A brief about the Hong Kong visit

A short summary of our Hong Kong (as part of the International Immersion Program in PGPX) experience:

We received excellent lectures, went on a cultural tour of the Hong Kong downtown and visited two companies. The visits helped us gain first-hand insight about the present and future Chinese market. At Kingdee (a Chinese ERP company) we got to know about the advantages of tailoring the offering for the local market and the advantages of creating a market space for yourself by identifying a market where there is no competiton (Kingdee has identified the Small and Medium Businesses where the big players like SAP and Peoplesoft did not focus). IMO – an example of the Blue Ocean strategy. The visit to China Telecom helped us understood how the Chinese government owned companies cater to the needs of the customer. We exchanged notes about how things work in India (and due to our global experience, our views on the global markets was also well received).

We also worked on a project to analyze the reasons behind the resiliency displayed by India and China’s economies to the global financial crisis. I analyzed the reasons from the perspective of Financial Systems of the two countries.

Takeaway – 1: It is possible to implement a ‘Performance based System’ in the political environment –  similar to how the managers get promoted in the Capitalist system. In the Chinese political system those politicians who make people happy, who ensure employment, who ensure sustained revenue for their department/city/ministry get a chance to move up the ladder. Of course this ideal situation maynot work from top to bottom and there might be some leakage, but it seems to work at least at the upper echelons of the political system.

Takeaway – 2: It is possible to find innovative solutions for the issues facing the public – if the politicians apply their mind!! For example, in order to subsidize the suburban train travel (Metro trains), not only the station complexes provide real estate for shopping malls, but even the real estate opportunity on top of the train tracks has been heavily leveraged. Huge pillars around the train tracks support multi-storied apartments (50 to 60 stories)!! For a train commuter it appears as if the train is going through a small tunnel, but in reality there is an apartment above the train tracks!! I was awed… I feel that this presents a huge opportunity in Indian cities. In places like Chennai and Mumbai (and many tier II cities) the train tracks wind through the heart of the city and this space can be leased/rented to build residential and commercial complexes…

Takeaway – 3: All the land is ownned by the Government and individuals/companies lease it from the Government. Due to this reason the cost of setting up a company is cheaper. Hence the price of the product includes mainly the manufacturing cost and does not include any land acquisition or huge rental payable to the private sector. This set up also provides a very easy mechanism for the Government to provide subsidy. Whenever the Government wants to boost the economy or develop a particular area first thing that is done is to lower the leasing cost or even lease the land for free.