What it feels like within an economy growing at 10% August 4, 2007Posted by bernardlunn in Globalization, India.
Coming back from a week in India, I am reflecting on how different business feels like when GDP growth is in double digits. This is very different from simply growth in asset valuation (i.e. stock & property prices). This is the whole economy growing at 10%. It is certainly not just outsourcing, in fact that is not where you saw the excitement. Think Eisenhower America building the physical infrastructure that enables a mass-scale consumer economy, but at Internet speed.
I have been doing business in India since 1994 and this boom looks very different. One acid test I have is looking at the Billboards on the way into Mumbai from the airport. In 1994 they were advertising stock exchange shares and my instinct was bubble and that proved right. In the shortest bubble in history, for a about 3 months in late 1999, you saw Dot Com billboards. Now it is what you would expect for billboards, consumer products and services.
Looking at the newspaper on the first day, two stories jump out:
One. A company called Suzlon Energy, making alternative energy from massive wind power farms, buying a $10m SAP implementation from IBM. Another story relates how Suzlon is a huge success story for American investors through funds such as Citi and ChrysCapital. This is certainly not another outsourcing story.
Two. An article about how Indian entrepreneurs and old family business owners are more willing to sell out. This is leading to capital formation within India, liquidity that is going
into Indian based VC/PE funds as well as angel investing.
Now a quiz. I am eating airplane food that is fresh and tasty using real cutlery and a cloth napkins, served by 4 cabin crew in a two aisle plane and they seem genuinely pleased to serve people. My personalized entertainment system has a huge choice of movies, news, games, music. Am I on long haul business class? No, this is domestic Economy on Jet Airways from Delhi to Mumbai. The founder CEO of Jet, Naresh Goyal, goes down in my book as one of the truly great entrepreneurs. Building this kind of consistently high levels of service in a country where infrastructure is a challenge and where large institutions have typically treated customers as annoying pests is a massive achievement. Jet has set the standard that has forced the other airlines to follow. Now the airports are starting to get revamped as customers come to expect the same quality on the ground.