The Biochar Blog

Archive for the ‘Globalisation’ Category

SSON: OK Cliff: how’s the sourcing space developed over the last few years?

Cliff Justice: I think most people – myself included – view a shift around 2005-6 in terms of where the drivers are and some of that may be economy-related or fears over the economy, and some of it may be the maturity at the end of stream – a lot of things have changed. The industry has become more mature. From 2000 to, say, 2005, there was a big focus on outsourcing and offshoring as a way to reduce cost, and access low-cost markets for the purpose of reducing direct labour costs. Since then there has been a renewed focus on not only reducing costs but on improving quality and the effectiveness of the organization – on implementing technology, and leveraging the maturity of the service providers to improve effectiveness. That’s become an equally important driver.

In the past year or so we’ve seen a downturn in the economy which obviously keeps cost at the forefront, but there is an equally strong focus on accessing the capabilities and the maturity, the Six Sigma processes, that a service provider can bring into the organization to drive ongoing productivity and improvement. The issue that companies saw when just going after the labor arbitrage was that it’s a one-time benefit. If you’re not accessing the markets that produce high-quality talent, sustainable talent and sustainable improvements then you’re back where you started a year or two later. So we are putting an increased focus on putting the right resources in the right location with the right service providers that have the capabilities for ongoing sustainable productivity gains, and clients are looking for that.

SSON: Presumably a lot of the shift that took place was as a result of key locations becoming able to provide that sort of element?

CJ: In the past we had predominantly India providing 90-95% of the low-cost labor market. Over the past three years or so we’ve seen, for example, the Philippines emerge as a destination to provide high-quality low-cost voice support as well as F&A BPO support, and for various reasons: synergies with the American educational system and American culture, that provide an advantage that India doesn’t; going a level deeper, the Philippine accounting standards are very similar to American accounting standards; their accent is much more of a western, American accent than you find in India. For call centers, for F&A BPO activity we’re seeing a lot of capability in the Philippines, which is providing some relief – or competition – for India depending on how you look at it.

SSON: What about China?

CJ: Well, China has a role as well. China has a role in technology; a role in very transactional BPO; they’ve been doing well with embedded software; they’ve been providing capabilities in certain types of software development – the coding aspect. But the relationship between Chinese companies and their western counterparts and services really hasn’t matured as well as, I think, some of the predictions would have led you to believe five years ago. It’s still a very small market in terms of directly outsourcing services into China. Service providers providing that as part of their overall solution and having a Chinese component in the back doing data entry or some technology-related work, but providing a western or Indian front end to the client: that’s something we’re seeing a little of. But in terms of the market potential and where it is now, the English language is a big hindrance to China. The ability to communicate right now is an issue.

SSON: Those locations are providing things demanded by external firms. Let’s change the focus a little: how have the requirements of those firms changed over the past few years, in terms of what they’ve been asking of Equaterra?

CJ: Client requirements have become a little more related to the long view. They’re looking a little more at the overall strategy and how sourcing fits into that. Clients maybe five or six years ago were perhaps CIO or even line management. Today the CFO is much more involved in every engagement. So looking at how sourcing ties in with the overall company strategy and will drive and help execute in the long term: client requirements have changed in that sense. We’re looking at how sourcing globally can help a client focus on meeting their long-term needs and their long-term strategic vision and not just the tactical cost-reduction.

SSON: Has the nature of your clients changed in terms of either size or the industry they come from?

CJ: Well it’s still predominantly large companies that are doing this, and it has been for a long time; but we are seeing more mid-market companies having an interest in this. So I think the mix of clients is expanding from large Global 2000 companies to mid-market companies with an interest in global sourcing: how they can access talent that you just can’t access ordinarily. The competition for talent is just too tight in western countries. So for mid-market companies to grow they’re looking at accessing global markets to tap into research and design, into analytics capabilities that exist in other countries. You just can’t find the resources here. It’s not necessarily a cost play for mid-market companies as much as it is a growth issue.

SSON: Presumably that can only be exacerbated over time: the talent gap’s not going to get any smaller.

CJ: No. As other countries come online and become more mature – for example, you see companies getting into Vietnam now; Intel has established a large presence in Vietnam, and other companies are establishing sourcing capabilities there. So other countries like that are tapping into the engineering talent that’s available. It is getting costly in India. Comparatively with the US or the UK or Europe it’s still very competitive, but it’s a matter of finding the right talent, and there’s a lot of capability in Latin America, in Russia, in Central and Eastern Europe: these markets have a long way to go before they’re fully mature and there’s a lot of capacity that’s out there. It’s just a matter of that capacity becoming mature in a way that can be marketed globally and to western companies. English is a factor.

SSON: To what extent over the next few years are the big emerging economies going to become outsourcers themselves?

CJ: That’s another big issue. We’re now competing for the same talent in India as Indian companies are. The Indian market is growing. We’ve known that the Chinese market has had a large domestic demand for quite some time, but now a lot of the major supply markets have big demands on their own internal resources. So it’s not just exporting the skill-set. That’s absolutely a difference today from five years ago. Those companies are going global, and they’re accessing and going after the same skills as we are, but within their own countries.

SSON: So how important do you think that’s going to be in the rise of second-tier locations? You mentioned Vietnam, which is of course perfectly placed near both India and China…

CJ: It’s important. We’re already seeing Chinese companies that have had skill shortages in the big cities in China look at Cambodia, and other countries like that. We’re going to see companies from every developing country – and every developed country – going after resources not just within traditional markets but in emerging countries as well.

SSON: It sounds like outsourcing could save the world…

CJ: It’s definitely a long-term business issue. It’s certainly not a panacea. There’s still a ways to go in terms of maturing the governance of outsourcing, and reaching standards on how complex multi-provider sourcing relationships are managed within organizations. But yes, this is not something that’s going to be going away in the next 20 years. It’s going to be important for any company to be competitive.

SSON: Let’s shift the focus onto shared services. What proportion of shared services leaders have outsourcing strategies?

CJ: OK: let’s start with captive centers, with shared services that have put captive centers in other countries. We’ve seen a major trend towards leveraging the mature outsourcing providers to improve the shared services organizations that have been established around the world. So as shared service centers have globalised – and we tend to call these captive when they’re located in places like India or Latin America – those centers have in general not met the expectations. Operating a shared service center remotely presents its own challenges. The expertise and the infrastructure capabilities needed to manage an offshore SSC are different. So we’re seeing a trend towards SSCs outsourcing components of the internal organization.

There are various names for it – virtual captive, hybrid, internal/external delivery organizations – where outsourcing service providers will provide some infrastructure, and some process capabilities, and they may even share the management and jointly manage components of the operation. Service providers may bring some process maturity that they have, or some training capabilities into the SSC – or HR initiatives, HR capability to go out and hire and recruit and train and retain the personnel. If India has let’s say 300-500 captive centers, a good portion of those will be exploring the third-party-type relationships at one level or another. A large number already are. Large-name companies at some level have partnerships or sourcing agreements with third parties to help manage and improve their SSCs.

SSON: Presumably you’re seeing this as something that’s accelerating?

CJ: It is accelerating. What that means for us is that our market is not just western: it’s also companies in the domestic Indian or Chinese or Latin American markets that have the SSCs in place, so we can advise them through outsourcing parts of them.

SSON: How far do you think the business has changed as a result of the credit crunch?

CJ: You know, outsourcing – especially global outsourcing – is counter-cyclical: when the economy’s good the outsourcing business is good; when the economy is bad, the business gets actually a little bit better! So we’ve seen companies move a bit more aggressively towards outsourcing as a result of the credit crunch; companies that need to stretch their dollar more than they have are looking at how they can maintain the level of service that they have, at lower cost. So they are looking at how outsourcing can help them reduce their cost.

SSON: Do you see this as being adjacent to the process that has already been ongoing in recent years, or are certain types of companies and certain sectors becoming – specifically as a result of the crunch – forced to adopt outsourcing as part of their strategies?

CJ: Yes – or maybe they’re being more aggressive when before they could afford to be a little more conservative when the priority was maybe focused on keeping more resources domestically, to manage relationships. Maybe the credit crunch and economic hardship pushes them to move resources to the most efficient area they can. Many times that means a lower-cost country. So it forces them to expand what they were already doing.

The financial services industry is probably the most mature outsourcing industry – they’ve been outsourcing long before anyone else – and the market was pretty penetrated. This now just forces them to become more aggressive in their global sourcing strategy: their captive centers in India expand; everything we were talking about in terms of the Indian or offshore providers working within their SSOs. The financial services industry has to maintain a lot more control and visibility just because it’s such a regulated industry, so their relationships with third parties have to be well documented, well structured, agreements have to meet their governance and liability requirements. I think they’re getting more aggressive.

It certainly hasn’t slowed. Some predictions were that companies that were heavily leveraged in the financial services sector were at risk: unless you’re with a company that completely went out of business, or the business was reduced dramatically, the outsourcing business has really benefited from the credit crunch. It forces a lot more companies to look at outsourcing or an alternative sourcing strategy.

SSON: Let’s put you on the spot: what’s going to happen in the next five years and which will be the big locations and sectors that will be driving outsourcing?

CJ: That’s not putting me on the spot: I think about this a lot! The next five years, we’ll see more sectors getting involved and becoming more mature in outsourcing: pharmaceutical, healthcare, will be major. Pharma was a little bit late to the outsourcing game, so they’ll be expanding that dramatically, and you’ll see a lot of resources in pharmacovigilance, and some of the analytic areas associated with pharma being outsourced and offshored. It’ll drive tremendous savings in that area. We’re seeing continuing outsourcing in manufacturing. From those verticals, I think we’ll see the most growth.

In terms of the complexion of the market, what we know of as “offshore” and “domestic” today, those lines will be completely blurred. It will just be global sourcing. There’s not going to be a discernable difference. Companies like Accenture and IBM are truly global service providers. When you outsource applications you may have your business requirements done onsite but your coding done in India, your transactions processed in Prague, your calls taken in the Philippines. Traditional Indian service providers are moving more towards the west and developing more of an onsite capability, and the traditional onsite domestic outsourcing service providers are moving towards having the right resources in global locations. And those will adjust and shift as the market changes.

You won’t have a company that’s overcommitted in one market: they’ll have reach in a lot of markets, and as politics change and economies change you may see one market reduce in size and another market expand depending on the skill sets that are available. So more of a supply chain for services, much like manufacturing did, will become more mature. It’s there today, but it’ll become more mature and there’ll be more of a requirement to be competitive in the mainstream climate. You won’t know if your software’s been coded out of India or Russia or China depending on where the requirements are being met, and those requirements will be political stability, transparency, security; all of those requirements will be standard regardless of location.

You’ll see less scrutiny over location as long as that location meets the minimum standard. We’re seeing security standards like BS7799 or ISO27001 setting security standards for international locations, and as long as those standards are audited and maintained then it gives clients, regulators and customers a level of comfort knowing that security measures are met, whether it’s in the US or in India.

Most people would agree that the concept of a job today is vastly different from that of 20 years ago. Organisations are changing at speed, technology has changed the face and pace of work, and globalisation is pushing every business to examine it’s operations in a totally different context.

How do we, the people that work within this changing environment, manage our own needs and wants.

Over the last 10 years I have had contact with many individuals searching for their place in the working world. For many, a growing sense of dissatisfaction with their work, or a general feeling that things aren’t as they should be, has left them with two questions to answer – “Why am I here?”, and “What would I really love to do for a job?”.

The concept of the ideal job is, I believe, fraught with danger. As long as we believe that there is a single job that will make us truly happy, then we are immediately limiting our actions and beliefs in searching for it. We set ourselves up for failure with expectations that the answer will “come” to us, or that a job needs to be perfect.

The truth is that there is rarely a single outcome in the search for the ideal job. A career is only a part of a lifestyle – a lifestyle encompasses all aspects of our life. Those who consider their career in isolation of their desired lifestyle may end up making less than ideal job-related choices. 

So is it really about planning a career, or is it more about planning a lifestyle, of which work/career is one component?

A clearly structured process will help you to define the parameters of work that are important for you, rather than specific jobs. For example, preferred industries, work type (full or part time etc), working hours, travel, level of autonomy or team work, desired income, responsibility, skills you want to use, location and so on. Once you are clear on your parameters, perhaps have even prioitised them for their importance to you, you can evaluate your career options against them. With this approach, the weight of expectation is lifted, the burden of finding the “one and only right answer” is gone. You have the freedom to consider a large number of roles knowing that you will make a choice based on your personal criteria.

At the end of the day, career decisions are about making choices not finding right and wrong answers. Give yourself parameters, and put the power of choice firmly in your hands – where it belongs.

 Where are we heading in “Modern” Health Services?

Although I am aware that there are significant differences between health services in different countries -and in fact within the same country-; as health worker, we all share an underlying commonality to a certain degree. I am writing this article under the assumption that, in this current era of “globalisation” and “standardisation”, there is a universal demand for the “modernisation” of health services. The health system has been forced to incorporate, within its constitution, terms such as health delivery management, strategic planning, strategic improvement, governance and quality, amongst many other fashionable words brandished around these days (the likes of which, yours truly finds confusing sometimes). However, we must accept that all of the above are part of the continuous evolution of the health service.

Before I proceed further, I would like to clarify to the readers the use of the word “modernising” in the context of this article. Here, I am referring to the involvement of numerous and diverse areas of expertise (e.g. business, aviation) within the field of health. This new approach has placed additional expectations on the clinicians, requiring them to possess reasonable knowledge in various fields. These skills include management, budgeting, cost, strategic development and other tasks which were previously left to the administration ‘to deal with’, whereas we clinicians were expected to focus on improving our clinical skills and, even more importantly, satisfying /managing our patients. I imagine that many of you will agree with me that this is a very nostalgic view, which is rarely found in this modern day and age.

I am not going to bore you with details about the health service where I work, as I do not believe it to be of significant importance; it would in fact defeat the purpose of provoking a debate relating to the key question of this article (i.e. the title). It would suffice to say that there is a pressure, as a health provider, to embrace a great deal of management, business and budgeting concepts. I am like most clinicians; work in a rapidly “modernising” health system.  Hopefully, once the reader continues scanning through the article, they will understand why I elected to use this generalization.

My guess is when we look at “modernizing” health services in different countries there appear to be a significant difference between them at first glance but once we “dig deep” and examine in depth the fundamental structure of most of the health services (wither it is private, governmental, insured, free or hybrid) I assume that the reader will find common points, at least partially.

 I, as a health provider find myself in a strange position of being instructed to be knowledgeable about “quality ” , “management”, “strategic planning” ,”updating my evidence based knowledge” , “understanding the fundamentals of accounting and budgeting”  amongst many other words, which my memory could barely remember ,let alone grasp.

The main problem is all of the above are dictated to me by different parties whose priorities (rightly or wrongly) lie within their own “primary target”.  

One could argue that all of the above could be part of one thing and by doing one; this will lead to the achievement of the others (i.e. domino effect). This is a point which I hope my article would encourage debating.

From my humble point of view, I still cannot cope with all “the priorities” I am bombarded with and I do find contradiction in many of them; especially when it comes to (if we break it down in to a simple, old fashioned targets) patients’ care versus cost which- rightly or wrongly- in my opinion, what the main issue boils up to (this is again a controversial statement and subjected to debate).

I am here not to find a solution or to offer an “ideal” way to balance a juggling act, as I am still picking up the pieces and trying again and again to be able to pull up the act efficiently in front of many anticipating audiences, each looking at me from a different angle with different expectation.

I wish that I could say that I managed but the reality is that I could not. My department and my hospital could not and more importantly my health service leaders cannot which is the most worrying concern because it is these “experts” who are suppose to guide us,  yet sometimes you feel that the blind leading the blind.

So what happened in a decade or so to lead us; and I apologies for the generalization; to be entangled in this “modernizing” health service?

I myself are nostalgic for the day when we say patient comes first and we DO mean patient comes first. Yet, I find myself focusing less on patients and looking more at statistics, strategies, missions, visions, audits, surveys etc and although (please do not get me wrong) I am all for the above, but it is becoming harder and harder to balance my already flawed juggling act.

Allow me to give an example to demonstrate what I mean. As a consultant psychiatrist, I obviously posses skills that my colleagues may lack or are not be “privileged/ technically speaking” to carry. An example for a surgeon is a type of surgical procedure, for a radiologist a special radiological technique. In my case a therapy for certain disorders that required years of supervision and learning. Again, one may argue that I should take responsibility and that this is my own fault as I should transferred my knowledge to my colleges, but here where the dilemma lie, as time, ethics are against me. Clinically I am expected to priorities my time but this raises another dilemma as my time is not entirely in my hand and the vicious cycle goes on.   

Let me give a real life example which I hope will demonstrate the above argument. When I joined my current department I started (naively) to accept undertaking therapy for patients with personality disorder (i.e. a condition which requires specific skills learned through years of supervision and practice) as the waiting list was long, and I was the only person with the expertise to manage this population. I went to my secretary and with an authoritative instruction, told her to arrange booking one hour a day every Tuesday at 11am for at least 20 weeks minimum, with the possibility of increasing the number of session. The poor secretary looked at me and did the necessary.  After two sessions of relatively positive rapport building with my client, the time for the third session approached.  As the time for the session came my secretary called and informed me that there is a “mandatory” emergency meeting for all heads of department with the human resources to discuss an extremely important issue. Dilemma again, what should I do?  I thought that our motto of “do no harm” and ethically as my patient has a real risk of feeling abandoned (which could have a catastrophic effect on therapy) and more important could lead to risk of serious self harm, I made the decision not to attend the meeting and see the patient instead.

Next day, a warning letter was delivered to me through my work email and due to my absence (even though I have sent the reason, and asked one of my colleges to attend the meeting) our department has lost in term of some administrative decision making.

That was my baptism of fire and my welcome to the modern health care. As a head of department I find myself more and more involved in writing the ideal setting to serve our clients but the time consumed in this preventing me from doing exactly what I am writing!.

I wish that the issue is related to me only, but even down the “chain of command” each member of my staff is finding it more and more difficult to focus on patient, and more of their work involving replaying to emails, cutting cost, achieving targets, filling endless forms, auditing, teaching, gathering educational hours, coming with initiatives, fulfilling their objectives in the appraisal and much much more.

I hope that my experience and my words echoes with similar experiences with the readers and as I have mentioned in the beginning, I am not looking for solution but I am hoping to provoke a serious debate about where are we heading in this era of so called “modernisation” and is the involvement of many parties and philosophies in the process beneficial to the end result (patients)?.

I am looking forward for a thought provoking debate and would be grateful for any of the readers from different evolving health services to share their thoughts and opinions.

 

Medical tourism is gradually becoming an integral part of the travel and tourism industry and thus a highly viable revenue generator. In fact airlines now days also come forward and cooperate in terms of their deals and services when a patient takes a trip to some distant place for a treatment. It is this cooperation between the travel and medical industry which made it possible for medical tourism to reach its present level of popularity and glory. And many countries across the globe have also developed a cordial relationship among each other through the medical tourists or in other words the cross-border patients.

Medical tourism has also enforced the concept of travel for a purpose and purpose does not necessarily mean a business purpose only. Rather something more important than that, because as they say “health is wealth”. Medical tourism has provided the opportunity to choose the best possible medical care without the restraints of any geographical boundaries. This seems to be one of the greatest blessings of the concept of globalisation. It has encouraged the friends and families of the patient to nurture a hope in their mind.

It cannot be denied that all this has become possible because world has become a very small place. And more than that almost every corner of the world has become accessible from any other corner. And this is made possible due to the massive advancement of transportation and communication system.  Indeed even a few years back people could not even dream of going to some other place for a medical treatment or for getting an important surgery done.

It goes without saying that every single sphere of life is interlinked and thus each and every industry is related to each other in some way or other. Thus with the development of the concept of global medical tourism all industries related to the concept have grown and expanded like that of the travel industry, the aviation industry, the telecommunication industry and so on and so forth. More and more travel packages have come up to cater to the requirements of the travelling patient and their companions. Travel agents started specializing on or focusing on this particular brand of tourism. Then again the software industry is coming up with new applications which help in keeping patient records in a more user-friendly manner. More and more websites are coming up focusing on offering patients with all services related to medical tourism at one place within just a few clicks.

Indeed medical tourism is gradually developing into a full grown industry in itself.

IT CHALLENGES FACED BY BUSINESSES IN AFRICA

One is often perplexed when an organisation talks about business processes & change. Company executives begin to squirm in their seats, as they know that this will be the long haul to the promised land, probably leading to nowhere and sacrificing some along the way. Executives immediately believe that new IT systems are required to lead the way forward, i.e. – Enterprise Resource Planning (ERP), etc. Many companies from first world countries with years of experience have failed miserably to enhance the power of IT. This is due to lack of understanding/covering the basics, before implementing an “IT system” to improve/resolve organisations business processes. Faced with myriad challenges, African business leaders are therefore not absolved of perplexed problems that first world countries face. African business leaders therefore, need to cover the basics prior to embarking on huge projects that produce undesired or no results to improve their businesses.

Several key IT challenges are pertinent to businesses in Africa. These are –

1) The strategic business challenge

Management of African businesses do not realise the impact of IT on business processes and how IT should integrate into the business to effectively gain competitive advantage. Just because the latest hardware technologies are acquired does not mean one would be competitive. Competitiveness would only be appropriate when IT is fully exploited for all its capabilities and opportunities. If business processes are not working effectively, IT will only speed up problems and not solve them. IT just like any other resource needs to be managed efficiently and effectively.

2) The globalisation challenge

African companies like Sasol, MTN, and many others have realised that in order for them to expand their operations they have to compete with the rest of the world. As a result, IT plays an important part in uniting local and international operations into one cohesive business unit. The South African government has been slow in embracing new opportunities that IT expansion and development could bring to companies and the ordinary citizen. This can be seen by government not granting more telecommunications business licences, and non-deregulation of internet broadband spectrum to service providers to expand IT infrastructure in Africa. This can be attributed to government not understanding the implication of IT and the lack of laws and policies governing the technology.

3) The information architecture and infrastructure challenge –

Many businesses in Africa have not identified their core competencies and how these drive the business; neither do they have sound back office business processes in place. African businesses have the view that, as long as we are connected to the outside world we can do business. Business competencies and goals should drive the business and not the technology. IT should only be a supporting backbone facilitating process. The non existence of IT and communications infrastructure and the exorbitant cost of installing such infrastructure also contribute to the challenge.

4) The Information Systems Investment Challenge

Businesses in Africa like the rest of the world see IT investment in terms of the monetary value of their hardware and software (physical assets). Costs associated with non-physical assets of IT are overlooked. Also, businesses are unaware of:

-          What productivity levels are due to IT or non IT influences;

-          The cost of lost sales opportunities from poorly managed e-commerce or e-business websites;

-          The determination of the return on IT investment.

5) The Responsibility and Control Challenges

As with all technologies, it has to be driven and controlled by human intervention. Most of the IT challenges emanate from the “Persware”, i.e. – people. As long as there is no smooth integration of IT into the people’s environment then challenges will not be resolved. With the high illiteracy levels and poor education on the African continent, it remains a challenge to train and develop people fast enough to catch up with technological innovations and ultimately control and maintain an IT infrastructure. In Africa this is quite pertinent as most people are used to doing things their way and are not fast enough in adapting to new ways of doing things.  On the other hand, people in remote areas of the African continent are fast becoming cellular phone users and this, I think, is one step closer to bridging the IT challenge in the communications divide.

Basic steps that can be used to address the challenges -

1) Agree on common user requirements

Ensure that business processes work efficiently and effectively. Business processes should be short and definitive. All users of IT in the organisation should agree and participate on common requirements which would work in all functional business areas and is acceptable to all parties.

2) Introduce changes in business procedures

Users or “Persware” support is important in anything that needs to be achieved in an organisation. Managers and employees should be able to exchange ideas and share a common vision and goal in achieving and implementing changes in business procedures. Through user participation, people will feel that they are part of the process and have contributed to changing procedures and as a result the organisation will succeed in its endeavours.

3) Coordinate applications development

People need to be informed in whatever the organisation plans to do. IT can disseminate information through: e-mail, intranet and internet, so that everyone is kept abreast of changes. All applications development will be coordinated between various departments so that everyone knows what the status quo is at any given time and no functional area is left far behind in implementing new processes.

4) Coordinate software releases

Everyone involved in the process from various functional areas need to be working on the same thing at the same time. Therefore, software releases should occur throughout the organisation at the same time, to ensure that everyone is working on the same page.

5) Encourage local users to support global systems

Local users need to be encouraged and given the feeling that they have ownership over the system. However, at the same time all users should adapt to new ideas and ways of doing things. African businesses now have to compete with the world and people who are slow to adapt and are inflexible will not survive in the age of IT. This can only be done through user participation in massive IT processes put in place; linking all operations throughout the world in sharing common ideas and knowledge through enterprise resource planning systems such as SAP.

6) Invest in people

African governments, organisations, etc, should invest in educating and developing African people with regards to the development and use of IT on the continent to develop its own in-house pool of IT specialists.

IT can be a panacea for businesses. This is even more so in the African context, where a number of challenges & opportunities exist. African business leaders have a chance to learn from the rest of the world, by avoiding mistakes that have plagued other multinationals.  In order to do this, business leaders on the African continent need to understand the challenges and implications once a decision is made in order to realise solutions.

Eco Towns have been a controversial issue ever since their introduction in 2007. The need to provide sustainable homes, coupled with a gross housing shortage has since amplified calls for their introduction. However, these are prone to adverse social effects, not least with resultant feelings of isolation and disheartenment.

These adverse social effects may be compared to that seen by Jim Carrey in the film “The Truman Show”. This ‘Truman effect’ is thus a cocoon feeling of remoteness, attributed to living a sheltered existence, cut off from the wider national community, similar to that witnessed within the film which was enveloped in a literal bubble.

These towns main attraction are their environmental credentials in achieving a sustainable lifestyle through use of renewable technologies such as solar panels, wind turbines. These green characteristics are very much debateable, as the article Eco Towns- A green myth demonstrates.

A key aspect of such settlements is in creating independent communities, which are to an extent, self-sufficient, attained through localised resources. Although this may help to achieve greater unity and friendships between neighbours, it is likely that without adequate design and planning, greater social ramifications may result. It is incredibly difficult to create a settlement without adequate links to neighbouring towns and cities, for we live in a globalized era of networks and connections. For without such links to adjacent towns and cities occupants may experience negative and disheartening feelings of isolation.

Eco Town planners need to carefully identify these issues if they are to avert a social catastrophe, and accept our continued nomadic nature and need to travel. A key aspect to achieving a Carbon Zero lifestyle, something these settlements aspire for, is in avoiding the use of standard oil based, polluting vehicles.  This will put significant pressure on planners and designers alike, resulting in the possibility for limitations or even exclusion of private vehicular use altogether. Consequently, occupants will find it hard to reach friends and family located elsewhere, and may well find themselves in a socially isolated bubble or cocoon, which is hard to break.

Eco Towns share a similar artificial feel to that identified within the “Truman Show”, a result of a general inadequate mix of new modern buildings lacking distinct and unique architectural features combined with a mass of concrete, paving and strategically located trees and vegetation, to give the impression of a highly maintained yet characterless townscape in which to live. As we are highly attuned to our surroundings and environment, repetitive aesthetics will worsen attitudes and perceptions leading to social rejection and overriding dissatisfaction. The advent of travel and with it Globalisation, has heightened our appetite for experiencing new and different surroundings to such an extent, that it is unlikely we will ever be satisfied with remaining confined and restricted to one place for any length of time.

Without appropriate planning and design detailing, Eco Towns may well suffer from the ‘Truman effect’, due to a combination of poor infrastructure connections to existing settlements, and due to localised design criteria, which attempts to limit individuals movements to a small area, thus minimising their carbon footprint.

                                                   Abstract

 

In recent years the destination sectors in FDI have became more varied.  FDI inflows have shifted from infrastructure, natural resources and export driven manufacturing to other areas such as retailing, tourism, construction and off shore services.  A World Bank study showed that cumulative FDI inflows to the retail sector in the 20 largest developing countries amounted to US$ 45 billion in 1998-2002 (about 7 per cent of the total of these countries).  The study showed that after liberalization; countries such as Brazil, Poland and Thailand have received significant FDI in retailing. 

In spite of the recent developments in retailing and its immense contribution to the economy, retailing continues to be are the least evolved industries and the growth of organised retailing in India has been much slower as compared to rest of the world. Over a period of 10 years, the show of organised retailing in total retailing has grown from 10 per cent to 40 percent in Brazil and 20 percent in China, while in India it is only 2 per cent (between 1995-2005). One important reason for this is that retailing is one of the few sectors where foreign direct investment is not allowed. Within the country, there have been protests by trading associations and other stakeholders against allowing FDI in retailing. On the other hand, the growing market has attracted foreign investors and India has been portrayed as an important investment destination for the global retail chains. The present paper attempts to analyze the reason why foreign retailers are interested in India, the strategies they are adopting to enter India and  there prospects in India

 

 

After the waves of globalisation, liberalisation and privatisation marketing scenario particularly retailing has changed radically. These changes have resulted in emergence of new environment for buyers’ behaviour and purchasing habits. The upper and upper middle strata of the society now prefers to purchase well established branded goods from standard showrooms and it has transformed the entire picture and perception not only in the metro cities but almost in all big cities of our country. It is worth mentioning that retailing in India has been hailed as one of the sun-rise sectors in the economy. According to A. T. Kearney, a well known International Management Consultant, “India is the second most attractive retail designation globally, among thirty emergent markets.” Till now unorganised retailing sector was dominating retail trade in India by constituting 98% of all retailing trade but now not only traditional Indian retailers but giant Indian retailers like Reliance has entered in the area and is planning to expand its activities in this sector in a big wag. Even world renowned retailing organisation like Wal-Mart has decided to enter in India via joint venture with Bharti and French retailer Carrefour is busy in chalking out strategy to enter the hyper market and supermarket retail format in India through Dubai based retail major Landmark group.

            In this context an effort has been made in this paper to review the emergence of global retailers in India, to examine the govt. policy relating to FDI in retailing and to evaluate the prospects of global retailing in India.

 

Why Global Retailers are Interested in India?

More specifically the global players are interested in India due to following reasons:

I)             Strategic Location & Geography:  India enjoys unique geographical advantage. It is strategically located in Asia with access to all leading markets of the World. With total area of 32, 87,590 Sq. Km, Coastline of 7000 Km and borders with six countries India becomes most promising destination for the foreign direct investment.

II)          Versatile Demographics: Demographically with a population of more than 1.1 billion and diverse culture, India is a land of all seasons.  India presents a real cosmopolitan population with diverse religions and culture. Hinduism, Buddhism, Jainism, Sikhism, Christianity and Islam are the main religions of India. This variety of religions provides India with a diverse culture. Besides, India has versatile population of urban and rural nature. This versatility of population makes India a ready made market for foreign retailers.

III)       Vast growing Economy: On economic front, India the largest democracy of the world, have a stable Govt. with robust programme of economic reforms. India with  a foreign exchange reserve of more than US $120 billion, FDI of more than US $9.9 billion ,average GDP growth of more than 7% per annum, rupee appreciation Vs U.S dollar of more than 2% in last two years and with a rapidly growing investment in infrastructure has all the ingredients of a emerging economic super power. India is tipped to be third largest economy in terms of GDP by the year 2050 (Table 1)   

 

                       Table 1: Forecast of GDP ($ Trillion)

Country

2010

2050

China

3.0

44.5

U.S.A

13.3

35.2

India

0.9

27.8

Japan

4.6

6.7

Brazil

0.7

6.1

Russia

0.8

5.9

U.K.

1.9

3.8

Germany

2.2

3.6

Italy

1.3

2.1

Source: McKinsey Quarterly Nov.04

                  In such a scenario every multinational aims to set up a base in India, not to participate in Indian growth story, rather to build their own future.

IV)  Retailing: The Emerging Revolution: Retailing is the largest private industry in India and second largest employer after agriculture. The sector contributes to around 10 percent of GDP. With over 12 million retail outlets, India has the highest retail outlets density in the world. This sector witnessed significant development in the past 10 years from small unorganized family owned retail formats to organized retailing. Liberalization of the economy, rise in per capita income and growing consumerism has encouraged large business and venture capitalist in investing in retail infrastructure. The importance of retail sector in India can be judged from following facts (a) Retail sector is the largest contributor to the Indian GDP (b) The retail Sector provides 15% employment (c) India has world largest retail network with 12 million outlets (d) Total market size of retailing in India Is U.S $ 180 billion (e) Current Share of Organized Retailing is just 2% which comes around to $3.6 trillion (f) Organized retail sector is growing @ 28% per annum.

V)    Indian Retailing: Opportunities Unexplored: India is sometimes referred to as the nation of shopkeepers. This is because the country has the highest density of retail outlets – over 12 million. However, unlike most developed and developing countries, Indian retail sector is highly fragmented and bulk of the business is in the unorganized sector. As compared to China (Table 2) the presence of global players in India is very less

Table 2: Number of Foreign Retailers in India & China

Retailer

China

India

           Wal- Mart

40

——–

           Carrefour

53

———

           Tesco

30

———–

            Metro

21

02

            KFC

Over 1000

04

            Starbucks

70

——

            McDonald’s

580

47

            Pizza Hut

110

75

            Louis Vuitton

06

2

            Prada

10

——–

            B&Q

20

——-

            Hugo Boss

60

02

Source: McKinsey Quarterly Nov.04

 

India in such a scenario presents following facts to foreign retailers:

There is a huge, huge industry with no large players. Some Indian large players have entered just recently like Reliance, Trent
India can support significant players averaging $1 bn. in Grocery and $0.3- 0.5 bn. in apparel within next ten years.
The transition will open multiple opportunities for companies and investors

In addition to the above, improved living standards and continuing economic growth, friendly business environment, growing spending power and increasing number of conscious customers aspiring to own quality and branded products in India are also attracting to global retailers to enter in Indian market.

 

Major Global Players in Retailing:   The top 30 global retailers together with their percentage of sale from grocery and the percentage of sales in domestic and foreign markets for the year 2003 are given in Table 3. 

 

Table 3: Top 30 Global Retailers with their Sales in Grocery and Percentage

Share of Domestic and Foreign sales in Total Retail Sales, 2003

  Rank

Company

Country of Origin

Net Sales 2003 (USD mn)

Grocery Sales (%)

Domestic Sales(%)

Foreign Sales(%)

1.

Wal-Mart

USA

256,329

43.7

79.1

20.9

2.

Carrefour

France

79,609

77.4

50.7

49.3

3.

Ahold

Neth.

63,325

84.0

15.8

84.2

4.

Metro Group

Germany

60,532

50.5

52.9

47.1

5.

Kroger

USA

53,791

70.2

100.0

0.0

6.

Tesco

UK

50,326

74.6

80.1

19.9

7.

Target

USA

48,163

17.8

100.00

0.0

8.

Rewe

Germany

44,251

7.6

71.4

28.6

9.

Aldi

Germany

41,011

83.6

63.0

37.0

11.

ITM(Intermarche)

France

37,723

77.3

72.2

27.8

12.

Safeway(USA)

USA

35,552

75.5

85.3

14.7

13.

Schwarz Group

Germany

33,357

83.0

66.2

33.8

14.

Schwarz Group

Germany

33,357

83.0

66.2

33.8

15.

Walagreens

USA

32,505

380

100.00

0.0

16.

Auchan

France

32,422

57.2

57.5

42.5

17.

AEON

Japan

30,574

47.2

91.7

8.3

18.

Ito-Yokado

Japan

30,541

62.5

73.8

26.2

19.

Edeka

Germany

29,670

83.8

91.2

8.8

20.

Sainsbury

UK

27,995

73.3

85.1

14.9

21.

Tengelmann

Germany

27,721

69.7

49.1

50.9

22.

Leclerc

France

27,332

59.9

95.7

4.3

23.

CVS

USA

26,588

31.2

100.0

0.0

24.

Casino

France

25,958

73.3

58.9

41.1

25.

Kmart

USA

23,253

14.0

100.0

0.0

26.

Delhaize Group

Belgium

21,256

77.1

20.1

79.9

27.

Loblaw

Canada

18,002

77.5

100.0

0.0

28.

JC Penney

USA

17,786

16.9

99.4

0.6

29.

Coles Myer

Australia

17,523

58.5

99.4

0.6

30.

Daiei

Japan

17,158

43.3

98.9

1.1

Total Top 30

1,287,382

 

 

 

Others

2,612,618

 

 

 

Total Worldwide

3,900,000

 

 

 

                 

Source:  Extracted from M+M Planet Retail

 

Arguments in favour of FDI in Retailing  

FDI in retailing is favoured on following grounds:

(1) The global retailers have advanced management know how in merchandising and inventory management and have adopted new technologies which can significantly improve productivity and efficiency in retailing. (2)  Entry of large low-cost retailers and adoption of integrated supply chain management by them is likely to lower down the prices. (3)  FDI in retailing can easily assure the quality of product, better shopping experience and customer services. (4)  They promote the linkage of local suppliers, farmers and manufacturers, no doubt only those who can meet the quality and safety standards, to global market and this will ensure a reliable and profitable market to these local players. (5)  As multinational players are spreading their operation, regional players are also developing their supply chain differentiating their strategies and improving their operations to counter the size of international players. This all will encourage the investment and employment in supply chain management. (6)  Joint ventures would ease capital constraints of existing organised retailers and (7)  FDI would lead to development of different retail formats and modernisation of the sector.

Arguments against FDI in Retailing

Many trading associations, political parties and industrial associations have argued against FDI in retailing due to following reasons:

(1)      Indian retailers have yet to consolidate their position. The existing retailing scenario is characterized by the presence of a large number of fragmented family owned businesses, who would not be able to survive the competition from global players.

(2)      The examples of south east Asian countries show that after allowing FDI, the domestic retailers were marginalised and this led to unemployment.

(3)      FDI in retailing can upset the import balance, as large international retailers may prefer to source majority of their products globally rather than investing in local products.

(4)      Global retailers might resort to predatory pricing. Due to their financial clout, they often sell below cost in the new markets. Once the domestic players are wiped out of the market foreign players enjoy a monopoly position which allows them to increase prices and earn profits.

(5)      Indian retailers have argued that since lending rates are much higher in India, Indian retailers, especially small retailers, are at a disadvantageous position compared to foreign retailers who have access to International funds at lower interest rates. High cost of borrowing forces the domestic players to charge higher prices for the products.

(6)      FDI in retail trade would not attract large inflows of foreign investment since very little investment is required to conduct retail business. Goods are bought on credit and sales are made on cash basis. Hence, the working capital requirement is negligible. On the contrary; after making initial investment on basic infrastructure, the multinational retailers may remit the higher amount of profits earned in India to their own country.

FDI in Retailing in India – Policy and Entry Routes

            In India, till recently, FDI was not allowed in retailing, but the Union cabinet on January 24, 2006 rationalised and simplified the FDI policy and allowed the contentious issue of foreign investment in retail sector by allowing FDI up to 51 percent with prior government approval for retail trade in single brand products.  This would imply that foreign companies would be allowed to sell goods sold internationally under a single brand, viz. Reebok, Nokia, Adidas. Retailing of goods of multiple brands, even if such products are produced by same manufacturer would not be allowed.  However, there are indications that the Government may allow foreign investments in retail segments where small domestic players do not operate. The Department of Industrial Policy and Promotion is preparing a detailed policy for further liberalisation of FDI in the country, which is likely to be announced before the budget 2007-08. As part of the proposed move, the Ministry has marked out sports goods, electronics and building equipment as some of the sectors that may be opened up with a 51% cap on FDI. The government is also considering to permit multi-brand retail in such areas. The government is likely to discuss the matter with the left parties before taking a final call on the issue. The Left has initially stalled the government’s plans to allow FDI in multi-brand retail on the grounds that it will adversely affect mom-and-pop stores.

It is worth mentioning that FDI restrictions have not deterred prominent international players from entering India. Many U.S and other international retailers and consumer goods companies consider India a top-priority market with the potential for breakthrough growth. In this context (a) Wal-Mart CEO, John Menzar visited India in 2005 and met with Prime Minister to discuss relevant issues. Wal-Mart’s sourcing from India, which was U.S.$300 million in 2004 reached to U.S.$1.2 billion in 2005.(b) Fashion brand DKNY is set to foray into Indian fashion industry through franchise agreement with Indian company, S. Kumar’s. (c) Tommy Hilfiger, International fashion icon says that “We are going to build  a wonderful lifestyle business here” (d) Phillip Morris is ready to unveil its plans for kraft in India through Kraft Jacob Suchard (KJS) India, a wholly owned arm of Philip Morris India (e) Starbucks has expressed its interest in entering India through the franchise route.

            Although before January 24, 2006 FDI was not allowed in retailing, many international players are operating in the country.  Some of entry routes employed by them are discussed in details as below:

(a)  Manufacturing and Local Sourcing:  Companies that set up manufacturing facilities are allowed to sell the products in the domestic market.  Consumer durable companies such as Sony and Samsung have entered the retail sector through this route.  Due to high labour cost in their domestic market, many international brands are setting up manufacturing bases in developing countries such as India and China and / or are sourcing products from local manufacturers.  For example, Levi’s and Tommy Hilfiger are sourcing products from Indian manufacturers like Arvind Mills.  Benetton has a manufacturing unit in India.  Other international brands like GIVO from Italy have set up export-oriented manufacturing facilities.  These companies are allowed to sell products to Indian consumers through franchising, local distributors, existing Indian retailers, own outlets, etc.

 

(b) Franchising:  Franchising is the most preferred mode through which foreign players have entered the Indian market.  It is the easiest route to enter the Indian market.  Franchising is often used as a mode to expand the market of a particular retail enterprise outside domestic economy since it allows firms to expand without investing their own capital, is based on local expertise and enables firms to curb local oppositions and regulations. This is the most common mode for entry of fast food chains across the world.  Apart from fast food chains like Pizza Hut, players such as Lacoste, Mango, Nike and Marks and Spencer, have entered the Indian market through this route.

            For setting up franchising operation, the foreign players are required to take permission from the Reserve Bank of India (RBI).  RBI often imposes the condition that franchisers have to bring in foreign investment and set up a base for carrying on operational activities.  A foreign franchiser not wishing to make a direct investment would have to render technical assistance to the franchisee.  Some franchisee, such as Pizza Hut has made significant investment in the supply chain.

            The arrangements between franchisee and franchiser are found to be extremely flexible and are based on negotiation between the two.  Some Indian franchisees have complained about high franchising fees together with high real estate costs, high import duties and other costs escalate the prices.  For instance, the cost of a Marks and Spencer product is higher than not only the brands produced domestically but also in comparison to the price of the product in the UK.  The high prices restrict the ability of the foreign players to penetrate the market but they have entered the country to make their brands visible to the huge Indian market.

            If FDI is allowed in retailing, franchisees are not very sure whether they would hold the retailing rights for the brands.  According to industry representatives, since franchisees largely constitute of domestic traders (even some unorganised retailers have take up franchising rights) who have made significant investment in infrastructure, government through legislation must ensure that they do not loose out their franchising rights if FDI is allowed in retailing and the franchisers decide to change the mode of operation.  The existing franchisees have also expressed an interest in entering into joint venture with the franchisers if FDI is allowed in retailing.

(c)  Test Marketing:  Test marketing is another route through which many foreign players have entered the Indian market.  Foreign investment Promotion Board (FIPB) allows foreign companies for test marketing of their products for a two-year period by the end of which they are required to set up manufacturing facilities in India.  Direct selling companies like Amway and Oriflame entered the Indian market through this route.  Initially, Amway got an approval for test marketing for a period of two years but they managed to secure an extension of one more year.  At the end of the third year, they set up contract manufacturing facilities and brought in foreign investment and technical know-how.  Oriflame too extended its test marketing license for a third year and at the end of which had set up a manufacturing facility in Noida (UP) for producing certain specific products.  Other products are imported and would continue to be imported from abroad.

            Nokia came to India through the test marketing route in mid-1990s.  Initially they got a license for two years to test their products in the Mumbai circle.  After three months of their entry they tied up with the service providers to provide integrated services to their customers.  Due to pressure from the FIPB, Nokia had tied up with the HCL Infotech as a strategic partner for all India distribution of Nokia products.  After the success of its products in the country, Nokia had opened up an office but had not set up a manufacturing facility and continued to import all products (even models made specifically for India).  After another two years they divided the country into four zones and entered into a strategic alliance for distribution with Supreme for East and West India while HCL continued with North and Southern zone.  Nokia had also applied for the cash and carry license from the FIPB and has recently got the license.  Nokia is aggressively targeting the Indian consumers and plan to capture 75 percent of the mobile market in the next seven years.  The company, which currently operates as a wholesale cash-and carry, recently announced that it would set up manufacturing facilities very soon.

            The test marketing route allows foreign players to test the demand for their products in Indian market before undertaking investment.  Even if FDI is allowed in retailing, many foreign players would like to enter the Indian market through this route.

 

(d) Wholesale Cash-and-Carry Operation: This is the route through which large international retailers such as Germany’s Metro Cash & Carry GmbH and Shoprite Checkers of South Africa have entered the Indian market.  The wholesale cash-and-carry operation is defined as any trading outlets where goods are sold at the wholesale rate for retailers and businesses to buy.  The transactions are only for business purposes and not for personal consumption as in the case of retailing.

(e)  Distributor:    Companies such as Swarovski and Hugo Boss have set up distribution offices in India and these offices supply the products to local retailers.  All products of Hugo Boss are imported and distributed through the company’s distributor.

(f) Special Cases: The Sri Lankan retailers have entered the India market through the initiatives of Export Development Board of Sri Lanka (EDB) which obtained special permission from the RBI to set up retail operations in India.  The EDB has leased 17 retail outlets in Spencer Plaza in Chennai in which Sri Lankan retailers are showcasing and selling their products.  The Sri Lankan products showcased in these stores are mostly at the higher end of the quality spectrum and can be brought into the country free of duty.  This gives an advantage to large Sri Lankan retailers like Hameedia not only to establish a global presence but also to access the large customer base of India at competitive prices.  The EDB is also exploring the possibilities of setting up similar trade centres in other cities like Delhi and Mumbai.  Although this mode has allowed retailers from Sri Lanka to enter the Indian market without domestic manufacturing and sourcing conditions and some products sold by these traders are similar to those sold by Indian retailers, EDB did not face any opposition from Chambers, retailers and the trading houses.

            Although the official policy is that FDI in retailing is allowed only in one brand and that too up to 51% in retailing, but it has not acted as an entry barrier.  Foreign players have a substantial presence in the country and have used several alternative unique routes to enter Indian Trading Sector.  Some of the existing foreign players are listed below in table 4.

Table 4: Some Existing Foreign Players and Prospective Entrants

Retailers

Type

Status

7-Eleven

Supermarket

Evaluating

Amway

Direct selling

Already in

Auchan

Hypermarket

Evaluating

Carrefour

Multi-format retailer

Wait and watch

Dairy Farm

Multi-format retailers

Tied up with RPG

JC Penny

Product sourcing

Already in

Landmark

Department Store

Already in

Lee Cooper

Product sourcing

Already in

Levi’s

Product sourcing

Already in

Mango

Apparel retailer

Already in

Marks & Spencer

Department Store

Already in

Metro

Cash & carry

Already in

Oriflame

Direct selling

Already in

Reebok

Oint venture

Already in

Shoprite

Wholesale cash-and-carry and franchising

Already in

Sony

Manufacturer Retailer

Already in

Wal-Mart

Hypermarket

Agreement with Bharti

Source: FDI in Retail Sector, Department of consumer affairs, Government of India, p. 115.

  Conclusion

            It is evident that ever growing urban and rural markets in India represent an unprecedented and vast unexplored opportunity for retailing to all types of formats. Initially there may be certain reservations and apprehensions in allowing global players in India’s retailing but if they are allowed in a phased manner on the basis of a well conceived and chalked out policy, they are likely to lead to more investment in organized retailing and allied sectors. As already discussed, it would also lead to inflow of  latest technical know how, establishment of well integrated and sophisticated supply chains, availability of standard, latest and quality products, help in up gradation of human skills and increased sourcing from India. Yet the following points may be kept into consideration in this context:

Since the Indian retail sector is highly fragmented and domestic retailers are in the process of consolidating their position, the opening up of FDI regime should be in phased manner over 5 to 10 years time frame so as to give the domestic retailers enough time to adjust changes.
FDI should not be allowed for multi brand stores in near future, as Indian retailers will not be able to face competition with these stores immediately.
At present it is also not desirable to increase FDI ceiling to more than 51% even for single premium brand stores. It will help us to ensure check and control on business operations of global retailers and to protect the interests of domestic players. However, the limit of equity participation can be increased in due course of time as we did in telecom, banking and insurance sectors.
Foreign players should not be allowed to trade in certain sensitive products like arms and ammunition, military equipment, etc. and the list of excluded products should be clearly stated in the FDI policy.
Generally super markets and hyper markets should not be allowed in the mid of city so as to protect the existence of unorganised or comparatively medium sized retail organizations.

 

            The strategy of opening up should be backed by appropriate reform measures.  India can learn from the experiences of other developed and developing countries and develop its own strategies, laws and regulations that would be in the best interest of the country.  As of now, there is no proper definition of retailing or retail formats in India.  International players are exploiting the situation and are often entering the market and expanding their businesses through multiple routes and are operating in the country with more than one format of retailing.  The regulatory regime should address these issues.  The entry norms should clearly state the approval requirements, conditions / restrictions if any imposed, etc.  The government should also strictly enforce the quality standards for local production and imports.

 

References
FDI in Retail Sector in India, Department of Consumer Affairs, Ministry of Consumer Affairs, Public and Food Department, Government of India.
U.S. Department of Labour, Bureau of Labour Statistics. http//stats.bls.gov/iag/whole retailtrade.htm
http://www.brc.org.uk/latesdata.asp
The Earth Institute of Columbia University.
The World Bank Group Website : http://rru.worldbank.org/documents.pdf
Swapna Pradhan: Retailing Management, The McGraw-Hill Companies(2007)
Chetan Bajaj, Rajnish Tuli & Nidhi Srivastav: Retail Management, Oxford University Press (2006)
Suja Nair: Retail Management, Himalaya Publishing House (2006)

Colonialism never ended

It is recognised by almost everyone that colonialism is a bad thing. They teach this in the schools in England. We have also been taught that colonialism in Ghana ended 50 years ago when Nkrumah won independence. Colonialism certainly ended but now appears to be continuing under a different name.

The aim of colonialism was eloquently expressed by the colonialist Cecil Rhodes:

“We must find new lands from which we can easily obtain raw materials and at the same time exploit the cheap slave labour that is available from the natives of the colonies. The colonies would also provide a dumping ground for the surplus goods produced in our factories.”

It seems little has changed. And Africa is still a momentous prize to win. It is the home to strategic minerals and some of the largest deposit of natural resources such as timber, diamonds, gold, bauxite and coltan. 8 of the world’s oil producing countries are in Africa: Nigeria, Sudan, Algeria, Chad, Egypt and Equatorial Guinea, Congo-Brazzaville and Democratic Republic of Congo. West Africa supplies 12% of the oil needs of America. America’s National Intelligence Council predicts this will rise to 25% by 2015.

Africa needs help?

Sitting on such a desired prize, it makes one wonder at the African’s strange propensity to appear over grateful when a foreigner expresses interest in their country. They should indeed feel flattered but often appear submissive. One reason may be they feel they have little of value and believe themselves and their culture to be inferior. Whatever the reason they are hoping that the foreigner is going to help them.

But is it not astonishing that some people can still think that the aim of foreign businesses (and let us not forget that the World Bank is also a business) is to ‘help’ Africa? Businesses have a legal requirement to make profit for their shareholders. Any expression of interest in Africa is because they realise the profit to be made.

And help from governments has the same aim. Margaret Beckett of Tony Blair’s government stated on 18 April, 2007 that the job of government is ‘to make sure that the rest of the world’ is ‘safe and well-disposed for our businesses’. Gordon Brown, now British prime minister implored the CBI, last November, to be ‘evangelists for globalisation’ through which Britain will ‘find its destiny as a nation’. Both Blair and Brown have imposed neo-liberal policies on Africa, resulting in the destruction of the local economy and an open market for powerful companies to exploit.

John Perkins was an economic hit man. He describes his role as follows:

“Economic hit men are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, the U.S. Agency for International Development (USAID), and other foreign “aid” organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet’s natural resources. Their tools included fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder. They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalization.”

Edward Goldsmith notes:

“The pretext [for development] was to fight poverty and make Third World countries wealthy like us, the reality was to open up their markets to American and other Western corporations and to gain access to their cheap labour and cheap raw materials.” (Goldsmith, open letter to Jagdish Bhagwati)

After so many years of this kind of help is it any wonder things only appeared to have got worse?

Africa can enhance status

Africa has also given celebrities and politicians power based on their confessed concern for the continent. Sir Bob Geldof, ex-singer with the Boomtown Rats and Bono, the lead singer of U2, are the self-proclaimed champions of Africa. Geldolf has described himself as “Mr Africa”.

Geldof’s new career as the campaigner for Africa has generated a TV series, books and massive rock concerts.

Bono has declared:

“I represent a lot of people [in Africa] who have no voice at all…They haven’t asked me to represent them. It’s cheeky but I hope they’re glad I do.”

Bono appears to have had a good deal of influence at the G8 conference in Heiligendamm in Germany. Although nobody elected him, he met with almost all the world leaders present and his own version of the conference dominated the UK press.

Paul Theroux argues:

“Because Africa seems unfinished and so different from the rest of the world, a landscape on which a person can sketch a new personality, it attracts mythomaniacs, people who wish to convince the world of their worth.”

From Geldolf, Bono, Blair, the G8, various NGOs and so on, these people, unelected by Africans, claim to know what is best for Africa. This moral posturing gives them credibility and status, gives them the ‘feel-good factor’, even though they may do little or nothing in return.

Identity as intellectual self-defence

Without a proper appreciation of culture and identity, Africans will continue to fall foul to the project once called colonisation. It’s important to keep up-to-date with what is going on outside the country and to read behind the lines of policy documents. Whilst Africans continue to believe that foreign things are better than local things, that foreign minds are better than African minds, that modernity is better than tradition, they will continue to be colonised.