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Monthly Archives: March 2007

A Rare Bollywood Gem

umrao-jaan.JPGUmrao Jaan gets two thumbs up from 2point6billion!

A J.P. Dutta film set in late 19th century India recollects the story of India’s best known courtesan, Umrao Jaan (born as Amiran) who was abducted as a child and sold to a brothel in Muslim Lucknow.  Raised to be an educated, civilized and talented artisan trained to sell desire, Umrao Jaan longs for a lost childhood and struggles against her fate of life without love.

Umrao Jaan puts all previous films of courtesans, concubines and geishas to shame; it fulfills all of the requirements needed in telling a good story but what’s more, it puts value into characterizing each role rather than glorifying imagry, sound and stereotypes.  Dutta’s choice to emphasize the person over the persona gives the film a true character and the director’s persistence to stick with a storyline sheds a refreshing light on what Bollywood can – and should more often – achieve, to tell a genuine story.  These are the things that are missing in most of Bollywood’s recent films which all-too-often overdo the Bollywood ‘rule of thumb’ or the ‘three threes’ – three songs, three dances and three hours – which try too hard to stimulate the audience with superficiality and silly excitement and which lack good storytelling. 

Umrao Jaan has the stuff that we want to see in Indian films.  It is a must see!

Dutta is by far Bollywood’s best modern troubadour!

Posted in Culture & History | 4 Comments

China, India: economic performance comparisons, a perspective on the past

A recent study comparing China and India’s economic performance – which uses a simple growth accounting exercise to produce estimates of contributions of education, labor, and capital in agriculture, industry and services sectors – results in interesting perspectives on the sources of economic growth in these two huge countries.  The study looks at economic experiences in each country from 1978-2004 and though the nature of the report is to examine significant developments over the past quarter century, the analysis pretty much stops at 2004.  Considerable shifts and changes have taken place in each respective country since 2004 so this report, though in-depth, is – at best – a historical reflection which does not suggest direct implications for present-day or future projections of China or India’s growth patterns. 

For a modern-historical perspective, the paper is certainly worth reading.

Accounting for Growth: Comparing China and India by Barry Bosworth and Susan M. Collins (Brookings Institution), a working paper of the National Bureau of Economic Research (NBER), Washington DC.  No. 12943, February 2007.

The paper can be downloaded for free at: http://www.nber.org/papers/w12943.

Posted in Foreign Trade | 2 Comments

Home grown Chinese & Indian wines

“Pah !” I hear you retort – “I’m not drinking that muck !”

Well, like many conceptions about China and India, the admittedly previous rather vinegaresque concoctions that were brewed up in a barrel in a Sichuan or Gudjarati back yard certainly deserved only the strongest palates and stomachs. But, the times they-are-a-changing, and although I have no idea whether Bob Dylan is a wine connosieur, it’s an interesting link to the recent embracing of global trends that both China and India are developing an appreciation of vinho. But are they any good ?

Well, at considerable personal expense, danger and liver damage I can provide the first 2point6billion.com wine review. Read on…

CHINESE WINES

Home of “Great Wall”, “Dynasty” and various other odd brands, China has in fact been making wine for thousands of years. However, with a genetic inability to breakdown alcohol (90% of the population – which is why many Chinese turn red and feel very ill after just a little drop), China’s drinking culture evolved rather differently. Not being able to drink alcohol so much for pleasure over the course of an evening, the Chinese drink to get drunk. And pretty spectacular they are at it too. Wine is not the best alcohol delivery mechanism to use for this, so the Chinese distill mainly rice and sorghum to get trashed. Mao Tai being one of the best known. Again, not being drunk for an exquisite long lasting evening by the fire, Mao Tai and the various Chinese spirits tend to be pretty rough and very strong. Drinking sessions during contract negotiations as many businessmen will know are both (a) foul, and (b) usually result in participants being carried to their rooms as “Bai Zhou stopped play”. China has however developed a huge beer drinking culture, although most of the brands, with Tsingtao being dominant, being rather light lager type brews with a low alcohol content.  But back to wines. New wealth in China has meant a explosion of imported wines, mainly at the middle range – say USD70-100 a bottle. In fact, ASC Fine Wines are clients of mine and do a great job in importing and distributing the better international brands across China. However, for domestic production, the best known brands are Great Wall and Dynasty. I have heard tales of these actually being adulterated with cheap Chilean hooch, and despite the attempts, mainly by Great Wall, to introduce some expensive and well packaged wines into their range, both these brands are largely made up of rather tannic, acidic Cab Savs. Good for marinading meat with – which is what I buy them for – but you won’t be scoring any points with a date if you order either of these. ChangYu is recognised as an “official world famous brand” by the Chinese, which reeks of the American Football “World Series” with only teams from what always seems to be Detroit and Chicago contesting the issue, but be that as it may, ChangYu does have a rather more interesting history. Starting life as a Chinese-Hungarian JV over a 100 years ago, they claim to have the largest wineyards in Asia – some 4,000 hectares. I’ve seen it, and it’s huge. Again, can sav predominates and the bulk is cheap product for the domestic market that thinks splashing out 40 kwai on a bottle of wine is exotic. Many of the vines are also young and will not mature – even if they are tended properly – for 15 years. But keep an eye on it, and maybe by the time I reach 70 ChangYu will have produced a bottle of something smooth and balanced. But thats not much help when I fancy a claret with a medium rare steak at the Aria restaurant at the China World Hotel at Guo Mao in Beijing next week.
However China does have some good wines. For reds, the wines of Xinjiang – West China – and particularly from the old silk road city of Turpan are quite something – the “Lou Lan” brand (Cab Sav and Sav blanc) both being very acceptable. And a remarkable story about how they came to be made, some two hundred miles into the Taklimakan Desert. Read the April 2006 issue of our “China Expat” magazine at www.chinaexpat.com for the full story. Xinjiang also makes ice wines – which are pretty good – hardy vines and cold winters there mean they can do this the traditional way – leaving the grape on the wine late in the season until they freeze. The frozen water can then be mushed away leaving alcohol – and flavor. All good stuff, and I have seen cases of those disappear in an evening at Mat Ryans old bar in Shanghai. Otherwise, Tsingdao – the name refers to the old German treaty port on China’s east coast – also make good wines, with a rather nice and not too buttery Chardonnay, a decent enough Sav Blanc, and a recent attempt at a Reisling all worthy of applause if not medals at this stage. Jancis Robinson, the Financial Times wine critic, has also commented positively about these, and hey, she knows what she’s talking about. Thats about all I know on Chinese wines of any note, (apart from the wonderful Osmanthus flower wine that can be found in Guilin) but if anyone else has anything to share then please do.

TIBETAN WINES

As a quick addition as we travel south towards India I’ll quickly mention the Tibetan Barley Wines, which can be found in various restaurants, especially in Lhasa and around the Tibetan community in Beijing. Originally produced with the help of French missionaires over 100 years ago, these are a combination of red wine (I think from China) and barley wine. The grain gives them a certain earthy flavor for sure, and they are a bit of an acquired taste, but curiously enough do go down well with a decent Tibetan meal. However I think a Tibetan ambience is really required as a ‘spiritual’ accompianment to these wines.

INDIAN WINES

India has come a long way in it’s production of domestic wines and is now producing some very acceptable brands. Distribution seems often to be a problem however, with somewhat erratic coverage. This is what I know:

Sula Vinyards are located about three hours drive north out of Bombay. Originally long a fruit growing area, interaction with Californian wine makers has shown the site has the capability of producing some consistantly good wines. Again, maturing the vines is an on-going process, but they are turning out a reasonable Cab-Sav Shiraz, and an interesting but still watery Red Zinfandel. Their Chenin Blanc is perfectly acceptable chilled on a hot Bombay afternoon, and the Sav Blanc too is worth it’s space in the fridge. The star however of Sula is the excellent Dindori Reserve Shiraz, which is probably the best wine made in India at this time. It’s well balanced, fruity and dense and I hear they are going to start to vintage it. If you can see it on the menu – grab a bottle. Also worth mentioning is their light, flowery dessert wine, the late harvest chenin blanc, which is nice enough. India of course doesn’t have the weather to get in the icy concentrations of fruit and sweetness that other dessert wines can provide, but again, I enjoyed it and on a hot day, something flowery will always go done well. Sula is a well run vinyard and is bringing in a lot of international expertise to assist with the development, so look out for it and especially that Dindori. Just as an aside – to illustrate the differences that exist when making wines in India – I asked the winemakers two of the hazards they faced when producing wines. “Snake bite” was one reply “we get a small, bright green venomous tree snake climbing up the vines and when the grapes are picked by hand….we keep anti-venom on the premises” and “Jaguars coming down from the hills and attacking the guard dogs” being the other. Bordeux this is not.

Chateau Indage is another good Indian wine maker, and they produce good quality, but not yet outstanding wines under the “Ivy” brand. With vinyards just outside Bangalore, they grow Shiraz, Cabernet Franc, Chardonnay and Pinot Noir, and while I have heard some good reports, I have personally yet to try something that was any better than OK. Still, what do I know ? Maybe someone out there can educate me. However, they do produce the wonderful “Marquis de Pompadour” sparkling wine, which is the best of the “Indian Champagnes” I have had. Made in the classic champagne style with both chardonnay and pinot nior and the addition of the ugni blanc grape, this is a great wine to enjoy after a hard days work or to celebrate. It was previously known in it’s export version as “Omar Khayamm” – Chris Patten used to have it at Government House in Hong Kong during his time there as the last Governor.
Also getting rave reviews is Reveilo, an Indian-Italian enterprise based in Maharashtra, with a very good Shiraz, a well balanced and fruity Cab Sav, and decent Chardonnays and Chenin Blanc too. Just coming onto the markets, again quality is being invested in and these are wines to look out for.

I tried the new Seagrams “Nine Hills” wines the other evening at V Lounge at Juhu in Bombay, and despite the big name behind them, I had to say I was a bit disappointed. The Cab sav just tasted weird to me, while the Zinfandel rose was very raspberryish – as if someone had poured in some juice. I have heard the Merlot is better but have yet to sample it.

I hope this has been of use – I’ll add more as I get to sample anything new – and if you have anything to add of update – please fell free.

Good health !

Posted in Culture & History | 8 Comments

Can India Overtake China in GDP & FDI ?

The assertive question on the streets in Bombay and Delhi is not just a question of “if” – it’s a question of “when”. From the outsider, and especially from China, it may seem a rather optimistic comment, and for sure, one of the endearing traits of the Indian population is their exquisite optimism. Garnered with rapid mood swings however, it can range from the breast beating machismo posturing of “Our boys will win the Cricket World Cup !” (currently being played in the West Indies) to depair upon defeat (against Bangladesh) to more upbeat optimism again upon a record win against lowly Bermuda. So, it’s to be expected that Indian statements of an upbeat nature can be taken with a pinch of curry powder.

However, there is more to the theory of India overtaking China’s FDI and GDP figures than mere posturing. I’ve heard many stories and anecdotes about the reasons why and why not, but two essential truisms come into play to determine the actual outcome. The reality being that yes, under certain circumstances, India can overtake China’s position in global economics. These are the two big issues:

Democracy vs One Party State

It looks like China won this – the Chinese state with no opposition just getting things done, while India is mired in democracy. However I’m not convinced the race is over. Rather like the hare and the tortoise, for sure China’s hare has disappeared over the horizon. It’s FDI is ten times that of Indias. But can China sustain a one-party system ? Here’s the conundrum – with that massive population – if China doesn’t keep everyone busy and sharing in the nations new wealth, problems can occur. Keeping hundreds of millions of workers occupied means having labor intensive industries, just at a time when IT is leading the global economy into the future. In order to survive as a one party nation, China has hit a brick wall in terms of it’s investment requirements – labor intensive, old fashioned and increasingly outmoded. India has no such restrictions, and it’s IT industry – despite it’s democratic position – is world class. If China hits that one party labor intensive “keep ’em busy to stop them rebelling” position, then it will become increasingly burdened, and India can and will catch up.

A Democratic China ?  The Signs Are There…
As to China throwing off the one party system, well thats interesting. The National Reform & Development Commission – the communist parties think tank – has a team looking at the democratization of China. Plus – as an observation – why are some of China’s corrupt officials embezzelling huge amounts of money – in excess of USD 1 billion in some cases ? The only reason you would need such a gigantic sum is to want to position yourself as a future ‘first family’ – if China became democratic, and need to have that sort of capital to be the powers behind the throne. “Managed democracy” – where the communist party transmogrifies into power being held by an elite group of families – is more likely. 20-30 years ? If that is the only way China can maintain it’s growth, it has to democratize. If not, India will catch up.

The Power of the Population

China’s population is aging – in fact it’s the fastest growing population of elderly in any major country. Retirees will double by 2015 to 200 million. That, plus the effect of the one child policy, is starting to affect China’s demographics, as their workforce begins to shrink and age. An evolution of cheap young workers into pension bearing citizens will slow the Chinese economy down and make it’s labor force more expensive.

India doesn’t have that problem. It has plenty of cheap, young labor. It’s problem however is rather different – with 65% of Indians living in rural villages – it’s getting them empowered and into the workforce that is the major issue. Investments into education, and empowering that latent population is key. Whether or not India can pull that off is a debatable point. But with the economists and government all recognising the truth behind a sustainable Indian growth demanding it’s underused rural population is freed from their  shackles of poverty, India is certainly aware of the issue.

Can India overtake China ? It could happen. And the political platform and population demographics are the two major drivers that can make this so.

Posted in Foreign Trade | 5 Comments

China and India’s Challenge of Innovation – Meheroo Jussawalla

Senior Fellow Emerita at the East West Center in Hawaii, Meheroo Jussawalla, recently released a paper comparing China and India’s prospects of innovation.  In additon to the paper’s in-depth analysis of how the global balance – in terms of innovation – is shifting to the east as China and India evolve, Dr. Jussawalla shares a unique perspective on how the two countries can not be considered as merging or competing but rather their advantage in complimenting each other’s strengths.

The full text of the paper has been made available by Dr. Jussawalla and it can be accessed on 2point6billion.com at: http://www.2point6billion.com/The_Challenge_of_Innovation.pdf.

The East West Center provides a summary of the paper at: http://www.news8hawaii.com/global/story.asp?s=6240190&ClientType=Printable.

Thanks to Dr. Jussawalla for sharing her paper with our readership and to Jerry Stryker, friend of 2point6billion, for flagging up this valuable piece of information!

Posted in Foreign Trade | 1 Comment

Comments on Growth by India’s Finance Minister

We met today with India’s Finance Minister, P. Chidambaram. In a frank and pragmatic address he made the following points and observations relating to the sustainability of India’s growth:

How do you see India’s FDI evolving ?

India had FDI of USD10billion in 2006, this is expected to rise to USD12.5billion for 2007. We believe this will rise to about USD25 billion in the next five-ten years. Another income source for the country that differentiates us from say, China, is that of the Indian diaspora, which is the largest in the world. Indians overseas remit annually about USD24 billion back to India. But regular FDI is expected to grow at about 9% annually.
What measures are in place to sustain this ?

We are well down the road of reforming as a nation. For example, our Government is now made up of academics and professionals, our Prime Minister is a world renowned economist and was educated at Cambridge (1st class honours degree) and Oxford (D. Phil. degree). As finance Minister I am a qualified lawyer and a Harvard graduate. Our Planning Commission is headed up by a Professor of economics, while our Minister of Science & Technology is also a lawyer and has been President of the Supreme Bar. Our Minister for Commerce has a degree in commerce. So government now has the right academic talent, we are more academics than politicians, and this helps in getting the intellect required to understand what needs to be done, where the problems are, and how to fix them. We have liberalised most industries in India, and most are available for foreigners to particpate in 100%. Other sectors, such as banking and insurance, will be liberalised by 2009, and our effective tax rate is 20%. So we have a lot to offer. Sustained growth is out key. We also enjoy high savings rates in excess of 30% of GDP and as long as this is maintained our fundamental growth will be sustainable. India is already the worlds 3rd largest economy having overtaken Japan recently.
Which areas of India are seeing the highest growth rates ?

Delhi and the Punjab lead, followed by Mumbai and the Western coast, and South East Indian around Chennai. The coastal cities are doing well. Our challenge is to get that growth into the rural areas. 65% of Indians live in rural villages and we need to empower them. We need to balance our increased economy and infrastructure development with the moral issue of providing basic services, such as fresh drinking water, sanitation, education, and medical care to the rural areas. If we can accomplish this we will overtake China by 2030 as the demographics of India’s young population, our huge labour force affect global development, and as China’s one child policy starts to bite into their aging population.

What about the disparity between the service industry and the manufacturing industry in India’s economy ?

Much is made of this, and we have had problems with the development and implementation of large manufacturing industries. But this is changing. Manufacturing will have grown by 11% in this quarter and a percentage of GDP. So we don’t see this as an issue actually. At present services account for 55% of GDP, Manufacturing 28% and Agriculture 17%. Agriculture is where the problems lie, not manufacturing, and we are pushing through reforms to assist this sector also.

Is Micro-credit a big tool for the rural population ?

Very much so and it is an untold tale of success actually. India has 2.5 million self-help schemes, largely run by women, and supported by NGO’s and banks. They have a recovery rate of between 97-99%, which is a fantastic achievement. This is also helping lift the rural population out of poverty and later, into productivity. It will take awhile but the rural population will be the continuing engine of India’s growth in 20 years time.

How important are developing countries in global growth ?

Actually 2006 was a watershed year. For the first time, 50% of gobal growth came from the developing nations. The US is still immensely powerful, but Asia is now the primary growth driver, lead by China and with India behind. This will not change. To succeed globally, international businesses must have China and India in their plans.
How does India compare with China in it’s economy ?

Apart from some similarites in demographics, there is a huge difference in the type of economies we have. India is actually far closer to the US model than the Chinese. China’s economy is dependent upon exports, whereas India is a consumer led economy. We have a massive middle class that can and does buy. We use exports to fund our imports, and have a healthy domestic market for product that is far stronger than China’s.

Minister, thank you for your time.

Note: IBM have just announced plans to invest USD6 billion in India by 2009, effectively tripling their existing investment of USD2 billion. Growth for IBM in India during 2006 was 38%, with a workforce of some 50,000 employees in India. 90% of that workforce is engaged in providing services external from India.

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Blogging from Bangalore – John Elkington

Friend of 2point6billion, John Elkington, writes of his journey – meetings with fascinating entrepreneurs and innovative firms – in Bangalore…

It was something of whistlestop tour.  I was in Bangalore/Bengaluru for the first time, having visited India for the first time in January 2006.  Bangalore turned out to be rather different to Delhi and Mumbai, where my colleague Kavita Prakash-Mani and I found ourselves last time.  And the reason I was in Bangalore?  To take part in a 3-day session on the future of technology – particularly the future of sustainable mobility – out to 2027.  Our host: the Shell GameChanger team.
 
“Most people go through life playing by rules other people wrote,” say the Shell GameChanger team (
http://www.shell/com/home/Framework?siteId=gamechanger-en). “We believe some people can’t stop dreaming about how things could be better under a different set of rules. Once in a while, a dreamer succeeds against difficult odds to truly change the rules of the game on her own. However, often it takes a few things the dreamer doesn’t have to show that the idea will work. For lack of money, a few connections, and perhaps a bit of guidance, many great ideas never get off the ground. Shell GameChanger is designed to provide funds, introduce you to the right people, and perhaps provide some useful advice. We invest in radically novel, early stage ideas in the ‘energy and mobility’ industry to help you get them from your mind to ‘proof of concept.'”

But before the GameChanger session started, I managed to meet a number of really interesting people in the area.  They included Rohini Nilekani and her team at Arghyam Trust (http://www.indiawaterportal.org/arghyam/), whose motto is ‘Enough Water, Safe Water … For All’; Svati Bhogle (CEO) and Mr Rajagopolan (Chairman) of TIDE (Technology Informatics Design Endeavour)  and then the President and Chairman of United Breweries (http://www.theubgroup.com/), whose original Scottish genes were clear from some of the brands in the glass cases on the stairs up to their top-floor offices. 
 
Later, I travelled out to Electronics City this morning, to see Kris Gopalakrishnan at the Infosys campus (
http://www.infosys.com), where he is Chief Operating Officer. He was also one of the founders, alongside Nandan Nilekani, CEO, President and Managing Director.  Nandan Nilekani co-chairs the Tomorrow’s Global Company Inquiry (http://www.tomorrowscompany.com/), where I’m a member of the Inquiry Team.  I was enormously impressed by the Infosys combination of deeply-held values and towering ambitions. As N. R. Narayana Murthy, Chairman and Chief Mentor, put it when the company – founded in 1981 – celebrated its 25th anniversary last year: “A great corporation must live for hundreds of years. Hence, we are still babies. Even these initial baby-years have taught us several lessons. These lessons are valuable not just for our future journey but for other corporations in the country and, perhaps, the world.” He stressed, among other factors in the company’s success, “An enduring value system based on openness, honesty, integrity, meritocracy, fairness, transparency and excellence.”

orb-energy.JPGThen across to Orb Energy (http://www.orbenergy.com/). Orb represents a large slice of a renewable energy unit that used to be run by Shell India, but spun out.  Again, very impressed – though this really is a baby company. Interested to hear their plans for franchising, which will be useful background for the survey report we are just completing for The Skoll Foundation (http://www.sustainability.com/insight/skoll.asp).  Returned to London keen to return to India as soon as possible, which is just as well – since SustainAbility has decided to work towards an Indian office over the next 3-4 years.

John Elkington is Founder & Chief Entrepreneur at SustainAbility (http://www.sustainability.com) and blogs at http://www.johnelkington.com

Photo: N.P. Ramesh (COO) and Damian Miller (CEO) of Orb

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