Friday 13 July 2007

HDFC, Wipro, Infosys among Asia's most admired companies

There's no shortage of Asian companies that have prospered thanks to a laser-like focus on their home markets. But what wins enough fans to land on BusinessWeek's list of most admired companies in Asia is success overseas.

Over the past few weeks, we've been asking visitors to BusinessWeek.com to vote for the Asian companies they most admire. The results now in and one trend is clear. Whether it's Toyota in Japan, Lenovo in China, or Infosys [Get Quote] in India, the companies that have won recognition this year are those that have been pushing to build their businesses globally.

Toyota, of course, has a long history in the U.S. Now the Japanese automaker is beefing up its presence there even more. "We're committed to building cars where we sell them. We've done that, and there's no reason to think we won't be doing that in the future," says Jim Press, head of Toyota's North American operations.

Cruise Control? No Way

In North America alone, Toyota is in the process of boosting production by 600,000 units per year at five locations, including a new, 150,000-capacity, sport-utility vehicle plant in Mississippi scheduled to come online in 2010.

3 Indian companies among Asia's 15 best firms
1	Infosys
2	Wipro [Get Quote]
3	HDFC Bank [Get Quote]

Toyota isn't ignoring giant market opportunities closer to home, either. In China it has long taken a back seat to Honda. But this year it looks likely to overtake its rival to become the leading Japanese carmaker in the high-revving Chinese market.

Like Toyota, Nintendo boasts legions of American devot�es. Of the 10 best-selling games in the U.S. in April, the top four were all made by Nintendo. They included Pokemon Diamond and Pokemon Pearl, which combined sold almost 1.8 million copies in April even though they only went on sale on the 22nd.

Thanks to the enduring popularity of the Pokemon game series and the runaway success of Nintendo's Wii game console, the company has been a favorite not just among gamers but also among investors. The stock price is up more than 47% this year, and the company now has a bigger market capitalization than Sony, even though Nintendo's sales are less than 12% those of Sony's.

Lenovo's Home-Court Advantage

The U.S. is also a make-or-break market for Lenovo, one of three Chinese companies on our list. Lenovo Group purchased the PC division of IBM in 2005, and since then management has been trying to persuade American computer buyers to embrace the Chinese brand.

It's been tough going, but Lenovo is starting to see some results from its American push. In the quarter that ended Mar. 30, the company reported that it had an operating profit margin of 1.6% in the U.S. That might not sound impressive, but compare it to the negative 3.4% of the previous quarter, and the number becomes more meaningful.

"Lenovo finally achieved profitability in the U.S.," a quartet of Bear Stearns analysts led by Jack Tse wrote shortly after the results came out in late May. "Lenovo clearly has made a good progress."

While Lenovo still faces serious challenges from bigger rivals like Hewlett-Packard and Dell, not to mention Taiwanese competitor Acer, it remains the No. 1 player in its home market by a big margin. Other companies on our list enjoy similar dominance.

Expansive Plans

Consider, for instance, NHN. It's the top portal and search engine in South Korea, far ahead of Google.

And like so many of the other companies on this year's list, NHN is branching out. It is now expanding its business to Japan. In that sense it's similar to Baidu.com, the Beijing company that is the top search engine in China. Baidu also is crushing Google, with the American search giant a distant No. 2 in the Chinese market. And like NHN, Baidu earlier this year set up a subsidiary in Japan.

In tiny Singapore, the need to expand beyond the home market is more obvious than in a gigantic market like China or India. Both of the Singaporean companies on our list have been leading that push.

Singapore Airlines is in negotiations to acquire a 25% stake in China Eastern, one of China's largest carriers. At the same time, the airline is expanding its reach through its subsidiary Tiger Air, a new, lower-cost carrier.

State-backed Singapore Telecom, meanwhile, already derives a big chunk of its profits from its Australian subsidiary, Optus. Now it's expanding in other parts of Asia.

SingTel has a 30.8% stake in Bharti Airtel [Get Quote], one of the world's fastest-growing cellular carriers. And on June 28 the Singaporean company reached a deal to pay $758 million for a 30% stake in Warid Telecom International, one of Pakistan's top operators.

Old-Style Manufacturing

Another factor contributing to the popularity of the companies on BusinessWeek's list is technology leadership and innovation. Companies such as Infosys and Wipro in India have well-established reputations as being top innovators in providing IT services for customers.

And as Korea's Posco demonstrates, tech leadership pays off in old-style manufacturing, too. The Korean steelmaker inaugurated a new plant in May with a new type of technology that uses noncoking coal rather than the more expensive hard-coking coal favored by most steelmakers.

The Posco plant has "first-of-its kind technology," enthused Credit Suisse analysts Hocheol Kim and Seungwoo Hong in a June 21 research report. Thanks to that commitment to new technology, "the company has made a big step towards strengthening its global cost leadership," the two wrote, adding that Posco's tech advantage should come in handy as the company expands beyond Korea to India and other Asian countries.

In Korea, Naver Trumps Google

Govt clears Mukesh Ambani's SEZ; 27 others get nod

Undaunted by criticism by a Parliamentary panel, the government cleared 28 fresh special economic zone proposals on Thursday, including the Navi Mumbai promoted by Reliance Industries [Get Quote] Chairman Mukesh Ambani, taking the total number of approvals to over 500.

The board of approvals gave formal approvals to 21 special economic zone proposals and seven 'in-principle' cases.

The Navi Mumbai SEZ proposal of Ambani and his close aide Anand Jain was finally given the nod after the Centre received a green signal from the Maharashtra government.

The multi-product Navi Mumbai SEZ has been cleared with the condition that promoters should build, within a year, the infrastructure that would ensure contiguity on the 1,250 hectare land where it is coming up in Maharashtra, Commerce Secretary and Chairman of BoA G K Pillai said.

The Special Purpose Vehicle that is building the SEZ has also been prevented from allowing any unit to come up in the zone before underpasses and over bridges are constructed for meeting contiguity requirements, he said.

The Navi Mumbai SEZ proposal had been deferred twice by the BoA on issues of contiguity and rights of villages in the vicinity of the zone. Thursday's clearance came after all the issues were addressed.

The state government was asked to give its views on the report of Revenue Department, which raised issues that included rights of the villagers in the area.

The Parliamentary Standing Committee, headed by senior BJP leader Murli Manohar Joshi, had asked the government last week to put a freeze on fresh notifications until the SEZ Act and the rules were changed.

The committee observed that the government was showing 'undue haste' in clearing SEZs, ignoring interests of farmers and other stakeholders.

Rising rupee - Warning ahead

Jahangir Aziz and Kalpana Kochhar of the International Monetary Fund recently argued in this paper (July 5): "The lesson for India is that allowing the rupee to appreciate helps to cool an overextended economy without driving interest rates so high as to kill off much-needed investment.

"Resisting nominal exchange rate appreciation because of concerns over export competitiveness is counterproductive - the resulting higher liquidity and inflation will inevitably erode competitiveness by making domestic goods more expensive.

"A much more sustainable strategy would be to achieve cost efficiencies through urgent infrastructure upgradation and education and labour market reforms."

There are so many unstated but sweeping assumptions in these couple of sentences: that the economy is "over-extended" (one disagrees); that "resisting nominal exchange rate appreciation" is counterproductive (we have managed to do this extremely productively for 15 years); that nominal appreciation of the currency will not erode competitiveness (rubbish); that infrastructure upgrade and education achieve cost-efficiencies (yes, but only over the medium term; by that time, all of us will be dead anyway).

The views are of course in keeping with the illustrious record of the IMF in surveillance of exchange rate policies, one of its primary objectives under the articles of association. It found very little wrong with the policies in the South-east Asian economies, even a few months before the region was engulfed in a series of balance of payments crises, just about a decade back.

It also granted yet another loan to Argentina, a little before the currency board policy became unsustainable, had to be abandoned, and the peso collapsed to a fraction of its earlier value. As for labour market reform, it is a pie in the sky in the current political environment.

Meantime, however, it does seem that the central bank is fully in agreement with the worthy IMF economists, and continues to allow the tail of sterilisation economics to wag the dog of the real economy. Incidentally, even as our central bank keeps articulating the difficulties in managing capital flows, Vietnam, a much smaller economy, is hoping to absorb $150 bn of capital inflows over the next five years - and China probably double that!

But this apart, despite the surprisingly low deficit on the current account for 2006-07, as conventionally calculated, reported by the central bank, there are a few points worth taking note of:

The merchandise trade deficit continued to gallop last year, even before the sharp rise of the rupee in the current year. The position will only worsen significantly in the current fiscal year: the first two months' numbers evidence a rise of 60 per cent in the deficit. And, oil prices have recently crossed $76 a barrel.

The current account deficit, excluding remittances, which are exogenous to and have nothing to do with economic competitiveness, was 4 per cent of GDP. Our complacency on the issue needs to be tempered by the fact that, unlike the US dollar, the rupee is not a reserve currency.

And, quite apart from the growth and jobs lost because of the deficit, there are limits to how much red ink we can continue to sustain in the belief that foreigners are only too ready to finance it forever.

To my mind, the major reasons for the Asian crisis a decade back were overvalued exchange rates, complacency about deficits on the current account, and freedom to residents to transfer savings abroad. All of these are present, in greater or lesser degree, in our case. An additional factor was short-term external credit, supposedly not present in our case - but see the next point.

Ostensibly, our short-term credit is low, $12 bn, as of March 2007, according to the external debt statistics released by the RBI. However, "this number does not include supplier's credits of up to 180 days". It is doubtful whether even supplier credit beyond 180 days is being properly captured. (Authorised dealers have considerable freedom to approve credit up to one year, and even beyond for certain imports: do the RBI data capture this?) What could be the amount?

The aggregate merchandise imports in 2006-07 were $200 billion. From what I know from my corporate clients' position, easily half of this is coming under supplier/buyer credits. In other words, the actual short-term trade credit outstanding could well be of the order of $50 billion plus, a huge number by any standards. (In fact, in today's exchange and interest rate scenario, any treasurer not using credit on imports deserves to be sacked!)

And, the central bank seems to have no data on the changes in flows or stock. It claims to account for leads and lags in exports under "other capital", but seems to gloss over the far bigger leads and lags on the importing side.

The commerce ministry wants to go back to the old era of fiscal subsidies to exports. Surely, the Prime Minister, at least in his old avatar as an economist, knows better than anybody else the importance of a competitive exchange rate?

But such issues apart, many other myths persist: for example, "a stronger rupee is beneficial for...import-dependent exports". The diamond cutters and polishers in Surat obviously do not know this: they are closing businesses!

The fact is that for import-dependent exports, the economics depends on the value added which is, effectively, in foreign currency terms, while costs are in rupees. The margins vanish with an appreciating rupee.

Complacency on the current account just because the deficit can be financed at least for now could prove costly, particularly when many external analysts believe the equity market to be overvalued (Citigroup recently described it as the least attractive in Asia), and the escalation in wage cost, on the one hand, and the sharp rise in the rupee, on the other, are squeezing the margins even in the vaunted services export sector.

Horror!!! Friday the 13th

MBA Schools - Trouble in Paradise?

Things have never been better for business schools. College graduates in every country in the world vie for admissions to business schools, after, in many cases, spending months training for the tough entrance exams. Business schools everywhere have the luxury of picking and choosing among the many who apply.

In the United States, at the top business schools, only a small proportion of the applicants are admitted. In India, the choosiness is even more, with the Indian Institutes of Management admitting less than 1 per cent of the nearly 200,000 who take the admission tests.

The picture gets even rosier at graduation time with employers scrambling for a chance to make their pitch to students. Starting salaries for MBAs from the top business schools in every country beat that of any other profession by miles and have been in an ever-increasing spiral for the last few years.

At the IIMs, during the last few years the placement "season" lasts less than a week, during which the entire graduating class is snapped up. At the top international business schools like the Harvard Business School and INSEAD in Europe, the feeding frenzy is as much.

Why, then, has there been a spate of articles in recent times from respected business school professors with titles like "How Business Schools Lost their Way," "The End of Business Schools," and "Can American Business Schools Survive?" What trouble do these savants see in the future while the rest of the world continues besotted with an MBA degree?

To start with, when lists of business leaders are drawn up, people who really made a difference, people like Bill Gates of Microsoft or Dhirubhai Ambani closer home, MBAs don't figure in them. More embarrassing, many (as in these two cases) do not even have a college degree, let alone an MBA.

When studies are done about the career progression after a few years of work, MBAs do not seem to have made significantly more progress than non-MBAs.

An internal study done by the prestigious US management consulting firm, Monitor, found that "people hired from high-end business schools were no better at integrative thinking than undergraduates...hired from the top-notch liberal arts programs".

Some would-be reformers of the MBA programs, like Jeffrey Pfeffer of the Stanford Business School, believe that much of what business schools teach - analytical tools like statistics and basic disciplines like economics and sociology - are readily learned and imitated by any intelligent person.

On the other hand, things like communication ability, inter-personal skills, leadership and, most importantly, "wisdom", the ability to weave together and make use of different kinds of knowledge, are less easily taught. Paradoxically, these are the very skills that lie at the heart of a leadership role in management.

Others like Warren Bennis and James O'Toole (their article in the Harvard Business Review, "How Business Schools Lost their Way," is much quoted in this debate) say that there is actually a crisis in management education and trace this to business schools attempting to adopt a "scientific model".

This model attempts to treat management education as if it was something like physics or chemistry or biology whereas it is, in their view, more a "profession" like medicine or law. They see this distinction between an academic discipline and a profession as the central issue.

Why have business schools adopted the scientific model of physicists and economists rather than the professional model of doctors and lawyers? They believe this arises from business schools attempting to gain scientific respectability and avoid the stigma of a vocational training centre. The scientific model, says Bennis, "advances the careers and satisfies the egos of the professoriate".

Business schools have always had this conflict: is it their role to impart "training" or is it to impart "education"? This is not a trivial distinction. Training is aimed at equipping students with a set of tools that they can immediately apply in their very first job.

For example, teaching students to do a discounted cash flow analysis, that trusty tool of financial analysts, is "training". "Education," on the other hand, is supposed to be longer-lasting. For example, understanding the nuances of the difference between the law of diminishing returns and the law of increasing returns and more importantly how these two different theories came about may not do much for a student in his first job but would perhaps equip him with a lifelong ability to understand the drivers of business success and failure.

The result of all this debate is a worldwide attempt to reform business school curricula. One direction of this reform is to infuse more humanities into the curriculum. James March of Stanford is supposed to have taught his famous behavioural sciences course using novels like War and Peace as his textbook. There is more to learn about human behaviour in these classics, he believed, than in articles in business journals.

"Business schools," says Bennis, "need a diverse faculty populated with professors who, collectively, hold a variety of skills and interests that cover territory as broad and as deep as business itself."

If paradise has to be regained in this age of specialisation, is a broad-based humanities-oriented curriculum the answer for business schools?

How Friday the 13th Works

Let's look at this objectively for a second:

In order to organize time, human beings created calendars.
As part of today's dominant calendar system, every year is divided into 12 periods called months, consisting of roughly 30 days each.
All days are also grouped into sets of seven, called weeks.
In the Western world, a significant chunk of the population suspects bad things will happen whenever the 13th day of a month occurs on the day of the week called Friday.

Like many human beliefs, the fear of Friday the 13th (known as paraskevidekatriaphobia) isn't exactly grounded in scientific logic. But the really strange thing is that most of the people who believe the day is unlucky offer no explanation at all, logical or illogical. As with most superstitions, people fear Friday the 13th for its own sake, without any need for background information.

The superstition does have deep, compelling roots, however, and the origins help explain why the belief is so widespread today. In this article, we'll look at some of the interesting stories behind this unluckiest of days.

The Christian Tradition

The fear of Friday the 13th stems from two separate fears -- the fear of the number 13 and the fear of Fridays. Both fears have deep roots in Western culture, most notably in Christian theology.

Thirteen is significant to Christians because it is the number of people who were present at the Last Supper (Jesus and his 12 apostles). Judas, the apostle who betrayed Jesus, was the 13th member of the party to arrive.

Christians have traditionally been wary of Fridays because Jesus was crucified on a Friday. Additionally, some theologians hold that Adam and Eve ate from the forbidden fruit on a Friday, and that the Great Flood began on a Friday. In the past, many Christians would never begin any new project or trip on a Friday, fearing they would be doomed from the start.

Sailors were particularly superstitious in this regard, often refusing to ship out on a Friday. According to unverified legend (very likely untrue), the British Navy commissioned a ship in the 1800s called H.M.S. Friday, in order to quell the superstition. The navy selected the crew on a Friday, launched the ship on a Friday and even selected a man named James Friday as the ship's captain. Then, one Friday morning, the ship set off on its maiden voyage... and disappeared forever. A similar, entirely factual story is the harrowing flight of Apollo 13.

Some historians suggest the Christian distrust of Fridays is actually linked to the early Catholic Church's overall suppression of pagan religions and women. In the Roman calendar, Friday was devoted to Venus, the goddess of love. When Norsemen adapted the calendar, they named the day after Frigg, or Freya, Norse goddesses connected to love and sex. Both of these strong female figures once posed a threat to male-dominated Christianity, the theory goes, so the Christian church vilified the day named after them.

This characterization may also have played a part in the fear of the number 13. It was said that Frigg would often join a coven of witches, normally a group of 12, bringing the total to 13. This idea may have originated with the Christian Church itself; it's impossible to verify the exact origins of most folklore. A similar Christian legend holds that 13 is unholy because it signifies the gathering of 12 witches and the devil.

The number 13 could also have been considered pagan because there are 13 months in the pagan lunar calendar. The lunar calendar also corresponds to the human menstrual cycle, connecting the number to femininity.

Other Traditions

The Christian perspective on Friday and 13 is the most relevant today, but it's only one part of the Friday the 13th tradition.

Some trace the infamy of the number 13 back to ancient Norse culture. In Norse mythology, the beloved hero Balder was killed at a banquet by the mischievous god Loki, who crashed the party of twelve, bringing the group to 13. This story, as well as the story of the Last Supper, led to one of the most entrenched 13-related beliefs: You should never sit down to a meal in a group of 13.

Another significant piece of the legend is a particularly bad Friday the 13th that occurred in the middle ages. On a Friday the 13th in 1306, King Philip of France arrested the revered Knights Templar and began torturing them, marking the occasion as a day of evil. Check out this site to learn more.

Both Friday and the number 13 were once closely associated with capital punishment. In British tradition, Friday was the conventional day for public hangings, and there were supposedly 13 steps leading up to the noose.

Ultimately, the complex folklore of Friday the 13th doesn't have much to do with people's fears today. The fear has much more to do with personal experience. People learn at a young age that Friday the 13th is supposed to be unlucky, for whatever reason, and then they look for evidence that the legend is true. The evidence isn't hard to come by, of course. If you get in a car wreck on one Friday the 13th, lose your wallet, or even spill your coffee, that day will probably stay with you. But if you think about it, bad things, big and small, happen all the time. If you're looking for bad luck on Friday the 13th, you'll probably find it.

For more information about Friday the 13th and other superstitions, check out the links on the next page.

Lots More Information

US Senate opens with Hindu prayer

History was created in the United States Senate at 9.30 am on Thursday, when Rajan Zed, the Hindu chaplain of the Indian Association of Northern Nevada, opened the Senate with a Hindu prayer.

This is the first such instance since the formation of the powerful Upper House in 1789.

A few Christian fundamentalists protested and began screaming, while holding the Bible aloft, "Lord Jesus, protect us from this abomination."

Officers from the Sergeant of Arms' office ejected one after the other (three were taken away) from the Senate gallery which looks down on the floor.

The president pro-tem of the Senate, had to beat the podium with his gavel thrice. He requested Zed to halt his prayer just as he was about to begin, and called on the Sergeant of Arms to restore order in the Senate Chamber.

A Senate aide said these people probably had gotten visitor's passes to the Senate gallery through a Senator's office and noted that "disrupting a Senate in the chamber is a criminal offense and they can be arrested."

A few minutes later, Zed delivered his prayer which took no more than 90 seconds, which as per the instructions from the Office of the Chaplain of the Senate had to be delivered exclusively and entirely in English.

"Let us pray," Zed began, "We meditate on the transcendental glory of the deity supreme, who is inside the heart of the earth, inside the life of the sky and inside the soul of heaven. May he stimulate and illuminate our minds.

"Lead us from the unreal to real, from darkness to light, and from death to immortality. May we be protected together. May we be nourished together. May we work together with great vigor. May our study be enlightening. May no obstacle arise between us."

Seeking the blessings of god on behalf of and for the Senators, Zed declared, "May the Senators strive constantly to serve the welfare of the world, performing their duties with the welfare of others always in mind. Because by devotion to selfless work one attains the supreme goal of life. May they work carefully and wisely, guided by compassion, and without though for themselves."

"United your resolve, united your hearts, may your spirits be at one, that you may long dwell in unity and concord!" he added, and ended with, "Peace, peace, peace be unto all."

Before stepping away from the podium, Zed also said, "And, Lord, we ask you to comfort the family of former First Lady, Lady Bird Johnson," wife of the former and late President Lyndon Baines Johnson, who died at age 94.

Speaking to rediff.com immediately after he delivered the prayer, Zed said, "I sprinkled some Ganga jal -- the water from the Holy Ganges [Images] on the podium before the prayer."

He also bemoaned the protests, saying, "I believe dialogue is always better," and profusely thanked Senate Majority Leader Harry Reid, Nevada Democrat, who had arranged for him to deliver the first Hindu prayer in the US Senate.

"The Senator was a very courageous man for standing up and giving us this opportunity. He was very courageous and I appreciate what he did very much," he said.

A few minutes later, when this correspondent accompanied Zed, his wife, Shipa, and four of his friends from Virginia, who were the only Indians present in the gallery to witness this historic chapter in the US Senate, to Reid's office, Zed told Reid, "We appreciate your courage, you stood up to them. We appreciate it very much that you went through with it."

Reid, seeing the conspicuous tilak of Zed's forehead, asked him what it was about, and the latter, who was wearing the saffron robes synonymous with Hindu priests, explained that it is a sign of auspiciousness.

Earlier, before the prayer, Reid told rediff.com, "There has been some criticism that I arranged this, which is true."

Asked if these protests were from other denominations, Reid said, "From other people," and noted, "The Senate Chaplain's office got hundreds of people protesting, by phone, mail and e-mail for allowing this."

But he asserted: "It shows what America is all about. Having real big arms to put around everyone and this is a religion that has been around a long time, which has brought peace and contentment to people over the generations and we are happy to have a (Hindu) prayer."

Before the prayer, Zed told rediff.com he felt honored, humbled and thrilled that he was creating history. "It's a great honor for me, my family, for the great state of Nevada, for all Americans and for us all Hindus. It's is indeed a historic occasion for all of us Indian-Americans also."

Zed said the fact that a Hindu prayer was opening the US Senate for the first time, was a clear indication that there is an acceptance of Hinduism as part of America today. "Slowly we are becoming mainstream. Yoga is very popular already, and through yoga in America, Hinduism is becoming more known. I teach Hinduism classes also in the community colleges (in Reno, Nevada) and I get a very favorable reception."

Each day, when the Senate is in session, the Senate chaplain delivers the opening prayer, before the Senate gets down to the business of lawmaking, which it shares with the US House of Representatives, but occasionally, on the urging of one community of another, particularly those from minority religions, guest chaplains are invited from across the country to deliver a prayer from their faith.

Zed, an alumnus of the Panjab University, from where he received his bachelor of journalism degree, is also the public relations office of the India Association of North Nevada.

After coming to the US for higher studies, Zed received his master of science and master of business administration from San Jose State University in California and the University of Nevada, Reno, respectively.