Posts Tagged ‘India’

Thank You, Mr Carrier

July 31, 2012

It got a little warm today, so I slunk into my favorite coffee shop, where the
manager, Phil, prefers having the air conditioning on. He’s my kind of guy.

Much of the rest of the country swelters in 90-100+ heat and humidity, while here in green Seattle it doesn’t get quite that hot; that doesn’t mean that it never gets uncomfortable. The average temperature in Seattle in July and August is in the mid- 70’s, but remember that Mother Nature throws her dice now and then, just to make it interesting. In summer of 2009, Michelle and I came to Seattle from Boston for a vacation, and it hit 104, making my promises of mild climate pretty untrustworthy.

Like many locals, we wanted desperately to find a nice, cool air-conditioned hotel room, since our hosts did not have it. We found out that only something like 16% of Seattle homes have a/c, simply because it does not get that hot very often.

But what about those places that regularly do get hot?

I was born and raised in the Washington DC area, and a/c is not a luxury — it’s a necessity. In summer you lead an air-conditioned life, going from home to car to office building; at the end of the day you reverse the order. Even brief exposure to the elements brings on perspiration galore, and then you get that weird combination of a damp chill when the a/c finally hits you and your icky, damp clothes.

Air conditioning takes up lots of electricity, and when the electricity is not flowing, there is no air conditioning, which makes for a lot of sweaty, unhappy people. I feel sorry for those hundreds of millions of people in India who are without power recently.

There are over 1.2 billion people in India, the world’s second most populous country after China, and those people need electricity. Maybe such luminaries as Edison and Tesla ought to take a posthumous bow for their crucial contributions to our welfare and comfort today. The power grid in India, however, is not as advanced or as reliable as in other countries. Massive power outages have caused cars to jam in a morass of molasses due to dead traffic lights; have stilled the overcrowded trains; and have led to outrageous heat in workplaces and homes.

Earlier this month, the 17th, was the 110th anniversary of the birth of modern air conditioning. We all know the Carrier brand of a/c, but what most do not know is that it was Willis Haviland Carrier (1876-1950), who brought us that air-chilling appliance we all love today. He was a mechanical engineer, and he solved the most important parts of the riddles concerning the temperature, humidity and cleansing of air.

To Willis Carrier, I would like to lift a toast, of a glass of very cold iced tea. I wonder how much I could get for it in India?

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Testing the Envelope

September 3, 2011

International business provides one of the most interesting arenas to observe humankind at its best, and its worst. For thousands of years, traders have bought and sold over-priced goods and rendered shoddy services in the great market towns and port cities of the world. Vast numbers of stinky people would congregate and speak dozens, if not hundreds, of impenetrable languages while navigating myriad cultural differences with the dual purposes of making money and improving one’s situation.

Often, however, there would be someone else who wanted to make money and improve their situation, and that person could get in your way. This conflict, my friends, is called competition. Trust me when I say that business competition today looks the same on a stock exchange floor as it did when gladiators fought back in Rome’s Colloseum, only today they wear ties.

Fighting implies a winner and a loser, and when the need to win is high, some contestants cheat.

Market towns and ports also provided unique circumstances for learning, whether about new products and services to sell, or finding cool new ways to sell old products and services. Traders who imitated successful business practitioners and acquired new knowledge stayed ahead of the pack, giving themselves new opportunities to succeed. Success and wealth meant that they could buy Ferraris and then die while still young and beautiful. And if they couldn’t succeed honestly, they could learn new ways to cheat.

So just like children imitate their parents, businesses can imitate, or even try to copy, other businesses which they admire. And even at a more macro level, some countries may try to imitate other countries. India, it turns out, wants to be more like China; the land of Buddha wants to imitate the land of the dragon.

According to a recent article, in which many politicians and business owners in India were interviewed, Indians are envious of much of what China has accomplished in recent years: high if not stellar growth rates; herculean infrastructure improvement projects such as dams, bridges, railroads and airports; and – a shocker – its system of government. It is a “widely held view” that China is outperforming India because it is more “disciplined.” Indians feel that this is due to the fact that China’s Communist Party runs things unilaterally, while India has one of those typically sloppy, multiparty democracies that appears to be about as manageable as a herd of cats.

But do they really want to be like China? It is a “widely held view” that Dragonland is a hotbed of bribery and corruption. In 2006, Wal-Mart conducted a series of audits of companies in China making many of the zillions of low-cost items the world’s largest retailer sells. The auditors found that only a very tiny minority of Chinese businesses manufacturing products for Wal-Mart adhered to contractual agreements such as paying the legal minimum wage, paying for overtime work, not employing underage workers, and providing the equipment, training and working environment considered proper and safe when handling toxic or otherwise dangerous materials.

What popped my eyes out was that there are consulting firms in China that will help your company to cheat, by such means as: generating bogus employee time-sheets; coaching you on what to say to auditors and how to answer questions they are likely to ask; and providing helpful tips such as throwing blankets over the heads of the cheeky employees, the ones who are likely to tell auditors the inconvenient truth, and hustling them out of the factory when the audit teams arrive.  Unbelievable.

This year China has been mired in food industry scandals, as described on these pages, with such things as infant milk powder tainted with melamine. In your kitchen are probably spatulas and other items made of melamine, but do you wish to ingest them? Evidently, by judiciously adding amounts of finely ground melamine to the infant milk formula, testing instruments are fooled into thinking that the levels of nutrients are higher than they really are. So Chinese dairy managers figured they could cheat by adding ground up spatulas and feed the results to babies, and that would be OK, as long as they made lots more money.

The Three Gorges Dam, a huge, late-1990’s project of which the Chinese are really proud, already shows signs of cracks and leaking, and scientists are worried that no number of little Dutch boys will be able to fix it. During an inspection of dykes that suffered more than expected damage after floods along the Yangtze River in 1998, then premier Zhu Rongji discovered that some had melted away “like bean curd” due to corrupt and shoddy compliance with best engineering practices. Cutting corners and bribing inspectors, no matter if public safety is involved, is the Chinese way.

The recent bullet train catastrophe has caught the world’s attention, and two of the key railway ministers reportedly pocketed billions of dollars. The railway minister and the boss of the high-speed train system, is Liu Zhijun. He was fired back in February, and it is estimated that he received approximately $320 million in bribes. His second in command, Zhang Shuguang, deputy general engineer of the railway ministry and director of its transportation department, was found back in March to have been the recipient of many fat envelopes too. Reportedly he has $2.8 billion squirreled away in Swiss and foreign bank accounts, this on a purported $1220/month salary.

Officials from the Chinese telecomm industry have just joined the party. Zhang Chunjiang, at one time the vice chairman (ha ha, “vice” chairman) of China Mobile, the largest mobile phone service provider in the world (if measured by number of subscribers), has been a bad boy. In July, he was charged with accepting somewhere in the vicinity of $1.15 million in bribes. (He should have worked for the railroads.) He was sentenced to death, which was reduced for good behavior, which in China means that he has to share his ill-gotten gains with the Central Committee.

Last week, Li Hua, the former chairman and general manager of the Sichuan branch of China Mobile, was convicted of accepting more than $2.5 million in bribes. Like Zhang, Li was sentenced to death, but will also receive a commuted sentence — I understand that the poor bastard will be forced to watch videos of Jo Calderone for the rest of his days.

As everybody knows, India has been very successful at out-sourcing, which has been made possible by a well-educated workforce. These highly trained Indians  are paid less than their American counterparts, which helps to keep costs down. One area in which they excel is the medical industry. For example, Indian doctors, many of whom trained in the US, analyze x-rays which have been sent by American doctors. At the end of an American’s workday, a radiologist can send an x-ray over the Internet to a doctor in India. This doctor, due to time differences, then receives the x-ray and examines it while the American sleeps. Then when he or she is done, the doctor in India, at lower cost than is possible in the States, sends the report back to the US doctor, who sees the results first thing the next morning.

Similarly, workers in the Indian software industry can receive umpteen lines of code from an American software engineer, assess the work, provide revisions and corrections as necessary, and then send it back for use in the US. Again, costs for such work in India are lower than in the US.

Call centers, as many Americans know, have been in the forefront of Indian out-sourcing. Many of us are familiar with the movie (2006) and TV show (2010) of the same name, “Outsourced.” We are also aware that when we call a large company to order something, or if we try to get some tech support, instead of speaking to an American operator, we are likely to get connected to someone in India. This is pretty easy to tell, since the person in the monster cubicle field, perhaps in Mumbai, has that unmistakable accent, as in “Thankyouverymuchplease.”

By bribing people from Beijing to Bangalore – which was horrible – this intrepid reporter has discovered that India and China are about to sign an unusual agreement. We know that bribes flow through China like blood through an Olympic gymnast. But lately, there is growing fear of getting caught and then severely punished.

(The Chinese don’t worry about bribery and corruption as being morally wrong; almost like little children they are just frightened that they might get caught and spanked.)

While China knows that India has a competitive advantage in out-sourcing, and can provide many services at prices far below those charged in other countries, India wants to be more like China and learn more about Chinese business practices.

Here’s what I found: Chinese companies have signed contracts with Indian out-sourcing firms to perform off-shore bribery services.

These pioneering Chinese firms hope to save money and still enjoy the many benefits of offering and accepting bribes, while reducing the risk of being caught; Indian businesspeople will get their wish and learn how to be more like the Chinese.

Using nude photos of celebrities downloaded from the Internet — no, sorry, there isn’t a link — I bribed officials on both sides of the arrangement, and uncovered the new schedule of bribe transaction fees that will be used. It looks like India will be able to dominate this new sector by providing high-quality, out-sourced bribery services at cut-rate prices.

Formerly, to gain approval of a contract to obtain, say 1,000 tons of yttrium, it would cost the foreign firm $500,000 in bribes to a Chinese official or manager.  But by out-sourcing to India, and taking advantage of exchange rate fluctuations, a firm might spend only $350,000 and still enjoy the same relative benefit (“bribe power equivalency” or BPE).  In the old days, in order to bribe railway or construction inspectors in China for a large-scale project, a firm would have to spend around $1.25 million to pass a routine inspection.  But as an out-sourced bribery, India can perform the same service for only $700,000.

In order to gain expertise in this “theatre of dissimulation” the less knowledgeable Indian firms have been gathering works on the subject and have been schooling themselves on the finer points of what the Chinese call “guanxi.” The Indian companies have also purchased a large quantity of an excellent publication by The Economist, a detailed report on global bribery. These companies feel that this primer on the protocols and etiquette of bribery will give them a leg up on this age-old way of doing business.

Bribery economists at the University of Massachusetts, where William M. Bulger used to be president, estimate that India could become the world’s leader in out-sourced bribery within 5 years.

To run the new Indian bribery call center in Mumbai, rumors have spread that Li Hua, the former telecomm executive has been hired. Evidently, those wishing to offer or accept a bribe will be given a discount on processing fees, if they call using their China Mobile account.

There is no word on whether spanking will ever be out-sourced.