The Walmart- Flipcart Deal: Lure of the Quick Buck, Lack of National Pride and Staying Power

17 May 2018 17:05:44


The American retail giant Walmart has bought out the most successful start-up Indian company of recent times Flipcart Internet Pvt. Ltd. which was a multi-item e-retail company. It is perhaps better to say that Flipcart sold out to Walmart, because no one can buy anyone out, unless the seller loses his nerve. Do you think the American duo, Steve Jobs and Steve Wozniak, who set up what is now a famous company, Apple, from scratch with a very low capital, would have sold out? Particularly to a foreign buyer? The answer is a No, No. We Indians have a propensity to sell out and make a quick buck, rather than stay in the business against competition and hold on to our national pride.

Long before Flipcart, once upon a time there was an Indian beverage called Thums-Up that was invented and marketed as a soft fizzy drink when Coca Cola was thrown out from the country. Thums-Up thrived in a protected market. But the creative aspect behind its inception is glorious and must be recalled. It was like a Cola drink but not made from the African nut which is the basic ingredient of all American Colas. Thums-Up’s concentrate was made from Indian tea extract and spices, and needed a considerable amount of research before launch and involved much risk. It was truly a Swadeshi product. Then our economy was opened up and exposed to global competition. Thums-Up in the opinion of many was (and still is) superior to Coca Cola, and could have held a share of the market. But its launch-master Ramesh Chauhan did not have the nerve and staying power, which is also called Stamina. He sold out to Coca Cola and spun a web of excuses such as the Franchises were all in favour of Coca Cola and my hands were forced, etc. Coca Cola quickly realized the true worth of the taken-over beverage and kept on selling it.

Any American or German or Japanese or Korean businessman in the place of Chauhan would never sell out an original and unique product invented by his company. Instead he would enter the export market in a big way, and compete against international companies. In the process he would create a brand name for his country. Now Coca Cola markets Thums-Up only in India. They do not market it worldwide because that would eat into the market share of their own American beverage. If Chauhan had not been chicken-hearted and held on, today Thums-Up would be selling worldwide and providing jobs to thousands of Indian youth.

 

Our businessmen do not think global. Both Flipcart and ThumsUp were happy to remain confined within the Indian market. Look at Alibaba, which is a Chinese e-retail company that operate all over Asia and which will not sell out but compete against Amazon and Walmart, and retain a share of the market. They have written in their Vision Statement in the web that they must survive at least for 102 years; since they were born in 1999, lasting 102 years will enable them to span across three centuries. That is what is called stamina and how brand name China will be made. When our Prime Minister Narendra Modi says “Make in India’, what he means is to create a brand name India that would endure. However, what we are seeing is speed rather than stamina. Flipcart speedily rose and speedily sold out. Our media is lionizing the two Bansals, the makers of Flipcart, as role models for the Indian youth who are aspiring to start up. The media cannot make lions out of chickens, no matter how hard they try. For our start-up young men, to have no role model is better than to have an unworthy role model. Our start-up companies should have national pride and stamina and resist the lure of the quick buck. Be creative like the research team of Thums-Up but do not chicken out like Thums-Up.

Let me take the example of the Korean Daewoo-Hyundai car makers. Originally they were two separate companies born in the late 1960s soon after the Korean armistice was signed (in 1963) bringing peace after almost 30 years of continuous warfare and Japanese occupation that had devastated the country. Initially they were selling/exporting apparels toys etc. In 1978 they joined hands to make a car. The two Indian giants, the Birlas and Tatas, had by that time an experience of 25 years or so in car making, and they kept on making the same design borrowed from western companies under license. The primary condition of the license for the initial years was that the Indian car makers cannot sell outside India. There was no effort whatsoever on the part of Indians to develop a new design of an indigenous car.

The Koreans charted a very different path. They initially borrowed an engine from the Mitsubishi of Japan under license, but decided to design everything else in house. Apart from an engine, a car has an ignition system, signaling system, suspension system, steering system, brake system and many more, and to hold them together in a functioning assembly, a car needs a sound structure. The Koreans designed all of these and entered the international market with their product. There were many a hiccup and one of the companies went bankrupt and the other company bought it. But even then they did not sell out to the Japanese or any foreign car maker who were keen to take over. The 1990s brought success in small measures. Thus it took 12 years of gestation for the company to turn around and make profit. They even started designing their own engines and now they are the only competitors of the Japanese in small car segment worldwide.

What India needs is lion-hearted businessmen who would take risk, be creative and invest in research, develop new and attractive products, market them worldwide and never lose nerve in the face of competition and never sell out; in the process create thousands of jobs for their fellow countrymen and make the nation proud.

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