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Vision For The Future

The Dayafter, May 1, 2013

 
By Geetika Dang
 

German entrepreneur Frank-Jürgen Richter established Horasis as an independent think tank in Zurich in 2005 to “enact visions for a sustainable future” through interaction between developed countries and emerging markets. Unlike its contemporaries, Horasis holds invitation-only meetings of global business leaders with focus on India, China, Russia and West Asia. Naturally, therefore, it is increasingly seen as the rival to Davos based World Economic Forum for emerging markets for which he was the Director from 2001-05. Significantly, Horasis hold its annual meetings usually outside the respective geographic location of the ‘in-focus’ nation.

Excerpts from Geetika Dang of The Dayafter in a freewheeling interview with Frank-Jürgen Richter

The Dayafter (DA): Horasis has recently spoken about ‘educating for frugality’. It is an interesting concept. Could you share your thoughts…
Frank Richter (FR): I feel we need frugality and discipline in Europe. People there often spend more than they earn and this has led to huge budget deficits and debt crisis and which, in turn, led to bankruptcy of quite a few nations. I feel what’s happening in Europe is that people work for a mere 35-36 hours a week and enjoy vacation for as many as 6 weeks. So there is a lot of scope to work harder because if you compare these numbers with those in counties like India and China then we are definitely losing out on a lot. Although, we enjoy a good legacy of engineering, entrepreneurship and that of an overall caring state, we don’t have much innovation coming in because we are too laid back. People in Europe take many things for granted, for example, a college degree, which is something the Indian and the Chinese kids have to work really hard for. So on the one hand we need frugality in spending just as much as we earn, and on the other, we need a more dynamic entrepreneurial mindset wherein there is a vigour to achieve high goals.

DA: Another topic that Horasis touched upon its annual general meeting was about the ‘Promise of the BRICS nations and whether they are living up to it’. How would you evaluate the outcome of the Durban summit – BRICS achievements against their perceived potential?
FR: I think all the BRICS nations are individually on the right track and are doing quite well for themselves. Off course, every nation has its own issues as far as development is concerned. For example, there are infrastructural shortages in India while China has its own set of environmental concerns.

Having said that, I feel that the BRICS nations are still performing far better than the western world. What is needed now is a certain degree of coordination and the proposal of creating a BRICS development bank is a good idea to work towards the same. However, it’s still just a proposal that hasn’t materialized yet. It is yet to be decided how this bank will collaborate or complete with the World Bank. It has, however, received some flak from the western world. This is because when the World Bank invests in, for example, Africa, then these nations have to accordingly adhere to reform in various sections of their governance and society.

The Chinese, in the other hand, according to many, will invest purely for business without any terms and conditions attached. So, it’s not wrong to say that it’s a bit less altruistic than, say, the IMF or the World Bank. However, most of the African development in the past decade has been primarily due to the Indian and Chinese investments there.

Hence, I support the BRICS nations as far as this is concerned as they are still developing and should be allowed to do so in their own way. But we still need global governance, in the sense there is a need of a global approach.

Having said that I am quite optimistic and what is needed is sheer coordination. For example, apart from political coordination, there is so much that India and China can do together as far as business is concerned. Also, Russia is losing out in the Europe in counties like Cyprus and Luxembourg, to name a few; hence, Russia could always turn to India as good investment opportunity.

DA: Your comment on the growing trade deficit between India and china?
FR: The Chinese are very aggressive as far as trade and investments are concerned which, of course, is linked to the state of its economy. The Chinese Exim Bank, that is, the Export-Import Bank of China, supports investment of private companies in India. There are many sectors, like that of, telecom, where India is not welcome to the Chinese investment. I personally feel that there is a lot of potential for Indian companies in China and, hence, they should open subsidiaries there and go into market niches.

Companies like Infosys, Wipro, and TCS have large delivery centres in Shanghai. But in the more traditional areas, like manufacturing, China outplays India, and the later could use it for the same. Besides the manufacturing capabilities of China, India should also consider the huge market base of 1.2 billion people; hence, instead of looking to the West, India should also look to its East. Also, a lot of Chinese companies are aggressively moving ahead in the service sector and competing with the likes of Wipro and Infosys. For example, Noisoft is the largest IT outsourcing company of China and it is competing neck-to-neck with IT giant, Infosys. Hence, there is no place for complacency.

DA: At your recent annual meeting, the central topic was restructuring of institutions post –recession. What new ideas emerged?
FR: Post-the financial crisis, I feel there is an urgent need for institutions like the World Bank and the IMF to have a more global stakeholder -ship. A new refreshing approach would be to see more BRICS representation in these organisations. Most of these organisations in Geneva, Paris, and Washington are cut off from the ground realities due to various bureaucratic hindrances. The World Bank head is usually an American while that of the IMF is usually a European. I strongly feel that instead of going for the nationality, these institutions should be headed by the person best fit for it. Civil society, NGO’s, media and the business community have a major role to play. Frankly, more stake holders and global governance are at the crux of the matter.

DA: Could you please elaborate on the kind of collaborative solutions that Horasis visualises?
FR: The principal at the heart of Horasis is that of sustainability of business. There are a lot of deals that take place these days with the motive of short-term profitability. We, at Horasis, sincerely promote a long term vision by creating awareness. There is an element of responsible business dealings that is involved. Otherwise, we will leave bankrupt organisations behind us, as a result of myopic business planning.

 


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