Rakesh Wadhwa

Kathmandu:

In India, prior to 1991, entry of multinational national corporations (MNC’s) was severely restricted. I remember the time when India had just two car companies, Fiat and Ambassador. Consumer products were virtually the sole domain of Hindustan Lever Limited (HLL). The only scooter on the roads was a ‘Vespa’. The only supplier of duplicating machines (precursor to the photocopier), was ‘Gestetner’, it later become the ‘Indian Duplicating Company’. All these companies were founded with foreign collaboration. India was on guard against the MNC’s. After its experience with the East India Company, widely regarded as leading to British rule, the fear was understandable. The remedy adopted by India, though, was wrong. There is nothing as good as restricted entry for those are able to get in. If a company obtained permission to set up its operations in India, it knew that the battle was won. Competition would not be allowed in, and therefore it could breathe easy. It did not have to worry about innovation. Products made with old outdated technology could be dumped with impunity on consumers who had no choice.

The Indian consumer had the worst of all the worlds. He was forced to pay prices which were the world’s highest for goods which were the world’s shoddiest. Nothing made in India could be sold internationally. Companies grew complacent and some made enormous profits in this protected environment. One of the safest shares to purchase was that of HLL. Its shares showed an appreciation which exceeded that of any other investment – be it in gold, real estate, or in another company. India was not alone in inflicting disaster on its citizens. Many other countries pursued the same course. Nepal was no different. MNC’s were permitted entry into its markets in rare circumstances, and, when they did come in, they could pass off whatever rubbish they wanted onto their consumers.

Brazil too followed suit. The effect on its electronic industry could not have been worse. In 1988, Fujitsu, unafraid of competition in this severely circumscribed atmosphere transferred only old, outdated technology for manufacture of fax machines. By 1994, the decrepit Brazilian fax machines which cost far more than the world’s average were on verge of extinction being dinosaurs of the information age. Brazil’s parliament, realizing the failure of its policies, drastically cut tariffs, and opened its electronic industry, including fax machines, to international competition in 1995. The same Fujitsu which had in 1988 so blatantly transferred pre-historic fax technology to Brazil had no option but to transfer the most upto date know-how to Taiwan in the very same year. Why? Because Taiwan, levied no duties and allowed competition. By 1994, Taiwan was the leading manufacturer of electronics, including fax machines, in the world. Brazil lost. Taiwan won.

Taiwan’s consumers won. Their exporters won. Their workers won. They were victors because competition brings out the best in all of us. The fittest companies survive and their battles in the home market prepare them for battles abroad. Hong Kong, Singapore, Australia, New Zealand, Chile, Dubai, Switzerland, Ireland and the US also won, and they won big time. By following the same path, keeping their markets op-en, keeping their taxes low, later, India, China, Brazil, Srilanka and even Nepal opened their markets and all have seen gains.

In India, HLL now faces competition and its share is no longer the darling of the stock market. Profits have dipped under the onslaught of competition from other MNC’s like Procter and Gamble, and Henkel. Homegrown companies like Godrej and Nirma too have thrived in an open environment and are giving a run for its money to HLL. It has had to repeatedly reduce prices of its soaps and shampoos. What is bad for HLL has turned out to be great for the Indian consumer.

Cars, scooters, motor cycles, perfumes, cosmetics, telephones, banking services, you name it are available to the Indian consumer in a never-before-seen line up. China has experienced an even more of a boom thanks to its greater liberalisation. Nepal need not fear MNC’s. It should make its land a battleground for the world’s best corporations. As they vie to sell to the Nepali consumer, and, as they compete to hire the Nepali worker, citizens of this country will be the ones to emerge victorious.

(The writer can be contacted at: everest@mos.com.np)