Last week’s post looked at China in the context of globalization. Now our attention turns to India, another emerging country with tremendous growth. A quick glance at India’s businesses would indicate that its primary contributions to the global economy are cars, steel, call centers and Bollywood. However that would be a superficial assessment of the country’s contributions and future impact. Since 1991, when India opened up its economy, investments from foreign companies have flowed in and aided the building of its ailing infrastructure. Now, after years of growth, India now stands as one of the fastest growing global economies, second only to China.
According to Chandrasekaran Balakrishnan, the 2004 Moffatt Prize in Economics winner:
“India has to concentrate on five important areas or things to follow to achieve this goal: technological entrepreneurship, new business openings for small and medium enterprises, importance of quality management, new prospects in rural areas and privatization of financial institutions…
There will be new prospects in rural India. The growth of the Indian economy very much depends upon rural participation in the global race. After implementing the new economic policy the role of villages got its own significance because of its unique outlook and branding methods. For example food processing and packaging are one of the areas where new entrepreneurs can enter into a big way. It may be organized in a collective way with the help of co-operatives to meet the global demand.”
In his book, The Fortune at the Bottom of the Pyramid, author C.K. Prahalad examines how companies that innovate products and services targeting the world’s poorest populations can find economic gains. He indicates that companies in China and India are doing this better than others. The premise in his book is that companies that innovate products and services targeting the world’s poorest populations can find economic gains. He offers some examples:
- India’s Hindustan Lever invented a low-cost water purifier for India’s rural population
- Godrej’s refrigerator for $60 targeting people living in villages. The low-cost refrigerator keeps the water and vegetables cool but does not produce ice, which is not important for the rural population.
- Airtel created a business model to produce cheap wireless minutes for the growing Indian population and became the largest telecom provider in India.
- China’s Haier invented a washing machine for rural customers that is capable of washing both clothes and potatoes. Haier also invented rodent-proof refrigerator that keeps food rodent-free for their rural customers.
By combining innovation, technology and products aimed at fighting poverty in the world, countries like China and India are taking advantage of new economic opportunities that can be mutually beneficial to the consumer and the company.