Mainland China!

We always ask one question: ' How do the Chinese have a booming economy?' and we compare ourselves with the 'giant' on all parameters including 'defense' sometimes.

Or it is the title of this article which hits our mind straight after that, if the initial is too intellectual for us.

The most common observation is about the FDI in India.

In a year-end review released this week, Kamal Nath, India's minister of commerce and industry, said FDI inflows were expected to surpass $11bn in 2006-07, compared with $5.5bn the previous year.

Wait! don't get excited so soon, please have look at the Chinese figures: - A report from the Economist Intelligence Unit this autumn projected that FDI in China would exceed $80bn in 2006.

I recall book I had read in my first year titled ' A Bridge Too Far ', i think it aptly applies in this case too. Just when are we going to bridge that gap? or is it really possible for us to do so?

If we feel that communism which brought in centralized authority and quasi-dictatorship in China post cultural revolution is the key, then have a look at this: -

LENOVO is arguably China's most important company, rising from obscurity 20 years ago to become the world's third-largest manufacturer of personal computers. Its purchase, for $1.25 billion in late 2004, of IBM's PC division, which boasted four times its own volume of sales, still ranks as one of the most daring overseas acquisitions by a Chinese company.

Yet there was nothing inevitable about Lenovo's ascent. Its founder Liu Chuanzhi was determined and politically shrewd. But as Ling Zhijun, a respected Chinese journalist, chronicles in this exhaustive new account, Mr. Liu and his colleagues—most of whom started in business in their 40s—had no experience of running a private company, no idea about modern computers (the first mainframes had to be cooled with ice cubes and a fan) and a formal education that had been cut short by the Cultural Revolution. As they built Lenovo, whose Chinese name is Lianxiang, they had to teach not just themselves, but a generation of Chinese bureaucrats how to run and regulate a private corporation.

Mr. Ling's impeccably sourced, fly-on-the-wall account of the company's struggles is fascinating. Lenovo depended on the protection and goodwill of the Chinese Academy of Sciences, which also became its biggest shareholder. However, despite Lenovo's subsequent stock market listing in Hong Kong and its skill in sidestepping ludicrous government rules against everything from differential pay and bonuses to control of the supply chain. Ownership of private assets is highly sensitive in China, and previous attempts by the government to reclaim ownership of effectively private companies have often proved disastrous—bankrupting Kelon, a fridge-maker, for example. With luck, Lenovo will escape this fate.

Mr. Ling gives most of the credit for Lenovo's success to Mr. Liu, who pushed boundaries while staying just the right side of the ideological line—and by doing so, changed the way China does business. Mr Liu launched incentive schemes and share options to motivate Lenovo's staff—handing out suitcases of cash and risking imprisonment to sidestep the government's 300% tax on bonus payments. The tax was subsequently scrapped. He pushed for a handful of employees to own their own homes—a revolutionary initiative in 1992—prompting China Construction Bank to announce the nation's first- ever personal loans and newspaper headlines to cry: "How can young people live in three whole rooms?" Lenovo was the first Chinese company to create advertisements that did more than just name a product and its price—so introducing brand building to China. And Mr. Liu accepted China's limits. Though politicians and his own engineers urged him to develop a "Chinese chip" and fight Western competitors on quality, Mr. Liu resisted. Seeing that Chinese science lagged behind, he focused instead on cutting prices and copying Western technology and sales methods.

Most mergers between Chinese and Western companies stumble. Insiders suggest this one may be faring better than most under William Amelio, the former head of Dell's Asia-Pacific division. It is too early to know for sure and Lenovo's history may be a poor guide to its future.

If Lenovo's rise in China has been haphazard, Microsoft's feels pre-programmed. Opening a research laboratory in China in 1998, a pioneering move for a foreign company was a calculated decision intended to help Microsoft attract fresh, cheap talent. That, combined with an investment of more than $100m, helped repair relations with Beijing that had been damaged by the group's heavy-handed commercial dealings in China.

This is just one of the many success stories in China, I picked this story as we all know Lenovo.

Resilience is not something that we inherit but it is something we acquire by perseverance, efforts and faith.

The best thing on the blog would have been a warm note of good luck for the new year, kindly excuse me for being curt, but if we want to be the best then i think we should prepare to beat the best.

So pull up your socks fellows we still have long way to go.

[Courtesy www.economist.com]

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Dhairyasheel Patil - MBA I,
Corporate Study Circle,
IMERT, Pune