Not very long back I was addressing a group of school teachers – in a big branded school. The school owners were worried about the government allowing foreign schools to come and operate in India – and naturally they were scared.

When it came to my turn I asked the teachers:

How many of you have travelled by air? (when I was in school asking teachers such a question would be like treason)

Many hands went up, and there was an animated exchange of experiences…

I said if foreign schools came, where would they recruit teachers from….

Again they were excited and said ‘Oh my friend has got a job as a teacher of English in China…etc. etc.’

So I said please understand the following:

Competition is good for YOU the consumer (we all have benefited by the competition among car manufacturers and mobile service providers, have we not?).

Competition is good if YOU are an employee in the industry (so many people from UTI, LIC, SBI and other Psu banks have been poached by private sector banks like Hdfc, Icici, Kotak, etc.).

Competition is good if YOU are a supplier (ask training institutes which is training for Jet Airways, Kingfisher, ….etc.) – there was no market when Indian Airlines was the ONLY airline.

Competition is BAD for YOU if you are the OWNER of the business where there is competition expected.

As a consumer I would be happy if FDI came to India (organised retail, Chinese and Indian labor kept inflation so low in US for the past 15 years). Y

Yes there will be turmoil. There is always some turmoil – in the long term the Indian entrepreneur will adapt – Starbucks cannot compete with a Udipi.

Now I am seeing the retailer wanting FDI in wholesale (LOL).

It is time we as consumers told Mamata, the left and the confused BJP (is it left, right, Middle or NOWHERE?) we want FDI…yes maybe with the speed breakers in place perhaps?

http://www.hindustantimes.com/business-news/WorldEconomy/Kirana-shops-cheer-FDI-in-wholesale-not-retail/Article1-779175.aspx

 

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  1. The biggest beneficiary is the consumer by any means. These big players by themselves will reduce the inflation by a minimum 1% which was proven in many markets (i had one fantastic presentation few years back but lost..). Agricultural innovations will naturally come in and i believe more than enough speedbreakers were in place this time but sorry – opposition means oppose anything and everything is our motto… 🙁

  2. Sorry Shinu, completely disagree. Read Big Food vs Big Insurance fights. Big Food – branded food sell obesity – over refined, over salted, over sweetened food. US Medical insurance is now spending much much more on treating obesity, cardio vascular diseases, alcohol and tobacco related illnesses CAUSED by Big Food.

    Simplicity is superior – but there is nobody to support. L O L

  3. How come we have 42 mutual funds (I am assuming it means competition?) but the asset management charges remains so high? Or with 14 life insurance companies – NONE OF THEM IS INTERESTED IN SELLING TERM INSURANCE?

  4. I wonder what these pure foreign banks like Citibank, Stanchart, Barcley and HSBC have added value in the country except fleecing the consumer with all the unethical charges and resorted to unew tactics harrassments.

    Unforunately these same entities behave differently in NA and Europe and have dual standards when it come to Asia. These ended up as employer of few people but created a negative affect on vast number of consumers.

  5. I still remember Some 5 years back some 5 years back an retail company head (think it’s Kishore Biyani) opposing FDI saying they THEY created organized multi brand market in India and they can’t see that some foreigner come now and take their work. But the same reatail industry head who are starved of investment/money are welcoming FDI with roaring sounds. So every body speaks according to HIS good but not for the whole good

  6. Competition is not necessarily good for the employees. The new entrant may use hi-technology with higher per-person productivity. This will put an existing business under stress even if it is producing quality products though with reduced productivity. This additional stress will have to play out in 2 ways…increase per-person productivity with same number of employees, thereby increasing the workload and stress on each employee…or retrench them and switch to the same hi-technology used by the competition. Either way, employees lose…their jobs or quality of life.

    Competition is good for a supplier IF he has the capacity to supply with no loss of quality. Otherwise you end up increasing production at the cost of quality (reduce QC rejections, use cheaper inputs if the business can’t get funding for same quality at higher volumes). This will not only hamper your steady growth, but can even spawn competition at the supplier level itself. That cancels out the benefit right?

    Finally, while competition appears good for the consumer, what ends up happening is that goods/services are produced in excess of demand and keep lying on the shelves of the retailers. There may even be wastage as once retailers margins are recovered, they may dispose off the remaining to people who don’t really need it. Retailers also tend to give selective price reductions…not everything is equally discounted…some products are highly discounted and advertised to get the customers in the door, most others are minimally discounted and serve to pad up their margins.

    Just my 2 paisa on “Competition”!

  7. Who will oppose to FDI if it comes with below restrictions,

    1. All saleable products should be from local resources.

    2. All Products should be procured from our farmers.

    3. No Import of saleable items

    4. Strong will to punish contract farming.

  8. @Ravindra,
    Then the potential FDI partner will say “Add a 5th item to the list:
    5. Get all your capital from domestic resources as well.
    Bye Bye!”

    Expecting that FDI is here to support local resources, local farmers, local supply chain etc., is pure fantasy and utopian. FDI will do no such thing…it will source from anywhere in the world who is the cheapest supplier. Domestic suppliers will not just be squeezed, but will be WRUNG DRY if FDI comes in. Same goes for farmers…FDI will establish such economies of scale that will gouge the farmers so badly that the current middlemen will begin to appear as charitable saints! Expect farmers owning their land to sell of in ever larger numbers and next step will be Govt of India will be forced to corporatize farming (forget contract farming) under pressure from the FDI supply chain to reduce food inflation by improving food production.

    You think all this cannot occur? Why not? Who/what will prevent it?

  9. Some politicians speak as if they need foriegn companies to come invest and do charity and develop the indian living standards…

    I am staying in Kuwait where there is almost 20 multibrand super markets including multinationals and over 1800+ bakala/kinara store/.. (whatever u call..:) )There is space for each and defenitely competition. over the years i have seen merchandising innovations, service innovations and pricing innovations trickle down from the large supermarkets to these local stores ( sorry no agriculture space for any in Kuwait- They just import almost everything and export a black fluid in dollors 🙂 ).

    Now the choice is for the customer to “save like you r to live 100 years more” or to “live like you are going to die tomorrow”. Let the capitalist, communist, socialist, or any tom dick and harry have their choice of living BUT WHY INSIST EVERYBODY HAS TO LIVE AS I THINK?

    When 120hrs monthly work was a norm with competition/ market demand has/can/should increase the same to 200-240 in many fields in india it just be good for the country.

    When mechanisation is brought in by competition WHY NOT where the farm lands are very very inefficiently utilised?

    When investments in technology, warehousing, transportation, packaging, merchandising…etc are brought in WHY NOT wny the monopoly of the traders cannot be broken down for the better of the farmers and end consumers?

  10. everyone needs to realize that the ONLY GOOD OF ANY ECONOMIC ACTIVITY is determined by if it BENEFITS THE CONSUMER.
    the worker,entrepreneur,supplier and the rest of the noise making “stakeholder” all exist to serve the consumer.
    without the consumer,none of the fellows would earn even one paise.

    all production and work exists for the sake of consumption.
    so any economic analysis that tries to confuse people by bringing in other parties is muddling the issue.they are playing on the fear of some vocal lobbies.the consumer is not a lobby -though it is the largest group of people.

    those who are worried about productivity improving machines only need to recall the protests against computerization.computerization not only improved efficiency,it freed up people to do other things.
    this neo-luddism based on gandhian fear of machines is a decivilizing force based on misunderstanding of basic economics: division of labour and specialization.

  11. No Pravin. What you are saying is old fashioned. At a time when the consumer does not even know what is good for him, things cannot be just for HIS good. A company making tobacco products or super refined maida products – is not good for the WORLD at large. The cost the tobacco user puts on the overall medical bill of the world is HUGE. Similarly companies making arms and ammunition, drugs, etc. CANNOT justify saying ‘it is good for the consumer’.

    In a more complex world one has to see how a company is treating all the stakeholders – and over a long period of time….NOT JUST the consumer or the shareholder….

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