Still in the game

Two decades on, India is still an attractive destination for foreign funds. The New Asia shows why

P V Narasimha Rao told me his only purpose in liberalising the economy was to obtain foreign funds to develop the infrastructure and free domestic revenue for social welfare. Speaking of schools and hospitals, he said "there will be blood on the streets otherwise", which I quoted in Singapore's Straits Times where I then worked. Others interpreted his reforms differently. Indian tycoons whom the media dubbed the Bombay Club grumbled about an influx of smart competitors from abroad, while foreign businessmen, eyeing a potentially rich market of 300 million (a guesstimate) middle class consumers, licked their chops in anticipation.

They are still doing so more than 20 years later. Hence The New Asia, subtitled Business Strategies for the Economic Region That Is Shaking Up the World, by David James and Rajeev Merchant, which Praeger will publish at the end of the month. I knew James when I was editor-in-residence at the East-West Centre in Honolulu. A Harvard graduate and alumnus of Stanford and the Chicago Law School, James was already established there as a research fellow. His co-author was managing director of AT&T Asia Pacific and now heads a business consultancy in Singapore. The pair is admirably qualified to guide adventurous Western businessmen through the xenophobia and superstitions of the world's largest democracy that is also becoming, as the authors note, "the world's service provider".

Instead of trotting out the old claim about India and China together accounting for the bulk of the world's gross domestic product until the Industrial Revolution gave Europe an unfair advantage, this well-researched manual says India alone "developed the largest economy of the world, controlling between one-third and one-fourth of the world's wealth" during the 1,500 years after 230 BC. Another nugget gives the lie to those who accuse Indian politicians of monopolising nepotism. Kanti Desai and Sanjay Gandhi would have whooped to read that when Wen Jiabao was China's prime minister, his son headed a large state-owned satellite company. Similarly, President Hu Jintao's son managed a state-controlled corporation "that held a monopoly on security scanners used in China's airports, shipping ports, and subway stations". Confucius might have called it family values with Chinese characteristics.

I mustn't get carried away. India is also Asia's seventh most corrupt country and ranks at the bottom - just above Cambodia and the Philippines - in business efficiency. In any case, India is just one of 16 countries James and Merchant examine in the context of what they call the "Five Factors" that accelerate and obstruct growth in the true tradition of Ganesh whom they invoke as emblematic of India. These are listed as: Resources and Geography; Governments; Technology, Innovation and Entrepreneurship; Competitive Business Practices; and Cultures and Social Institutions. This thematic pan-Asian approach enables the authors to argue that the Tata Group and South Korea's chaebol conglomerates have organisational structures similar to the cartels or groupings of companies called keiretsu that are replacing Japan's family-controlled zaibatsu.

Time was when European travellers to the Orient were warned of the perils of offering a ham sandwich to a Muslim or assuming that men holding hands were homosexuals. While cultural miscommunication continues, it's just as confusing when traditional stereotypes disappear. "Do not give whiskey or other forms of liquor to Muslims" (Number 20b in the book's 22-item seven-page "Tips for the journey") may deeply disappoint some I could name who wait with bated breath for visitors from abroad laden with duty-free purchases. Another quibble: I thought it's in England that superstitious folk demand a penny if they give a knife or scissors so that the gift becomes a sale and doesn't cut the bonds of friendship. It's called an Asian foible in The New Asia.

James and Merchant compare nations and national characteristics without fatuous references to "Chindia" and with greater subtlety than Lee Kuan Yew. Describing Vinoba Bhave's movement, Lee claimed the Chinese wouldn't have begged for land. They would have killed the landlords and seized it. The same distinction is drawn here with finesse. One paragraph in the Religions and Philosophies section says East Asians are successful businessmen because Confucianism teaches pragmatism. The next identifies Hinduism with social stratification, the family and "utmost respect for elders". In short, Indians cling to the status quo.

Worst of all, despite the $90-billion Delhi-Mumbai Industrial Corridor, which gets quite a bit of attention in these pages, the infrastructure is as bad as ever. And schools and hospitals are just as scarce. Books like The New Asia should facilitate the flow of investment dollars that alone can realise Narasimha Rao's dream.