Last month this blog pointed out that an India-Africa axis is forming in world trade. For those who understood the importance of this development the decision of Nokia to build its hub in India will not come as a surprise. Read to the end of this entry for some thoughts on what this rise in the importance of India means to fellow Commonwealth country Canada and, by extension, to Kingston.
The Indian market has been growing at a fast pace. The country added 7.3 million cell-phone subscribers in June, taking the total to 185.1 million, according to the Telecom Regulatory Authority of India. Nokia made India the site of a manufacturing hub eighteen months ago which was considered unusual at the time. Most electronics makers have avoided manufacturing goods in India for export, citing a poor infrastructure but Nokia knew what it was doing.
The Indian factory produced 60 million handsets since it opened but only half of those cell-phones are sold in India, the other half were exported to the Middle East, Africa, South Asia, Australia and New Zealand, according to a Nokia spokeswoman.
According to the Washington Post there are now more than 2.4 billion cell-phone users worldwide, with more than 1,000 new customers added every minute. About 59 percent of users are in developing countries, making cell-phones the first telecommunications technology in history to have more users there than in the developed world. China has about 25% of the total users – the US only 10%.
The reason I say Nokia knew what it was doing is that cell-phone usage in Africa is growing faster than in any other region and India, with common British Commonwealth roots, is the natural business highway to Africa for Europe and Asia. African users jumped from 63 million users two years ago to about 152 million today, according to David Pringle, a spokesman for the GSM Association, a trade group that represents cellular companies whose customers account for 80 percent of the global total.
What is driving all this growth is that the cell-phone is now the indispensible “computer” of the developing world. Nokia understands this and Apple, with its iPhone, “gets it” as well making their decision to force all applications through the iPhone browser instead of permitting foreign code to reside in the iPhone itself a brilliant move – ignoring their carping critics about this move is their wisest course of action when you glimpse the worldwide opportunity. Browser-based applications are the inevitable future of software distribution which accounts for the reason Google is apparently developing their own browser.
The Washington Post article I mention above can be found at http://www.washingtonpost.com/wp-dyn/content/article/2006/07/08/AR2006070801063_pf.html.
To encourage you to read the Washington Post article here is an excerpt:
“As surely as the light bulb and the automobile before them, the cell-phone and text messaging are radically changing the way people live in the developing world. In widespread use for about five years in much of Africa, technology long taken for granted by the world's rich has made life easier, safer and more prosperous for the world's poor.”
“For the first time, millions of Africans are able to communicate easily with people who are beyond shouting distance. Farmers and fishermen, for example, use text messaging to check market prices, eliminating middlemen and increasing profits -- and preventing long trips to the market on days it is canceled.”
“In cities, cell-phones are becoming a basic tool of electronic commerce, allowing consumers to transfer money to merchants with a few presses on the keypad.”
I suggest you read the rest of the article to understand how pervasively the cell-phone has changed people’s lives in the developing world.
So, what does this mean for Canada and Kingston?
The answer is best put in the context of a speech I attended at the Economic Club of Toronto on Aug 8th by Alan Rosling, the Executive Director of the Tata Group based in India. The sales of the Tata group represent 2.8% of the Gross National Product of India and they have been buying well known world brands such as Tetley Tea.
Rosling’s subject was “The Internationalization of India” and he argued the combination of global economic and demographic trends that have brought India and China out of the shadows is having a profound impact on India's interactions with the rest of the world.
He pointed to the emerging Indian affluent middle class, continued liberalization of the economy, a dynamic private sector and a deep pool of innovative, entrepreneurial and highly-skilled human capital that are driving the country's internationalization as both a producer and a consumer nation.
Rosling took Canada to task for not taking sufficient advantage of its Commonwealth heritage by engaging more with India. He compellingly argued that India is already a global economic force and will become increasingly significant in the future and the common heritage between India and Canada should make Canada more interested in an “Indian Strategy” than a “China Strategy.”
Rosling did not mention Africa specifically in his speech nor the fact that some skilled labour sectors in India are not as deep as once thought but when I asked him about Tata’s “Africa Strategy” he had a ready answer and pointed to impressive Tata moves in Africa. Tata is International as Rosling pointed out so it is not surprising if they source people for jobs worldwide – an option other companies in India may not have.
I would love to take a look at Tata’s human resources long range plan. I would not be surprised to find Canada targeted for many reasons – not the least of which could be the closing of employment opportunities for Canadians in the US for political and security reasons offering alert International companies like Tata a unique opportunity to successfully recruit in Canada.
Rosling pointed out that Tata is likely to be as important a force in such industrial sectors as the Automotive Sector as China will be and by inference it did not take much of a leap to see India and China succeeding Europe and Japan as entries into the North American automotive market.
Tata Motors Limited, formerly known as TELCO (TATA Engineering and Locomotive Company), is India’s largest passenger automobile and commercial vehicle manufacturing company. It is the world's 5th largest commercial vehicle manufacturer. A little research into Tata’s recent automotive initiatives uncovers the stunning (in my opinion under reported) announcement of a £1,250 ($2,650 CAD) compressed air powered “world car” to be in production next year according to the Economic Times on August 21. The reference is here: http://www.autoindustry.co.uk/news/21-08-07_1. The price point will move up if it is exported to Europe and North America but it may still be the least expensive alternative for many users and it produces virtually no pollution at all.
Could Tata offer this vehicle in North America? Maybe, but the point of entry would as likely be Mexico as Canada (how do you heat the passenger cabin for one thing?). It should be noted the motor was developed in France by a company headquartered in Luxembourg.
But Tata and other Indian companies are factors in the automotive space in other ways that could impact Canada immediately. They make parts. In the age of just-in-time manufacturing these parts need to be put into containers in the right sequence for assembly line use.
Think back to Kingston’s strategic position at the headwaters of the St Lawrence River and the role Kingston could play with a purpose built integration and sequencing facility plus the value added satellite facilities that could surround it.
Kingston is looking at a historic opportunity to re-capture the historic position the city held a century or more ago when rail, canals and roadways made Kingston one of the most important centres of commerce in Canada. It can happen again. In fact, it is being discussed actively – bookmark this blog because you may read about such developments here first.
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