UK industry faces its worst dragons so far: China, India

LONDON: Minister, it takes years to get planning permission. Minister, the tax regime is onerous and regulations are complex. Minister, the urban transport infrastructure is in bad shape, there’s not enough capacity, what are you doing? Minister, where are we going to meet our energy needs from in the future? Minister, I’m a small business, how do you expect us to compete globally?

There’s a strange sense of déjà vu. It’s easy to think we’re sitting in a CII or Ficci conclave in New Delhi, Mumbai or Bangalore. But we’re actually sitting with a bunch of British industry bigwigs, and it’s clear the concerns are the same in London or Ludhiana. But right now, taxes and regulations aside, the biggest concern of the British industry is facing up to the challenges from India and China. Often, the perception is that China and India are centre of low-cost, low value-added manufacturing.

The reality is very different. China, long seen as a manufacturing base, is moving up the value-chain. Similarly, in India, which has been best known for its IT and services, there’s a quiet manufacturing revolution taking place. “We will see global consumer giants coming out of China,” said Stephen Green, group chairman, HSBC Holdings. Martin Sorrell, WPP chairman pointed out that they value China Mobile as the 4th most valuable brand in the world, and that the future of western engagement with both these countries should realise that India is not Mumbai, and China is not just Shanghai.

“As MNCs move down the price line to compete in these markets, local players are moving up the value chain at the same time,” he said. As M&M’s Anand Mahindra puts it, “I’m glad to see that India is seen as a competitive threat to som

eone — for far too long, we have not been seen as such. We are looking not at being the lowest cost per unit of output, but lowest cost per unit of innovation.”

The main concerns that businessmen in the UK have today, is which one? As one representative working for a public company said, “It’s all very well for MNCs the size of WPP or HSBC to say both China and India, but we have limited resources and we’ll have to make a choice.”

In this balance, over the years, while China was top destination for a long time, India has gradually moved up the popularity charts. On the ground, India may be slow, have dirty roads from the airport, and so on ... but it does have a rule of law, a robust financial system, and an English speaking populace.