Thursday, December 13, 2007

Brand India or business pariah ?

News: Orient-Express Hotels rebuffs Tatas’ proposal again

The bit in this news that bugs me is the Orient’s statement, saying that aligning with Tata’s ‘predominantly domestic Indian hotels chain’ would adversely impact the brand value of Orient’s premium properties.

I see it, not as just a rebuff to Tata’s, but as a statement that undermines India’s business pride. It may well be the Orient’s considered opinion that aligning with Tata’s hotels (that run the Taj Group) doesn’t add to Orient’s brand value. But to say that dealing with hotels that are Indian would adversely impact the Orient brand value is a bit thick. They make India sound like ‘business pariah’, don't they?

I claim no knowledge of the intricacies of valuation of corporate brands. Correct me if I am wrong in sensing that Tata’s is a reputed global brand, and the Taj Group, rated high in the Indian hospitality sector. To say that aligning with them is bad for one’s brand value doesn’t make business sense. If anything, it smacks of corporate apartheid.

This reminds me of Arcelor’s initial reaction to Lakshmi Mittal’s takeover bid - “we don’t share the same strategic vision, business model and values”. Arcelor, you may recall, was then the second largest steel makers in the world; and Mittal Steel, the world’s largest. India-born Mittal was portrayed “in terms that could be described at best as xenophobic’ and they questioned his company’s “European culture and value”. That Mittal took over Arcelor is now history.

Unlike the Mittal's, Tata’s are not in a hostile takeover mode, not as yet. With a 11.5 percent stake in Orient-Express, all that Tata’s seek is an alliance that would bring its non-Indian hotels under the Orient-Express fold; enable both companies hold minority stake in each other’s equity capital and have representation on each other’s boards.

It’s is difficult for a corporate novice such as yours truly to understand how such an alliance would adversely affect the brand value of Orient’s premium properties. What is clear, however, is that Indian business enterprises, setting their sights on global strategic alliances, may well face rejection, not because their company performance records are not up to the mark, but because they are Indian.

Maybe corporate India needs to take a hard look at our efforts at building Brand India. Maybe, our ‘India Everywhere’ campaign at Davos hasn’t been good enough. What India needs to get herself ‘shining’ is produce more of the likes of ‘Steel’ Mittals and ‘Citigroup’ Pundit.

For all the spin and hype, 'Brand India', to my mind, is a concept that is largely illusory. But it is an illusion that appears to sway some global business minds.

2 comments:

Guru said...

'Brand India' should not be about putting 'Indian stickers' on to the likes of steel barons (who live as tax exiles)or the dynastical enterprise who go looking for global opportunities. Despite the wishes of the Indian chattering class and the unrealistic expectations of figures like Kalam, Brand India does not project a positive image outside India. China does and is feared as it marches on to become the world's third richest economy with a decade. Mittal and Pandit have left the country and it is a futile exercise to associate Brand India with them just as Irish did when John F Kennedy and Reagan were presidents.

There is a lot poverty in the country and millions are deprived of their basic necessities. Huge gap, the size of the universe exists between them, and the rich business men. It is they who need attention desperately rather than Mittal or Pandit.

narendra shenoy said...

I agree with Guru - associating Mittal or Pandit with Indian business acumen is farcical - but I think your point was commercial apartheid. That is a bit off. When oriental says that association with the Tatas will bring down its brand equity, it is actually saying that our clients are white and wouldn't dream of associating with darkies. As the bard said "a proud man's contumely"

Sadly, for white supremacists, money is quite color blind. Arcelor's chief made a statement to his share holders that while Arcelor was fine perfume, Mittal Steel was mere Eau de Cologne. The post takeover price has nearly doubled, dismissing his claims. Economics, it seems, likes brown people, even if economists don't. A consummation devoutly to be wished.