Monday, 30th October 2017

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RAISING OUR AMBITION - To build a brand, India must be best in making some things

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  • Published 1.12.09

At the end of World War I, there was a poor boy in Japan. He worked as a domestic servant in the house of a workshop owner. The workshop repaired and serviced Ford trucks. The owner saw an opportunity to make money in Manchuria, which at that time was a Japanese colony. So he left the workshop in charge of his young servant, and went off to Manchuria. He came back after eight years. Then his young servant got ambitious; he left his master and began a business of making engine oil. He continued in this small business till World War II. Just a fortnight before the war ended, an American bomb sent his factory up in flames. The man was very depressed. He started drinking, and stayed drunk for a year.

The time after World War II was a time of terrible food shortages. The people of Tokyo used to wander into the countryside and dig for roots to eat. It was also a time when there were a lot of small, idle petrol engines. The Japanese army used these engines to power their field telephones; after the war, the engines were useless. Our young man bought up these engines, put them at the back of bicycles, and turned them into primitive motorcycles. The people who were scouring the countryside for sweet potatoes were delighted with these motorized cycles. Our man did brisk business, and grew rich.

He then decided to go on a world tour. He went to Le Mans, and watched the motorcycle tournament. He was flabbergasted. He said to himself, I am making junk. He wanted to make a motorcycle that would win the Le Mans race. So he improved his technology and started making motorcycles.

He then wanted to export his motorcycles to America. But the Japanese government did not let him. It was keen to get Nissan and Toyota cars exported to the United States of America, and did not want Americans to think of Japan as a manufacturer of second-rate motorcycles. So our man designed a light two-wheeler, an early scooter which the Japanese government could not object to, and it allowed their export to the US. Our man advertised it in California as a fun vehicle for young men and their girlfriends; it was a roaring success. Finally, after the Japanese government gave up its preference for Toyota and Nissan, our man began to export cars. Today, they are a leading brand across the world. The man’s name was Yuichiro Honda.

Why did the Japanese government promote Nissan and Toyota, and not Honda? It was because it wanted to promote Japan as a brand, and wanted good cars to be a part of that brand. It did not simply want to promote Japan; Japan was already well-known all over the world. Japan was the country that had fought World War II as an ally of Germany. It was defeated, and its brand was in a shambles round the world. Its army had become notorious all over Asia and the Pacific for its atrocities. Japan’s was an embarrassing brand; the Japanese government wanted the world to forget Japan as a warring country, and to recognize it as a manufacturer of the world’s best products. Apart from its image as a belligerent country, it also faced the handicap that Japanese products were known before the war for their shoddiness. That is why it was so keen that exported Japanese cars should be as good as the best in the world. It tried hard for decades; today Japan is a well-known and respected manufacturing nation.

Germany has gone through a similar transformation. The German troops had become notorious for their atrocities in Poland and Russia. But Germany had become even more notorious for its killing of six million Jews. Amongst these Jews were businessmen, financiers and industrialists; they were amongst the most respectable Germans till the 1920s. Then Hitler took power; he robbed them of their wealth, and killed them. It was a terrible blot to overcome after the war.

Germany, like Japan, rebuilt its industry at the cutting edge of world technology. Audi, the German car, had an advertising slogan, “Technik die begeistert (technology that amazes)”; later it was replaced by “Vorsprung durch Technik (leap forward with technology), which became one of the world’s most famous advertising slogans.

But Germany could not create its brand as a technology leader until it wiped out its disgrace as a mass killer. If it had waited for the world to forget the massacre, that would have taken centuries. Instead of waiting, the German government distanced itself from the massacre by acknowledging and publicizing it. One of the most conspicuous museums in Berlin is the holocaust museum, which documents the massacre. And Germany gave billions of marks and euros to Israel. Today, Germany has achieved respectability, but at a tremendous cost. I am sure that not all Germans regret the holocaust. I am sure some think that it was a good thing. Whatever they think, denying the massacre or keeping silent about it would have been a bad strategy — just as the Gujarat government’s silence on the massacre of Muslims in 2002 was and continues to be a bad strategy, for the government and for Gujarat. Today, not only have the Germans left behind the stigma of Nazism, but they form the bedrock upon which the European Union has built its status as a power competing with the US.

Gujarat apart, the problem for India is not one of overcoming shame, but one of building a reputation. There was a time when countries and kingdoms built up a brand on military successes; Romans, Ottomans and Mughals for example. But after the Industrial Revolution, countries that have built up global reputations have been technologically good at something. Britain is remembered today as the hegemonic power of the 19th century. It reached there by means of military power. But what it then achieved had much to do with its technological leadership in shipbuilding, steel and textiles.

The US followed Britain; its leading role in the two world wars sealed its role as a world power. What gave it a lead over other countries was mass production, which it first developed in car manufacture: the Ford Model T was the best-known forerunner. Then it applied mass production to all industry, including steel, guns, ships, planes and shoes.

China’s rise as a world power is related to its ability to take over technology from abroad for a very broad range of goods, and to produce them with world-class efficiency and much lower wages than abroad. It is so competitive in manufacturing that it has built up an enormous export surplus. The surplus enables it to invest abroad; it has been investing in foreign mines, oilfields and other resources that its own industries need. It has given unprecedented amounts of foreign aid to African countries, and has got access to its natural resources as a result. If we are interested in building up Brand India, we must make India best in the world at doing at least some things.