Times of India talks exclusively to Prof. Tarun Khanna regarding emerging markets, market strategy and institutional voids.

Pundits are wrong to focus purely on Sino-Indian border tensions, China’s string of military establishments around India, or the competition for natural resources. I am an academic, but as a business school professor, live very much in the present, and recognize these tensions. Nonetheless, I aver that we will miss the much richer forest for the sparser trees by failing to highlight many more positive-sum possibilities, whose signatures are already among us. One such reality concerns the future growth of global commerce lying largely with interactions among developing countries, so-called ‘south south’ interaction.

Whether one looks at the Indian mobile operator Bharti buying assets across Africa, the Chinese investing in Brazil’s natural resources, or the Afrikaner-origin Naspers gradually buys Russian media assets, much of the next several decades of cross-border commerce will likely bypass New York and London. Indeed, economic symbiosis between China and India, the biggest ‘south’ economies, ought to be the sine qua non of such South-South interaction.

But will it be? Though bilateral trade has skyrocketed, there is reason to be sanguine. As I argued in Billions of Entrepreneurs in 2008, there is an underlying complementarity between the Chinese and Indian economies – what China is good at, India is not, and vice versa – but neither country has capitalized on the possibility of leveraging the other’s strengths. Paradoxically, global corporations, developing ‘hardware’ in China and ‘software’ in India, are more attuned to this. India must drop its reflexive insecurity of Chinese competition, and China must recognize that India’s strengths now extend far beyond software, ranging from microfinance to life-sciences.

Further, a modicum of creativity will expose many win-win opportunities. India is often held to punch over its weight globally in the projection of soft power, whether through Bollywood, or English literature with an Indian twist. Lately, China’s Confucius institutes, disseminating language and culture worldwide, are in catchup mode. Surprisingly, India, the ultimate palimpsest of influences, a cultural mélange through the centuries, has expressed skepticism of this; wouldn’t it have been better to suggest a reciprocal cultural program from India into China?

Unlike competing for factories, telephone licenses, or oil patches, cultural exchanges are not zero-sum. In Sino-Indian history, for example, travelling monks between the countries lubricated commerce. Instrumentally, monasteries provided respite for traders; more to the point, interchange bred familiarity and it is harder to demonize the familiar.

The American philosopher, Will Durant, said in a 1945 speech, “It is a mistake to think that the past is dead. …..The present is merely the past rolled up and concentrated in this second of time.” Naysayers about Sino-Indian relations perhaps, paraphrasing Durant, suffer from a limited perspective. [Pessimists] “view history as a turbulent stream of conflicts….But if we turn from that Mississippi of strife, hot with hate and dark with blood, to look upon the banks of the stream, we find quieter but more inspiring scenes.”

For China and India to be lodestones for the impending gush of South-South commerce, they must learn to cooperate, as they have in history, and more than they do currently.

Authored by Prof. Tarun Khanna, featured in Jinri Yindu (published by the Embassy of India, Bejing). Jinri Yindu translates to Our India in English.

Charitra Parthasarathy from NDTV HINDU talks to Prof. Tarun Khanna on the sidelines of the CII Partnership summit.

In a new book two Harvard Business School professors discuss how companies can navigate emerging markets


Economic Times features an Extract from the book.

Deficiency of institutions is a characteristic of an emerging market

Such are the vagaries of the emerging markets that many multinational corporations have repeatedly bitten dust at their doorsteps. And it’s that very conundrum that Tarun Khanna, the Jorge Paulo Lemann Professor at the Harvard Business School, has tried to unravel in his latest book ‘Winning in Emerging Markets: Roadmap for Strategy and Execution’ .

Along with his co-author and colleague Krishna Palepu, the professor contends that deficiency of institutions (capital market participants, market researchers, legal regulations etc) is a characteristic of an emerging market. And while the “institutional voids” can be major roadblocks for companies they also present an opportunity – if the MNCs and domestic companies play their cards right. In an exclusive chat with CD, Khanna talks about his new promethean approach to emerging markets…

Prof Tarun Khanna discusses his new book Winning in Emerging Markets with Vinod Mahanta of Economic Times. Read complete story here

Business Today focus on Winning in Emerging Markets in their recent issue.