Making the future work
| This book is one such and the author, Stefano Pelle, has drawn on his experience of working in a multinational FMCG company in Russia and in Asian countries, mostly in India. Judging by the numerous notes and references at the end of each chapter, the author has done a considerable amount of research. He starts with a comparison of the economies of the four countries with a number of tables and charts sourced from UN documents and, of course, the Goldman Sachs report. There are several similarities in these economies. The countries are large with a big population, India and China each accounting for over a billion. There is a large middle class population, whose number and purchasing power are increasing every year. Each country has bulging foreign exchange reserves. There are similarities in constraints as well"" corruption, infrastructural inadequacies, a large section of the population in the poor category, to name a few. |
| The economies of the developed countries, having reached a plateau, are frantically searching for new geographies for growth and the BRIC countries provide the ideal opportunity. They just cannot afford not to be in these countries. The author has thus set out to provide some guidelines for investors from the developed economies. His is primarily a nuts and bolts approach. He outlines various steps in setting up a greenfield project, meeting Government regulations, evolving personnel policies, distribution arrangements and so on. The chapter on the importance of ethics is revealing. Some of the case narrations from the BRIC countries show that investors have to negotiate a veritable minefield of regulations and they risk severe penalties or losses if they underestimate the seriousness of the situation. Coincidentally, these countries find themselves in the bottom third of the table on the Index of Corruption Perception! The author also stresses the importance of Corporate Social Responsibility and concludes with a listing of potential global operators in the BRIC countries and the future geopolitical environment they may find themselves operating in. This list, sourced from a Boston Consulting Group study, of course includes names from India that we would normally expect. |
| Since the author's experience is in the FMCG sector, the focus of the book is on this sector. This is its main drawback as he has clearly missed out on recent trends and interesting developments in FDI in other sectors. |
| In the engineering sector, for example, FDI is not just about putting up a factory for making a given product but about creating a manufacturing ecosystem. In other words, the manufacturer of the main product persuades his main component suppliers to set up facilities on the same or nearby campus. This ensures continuity and reliability of supplies. Suzuki started this trend a few years ago but it is now catching on, Nokia being one of the latest ones. |
| The most interesting development is in the retail sector, where policy is still evolving. The investment seeks to ensure the quality and continuity at each step in the supply chain, right from the producer to the consumer interface. This has a far-reaching impact as the benefits of FDI can reach the hitherto excluded sections of society, the rural population. |
| The BRIC report came out three years ago and the performance so far of the economies of the four countries has been better than what was projected. So one would be justified in harbouring the optimism that Bertrand Russell displayed about the future 70 years ago. |
| UNDERSTANDING EMERGING MARKETS BUILDING BUSINESS BRIC BY BRIC |
| Stefano Pelle Response Books Price: Rs 295; Pages: 246 |