It's Ability, Not Friendship That Matters

Saudi Education Minister Prince Faisal bin Abdullah has signed a SR2 billion contract with China Railway-15 Bureau Group for the construction of 200 school buildings in various cities of the Kingdom. The Chinese company won the contract in competition with several global construction companies, the Saudi Press Agency reported Saturday. The new school buildings with a total capacity of 150,000 will be operational months after the date of the signing of the contract. The contract period has been fixed at 14 months. The contract represented 6 percent of 3,500 projects currently being implemented by the Ministry of Education at a total cost of SR20 billion. When completed, the schools will have a capacity of 1,700,000 students of both sexes. The ministry takes over an average of 80 new schools a month.

This development shows two vital facts: one - China has become the preferred infrastructure builder for the Kingdom in recent years. Apart from schools, the Chinese companies are building Saudi Arabia's railways, and other infrastructure - worth billions of dollars.

Now consider these facts to understand India's relevance to Saudi Arabia:

1. Indians have been working in Saudi Arabia since before the days oil was found.
2. India has the largest number of expats living in Saudi Arabia as of now
3. India has the world's second largest population that follows Islam - the religion that defines the Saudi nation
4. Indian engineers and other professionals have played a huge role in building the existing infrastructure in Saudi Arabia (even though the contractors may have been non-Indian)
5. Saudis for generations have received education in India and have social links with India
6. Indians in Saudi Arabia have assimilated with the society by adopting Arabic language and local customs

Also look at this:

1. The Chinese do not live and work at all in Saudi Arabia, except a handful who work for Chinese companies that have won contracts here
2. China has since 60s suppressed its Uighur Muslim minority
3. There is hardly any cultural or other similarity or interaction between China and Saudi Arabia

However, the big bucks flow to China from Saudi Arabia. Saudi hypermarkets are full of cheap goods manufactured in China. China has wisely started a 24 hour Arabic satellite channel that spreads the virtues of the Chinese culture and the news of how happy the Chinese Muslims are!

The Indian government and companies should get this lesson - Shape up! Understand the world dynamics! The world will love you not because you are a friendly state with law abiding expats enriching the foreign economies. You will be loved for your strength, as in the case of your IT outsourcing abilities. Improve your brand equity. Look at you weaknesses - your inability to put your own infrastructure right - and you lose billions in potential business.

Smile-o-meter

Recently Tokyo railway station installed electronic scanning equipment on customer facing work stations - check out BBC. These gadgets catch the smiles of workers as they are communicating with customers buying tickets or asking for directions. If the worker is not smiling adequately - ie if the smile is not wide enough or teeth do not show up to a desired degree, she or he gets reported. Throughout the day the scan keeps reporting the smile score - I think the desired level is between 75% and 90% full smile as defined by preset parameters.

My first reaction is that I want to buy the shares of the company manufacturing the smile scan devices, as I can see the universality of this application. In whatever country you are, there would be dozens of institutions where thousands of workers need to be monitored for their smile quotient. It's a multi-billion dollar business in the making. On second thought, I am already dumping the shares. Probably workers will find several innovative ways of cursing the customers with a 90% smile. In that case smile scans will be useless. So the business plan flattens out.

Honestly, I find the stressed out air hostesses and cashiers more homely and predictable - smiling ones will leave me confused and unstable for a few moments!

Reality TV: How to Select Public Officials

The most interesting TV show over last few days was the confirmation hearing of Sonia Sotomayor, President Obama's nominee for the US Supreme Court. I really do not know how much of the the senators' voting process and the conditions for the appointment to be overturned, but it is great to see a would be public official so extensively questioned. The responses tell us a lot about the personality, her thinking and her track record.

Just imagine our supreme court judges and cabinet secretaries being interrogated. I am all for India emulating this useful democratic process. If not anything, these would provide rich content for the half dozen laughter championships hosted by various TV channels.

Nano and others: Why should cars in India be 60% or more expensive than elsewhere?

It's great that India has pioneered the world's cheapest car. This feat must be terribly difficult especially in India due to its skewed tax structure. In most manufacturing/importing countries a standard Honda Accord costs equivalent of Rs.1-1.1 million (USD 22,000). For that model we pay Rs.1.6+ million (USD 34,000). A BMW 5 Series costs Rs.2.3-2.4 million (USD 48,000), but in India it sells for Rs.5.5 million (USD 110,000), etc. This equation is true at the lower end, too.

The thought of taxing cars high is the inheritance from people who thought like the poor - probably rightly so 60 years ago - but its relevance is lost to the people who want to create wealth, not just realign it. Taxes on 'luxury' goods are aimed to redistribute wealth. We do need Robinhood mechanisms to transfer some money from the wealthy to the poor, but we need to redefine who is wealthy and also redefine the mechanisms.

A material reduction in import duties and excise duties on cars will lead to greater production and thereby greater employment. With low cost of labour, steel and other ingredients, India could be a preferred low cost producer for world's leading car companies, especially at a time when most of these companies are making losses. We can certainly be cheaper than likes of Mexico and Thailand, who already enjoy the status of preferred car manufacture locations.