Thursday, March 21, 2013

Billions of Entrepreneurs Book Review

Billions of Entrepreneurs: How China and India Are Reshaping Their Futures and Yours
Author: Tarun Khanna
ISBN: 978-1-4221-5728-2
By: Marc O’Bryan


            In Billions of Entrepreneurs, Tarun Khanna provides an insightful analytical comparison of the divergent paths toward economic development respectively taken by China and India. He sets the stage for this comparison by first describing the changing state of the current globalized economy. Developed nations are beginning to see their economic power and influence shift over to some key developing nations, China and India in particular. Similar to Zakaria’s warning in his book, The Post-American World, Khanna cautions developed nations to be aware of the progressive events taking place in China and India.  Khanna explains how these two nations are experiencing a surge of entrepreneurial activity that should be recognized as a catalyst for the transition of global power from Western nations to developing nations. 
            The primary purpose of Khanna’s book is to contrast the different forms of entrepreneurship taking place in India and China. The title of his book describes the sheer magnitude of entrepreneurial development taking place in these two nations. It is also a metaphorical reference to how these two countries are utilizing entrepreneurship not just for financial gain, but also for the betterment of their respective societies as a whole. As the two most populous countries, problems in China and India, such as poverty or unemployment, are magnified as a consequence of the massive size of their populations. This means that these two countries have a lot more work to do in comparison to developed nations. Khanna illuminates this point in order to justify his belief that “entrepreneurship in developing nations occurs in far more encompassing and far-reaching ways than in more developed settings.”

Contribution to Knowledge:

            Khanna provides a multifaceted analysis of the radically different environments of China and India in which entrepreneurs have been forced to maneuver. While entrepreneurs in China must operate under the strict regulatory controls of the government, entrepreneurs in India must navigate through a decentralized marketplace under a dysfunctional government.  Khanna provides practical knowledge to foreign investors considering China or India as their next targeted investment opportunity. Each nation has its own advantages and disadvantages when it comes to entrepreneurship and investment. 
            Another practical piece of analysis in Khanna’s book describes how China’s government welcomes foreign investors, while India’s government does not. India’s government heavily favors its own indigenous private businesses, while China gives its foreign investors the “red carpet treatment.” Khanna sheds light on the different obstacles that any up and coming entrepreneur will face in China and India. While an investor may receive ample support from the Chinese government, he or she will find out quickly that complying with Party demands is the only way to succeed. The Chinese government controls the major banking institutions and the development of new infrastructure, and therefore controls which businesses have the opportunity to succeed. Microsoft quickly learned that its enormous success in the U.S. and other markets did not automatically transfer into China. Even Bill Gates was forced to do some “courting” when he did business with the Chinese government. To gain the trust of the Party, Microsoft promised to share with them the Window’s source code, its most heavily guarded asset. Entrepreneurs seeking to do business in India will find an enormous barrier to entry simply based on the government’s preference for indigenous companies. However, entrepreneurs in India face almost no pressure from the government in terms of regulatory controls. The tradeoff is that India lacks decent infrastructure required by most businesses. Khanna’s analysis of the various issues that entrepreneurs face in each country offers practical insight for potential investors thinking of venturing into China or India.

Khanna’s Strengths:
            Khanna’s analysis of entrepreneurial development in India and China adopts concepts from the notable sociologist, Antonio Gramsci, a neo-Marxist whose writings attempt to account for the reasons why capitalism was able to take hold in only certain societies. The parallels between Khanna’s comparison of entrepreneurial development in China and India and Gramsci’s analysis of capitalism in advanced versus underdeveloped societies are a very intriguing feature of this book. Applying concepts from Gramsci, Khanna provides thorough contrasting descriptions of China and India that encompass a wide variety of each country’s cultural, political, and economic components.  
            Khanna describes China as a State-led nation in which the government controls most aspects of life. The Chinese Communist Party (CCP) runs the Chinese government and claims to use its “fiat authority” to serve the best interests of the public. The party supports and justifies its authoritative power by exclaiming its seemingly noble mission to improve public good over the interests of its private sector. China employs a top-down form of development in which the government controls the flow of capital, which essentially means they control the flow of opportunities available to entrepreneurs. In China, “the government is the entrepreneur,” meaning Chinese businesses that wish to succeed must operate within the Party’s guidelines and comply with the government’s demands. Khanna shows how China’s strong government is more efficient when it comes to infrastructure development and initiating change. Khanna’s analysis of the Chinese government is very similar to Gramsci’s conceptualization of the role of the State in the context of revolutionary change. Gramsci proposed the idea that nations with weak civil societies were easily controlled by the State. Under these conditions, the State is the hegemonic group that claims intellectual and moral leadership as an inherent right. This is what has allowed the CCP to control the Chinese government and society. Khanna describes the government’s control of information and private property rights as a significant source of power because it prevents the spread of ideas and discussion among the general public. The government’s panoptic monitoring of all information outlets is a form of behavioral conditioning that keeps Chinese citizens in line within the Party framework. Entrepreneurs do not have access to accurate information as the government skews economic and financial data to serve its own interests. These authoritarian policies provide little incentive or opportunity for potential entrepreneurs to pursue their ambitions when their own government is working against them in every way possible. While China lacks the appropriate stage for publicly led change, India’s apathetic government has set the stage for a dysfunctional and unorganized form of public discourse.
            Khanna’s portrayal of India as having a strong civil society relates directly to Gramsci’s concept of civil society as the catalyst for change. Civil society is comprised of the organizations that exist between the State and the economy. These are the non-governmental institutions that represent the varied interests of the public. Gramsci claimed that strong civil societies made it hard to initiate change because it required not just the consent of the State, but also the consent of a pluralist society in which there were many competing interests among different groups. This concept applies perfectly to Khanna’s account of India as a seemingly dysfunctional society incapable of implementing effective change. India’s pluralist composition and highly democratic characterization are the cause of the government’s ineffectiveness. Unlike China, where the government does not have to compete with a mélange of private interest groups, India’s government must work in cooperation with several competing interests that hinder progress. This is evident when one looks at the parliamentary procedures of the Indian government, which Khanna describes as a series of “catcalls, sit-ins, and walkouts” that prevent meaningful debate. China’s government, on the other hand, is incredibly organized and without dissent. China’s National People’s Congress (NPC) is able to control its society because its power is derived from its hegemonic claim of serving the public interest. Since this goal appears to encompass the interests of everyone, it is hard for private groups to go against it. India also has a hegemonic claim to serving the public interest, embodied in a law regarding development. This law states, “The object of all development is the human being.” The only problem is that each human being in India seems to have a conflicting interest, which in a highly democratic society, means nothing ever gets accomplished. India’s civil society with its many competing interests make it hard for any one group, including the government, to take control and initiate effective changes. For this reason, it is India’s civil society that is slowly making changes in India through its autonomous entrepreneurial efforts. These groups actually do all they can to avoid government involvement, which is viewed by many as an obstacle to actually getting something done.
            Khanna’s accounts of China and India’s respective abilities to foster entrepreneurial growth are made much more convincing by their backing from Gramsci’s concepts of civil society and hegemony. Rather than simply offering superficial observations about the differences between these two societies, Khanna delves much deeper into each country’s social structure to account for their different accommodations of entrepreneurship.

Khanna’s Weaknesses:

            The main weakness of Khanna’s book is the fact that it is an arduous task just to get through it.  He consistently goes into painstaking detail for each and every example he provides to support his main points. Each example contains numerous acronyms of organizations, new names of state officials, and an extensive history lesson on the topic at hand.  While providing examples is a great way to support any argument, Khanna takes this too far. His emphasis on these agonizingly detailed examples distracts the reader from the main points he is trying to make. By the middle of a chapter, it is hard to remember Khanna’s particular main point for that section of the book. His writing requires the reader to already be well informed of China and India’s respective political, economic, and cultural backgrounds. Without this prior knowledge, Khanna’s book is incredibly overwhelming and comes off as pedantic. This is particularly true of the chapter about the financial systems of India and China in which Khanna must expect the reader to be a financial analyst and political economist.  If Khanna could provide a more simplified version of this book in which his examples were limited in number and complexity, his main points would come across much clearer to readers.
            Another weakness of this book is Khanna’s lack of focus on the relations between India and China. He briefly mentions early on in the book in a section titled, “The New Dance,” how India and China would mutually benefit from a more cooperative relationship. He goes on to say how the potential combined economic power of these two developing nations could increase their joint global influence to a level that surpasses already developed nations. This seems like a very important topic to cover; yet he only addresses it briefly in the beginning and end of the book. Even though the main point of his book is to point out the differences in the entrepreneurial development of each country, it would have been interesting to learn more about the similarities between each country in regard to their economic development.
            One more disappointing aspect of this book was the lack of attention paid to the informal economy in India. There is only a brief mention of Dharavi, one of India’s largest slums with a thriving informal economy. Rather than focusing on the entrepreneurship of slum residents, this brief section of the book addresses the issue of gentrification in India.  Basically, India’s emphasis on private property rights has made it difficult for real estate developers to tear down these slums in order to transform them into more upscale areas. Khanna ignores the fact that these slums are a source of thriving entrepreneurship, where many of these slum residents have established small businesses. They have managed to do this with no help from the government, whose inability to properly plan for development led to the creation of these slums in the first place. With a title called Billions of Entrepreneurs, it seems odd that he would not focus more on the millions of entrepreneurs living in slums, who overwhelmingly contribute to the prosperity of India’s economy. Khanna’s book would have benefitted from discussing in more detail the efforts of small-time entrepreneurial operations rather than primarily focusing on huge companies like India’s Infosys and China’s TCL.

Overall Impression:

            Overall, Khanna’s Billions of Entrepreneur lacks a humanistic component. His discussion of development in China and India is characterized by a reified conceptualization of each country’s entrepreneurial landscape. This book was written too heavily from a business perspective. There isn’t enough cultural justification for why the differences he describes exist. If Khanna had been able to more directly incorporate a supplementary cultural or sociological viewpoint, the reader would have a well-rounded understanding of why entrepreneurship is so different in each country.
            On a more positive note, this book is incredibly informative to any reader willing to take the time to fully understand each supporting example. Khanna’s thought-provoking criticism of each country’s political and economic systems offers the reader the opportunity to understand the development of two rapidly emerging economies. This book is a must read for any up and coming business professional who will most likely end up interacting with one or even both of these developing nations. Khanna’s book provides the basic tools for understanding how to do business in each of these developing nations. This book essentially serves as an instruction manual on how to do business with India and China. After reading Zakaria’s Post-American World and gaining a basic understanding of how China and India are becoming stronger competitors in today’s global economy, Khanna’s book reinforces that viewpoint by informing the reader about each country’s path to development. For anyone looking to gain a better understanding of global competition and entrepreneurial opportunities, I would definitely recommend reading these books.