Ratan Tata, chairman emeritus of Indian holding company Tata Sons, took several questions this month at a key conference in China but the interesting part was the nature of the questions.
Interviewer Zhang Weying, professor of economics at Beijing University, hoped to glean lessons from the patriarch – attending the annual Boao Forum for Asia – about how Chinese companies could expand and go global. Zhang noted that, while China’s economy has outperformed India’s, its biggest companies still underperform the likes of Tata.
Ratan Tata didn’t seem to have much to say on that, other than noting that conglomerates remain important in India and South Korea.
Many Chinese companies wish to conduct mergers and acquisitions, domestically and abroad, and Zhang asked about this several times. Tata said the key was to respect the acquired company’s strengths and give it autonomy, leaving the holding company to provide strategic and ethical guidance. He added that acquisitions or growth for its own sake would end badly.
This led to a discussion of corruption – again, several questions from Zhang, and also from the audience. Tata said his companies faced low-level corruption frequently, which could lead to delays or other excuses that block a project, but that they refused to pay bribes and would eventually get the necessary approvals.
Zhang asked what if the lower-level managers are happy to give bribes to get fast results; Tata merely said you have to be patient and compete on your service and offering.
From corruption the discussion moved to its sibling: influence. Zhang asked Tata how he influenced the government and how often he met with the prime minister. Tata downplayed the influence of the various government-appointed task forces he chairs, noting that the final decisions usually came down to unrelated political factors. And while he could get access to the Indian prime minister, he did so only four or five times a year when there was something specific to discuss.
Tata hit predictable notes about the opportunities for Chinese companies to do more business in India, particularly in infrastructure, as well as for Indian companies to do more in China’s technology sector.
Tata unit Jaguar Land Rover has a joint venture with Chery Motors, manufacturing cars in China; once it is fully online the business will produce more vehicles than Jaguar Land Rover does in the UK.
The nature of doing joint ventures in China is “take it or leave it”, Tata said. He found the Chinese stance rigid. But once Jaguar Land Rover accepted the terms, the sailing was smooth and the regulatory approvals came swiftly.
Other questions involved the nature of family control, the difference between managers and entrepreneurs at the operating company level, and finding talent to run companies – all challenges in China’s corporate sector.
Some of the questions were odd. One question from the audience asked him to what extent Western powers are fomenting anti-Chinese feeling in India over the excuse of job losses to Chinese manufacturers. Tata noted that there isn’t enough Chinese activity in India to be a political issue.
So while Ratan Tata didn’t say anything of note, the conversation did illuminate the obsessions of today’s China: how to make conglomerates grow and work, how to create leading brands, how to turn bureaucratic enterprises into innovation machines, cynical assumptions about corruption and influence as a given, and all with a touch of paranoia.