Friday, January 15, 2010

Some more notes from the elephant and the dragon

- C.K.Prahalad says that businesses will gain by supplying to the lowest bottom of the pyramid, the middle class and lower.

- Your shirt or car would have traveled more countries than you did or will ever do. Thanks to the global supply chain and interwoven economies.

- If US were to continue it's dominance, people may have to re-train for jobs, get into nano, green tech sectors, improve infrastructure ( China's is better according some observations), start spending consciously ( Collectively Americans are in nagative savings mode as opposed to 30% odd savings in India and China. They spend more than they earn. Reason - in my view it is abundance of goods and luxuries all around and seamless ways of payments, plastic cards I mean..Cannot blame americans completely if they hoard their garage with goods from China), invest in education ( I was startled to see that American 15 year olds are 15 th or 8 th in their maths and science skills compared to rest of the world. This is not okay given that thye will have people all over the world competing with them unlike their parent's times), invest in reasearch and hence foster creativity and innovation.

- Why is all not reversible ? 'Buy America' is unlikely - Poeple have chosen Toyotas to Ford in past, they may not buy expensive goods from America and choose against low priced walmart made in china goods, they do not care who does the back office work like tax filing or mortgages or insurances - as long as it's done.
Protectionism - Does not work either, Europe suffered as a result with stagnant growth rates due to protectionism. Protecting jobs here would mean missing out on 'low wage' options and hence when the same person who lost job becomes a consumer, will have to pay heavy prices for all his expenses, which leaves less cash in his hands. Americans are net gainers on long run. $1 tn is the gain in 2006 and more in years that followed.

- Meredith even predicts from her observations that China and India will have a share of the Superpower pie in coming years. Indians will throw the government if the growth is not sustained and similarly there might be a public roar if they go without jobs. Hence their governments will make sure that they have a double digit growth.

- Ms.Meredith also talks about challenges both countries face in coming years..Like I already said it's a must read for many of us.


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