The Times of India carried a delightful piece the other day about finance minister P Chidambaram bumming around Beijing, soaking in the results of the scorching growth pace the Dragon has set! When queried about why India cannot do what its northern neighbour can, he lamented the various issues which hammer (and sickle!) our growth initiatives. However, a World Bank official put things in perspective saying the problem with India was not too much democracy, but bureaucracy, adding “if authoritarian rule was the answer to economic growth, then North Korea would be manna and South Korea would be in the doldrums.” The Bank official hit the nail on the head, but only partially. One only needs to look around to see how China goes about building itself and compare it with what we do. Since telecommunications is the big story in both countries, a close look at the sector itself would provide more than just clues. Nokia, the Finnish GSM giant, is starting a new JV with China’s Putian Communications to develop technology for Chinese 3G mobile standard known as TD-SCDMA. The company, according to reports, would invest $111 million and hold 49% stake in the venture. This follows a similar announcement by Germany’s Siemens AG last year which committed over $100 million for a similar development with Huawei Technologies. Other big daddies of the mobile world, Motorola and Ericsson, too have made commitments to support the Chinese standard. It is no secret that China has been actively pushing for its own standard in 3G to not only foster development of its own telecom sector, but more importantly, to avoid the huge royalties they would be required to pay to the existing manufacturers. It is quite possible that China would eventually go with the uniform world standard, but this posturing would get it concessions which we in India can only dream of. An instance of this is already visible in the GSM market. Currently there are four European (Ericsson, Nokia, Alcatel and Siemens), two American (Motorola and Nortel) and four Chinese (Huawei, ZTE, Datang and Putian) companies making GSM infrastructure. Wonder why, if the Indian market is among the most sought after market in the world, there aren’t any Indian manufacturer in the picture? The answer is simple. The Chinese seem to be governed by national interests alone. A high ranking official from a leading American telecom consultancy told me that the Chinese cleverly played their market card with the monopolistic European and American manufacturers.


Views expressed above are the author's own.