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  • Preface

    Jacob Langvad Nilsson is a Danish photographer. His photographic work is based around commercial and editorial photography, as well as visual ethnography (more)

  • Popular Posts

    • Business Ethnography as a Key Strategy for International Brands
    • Qualitative Research Methods
    • Visual Ethnography Examples
    • Sharin Foo of The Raveonettes photographed for Eurowoman magazine
    • The Role of Mobile Internet in Emerging Markets
    • Man on Beach
    • Nike Football Culture in Latin America
    • Understanding The New Middle Class Consumer
    • What is Ethnography?
    • François Delort, Hotel Santa Teresa for Monocle
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China’s Democratic Future

By Jacob Langvad Nilsson (email) — April 24th, 2012

Democracy in China is not a question of ‘if’, but ‘when’, according to Bruce Gilley, in his book “China’s Democratic Future: How It Will Happen and Where It Will Lead”. According to Gilley, a democratic future in China lies just around the corner. Gilley describes different scenarios on how this democratization in China will come about. He then poses the question: That being so, where it lead?

Bruce Gilley begins his book by identifying the basics of what democracy is. First and foremost, Gilley says, democracy is a system where the leaders are selected through free and fair elections. In pointing this out, Gilley also addresses common issues: Tolerance, liberalism and judicial impartiality. That being said, Gilley says democracy is definitely in China’s future.

He then addresses what consequences democracy may have for a country. There are two sides here. Inasmuch as democracy lends government legitimacy and freedom, it may also lead to violence, criminal acts and possibly, civil war. In the short run, there is the risk of stagnation and economic shrinkage. But in the long run, Gilley foresees steady economic growth taking over.

How will China’s culture respond to democracy? Noting its core Confucian roots, Gilley admits this cultural core is fundamentally antidemocratic. However, he also points out that all countries that are democratic today did not start out that way. They were once nondemocratic, too. This has happened to countries in the West and other parts of the world. Certainly, it can happen to any country, including China, Gilley says.

The author then considers the wishes of China’s people. He notes that all fields of people, including the intellectuals, say they want democracy and the reign of a popular voice. Gilley adds that the Chinese Communist Party and the influential military are also advocating liberalism. China is presently in a pro democracy stage.

Previous studies have suggested that utilitarian regimes tend to crumble when GDP per capita swells to between 3,000 and 10,000 dollars. A World Bank estimate indicated that in 2002, the GDP swelled to $4,000 in terms of purchasing power in China.

How Will China Democratize?

Gilley outlines several developments in China that point towards democracy. These include a growing kind of rule of law, an emergent civil society, ongoing debates on democracy within the CPP, political structural changes, continuous international communication, efforts towards globalization and even de-politicization of the military, among others. Gilley predicts that China will undergo three stages in its path to democratization:

The Crisis: This will occur when differences emerge between authoritarian rule and the normal crisis. He outlines two aspects of the same: it could be national and then be blamed on the very regime itself, or a political-economic crisis that first appears remote and unimportant — before suddenly landing at center stage. Gilley believes that China as a country may not face an economic slowdown. However, he does admit that it is still a possibility, going by the model of other countries when they were new democracies. One of the economic problems that China currently faces is a 7 percent GDP deficit, that can only be solved by printing more money- a phenomenon that may easily lead to inflation if not properly checked.

The Mobilization: The tendency of people and societies is to respond to crisis by reorganizing themselves. Mobilizing becomes intense if the crisis stands on the political arena and various activist groups band together with some elite reformist groups to mobilize and demand change.

Defection of the Elite and a Democratic Breakthrough: Once mobilization has been accomplished and the elite gains majority support, they finally announce that the only way to deal with the present crisis is to reform the existing political system. They then establish an interim government, which will announce a date when the elections will be held, and once they are held, democracy is achieved. Gilley asserts that the defection of the elite society from the rest of the people is the key to the onset of a democratic society.

Consolidation of Democracy

Gilley observes that during democracy’s third wave, a total of 29 democratic governments have managed to survive. These include the democratic governments of Albania, Bulgaria and Romania. However, some of them seem to have reached a point of stagnation. The next issue, then, is to ensure that democracy will last. In the case of China, there are mixed views on this. However, with proper management, then it is highly likely that China will have the opportunity to become a consolidated democracy.

Why is this so? For several reasons — China has a significant middle class with a lot of determination, a market economy, a de facto decentralized government, a democratic legacy, an emerging rule of law, a functioning state apparatus and a de-politicized military. The factors that work against a prosperous democracy in China, however, are numerous ethnic divisions, income inequalities, corruption, fiscal weaknesses, a disorganized opposition and a general antidemocratic cultural mindset.

It is also unknown what choices will be made by China’s political elites. However, great success can be attained if the decisions the elite makes are intended for the nation’s prosperity — and not to satisfy the selfish goals of some leaders who present themselves as a gateway to the cake. The decisions of the political elite will affect the whole face of democratic China in a massive way.

What Will a Democratic China Mean to the World?

The democratization of China will mean a fundamental change to global politics at every level, basically. It will come in terms of “soft power”, that is, the ability to influence the nations of the world at large. This is a legitimate claim. Representing 1.3b people, China will basically become the world’s largest democracy.

Gilley is also of the view that a democratized China will lead to questions such as equitable allocation of national resources and issues about the fair distribution of resources globally, among others. There is an argument today that globalization is producing characteristically rich countries that are getting richer while the poor countries get poorer. There are feelings that a democratic China will provide clear answers to these concerns.

That being said, other questions remain, and rather large ones at that: Is the world prepared to deal with a democratic China? And if that is so, what will (and should) the global response be? Gilley’s next book may have to tackle these questions.

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Multinationals in India: New Paradigms Business Applies

By Jacob Langvad Nilsson (email) — April 17th, 2012

Up until recently, an international brand would enter an emerging market like India, by taking an existing product and create a stripped down low-cost version for the new market. But not any longer. Traditional business models no longer apply in India. Increasingly, you will see new products developed from the ground up with new business models. The March 2012 McKinsey Quarterly article, “How Multinationals Can Win in India,” predicts that in the next 10 years, 20% of global revenue growth will come from India. For multinationals in India to succeed, they must adopt new business paradigms immediately.

So far, multinationals have made gains in particular niches. However, none had achieved market leadership on a large scale in India. The report cited examples of companies that failed by clinging to old global business paradigms. When they shifted tracks, they experienced a turnaround.

In the article in The Economist, ‘Less is more‘, (Nov 17th, 2011) supports the contention that old global business models are no longer effective in today’s market. In the past, developing countries were perceived to be sources of lower labor costs. Today these countries are creative and are building low-cost technology and machinery that are being sold in developed markets.

One of the cited examples is the Fetal Heart Monitor, developed by Siemens. The idea for it came from India. In the past, ultrasounds were used to monitor the heart of the fetus. But these machines are expensive, complicated and one must be trained on how to use it. In India they simply used off-the-shelf microphones. German engineers improved the product without changing its simplicity. Anyone can operate a Fetal Heart Monitor without any training. It is also much cheaper than an ultrasound.

New business paradigms needed in India

A new global business paradigm must utilize the capacity of large corporations to grasp the expertise of developed countries and combine it with innovative creations from developing countries like India. To do this successfully will mean letting go of old global business market mindsets and paradigms that didn’t succeed in India. These include:

 

  • The concept that one model fits all: This is not true in India. The country’s market is largely fragmented. In essence, there are many “Indias” within India. There is a plethora of cultures, geography, different languages, literacy levels and financial levels per culture group. There is a need to understand each of these cultures’ ways, needs and circumstances, so that products can be adjusted to meet each cultural market’s requirements to enhance sales
  • Hierarchy, bureaucratic roadblocks: A foreign multinational head who holds all decision making power poses a disadvantage, especially if he is based outside the country. He is unfamiliar with India’s unique business culture. Plus, India regularly experiences changing market conditions. The multinational head fails to respond to these changes adequately

Some multinationals recognized the flaws of centralized autonomy. They responded by delegating a high degree of autonomy to Indian operations. In one case, a company that did this experienced a 30% revenue growth yearly from 2001 – 2005, the McKinsey report said.

Delegate autonomy to India

Transferring autonomy to Indian operations is the crux of needed change by multinationals. It implies that only India’s top talent is tapped to handle the delegated autonomy competently. The Indian leader has knowledge of, and experience with the Indian market. He decides on capital expenditure, head-counts, product development, product customization and pricing. He also oversees empowerment of lower management levels to enhance innovation and free enterprise.

Strong middle management is critical to successfully implementing business growth strategy. Ironically, India lacks good local middle management talent. The McKinsey report cited three ways that some multinationals have responded to the situation. First, through the institution of a fair and transparent reward system based on performance. This included incentives including career advancement to encourage self starters with high performance levels. Secondly, through the creation of prestigious job positions. These jobs included membership on executive committees and global visibility. Other incentives were higher salaries and more authority. The position was usually granted to those with strengths on entrepreneurship.

The final way is through the provision of certified leadership development courses. This became an incentive to recruit new talent and was a way to retain good performers. Leadership programs were also introduced that provided mobility and structured global rotation for top performers.

Commitment raises bottom line

It is necessary that multinational companies shift their vision when they do business in India. It is not efficient nor profitable to always focus on the bottom line. A shift in vision will call for more commitment on the part of the multinational in many ways. One means of doing this would be to expand commitment cycles. Ideally, top leadership should aim for five-year target cycles in India, and aim high. Commitment would also require global CEOs and senior executives to visit the country an average of four times yearly. This will give them the opportunity to dialogue with local clients, and get a keener understanding of shifting business cycles so that they would have an eye on which local investments deserve continued support amid business cycles.

It goes without saying that when a multinational delegates authority to its Indian CEO, there is sufficient funding to back him up. This implies, too, that the multinational has aimed high and hired only the best man for the job. At the same time, understanding the capability of your Indian CEO, it is mutually beneficial that he also has a place in global executive committees.

Quality products, lower cost

Success in India requires understanding the spending power and the demands of the Indian market. Indians like good quality products, but these should be available at prices they can afford. To make these products affordable without sacrificing quality, one can remove frills that can cut production cost from 50-70%. Sometimes, there is a side benefit to the above. An example that McKinsey cited involved a low cost, no-frills tractor that a multinational firm created for Indian farmers. The product also, surprisingly, became marketable in the US, where a number of farmers wanted a sophisticated yet affordable tractor. What yinned, in essence, also yanged.

However, producing a good product is not enough, especially in India. It is necessary to have a distribution network and chain supply that works efficiently among the various “Indias within India.” This means that the multinationals must retain strong relationships with their leading stakeholders, such as external agencies, the government and regulators.

When making a five-cycle business plan, part of the plan should be to aim high. This would mean regularly seeking new business development options. A specific team must be formed for the purpose of developing local partnerships that enhance revenue. McKinsey cited the example of a large beverage firm that was hindered, among other things, by labor laws that made distribution expensive. The firm solved its problem and circumvented these laws by contracting local distribution entrepreneurs. In the end, market penetration was enhanced, at significantly lower costs.

Finally, it is time for multinationals to outsource Indian products and talent globally. India’s products are cheaper, and the country has a vast talent pool to produce these products on a much larger scale. This can be done with an R & D team from India that is tasked to discover new innovations in the country that are relevant to markets overseas.

Sources:

https://www.mckinseyquarterly.com/Strategy/Globalization/How_multinationals_can_win_in_India_2938#

http://www.economist.com/node/21537984

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Russia Will Join the European Union, Predicts Goldman Sachs

By Jacob Langvad Nilsson (email) — December 5th, 2011

In his forecast for the next 10-40 years, Jim O’Neill of Goldman Sachs defies the critics of Russia’s continued membership of the Bric team and it’s future economic growth: Russia doesn’t need dramatic growth rates. It just needs to avoid crises.

Russia is often singled out as the Bric country that doesn’t belong in the Brics. Critics say that with its aging population, dependence on oil and gas and widespread corruption, it’s not in the same league as its dynamic rivals – Brazil, India and China

Jim O’Neill, the Brics’ inventor, disagrees. In The Growth Map, a book marking the 10th anniversary of his coining of the acronym, he rejects suggestions that Russia should be dropped from the team. He argues, in his characteristically forthright way, that in terms of GDP her head, Russia has the potential to beat not just the other Brics but “all other European countries” – and join the European Union.

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Democracy in China by 2017

By Jacob Langvad Nilsson (email) — December 1st, 2011

Few countries with per head incomes of more than $10,000 a year survives as autocratic/authoritarian/totalitarian nations except for oil exporters. Charles Robertson of Renaissance Capital boldly predicts China could be a democracy by 2017:

China, on about $7,500 and growing fast, is approaching the income level when democratic change often begins. There are powerful arguments about why both countries might be permanent exceptions to the democracy rule.

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Jim Was Right about Bric

By Jacob Langvad Nilsson (email) — December 1st, 2011

Ten years ago Jim O’Neill of Goldman Sachs predicted the four growth economies – Brazil, China, India and Russia together would lead the World’s economic development. And he was right:

A quick look at the MSCI indices for the four Brics since 2001 shows that they have comfortably outperformed the S&P 500. If you invested $100 at the time of O’Neill’s report in November 2001 in each of the four Brics, you would now have $674 from Brazil, $451 from China, $459 from India and $414 from Russia. Your 100 S&P bucks? Worth $112.

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The Massive Workforce in China & India

By Jacob Langvad Nilsson (email) — December 1st, 2011

The emerging world, long a source of cheap labour, now rivals the rich countries for business innovation, says S.D. Shibulal, CEO of Infosys:

In recent years China and India have led the way in becoming the new hubs for growth, innovation and talent. They produce close to 700,000 engineers every year. The availability of such a large pool of talent is the much needed fuel to power the growth of industries across sectors in these countries. This has been complemented by the presence of a large middle-class population (160m in India and 230m in China) with rising disposable incomes. China and India are also challenging Western domination as the global innovation and R&D hub, rubbing shoulders with historic giants in global innovation indices. The road ahead for the Bric countries looks extremely promising.

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Bric Acronym Turns 10

By Jacob Langvad Nilsson (email) — December 1st, 2011

The Bric acronym celebrates it’s 10th anniversary. The world as we know it today is quite different from what it was a decade ago. To sustain growth, the world’s poor must be included in the development, as S.D. Shibulal, CEO of Infosys puts it:

[...] the biggest challenge that faces the Bric countries is quite unique in that they are countries of contradiction. Countries like India and China in particular, despite leading the Bric growth story, are no different. Take a look at India. It has had average growth of 8 to 8.5 per cent in recent years – but over 300m people still live below the poverty line. It produces over 3m graduates every year from its pool of 480 universities and 22,000 colleges. Despite this, 35 per cent of the world’s illiterate people are in India. Furthermore, over 8m children are still out of school and 240m children are not a part of the schooling system. There are 100m internet users in a country where only 12.5m have broadband. There are also over 600m mobile phone subscribers in India. Despite this level of technology penetration, India ranks 50th in financial inclusion globally.

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Juliana, Porto Alegre, Brazil for BOX1824

By Jacob Langvad Nilsson (email) — September 4th, 2011

‘The Brazilian Dream‘ (O Sonho Brasileiro) is a qualitative study of the young generation Brazilians, with focus on their dreams and desires.

'O Sonho Brasileiro' (The Brazilian Dream) - Visual ethnography by Jacob Langvad for BOX1824

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Thiago, São Paulo, Brazil for BOX1824

By Jacob Langvad Nilsson (email) — August 28th, 2011

Thiago in front of the community center Casa da Mulher (Women’s House) which also facilitates União Sampaio.’The Brazilian Dream‘ (O Sonho Brasileiro) is a qualitative study of the young generation Brazilians, with focus on their dreams and desires.

'O Sonho Brasileiro' (The Brazilian Dream) - Visual ethnography by Jacob Langvad for BOX1824

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Regina, Recife, Brazil for BOX1824

By Jacob Langvad Nilsson (email) — August 27th, 2011

‘The Brazilian Dream‘ (O Sonho Brasileiro) is a qualitative study of the young generation Brazilians, with focus on their dreams and desires.

'O Sonho Brasileiro' (The Brazilian Dream) - Visual ethnography by Jacob Langvad for BOX1824

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Visual Ethnography in Emerging Markets


Jacob Langvad Nilsson continues to work persistently in a cross-field between editorial photojournalism and visual ethnography to tell stories about globalization and aspirations of individuals living in a changing world

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