeds.
This difference shows itself clearly in sports. The Chinese Olympic team is purely Chinese; one does not see immigrants or non-Chinese players in that team. In contrast, the successful Indian Cricket team is polyglot, blended with players of different religions, Indian as well as Australian, South-African, Sri Lankan and even Pakistani.
This acceptance of multi-ethnicity comes from India's history as the ultimate land of immigrants. Some Indologists claim that every single race that lives in India today came to India from some where else. Indian society has adopted and assimilated every dominant language the world has produced, whether it be Sanskrut, Persian or English. (see our article - "Bollywood - Convergence of Sanskrut, Persian and English" - June 21). Today, English is an official Indian language and Indian English, within the next 25 years, will likely become the most dominant form of English in the world.
5. The Future
So when you look at China and India, you wonder which model will succeed in the next 25 years:
* the disciplined, mono-ethnic, centrally controlled, strength-oriented Chinese model or
* the chaotic, multi-ethnic, decentralized, flexibility-oriented Indian model.
Today,
* China governs the largest land-mass it has ever governed in its 5,000 year history, and has enjoyed a series of successes since 1947 due mainly to the vision, the commitment and the Strategic Will of its leaders, while
* India governs the smallest land-mass it has ever governed in its 5,000 year history and has suffered a series of reverses since 1947 due mainly to the lack of vision, lack of commitment and the utter lack of Strategic Will of its leaders.
Will this trend continue for the foreseeable future or will this trend begin to reverse in the near future?
Only Time will tell!
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