“In India, 101 Employees Pose Big Problems”

In the January 17-January 23, 2011 issue of Bloomberg Businessweek, an article called “In India, 101 Employees Pose Big Problems” describes how government involvement in business is actually hurting the country’s economy and limiting its potential. The article states that there are over two hundred laws restricting employers in India, but the main law discussed is the one that prohibits employers of over one hundred workers to fire an employee without government permission. This causes employers to have to choose between limiting the amount of workers, and thus output, they can have, or risking having inefficient workers. Employees would not have much of an incentive to work hard if they knew that they could not be fired. In November 2010, even the Prime Minister voiced his concern that these laws might be “hurting the very workers they are meant to protect.” In 2001, some exceptions were made to the laws in order to encourage growth in IT companies, such as Tata Consultancy Services, so it can be wondered why the government does not amend these laws for all industries if leaders believe they are preventing the economy from growing. As the laws stand, employers are finding loop holes that allow them to have more workers without having to settle for inefficiency. Since it is easier to fire contracted labor, employers are hiring workers on daily wage contracts or three year contracts. This probably causes workers to constantly fear for their jobs and assume that they are going to be unemployed at the end of their contracts. A factory worker, Nazia Begum, is in the top 20 percent of wage earners, and she only makes $3.80 for each of her ten hour work days. These laws are ultimately hurting workers and preventing India from a surge of industrial growth similar to what China has experienced.

The United States has laws regarding business to ensure that employees are treated fairly and have a safe environment in which to work. However, when companies need permission before doing things such as firing employees, it slows production. The company must wait for permission to fire an employee that they know much more about than the government, all the while dealing with that inefficient employee in the workplace. There should be laws protecting workers from being fired unfairly, but managers also need to be able to run their businesses. This law has even prevented foreign investors from showing interest in Indian companies. Businesspeople looking to expand into India might be hesitant upon realizing all of the laws restricting business that may inhibit them from being successful. Managers should always know the political systems of the countries they want to expand into and the laws that might make it more difficult for their businesses to grow and be efficient.

Elena Rudzinski

Works Cited:

Srivastava, Mehul. “In India, 101 Employees Pose Big Problems.” Bloomberg Businessweek. 17-23

January 2011.

“Made For China”

In the October 18, 2010 issue of Newsweek, an article titled “Made for China,” by Sonia Kolesnikov-Jessop and Rana Foroohar, explains that the Chinese market continues to grow in attractiveness in the eyes of Western marketers. Although China is still considered a poorer country than the United States and has a high savings rate, people in China have a growing interest in luxury goods. However, they do not want knock-offs of American and European brands. They want styles created especially for them. Some big sellers in China include computers, televisions, jewelry, cosmetics, and luxury automobiles. With the economy being the way it is, even successful, well-known companies are looking for ways out of this financial slump by looking to China for new customers. Many have learned from the past mistakes of others and made products exclusively for China. For example, BMW produced a luxury car called the “Tiger,” which is orange and black in color and named for the 2010 Chinese New Year. The brand Chloe is coming out with a new Marcie handbag. This bag will be red, a lucky color in China. Levi’s has come out with a new brand of denim called Denizen, which will be marketed toward the Chinese middle class. Brands such as Ralph Lauren have discovered a tip for luxury brands looking to sell in China: Most of the wealthy Chinese customers purchase their luxury items while they are traveling, so Ralph Lauren has been able to sell more in smaller cities than they have in large cities, such as Hong Kong. However, there have also been some failures by brands who did not thoroughly understand the Chinese culture. People in China buy Western items in order to show off their status, so when Wal-Mart expanded into China and kept its slogan of “Everyday Low Prices,” it did not appeal to wealthy Chinese consumers who wanted to buy high-end products, and less wealthy consumers are often not interested in Western products at all.

This does not mean that there is no room for non-luxury brands in China, as long as it is portrayed correctly. Luxury is really all about perception. In China, Pizza Hut is viewed as a fancy restaurant where many people go on dates and businesspeople meet to dine. The white tablecloths and fine cutlery, as well as the fact that Pizza Hut is a Western company, make Chinese people view Pizza Hut as a brand for the upper class. Luxury brand or not, there are many opportunities for Western companies in China. Over the last two years, spending in China has risen 15 percent, and it is predicted that spending will continue to grow. This is because the newest generation is more accustomed to spending than to saving.

The failures and successes of businesses mentioned in this article really say a lot about the importance of researching a country before expanding into it. If Wal-Mart had known more about Chinese culture, that people in China buy things from the West in order to show off status, they would have known to change their slogan to something with more appeal. Something as simple as the color of a product can really change how that product is perceived and how much value consumers place on it. BMW and Chloe did well in choosing the colors for their products, because it reflected parts of the culture and produced positive feelings in shoppers. A lot can also be said for understanding a more specific target market, as well as an evolving market. By segmenting the Chinese market according to age groups, marketers can develop different slogans and images for companies based on the generation’s priorities. If a company is looking at an older age group for their target market, it must be recognized that that group is used to saving their money. Since those in the newer generation are more accustomed to spending their money and treating themselves with material possessions, there might be even more room in the Chinese market for Western luxury goods. These companies just have to remember that perception really is everything, and much more goes into a product’s image than just the product itself.

Elena Rudzinski

Source:

Foroohar, Rana and Sonia Kolesnikov-Jessop. “Made for China.” Newsweek.18 October 2010.