May 2020 – Into India

Why Australia makes diplomatic errors in Asia – Article 4

Pictured – Julie Bishop was an exceptional politician and Australia Foreign Minister – preferring behind the scenes discussion to public brawling

Australia is well represented in Asia by outstanding diplomats, but most are frustrated that too much of their time is spent repairing relationships after public outbursts from down under.

Today’s good diplomatic work leads into tomorrow’s diplomatic problem – one step forward two steps back diplomacy.

What is to be done to change Australia?

Short term, although the public is suspicious of “junkets” we need to send our politicians (and aspiring politicians) regularly to India and China, charged with building relationships that build through regular telephone follow up.

Being able to make that call across a range of levels is effective communication with cultures that are collective, like most of Asia. Every MP becomes a diplomat.

Also building on the relationships that exist through our very large Indian and Chinese diasporas would make sense, and we just need to sit down with them and work out how to leverage their networks.

Of course, it would also be good if our political leaders listened to their diplomatic advisors before rushing into public commentary – but that might be wishful thinking.

This is an entrenched problem and the solution is long term.

We need to produce a generation of culturally sensitive and adaptable students. Any move to increase student exchanges will pay off long term in relationships and cultural understanding. It has to occur at every level of education with creative ways for primary and secondary schools to make Asian connections.

Australia has pulled off the miracle of creating multicultural Australia and we accept the need for sensitivity and adaptability to other cultures at home – we now need to do the same abroad.

Finally, for leaders at all levels, please, no more “lecturing”. No Asian country welcomes a public lecture from the west – it is seen as not respecting the achievements of the Asian country and, given our history of colonial exploitation, it is just another instance of the west’s superiority complex. In other words, it’s a bit hard to take from their perspective.

The Father of the Indian Nation, Mahatma Gandhi, understood the Indian public and their sense of being exploited by the west. When asked what he thought of western culture he replied that it would be a good idea.

This is the fourth article on “Why Australia makes diplomatic errors in Asia”.

Why Australia makes diplomatic errors in Asia – Article 3

Australians display a remarkable lack of curiosity about the culture of other countries.

Leading trade missions, I find few who really want to dig deep and understand the culture they are visiting. Most are either not interested or overly confident that good old Aussie friendship will get us through. It does not.

Friendship is overlaid by culture, so what we see as merely being friendly can give offence in other cultures.

Cultural training for businesses rarely goes beyond the “how to greet and exchange business cards” approach which is merely the tip of the cultural iceberg.

By learning about cultures, including our own, we can work out effective ways to stay true to ourselves while adapting to others. But this is a long way off.

Look at the case of relationships with India – soon to become one of the world’s top five economies and a vital cog in Indian Ocean regional security.

First there was the ban on sales on uranium – but the problem was more than the ban, it was our outspoken and public defence of not selling them uranium until they complied with global protocols.

It came across as a public lecture. It could have been done so much better in private diplomacy.

Then there was the issue of violence against an Indian student in Australia – before any investigation, Australia very strongly and publicly denied that there was any racist element in the attack. Clearly this was a premature claim and it riled the Indians, with hints of a cover up.

Again, a public spat which should have been a behind closed doors discussion and then a considered and cautious public statement. In the end, the relationship and trust were repaired but it took a Prime Ministerial visit and a lot of time to achieve this.

Underneath all these diplomatic errors is lack of cultural sensitivity.

This is the third in a series on “Why Australia makes diplomatic errors in Asia”.

Why Australia makes diplomatic errors in Asia – Article 2

As a regular visitor to India I note that USA President Donald Trump seems to be respected and popular there – he is evaluated in India based on his economic record and not on his bloopers.

I have not heard him ridiculed over there. His high office makes ridicule unthinkable.

Not so in Australia – from day one he has been ridiculed at all levels. Of course, he has provided ample material for these critics. I use this as an example of differing world perspectives, not as a defence of President Trump.

We always bring the “tall poppy syndrome” into play when we look around the world and we relish seeing the mighty fall – or at least have their weaknesses exposed. How many Aussies realise that most of the world and certainly Asia does not have tall poppy syndrome and are mystified when it is explained to them?

This syndrome is not a good cultural basis for friendships in Asia – and combine that with an aggressive public mindset and you have poor diplomacy.

In reality Australia is one of the friendliest nations – just not in politics or diplomacy.

This is the second in a series on “Why Australia makes diplomatic errors in Asia”.

Why Australia makes diplomatic errors in Asia – Article 1

Australia’s biggest challenge in relating to Asia is culture.

OUR culture, not theirs.

We have seen it recently with China and our call for an inquiry into the origins of Covid19 – surely a topic for behind the scenes diplomacy but it became a public fight and still bubbles along.

In our culture “if I am right, I will speak up, name and shame”.

In Asian culture, if I am right, I might speak but only “around the bush” and in a way that “saves face” and preserves relationship.

This is no small difference – it is the gulf that divides us from reaching our potential in our region.

“Saving face” is a part of Asian culture – so pointing the finger when something has gone wrong is the last thing we should do – better outcomes come from cultural awareness.

We all know the best diplomacy happens behind closed doors. The above might explain why so much of Australia’s diplomacy is conducted on the front page and the TV news.

This is the first in a series on “Why Australia makes diplomatic errors in Asia”.

Australia should join with India to become the “food bowls” of the Indian Ocean

India and Australia can become the major “food bowls” of the Indian Ocean region, if the two countries can find a way to collaborate in horticulture The region includes some of the world’s fastest growing middle classes, including much of Africa, the Middle East, India and its neighbours and Southeast Asia.

This is one of the conclusions of our study of “India-Australia Horticulture Collaboration” which was part funded by the Australia India Council, DFAT.

The Indian horticulture sector already faces pressure for change, presenting Australia with a once in a lifetime opportunity to build a collaborative commercial relationship with India.

Pressures for change in India are market driven as the middle class grows, Government driven with a push to bigger farms, mining industry driven as it seeks to play a positive community development role and horticulture industry driven, as farmers want innovation as a pathway to better incomes.

Indian market becoming health conscious

Market driven changes result from a growing middle class anxious about the content, health outcomes and quality of the vegetables and fruits they buy. Plus, a whole range of vegetables labelled as “exotic” in India now face rapidly rising demand – broccoli, cherry tomatoes, capsicums, parsley, celery, cabbages, zucchini and asparagus. Berries are becoming sought after, especially blueberries and strawberries.

Government driven changes are creating one of the biggest historical shifts in rural India – the new Farmer Product Organisations (FPO). The Government has set an aim for 10,000 of these collaborative ventures. An FPO is a grouping of at least 10 and up to 500 farmers into a collective including marketing. The Government will fund these FPO’s and possibly farm subsidies will be distributed via them.

The FPO structure is currently in need of support services to enable them to secure business acumen, market linkages, better insurance terms, quality assessment infrastructure, precision agriculture solutions for better crop management, access to finance, IoT based applications and more.

At the same time India’s agricultural research centres (Central, State and private) are very keen to be part of the solution and become a focus for knowledge and training in horticulture techniques new to India. Their demand for displays and services around hydroponics and protected cropping is very high.

Miner driven changes result from delays and obstruction from farmers, and awareness that by supporting horticulture innovation around mines, they can contribute to increasing the income of farmers and provide new income for rural women – thereby making a contribution to the livelihoods of the communities they operate in.

Indian farmer driven changes follow complaints of declining incomes and knowing they have an inability to meet the needs of the new middle class, at home and in the Indian Ocean region. Women in rural communities are seeking new ways to add income to households.

While farmers are traditionally conservative, there is growing awareness in India of the need for “new skills and innovations for new products”.

India will want collaboration, not high pressure selling

Facing these demands for change, India is not inclined to simply import and adopt western approaches – rather, it seeks to create Indian style innovations with global partners who can adapt to this demand. The Israel and Netherlands governments have established free standing centres of horticulture excellence, with low levels of interest and participation. Australia can move into this space if it is prepared to adapt to what India wants.

What will be needed for these changes? Skills training and train the trainer programs, IT systems, adapted hydroponics and adapted protected cropping systems and products, post-harvest storage and to market systems and a combination of displays and training at Government and private research centres (not free standing).

Protected Cropping (PC) opportunities are huge but need to be tailored for India – including shelter by artificial structures and materials, enabling modified growing conditions and protection from pests and adverse weather. In the mix here are greenhouses and glasshouses, shade houses, screen houses and crop top structures.

Hydroponics and Controlled Environment Horticulture (CEH)

The most modern and sophisticated form of protected cropping have been developed in Australia and we should be able to export this knowledge – might be relevant to corporate farms in India with some key adaptions, creating “modified hydroponics”. CEH combines high technology greenhouses with hydroponic (soil-less) growing systems. CEH makes it possible to consistently and reliably control or manipulate the growing environment and effectively manage nutrition, pests and diseases in crops.

Hydroponics in Australia and the west is crop production using a soilless growing medium with nutrients supplied in a liquid form. The choice of substrate can be varied to suit the crop and climatic requirements. Hydroponic growing also includes growing in a flowing nutrient stream without utilising a solid medium. This is known as nutrient film technique. For India, some adaptation of drip irrigation, soil and non-soil bases leads to “modified hydroponics” and would meet demand over there.

Agricultural research centres in India play a major role in supporting farmer innovation and skills upgrades. There is an opportunity for an Australian Centre of Protected Cropping and Hydroponics to be embedded in at least one of the Indian Government agricultural research centres, another with the State of Tamil Nadu and in a private research centre. These could be supported by a “virtual centre” with farmers accessing it via mobile phones.

This would be a major step forward in building a genuine India-Australia collaboration in horticulture, enhancing the capacity of both countries to become the food bowls of the Indian Ocean.

The “Developing India-Australia Collaboration in Horticulture” research project by Genesis Horticulture Solutions was part funded by the Australia India Council, Australian Government

Indian PM Modi announces A$400 billion stimulus policy

Indian prime Minister Narendra Modi has announced a A$400 billion stimulus package, one of the biggest in the world’s responses to Covid19.

The package is approximately 10% of India’s GDP.

The stimulus package is called “Atmanirbhar Bharat Abhiyaan” and aims to make India self reliant and to revive the stalled economy.

Details are still coming out but part of the program will be major reforms across areas such as land, labour and liquidity laws to underpin a boost to the “Make in India” campaign.

Other areas will likely include supply chain for agriculture, reforms to national taxation, simplification of some laws, build capable human resources and strengthening the financial system.

It is typical Modi – ambitious, unexpected in magnitude and investors are already reacting with enthusiasm.

The emerging symbol of change in India – watch out for Tonique

From the family coal mines to creating India’s largest and classiest liquor boutique, Anith Reddy (pictured below) and his new Tonique boutique liquor stores are a symbol of modern India with special attraction to middle class millennials.

Reddy has just opened his second store – Asia’s largest liquor boutique – in Bengaluru after earlier success in Hyderabad.

He has a store in Mumbai in mind but like the modern Indian entrepreneur, his ambitions are beyond India – he wants to open Tonique in New York.

At 30,000 sq. ft, spread over two floors, Tonique is certainly large. Unlike other liquor supermarkets in Bengaluru, like Madhuloka, Drops Total Spirits and House of Spirits, it is stylishly appointed, with hardwood floors, aroma oil diffusers and subtle mood lighting. “We want to be the Louis Vuitton of the liquor industry,” says Tonique’s founder, Hyderabad-based entrepreneur Anith Reddy.

Reddy, 43, (pictured below) believes buying liquor should be an experience – millennials value “experience” way above possessions and status, so he is on target.

In the store, buyers can interact with sommeliers and brewmasters. The store’s top floor, entirely dedicated to wine (1,000 different labels, including champagne), also houses a 600 sq. ft wine-tasting room that will host events, a bakery that will serve fresh liqueur chocolates and other delicacies, and a cheese section.

Bengaluru is a smart choice – the city’s social life and drinking habits set it apart from the rest of the cities in India. Bangalore has also been a favourite amongst many international brands.

And social behaviour is changing – now 60% of the visitors to Tonique are women, compared to an expectation of around 30%.

Apart from purchasing wine bottles to stock up your wine collection, you can also drink your wine in-store.

The consumer power of India’s millennials is just beginning to have impact and stores like Tonique are moving with this generation. There are 450 million millennials in India and those with money to spend are looking for that special brand. Tonique is showing the way!

Citrus Australia says Indian market needs at least 5 years of relationship building

Of course, Citrus Australia is encouraging growers to think about building relationships in the Indian market. We produce plenty of citrus and more to come.

But it was such a thrill to learn that their CEO, Nathan Hancock (pictured), believes at least a 5-10 year strategy is required.

INTO INDIA has been saying for years – India is for the long-term relationship builders and Citrus Australia is heading the right way.

He has told the industry they might need to accept a lower price just to build this relationship – and then there could be opportunities for price increase.

He rightly says India wants to buy “safe and healthy” food – and Australia has this reputation.

Citrus Australia has been looking at the potential for mandarins – I would too, and one target could be the millennials (age 21-37) who are more open to experimenting with foods.

Flipkart and the amazing growth of Indian startups

Year 2007 saw a landmark event in the history of Indian enterprise – one of many events that mean you should change your strategy for India market entry.

In October 2007, two young Amazon executives – Sachin and Binny Bansal (pictured above) set up an e-commerce website they called Flipkart, India’s most iconic startup story till date.

Flipkart was valued at US$ 21 billion when it was eventually acquired by Walmart in 2018.

The success of the Bansals also inspired many a startup journey in this period. Flipkart was obviously not an isolated event.

More top-notch professionals started sensing lucrative opportunities, leading by example and setting up their own ventures in the 1990’s. Sanjeev Bikhchandani, Founder & Executive Vice Chairman, Info Edge India Ltd (of Naukri.com fame), and VSS Mani, founder of Justdial, were some notable examples.

Deep Kalra, (pictured below) Founder, Chairman and Group CEO, MakeMyTrip.com, got acquainted with the potential of the internet as an avenue for distribution while working at GE Capital and decided to set up the popular travel portal.

The most significant game changer is the manner in which mobile phones and more specifically smartphones have penetrated the Indian market. The direct implication of this has been that a large majority of Indians have, or are about to access the internet for the first time on their mobile phones.

A report by Kantar-IMRB in March 2019 estimated India’s internet users at 566 million, projected to reach 627 million by the end of the year.

Around 97% of India’s netizens use mobile as one of the mediums.

This has created new avenues of growth and spurred startups like InMobi, Ola, Zomato, Practo, UrbanClap, BigBasket, Pepperfry and more.

These startups have been fueled by several other factors – increasing affinity towards entrepreneurship, potential of the Indian market, globalization and the resulting interface with other ecosystems (particularly Silicon Valley), rising confidence towards startup funding and facilitating policies.

According to the NASSCOMZinnov Startup Report 2019, the ecosystem added around 1,300 startups in 2019, taking the total to 8,900 tech startups.

India ranks third both in the number of startups and unicorns. The aggregation space has definitely been the beehive for startup innovation. The top ten unicorns of India as on date include 6 aggregators, two fintech firms and one edtech firm.

Investments by VCs have grown by four times during the period, and number of deals increased from 130 in 2013 to 270 in 2017.

India needs more stories like Delhivery (logistics), Vortex (solar ATMs) and Ather Energy (electric mobility).

A welcome trend is that of well-established corporates engaging with startups to bring greater innovative capabilities in their own DNA. This could be pivotal for India as it seeks to move ahead of the curve in areas like AI and machine learning.

Meantime China is part of this Indian story.

Chinese tech giants Alibaba and Tencent, early-stage investors Hillhouse Capital and CDH Investments, large corporations such as Meituan and Fosun, and smartphone makers Xiaomi and Oppo — a little over 100 Chinese firms have made investments in Indian startups.

Chinese VCs have invested over USD8 billion and hold large stakes in a number of Indian startups, including unicorns and “soonicorns”.

Watch this space…

Thanks to the Trade Promotion Council of India for information for this blog.

A great Indian Australian continues to give – Dr Rao and family

Well done Jana!

The Australia India Institute has just announced that the Australia India Social and Charitable Ventures Limited, through Mr T. Janardhana Rao OAM (pictured above and below) and his family, are providing a gift of at least $400,000 dollars over four years to the Australia India Institute.

The Aii said: “This extremely generous gift will support the Australia India Institute’s engagement activities with the University and business communities and also support students from India or of Indian heritage.”

Professor Craig Jeffrey, Director of the Aii, thanked Mr Rao and his family noting, “This important gift will greatly enhance the efforts of the Institute and University of Melbourne to develop the study of India and engage with the Indian diaspora. We are extremely grateful to Mr Rao and his family for their generosity and vision.”

For around 25 years Jana was both a surgeon and the Honorary Indian Consul in Victoria – a huge task.

He has been an inspiration to me for many years – pictured below:

Jana continues to be an example to us all – respectful, modest, a great listener, a principled man who could be very strong but never in an aggressive or divisive way, a man of quiet consensus and leading by example.

His son Harish Rao is a former National Chair of the Australia India Business Council, an advisor to the Australia India Institute, Director of the Australia World Orchestra and more – and my personal mentor on things India.