Obama runs into a BRIC wall
During Barack Obama’s first trip to India he shouted out the importance of good ties with the US, implored India to include companies like GE into its plans for infrastructure growth, and demanded that India “keep up their end of the bargain.”
If Obama knew anything about doing business inside India he would have showed up a lot sooner. But Obama, like every Westerner, focuses on big picture, venture-focused thinking. He is laser focused on the importance of India’s large democracy being connected to the US, but not willing to invest the time to develop that relationship to its potential. He is focused on making “friends” with countries in China’s backyard, but unwilling to consider that these countries do business with China to ensure a positive relationship.
Most of the organisations traveling with him have a different focus: time and money, the last two precious items on the earth from the American business perspective. While important, time and money are only part of a business relationship in India. Like the rest of the BRIC (Brazil, Russia, India and China) countries, India seeks a relationship. The ideal in these business cultures places greater importance on the relationship than the venture, making the time and money argument attractive but missing a critical component. This is why so many Western firms lose when try to sell to the BRIC. They don’t spend time building relationships. Its critical to realise that having the best product does not preclude you from this decision tree. There are countless stories of BRIC business choosing second or third class products because the relationship is stronger; the relationship is on an equal plane to time and money.
A magnifying glass has been placed over this difference as the BRIC countries grow in strength and, more importantly, desire. These four cultures, preferring to do business in similar ways, share a common desire to deliver on the predictions of the BRIC. This makes it desirable and easy to do business together. Not surprisingly, because they value relationships, the BRIC meets yearly to discuss how to work together. The leaders of all four countries sit down for several days and discuss synergies. An example of the success of these relationships – and there are many – is China’s mind-blowing increase in investment in Brazil: from $82 million in 2009 to $12 billion in 2010.
The combination of desire and ease of similar business cultures have built a BRIC wall that is gaining strength. It’s compelling for India to buy from China and Russia next door based on a common vision and focus on building BRIC relationships. Time and money, the other two factors also win with Russia and China labour sources being much cheaper than Western counterparts. This wall is only going to become stronger. Western firms will struggle to get through if they don’t learn how to do business in these cultures.
How do Western firms compete? The US trip highlights this best, although it’s not the highlight you read in the paper. Obama touted big deals that equal American jobs before he departed from India. These jobs, predicted to come from tentative agreements made with Boeing and promises of increased access to projects for General Electric. The irony is that the very same week GE announced they would buy several planes from Aviation Industry Corporation, a Chinese-run aerospace firm soon to be competing with Boeing. GE did this because it “gets” China and India. It gets that GE must be there on the ground constantly working on the relationship, showing that effort through buying planes from a Chinese that has developed only a showroom-ready plane mock-up. While the pundits in the press laughed at China’s ability to compete with Airbus and Boeing, GE knows better and sent a corresponding message: we support you.
Asking what’s this got to do with me? The outsourcing lead? The idea that firms in India, or any other member of the BRIC will be incentivised by money and time alone is strategy based solely on Western preferences. It might work once, twice but it will eventually fail. Delivering on the promise of globalisation that BRIC countries offer will happen most effectively when you have a relationship to leverage. The relationship will deliver on time, budget and quality. There are many failed project owners out there that know time-and-money-based strategies fail. Outsource leaders should look to Jeff Immelt, not Barack Obama, for a glimpse of someone who really understands India and the rest of the BRIC. Don’t show up demanding your outsourcer “keep up their end of the bargain.” Take a page out of the GE handbook book: get on a plane and start developing relationships.
Brandi Moore just published The Little BRIC Book: Cracking the code of global projects across Brazil, Russia, India and China. It is available on Amazon.