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Call for innovation with globalisation

Ashok Dasgupta

Growing presence of Chinese MNCs in major industries was a major topic at China Business Summit

PHOTO: PTI

BOOSTING TRADE: Union Minister for Science & Technology Kapil Sibal addressing at a breakfast session on `India: Opportunities and Challenges' organised by the Confederation of Indian Industries in Beijing on Monday.

BEIJING: The two-day China Business Summit organised by the World Economic Forum (WEF) concluded here on Monday with a unanimous call for globalisation along with innovation if the country's manufacturing sector is to see robust growth rates in the years to come.

At the closing plenary, four global corporate honchos hailed the arrival of global, high-growth companies from China and offered the aspiring international players advice on how to succeed in the world market. "What China has done is unique," said Maurice Lévy, Chairman and Chief Executive Officer, Publicis Groupe, France and a Co-Chair of the China Business Summit.

"Imagine what will happen when they have the skills, are able to build great brand innovation and own intellectual property rights. This is the future of China," he said.

The growing presence of Chinese MNCs in major industries and markets was a major topic of discussion at the Summit. In a survey of 100 participants conducted by the WEF, 58 per cent said that the issue would have the biggest impact on China's future development.

At the closing session, Mr. Levy and his fellow panellists offered advice to the aspiring Chinese players while Wang Jianzhou, Chief Executive, China Mobile, held out a warning and said: "If you go global only for the purpose of going global, then it is useless. The reason for going global is simple: to create new opportunities to make profits today and in the future." The Chinese computer group, Lenovo, went global through its acquisition of IBM's Personal Computing Division. Speaking from experience, Yang Yuanqing, Chairman of the Board, Lenovo Group (China), said: "We thought we were capable, that the profits we made in China, our backyard, would be strong enough to support us and we could make use of our highly efficient production and R&D. Our ability to build and maintain productivity was another advantage."

Major challenges

According to Mr. Yang, the IBM deal presented major challenges on how to keep customers and employers and how to successfully integrate and consolidate the two businesses and cultures. "Internationalisation is not an end in itself; it is a means to help you grow and develop," he said.

A prerequisite for going global is to have a leadership position in your domestic market, said Baba N. Kalyani, Chairman and Managing Director, Bharat Forge, India. Besides, a company should have an export track record. "Unless you go global, you won't have access to markets or technology and you won't generate leadership in your business," said Mr. Kalyani. "Sooner or later, you will have problems with somebody coming in [to compete]," he said while advising companies to venture abroad to adopt socially responsible practices in the communities in which they set up operations. "To win the trust of society and your employees and to get cultural compatibility, you should have corporate social responsibility," he said, as "dealing with society is extremely important to gaining acceptance by society."

In a session earlier during the day, it was unanimously agreed that support from the Government was an integral component of fostering innovation.

The Minister for Science and technology, Kapil Sibal, pointed out that more than 40 per cent of the world's innovation happened in the U.S., and for obvious reasons as the property rights were backed by legislation.

Situation different

In India and China, he said, the situation was quite different, although India had begun reforming legislation to resemble that of the U.S. He also shattered the myth that private enterprise alone fostered innovation. In the U.S., 40 per cent of research and development was financed by the public, he said.

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