China and India call for new strategies

The India vs. China debate has become so boring. China is miles ahead of India when it comes to manufacturing while India leads in services. Companies such as IBM have smartly taken advantage of this situation by shifting manufacturing operations to China and services to India.

Strategies such as these are increasingly getting popular. And a report in the Wall Street Journal stresses why western companies need to get smart fast to tap the potential of India and China.

What companies such as IBM do in the coming years will have big implications for the chemicals industry. The Indian government is doing its best to boost chemical manufacturing but the big jump can take place only when downstream manufacturing takes off in the country. Industry accounts for just 27% of the Indian GDP compared with around 49% in the case of China.

In the absence of a big enough domestic market, India chemical producers will have to rely on exports. And developing a globally competitive cost position will be vital to their success.

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One Response to China and India call for new strategies

  1. Krishnaraj 24 January, 2008 at 9:59 am #

    Sadly, market bulls and investors see only half of the picture — the monetary side.

    While one feels great about the India Growth Story, there is a hidden downside — a sort of India Death Story, unreported by the media. It is a story of social and environmental costs being quietly passed on by manufacturers, and frankly, society and environment are getting saturated.

    An important social principle is violated by many manufacturing activities: While engaged in a profit-making activity, one must not leave a mess behind for the rest of society to clean up.
    This principle can easily be understood as common decency. If I come to your house as a salesman in order to market something, I must clean up any mess that I make while selling my product.

    But this principle is continually breached by manufacturers and marketers on a large scale in our country, and nobody even thinks of objecting!

    Have you ever pondered how mineral water and soft-drink manufacturers who sell their product to you in a PET bottle take no further responsibility what happens to their non-biodegradable bottle? Most often, it ends up as litter in the environment, because the consumer simply does not know what to do with the bottle, other than tossing it away.
    This is not how it should be. At the time of conceptualizing and designing the product, the manufacturer has the responsibility of thinking what will happen to the discarded packaging, or, in the case of non-consumables, to the product itself after its use. He must take the responsibility to create a safe avenue for its disposal or recycling.

    This requires a mechanism to collect the empty container or used product. So he must set up that mechanism. For instance, the grocery shopkeeper may incentivate the consumer to return PET bopttles to him by initially charging a coupl;e of rupees as deposit for the bottle, which he returns when the consumer returns the bottle to him. These bottles can then be sent back to the company’s recycling facility. (This is how soft-drink bottles made of glass were returned to manufacturers until very recently, remember? We, the consumers, were OK with this system. So why the sudden urge to package everything in discardable materials?)
    We should mobilize citizens to demand legislation that every manufacturer must repurchase/collect and recycle as many tonnes of raw material as he uses on a week-by-week basis. For example, if a mineral-water manufacturer uses ten tonnes of plastics per week to manufacture bottles, he MUST buy back ten tonnes of plastic scrap and safely recycle it.

    Now think for a moment about used automobiles. Used cars and scooters in India are sold as second-hand vehicles, and then third-hand, fourth-hand. A second-hand vehicle may go from a metropolis to a small town or village. It keeps going further and further into the interiors as it ages, as its condition deteriorates and its market price dwindles. And then?

    And then it is sometimes sold to a garage at a throwaway price, and this garage may salvage spare parts from it. ut what remains of this vehicle, including worn-out tyres, may lie around rusting and gathering dust for years and years on some deserted road. The tyres, when they are often burnt in winter for warmth, releasing black, acrid smoke and carcinogenic chemicals into the atmosphere.

    Or it lies as a rusting eyesore in some building compound for many years as the last owner loses all motivation to either repair it or sell it.

    Thus, every automobile manufacturer sells a product that turns into many hundred tonnes of junk — assorted metal, plastic, glass and rubber junk — after 6-8 years. They end up littering the beautiful countryside with this junk. Is this socially acceptable behaviour?

    If one looks for solutions, they are not difficult to find. Legislation and regulations are the answer.

    Automobile manufacturers must be required by law to buy back that many tonnes of metals, plastics, glass etc every week, and find ways to recycle them. The cost may be met by raising the market price of their product… but the responsibility to make the recycling activity happen MUST be fixed on the manufacturer of every product.

    The same applies to tyres, batteries, plastic goods, newspapers, textiles, chemicals, auto-lubricant oils, etc. The list is long.

    It is possible that this will make some manufacturing and marketing processes unviable. If so, this would mean that these economic activities were unviable in the first place, and were sustainable only by passing on hidden costs to the environment, to society and to consumers! Such activities must necessarily come to an end.

    Many industrial activities are environmentally and socially subsidized to keep them economically profitable. Let us lobby governments to knock off that subsidy and see how many activities remain sustainable!

    I propose peaceful demonstrations to compel industries to self-regulate, and legislators to pass laws:

    Small groups of citizens shall collect the branded packaging material of various manufacturers from the environment, and delivering them in large bundles every week to their corporate offices. It belongs to them, right? So let them have it back!

    A peaceful demonstration like this, sustained over some weeks, would make a powerful statement. I think this will make a powerful media impact as well… and thereby, an impact on the consciousness of people.

    This would be the first step to making changes happen. Citizens, industry and government must first be made to acknowledge that there is a problem; then viable solutions will begin to emerge.

    What say, fellow-citizens? I would appreciate your detailed responses to this idea.
    Those who wish to join me in peaceful social action (as described) are urged to email me at friendlyghost.kk@gmail.com

    Warmly,
    Krish

    http://friendlyghost.rediffiland.com
    http://globalwarming.rediffiland.com

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