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CULTURAL NATIONALISM VIS-A-VIS MULTINATIONALS
Vasuki (Dr. C. Abraham Varghese)
Re - This Booklet and the Author :
*All nations practice Economic Nationalism unashamedly and unapologetically. *
*Multinational is a misnomer.
*The degree of corruption is directly proportional to the distance between the decision and the action points.*
Dr C. Abraham Varghese, is a renowned Management Expert. He took his M.Scand Ph.D from the University of Manchester and worked as Deputy Chairman of Brooke Bond India, and President of Rallis India, Bennett, Coleman & Co. Ltd, and Batliboi and Co. Now retired, he heads his own Management Counselling Services. Inspite of his spending years abroad, Dr Varghese is not over whelmed by the West. A staunch nationalist, he puts his bold and frank ideas about Swadeshi and Management of our country's economy in this booklet.
He writes under the pen-name of VASUKI the God Snake who served Gods and Rakshasas as a rope for churning the sea. His revolutionary approach will make the ideologues and economists sit up and take notice of this new perspective. Succinct and precise, he touches the most sensitive and yet conveniently overlooked important points.
Hindu Vivek Kendra has brought out this booklet
to launch a nationwide debate on the cardinal points made out by Dr Varghese.
Should you have any queries about these issues, please do write to us or to
:
Dr C. Abraham Varghese,
Management Counselling Services,
"Waverly", Main Avenue, Santacruz (W.),
Mumbai - 400 054
CULTURAL NATIONALISM VIS-A-VIS MULTINATIONALS
A. The Four Issues :
I. Cultural Nationalism
II. Secularism
III. Economic Nationalism
IV. Decentralization
and
B. Multinational Corporations
A. FOUR MAJOR ISSUES
I. CULTURAL NATIONALISM
In the medieval period of history, nations and states were constituted on the basis of religion. Most of the wars were fought on religious grounds.
Since the Industrial Revolution, war became an instrument of colonisation for acquiring raw materials or conquering markets for finished goods.
But in the recent past, nations were constituted and identified in the name of Capitalism (U.S.A.), Socialism (Scandinavia) and Communism (USSR). This process acquired further momentum during the Cold War until these economic ideologies failed and many nations eventually ruined. Human nature survived all these artificial divisions and retrieved the fundamental spirit of mankind that believes in nationalism as the basis of the nation state.
Nationalism is the eternal identity of a group of people who cultivated and developed a particular set of cultural traditions, including art, music and philosophy,.
Fortunately, the human mind, spread around the world, was nurtured and evolved independently. This resulted in the development and growth of distinctive cultural traditions and practices. The vitality of the human race is preserved in the fertile ground of distinct cultural entities.
Although the cultural traditions of human kind are separate entities in different parts of the world, together they constitute the lively and vibrant human civilisation. Indian culture is a major component of that civilisation.
Since the collapse of economic ideologies, nations are now promoting their distinctive cultural nationalism. Recently this happened in Germany, where two parts of the same country ruled by different ideologies for 50 years were united under a more enduring concept of German nationalism. This is the truth for all nations of the world, unfortunately, the exception is India.
The leaders of all the major nations, e.g. Churchill, De Gaulle, Adnauer, Roosevelt and down to. Mrs. Thatcher practiced nationalistic politics at home and abroad. Leaders of industrialized nations are all nationalists pretending to be internationalists. In India, however, we are all internationalists pretending to be nationalists. The industrialised nations began as nationalists, occasionally relapsing to internationalism; but the core of these nations is permanently rooted in nationalism.
The whole basis of the success of advanced industrialised nations has been their economic and cultural nationalism; as much as the lack of this has been the cause for dismal economic progress in India.
Further, nationalism is the only lasting and binding force for keeping states and societies together in a country. Only nationalism can effectively neutralise the centrifugal forces in any nation. The greatest and the immediate danger the country is facing today is the prospect of national disintegration. This originates from the weak spirit of nationalism. Punjab and the North Eastern states are in turmoil as the spirit of cultural nationalism is weak and practically discouraged. What was happening in Punjab may well happen in Tamil Nadu in the not too distant future. Tamil Nadu has more reasons to develop into a "Punjab". The danger of disintegration of the nation is very real.
Therefore, the prime task of the nation is to urgently develop and promote the spirit of cultural nationalism, which all Indians can proudly belong to. This is urgent and imperative, and the responsibility of every thinking Indian.
II. SECULARISM
Unlike most of the other countries, India has no history of religious wars before the Muslim and Christian colonial periods. One of the world's largest Jewish synagogues is located in Poona and the one in Cochin is more than a 1000 years old. Christians flourished throughout their history and still do in all parts of the country. India is home for the second largest Muslim population in the world next only to Indonesia.
It is more likely that an Indian Christian or Muslim will be discriminated against in the Christian West or the Islamic Middle East rather than in the Hindu India.
Islam over-reached in India as royal patronage enforced religion by use of force. The Christian missionaries went for the mind while Islam for the body. This has resulted in the literacy rate in the Muslim society being very dismal and the same the highest in the Christian Community.
Social divisions based on religion is a foreign concept which has no relevance in the Indian religious or social tradition. It is the Semitic religions that often preach and practice religious discrimination.
The time has come for the minorities in India to express their full confidence in the fairness of Hindu society. Only the minorities can bury communalism in India by reposing their faith in the non-exclusivity of the Hindu religion and the secular foundations of the Indian Constitution.
III. ECONOMIC NATIONALISM
The term "Economic Nationalism" was first used by Walter Lippman to describe the American Economic Policy towards International Trade Agreements.
All nations practice economic nationalism unashamedly and unapologetically. There is no international trade discussion which is not conducted by any country other than in the best interest of that country itself. India is the only major country which permits all types of economic activity whether it is detrimental to the national economy or otherwise.
As a country we beg and borrow but never begin or bargain.
Our bargaining methods and means are submissive and stem from a spirit of servitude. Japan, China and Israel bargain to the hilt and extract better concessions for themselves and their citizens than we are able to do. India first and the rest is next, should be our motto.
We easily submit ourselves for political subjugation and economic domination.
The concept of Swadeshi is not the exclusion of all technologies.
There is no commercial or technical or managerial activity engaged by any foreign company in India which cannot be done by an Indian equally efficiently and at much lower costs.
So far, the entry of multinational companies has not reduced the price for goods and services paid by the Indian consumers. In fact the reverse is true. And always will be. This is one of the major causes for inflation. The Congress Government with its international pretensions and lack of nationalistic identity and weak determination has proved its incompetence and total inability to negotiate any trade or economic deal for the country on terms comparable with most of the major trading nations in the world.
Swadeshi is a conviction that no foreign country should profit from an activity which we can do for ourselves in a cheaper and equally efficient manner as any other country.
IV. DECENTRALISATION
What was inhibiting the economic progress of the country is not the lack of liberalization but absence of decentralisation. There is nothing more detrimental to decision making than delay. Errors and inaccuracies can be corrected but the loss due to delay cannot be retrieved.
Centralization also promotes corruption.
The degree of corruption is directly proportional to the distance between the decision and the action points.
Centralisation constricts initiative and dampens interest. A vast country like India cannot be ruled from a single point removed thousands of miles away from people and places. The best in the people is not forthcoming now because of remote control from New Delhi. Most of the social and economic problems of the country can be quickly solved at a much lower investment if regional and local talents are encouraged and supported.
Men and women sitting in New Delhi today were the very same people taking decisions as part of the administration in the various states yesterday. How can a change of location add to the wisdom of a politician or bureaucrat? There have been instances where the cases recommended by a minister or official when he was at the state was dealt with by the same minister or official after he moved to Delhi. There is no sign of greater wisdom prevailing in New Delhi as compared to the state capitals. The reverse is more often true.
Liberalization should have been the consequent step after financial decentralisation. A decentralised India will be a socially dynamic, economically more viable and politically cohesive country. Liberalization should first liberate our mind and release our potential, rather than perpetuate the inferiority complex. We are not an underdeveloped nation ; but nation developed under foreign domination. In the past it was political, now the domination is economical.
A significant national role, political and economic,
for every citizen in his or her station of life at their own location will speed
up our social development and economic growth.
B. MULTI-NATIONAL CORPORATIONS
The current discussion about Multinationals in India is reminiscent of the debate in the 1940s about the virtues and vices of the British Raj. At that time the virtues were preached by the ICS - the Indian Civil Service, and the vices by the Indian National Congress. Paradoxically, the greatness and goodness of Multinational companies are now propagated by the same Indian National Congress supported by the new ICS - Indian Corporate Service. The earlier ICS-cadre and the new version of it, both are expected to praise MNCs for their own very existence. Both are bound to toe the Government official line as a matter of duty. The consequences for publicly departing from the official line was quite severe in case of the old Indian Civil Service; perhaps it is more so in case of the present Indian Corporate Service. Until recently when the official line was anti-multinational. the bureaucrats, including those who are in power today, trumpeted it as an appropriate policy for India.
The corporate heads of Indian companies and the senior executives working in them are reluctant to express their opposition to the multinationals as they will be blacklisted by them for joint ventures or jobs.
This public posture is not the true position of most of the Indian corporations. A perfectly understandable dilemma. How to protect the short term advantage and simultaneously not to lose the long term prospects of the company or individual
Recently there was a public expression by the CII, though feeble as it can only be, against the Government official policy of unreservedly welcoming multinationals. It is worthwhile, therefore, to examine the role played by multinationals in India.
The term multinational itself is a misnomer and such a corporation does not exist in reality anywhere in the world.
The simple fact that managers from a multiplicity of nations are working in a corporation does not make it multinational in its objectives. Nestle cannot claim to be an MNC because it operates in many countries and employ local citizens. Hindustan Lever cannot claim to be multinational because it has prefixed its corporate name with the word "Hindustan". This prefix may soon disappear as it happened in many other cases e.g. Indian Oxygen to British Oxygen. The true nature of the Organizational allegiance can be appreciated by understanding the financial objectives that the corporation pursue. The product they market and the customers they serve are irrelevant in this context. As a rule no local citizen is employed in the top financial position as it is practiced by most of the MNCs even in India.
The core objective of all corporations is to take money for its promoters or prime shareholders.
The apologists for MNCs claim that India needs the management & technology of the multinationals to improve the quality and reduce the price of various products purchased by the Indian consumers. Further, it is argued that India needs their investments for economic growth. It is an accepted fact that national relevance of a corporation is assessed by the twin criterion of quality and cost which should ultimately reflect in the price and value of the product to the consumer.
Quality is not an absolute concept. It is related to price. In the case of consumer products, if the basic quality stipulation of chemical purity is met, the product should be judged on the two parameters price and value. Both together determine the relevance of the product to the country where it is marketed.
It is also often argued that unless the country imports foreign goods the quality of Indian goods will not improve. This as an amazingly absurd argument.
How many foreign cars did Japan import and sell in Japanese market in order to improve the quality of cars made by the Japanese in Japan ? Ask Micky Kantor!!
We have in our country, a number of foreign airlines operating for many years. Has it helped to improve the quality of service by Air India ? The same is true with the banking sector. The next suggestion could be to import some Ministers in order to improve the performance of our own ministers in India. This might already be happening indirectly from the World Batik and IMF!
Quality is not a virtue to be imitated; but a habit to be cultivated by promoting professional excellence and national pride.
It is true, competition can speed up quality programmes. Competition can be either domestic or foreign; there is absolutely no difference between the two. In some sectors we do produce world class products without foreign competition e.g. textiles and many industrial products. The old Binny and Co. and Metal Box, both multinationals, decided to sell out rather than face Indian competition.
Importing foreign goods to improve domestic quality is like giving a boy a new pen to improve his spelling.
In most cases the technology brought by multinationals is either already existing in India or can easily be developed locally. As in all countries, there are some exceptions to this, e.g. electronics. USA also import electronic goods from Japan.
We can export Software to the U.S.A. design Satellites for space but cannot make Soft drinks for India.
Even a one hundred percent subsidiary of a foreign company does not guarantee import of the latest or appropriate technology ideally suited for India. The main objective of multinationals is NOT to transfer their latest technology to its subsidiary or foreign associates; but to make as much profit as quickly as possible.
One popular route for technology transfer that is generally advocated is the Joint Venture. This again is a fallacy.
In business there are no friends; but only rivals. A Joint Venture is an unequal association of future rivals temporarily constituted to meet the immediate political expediency.
In all Joint Ventures one of the partners will gradually try to acquire dominance at the expense of the other. The dominant one invariably will be the foreign partner who reluctantly joined hands with the weak local partner to overcome the initial resistance of public or political sentiments against foreign economic domination.
If there are no free lunches there are no Joint Ventures too.
If the multinationals have imported technology and management, the consumer should be the first beneficiary. In reality this has not been the case. There is no instance of price reduction of products because of the entry of a multinational. in that product segment. But there are many instances where the product price was increased by the multinationals under the pretext of quality improvement. In all cases the price increase has no relation to the improvement in quality or real value to the customer.
An example is the case of ice cream. Before the entry of a multinational, an Indian brand of ice cream was sold for about Rs. 10 to 12. The ice cream newly introduced by the multinational is being sold around Rs. 30. The excuse is better "quality". What the customer interested is to know whether the nutritional or any other value added to the product will justify the mark-up of three hundred percent? Is the new ice cream introduced by the Multinational three times better than the ice cream that was available to the Indian customer before the entry of the multi-national ?
Worse still, the Indian Company seized the opportunity and promptly increased the price of his product from Rs. 10 to 12 to Rs. 20 to Rs. 22 to cash in by piggy - backing with the MNC. The same story is repeated in many other products like soap, shoes, shirts etc.
This "Price Push " i. e. matching the price of domestic products close to the foreign brands is the new economic exploitation being perpetrated on the consumers in this country.
This phenomenon is true with almost all product segments where the multinationals have entered. According to the Government, inflation is only 4.2% but the real price rise in the market for popular consumer products is far in excess of the official inflation figure.
Competition is good for the consumer provided it is fair and equal. This should be supplemented by an effective Government machinery and concerted community action to penalise culprits who exploit consumers in the name of quality.
Foreign consumer products have succeeded in various countries of the world under colonial economic conditions and patronage.
The concept of "Brand Equity" is not a consumer friendly idea.
It is a concept employed by corporations to exploit uninformed customers by compromising quality and price to enhance corporate profit. The customer in India is loaded with exorbitant prices as he is practically defenceless against aggressive, often unethical, marketing propaganda. All advertisements, including the one currently on TV to quote "advertised on TV..." is aimed at preventing the customer exercising his choice rationally. It is absurd to suggest that companies spend vast sums of money to encourage a prospective customer to use his free choice. No chance.
The advertising budget of some of the multinational companies is more than the combined sales turnover of their Indian competitors put together.
Is this a honest way of creating a customer choice or is it a programme of ruthlessly eliminating indigenous competition?
The MNCs are being courted for their investments. No multinationals can be counted for significant investments in any country other than their "parent" country. The true corporate loyalty can be understood by examining its investment decisions. The MNCs including the major ones, have a dismal record of investment in India compared to the Indian companies.
Reliance Industries, during their comparatively short period of existence invested about Rs. 14000 crores in the country on green field projects. What has been the investment pattern of MNCs, who existed in India for half a century and more ? Their performance in this area is pathetic compared to their Indian counterparts.
There are a number of "inherent" financial advantages which prompts the MNCs to make the first investment. But very soon the plant and machinery set-up by the original investment becomes obsolete quickly, more so in the current state of fast moving technological advancement. The original investment in plant and machinery need continuous reinvestment for modernization and expansion. Most of the MNCs in this country failed India in this respect.
Investment followed by regular re-investment is the only proof of economic loyalty. We put money where we think our home is.
A recent instance is demonstrative of the MNC's investment policy in India. Glaxo India, recently made a profit of Rs. 210 crores; promptly decided to declare a 175% dividend and transferred Rs. 53.55 crores to the parent company in the U.K. Apparently, the Glaxo directors in India could not find any worthwhile investment opportunities in India! The official clarification was "The company's new priorities are palpable and adding manufacturing capacities is not among them". Obviously, the Indian Directors on the Glaxo Board also agreed.
The merry days of "economic mercenaries" are not over yet.
Most of the so called "Asian Tigers" did not depend upon MNCs for investment or technology or management. By maintaining independent decision making status for the choice of investment as well as technology, they grew fast and could beat the multinationals in their own game and are prospering well. The real question we have to answer is:
What would have been the state of JAPANESE ECONOMY today, if Japan had allowed American or British or German automobile manufacturers to hold majority share in the Japanese auto corporations like Toyota, Honda etc.?
Solution for our economic problem lies in the
answer to this question.