Indianizing a China Business (Part Three)

Business Cultural Differences Affecting China and India
(Part three of a five part series)

Jun. 11 – Importing a business into another country is never easy, and this is especially so in the case of China and India. The countries have different administrative systems, ways of doing things and separate cultural habits and idiosyncrasies. If these are not recognized, embarrassment and even criminal action can follow.

As my practice Dezan Shira & Associates has found out, care needs to be paid when replanting a subsidiary root of a business from one country to another. Not all systems or points of reference are the same. Dezan Shira & Associates first moved to establish operations in India four years ago (after 14 years extant only in China) and we found many surprising cases where what we thought we knew from a cultural perspective needed additional work and attention to detail. That said, we are also aware of aspects of China that may not be familiar to Indian or other overseas based businesses. Here are some more examples:

Alcohol consumption
Unlike China, India has dry states, in which the sale and consumption of alcohol is prohibited, for example the states of Gujarat and Mizoram. Certain national holidays such as Independence Day and Gandhi Jayanti (the birth date of Mahatma Gandhi) are dry nationally. Dry days are also observed on voting days. Prohibition has become controversial in Gujarat following a July 2009 episode in which widespread poisoning resulted from alcohol that had been sold illegally. All of the Indian states observe dry days on major religious festivals and occasions depending on the popularity of the festival in that region. Dry days are a serious matter and are enforced by the police. It can also offend others if alcohol is openly consumed during these periods. If planning special dinners or events in advance, it is best to check whether the intended date will be a dry one or not. In Sri Lanka, every full moon is a dry day, as are a variety of holy days. In Pakistan, only members of non-Muslim minorities such as Hindus, Christians and Zoroastrians are allowed to apply for permits for alcohol. The monthly quota depends on their income but is usually about five bottles of liquor or 100 bottles of beer. In a country of 140 million, only about 60 outlets are allowed to sell alcohol and there used to be only one major legal brewery, Murree Brewery in Rawalpindi. Enforced by the country’s Islamic Ideology Council, the ban on alcohol is strictly policed. Members of religious minorities often sell their liquor permits to Muslims and a black market trade in alcohol continues.

In Bangladesh, foreign passport holders of non-Muslim nations can drink in some licensed restaurants and bars (and expatriate clubs) and can purchase imported alcohol from “diplomatic bonded warehouses” at a hefty rate of sales duty (at 300 percent). Holders of diplomatic passports and some other specially privileged persons (such as U.N. employees) have “passbooks” which entitle them to buy imported alcohol from the same “bonded warehouses” duty free. Often duty free and duty paid prices are shown alongside one another. Bangladesh nationals of any religion may purchase alcohol from special outlets with a medical certificate. Illegal homemade liquor (known as “Mod” or “Bangla”) is widely consumed in rural areas. The (mostly Christian) Garo tribal folk also brew a strong rice beer called “Choo.” Christians are permitted to use wine for Holy Communion. The tourism nation of the Maldives also bans the importation of alcohol. If brought in, they may be deposited with customs and reclaimed upon exit. Alcoholic beverages are available only to foreign tourists on resort islands and may not be taken off the resort.

Taxis
Given the temperatures that can be reached in India, taxis come in two varieties, air conditioned and non-air conditioned. It is wise to choose the former, and the additional surcharge is small. Upon arrival, it is also sensible to head for the “pre-paid taxi” kiosk as touts frequent international airports looking for gullible travelers. Pre-paid taxis are a reasonable fare, usually larger vehicles and are used to dealing with foreign travelers. Beware of helpful porters insisting on handling your luggage outside the main exit, they will immediately demand tips and can be a nuisance. Your taxi driver will help with your luggage. On longer journeys it should be noted that some taxis are only licensed to operate within a particular state and additional planning may be required for out of state journeys. Hotel taxis or cars tend to be expensive – far better to enquire with the concierge as to better and more reasonable rates. Other than pre-paid taxis, it is also sensible to negotiate the price, even if the taxi is metered, before you commence your journey. Some journeys will obviously involve toll roads. Be prepared to have some small change (Rs.100 notes) ready as the driver himself may not carry much cash.

Hotel concierges
The service in Indian hotels is generally superb, and unlike Chinese concierges, who are often limited in their ability to help or be interested, Indian concierges are generally excellent sources of local information and will always know someone who can help with your request. They are also not so obviously on the make and treat guests respectfully as clients of the hotel. A tip however is appreciated – Rs.500 (US$10) goes a long way for good advice. It is always a good idea in Indian hotels to make friends with the concierge. These are professionals employed for their knowledge and many will have been within the hotels service for decades. They are an excellent source of local assistance and for getting things done. In this respect, Chinese concierge service has a long way to go. Les Clefs d’Or (the Society of Golden Keys) is not represented or recognized in China.

Banking
In a similar manner to China’s State Administration of Foreign Exchange, India monitors the flow of inbound and outbound capital via the Reserve Bank of India (RBI). The RBI also designates tier one banks in India to fulfill some of its duties, a situation that actually makes Indian bureaucracy at this level easier than in China, which employs capital controls. RBI approval is required for a variety of transactions, however this is relatively easy to arrange. India has about 100,000 ATMs against China’s 200,000. Generally speaking though, access to cash points is not problematic. Cash and foreign currency may also be freely exchanged at hotels or licensed foreign exchange brokers. In terms of international banks, Standard Chartered are the market leader (historically they have always had a strong India presence in much the same way HSBC is more associated with China) and most international banks maintain branches in all major cities.

Chris Devonshire-Ellis is the principal of Dezan Shira & Associates and its founding partner. He established the firm’s China operations in 1992 and its India practice in 2006. He regularly commutes between China and India. Contact: chinaindia@dezshira.com.

Chris also contributes to Asia Briefing’s other titles, India Briefing, China Briefing and Vietnam Briefing.