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'Shame Games' Put India Further Behind China

Barring any more disasters, the Commonwealth Games will open in New Delhi on schedule after all. The fact that the games won’t be delayed or cancelled is a victory for India’s beleaguered Prime Minister Manmohan Singh. Still, the games have already proved to be a disaster for the country and even if the rest of the games go off without a hitch, the images of crumbling infrastructure and filthy conditions will be hard to shake. The “Shame Games,” as an Indian magazine has dubbed them, will just reinforce the idea that corruption and mismanagement prevent India from matching the achievements of China.

American readers might be puzzled, asking who knows or cares about a second-tier event like the Commonwealth Games. Indians do care, though, and they long ago pointed to Delhi 2010 as India Shining’s answer to China’s success in staging the 2008 Olympics. This would be an event showing how India had overcome its corruption and mismanagement demons. The current failure therefore is about more than just whether some athletes don’t show up because of reports there’s poop on the walls in the living quarters. Here’s what Economic Times of India columnist Sudeshna Sen writes: “The disaster is economic and political. A setback to the country’s economic future , its geopolitical standing, its clout in places like UN and G20, et al. I don’t care what the Sensex is doing — we’re heading straight into Christmas bonus time when international traders need to spice up their earnings — the games disaster is going to make life very, very difficult for any politician, businessman, corporate, investor or diplomat in the future. Every single overseas investor who is being wooed for trillions of dollars to invest in India’s infrastructure will think thrice. Forget China and the Asian Games. Dear everyone, India is no longer considered in the same league as China, whatever we may wish to think.”

But China has plenty of corruption problems, too. And there’s no shortage of inept Chinese officials. So why does China succeed where India fails? Here’s one theory. In China, which executes more people than any other country, high level officials who screw up badly may face the death penalty if the country becomes an international laughing stock because of their actions. Consider the former head of the State Food and Drug Administration, Zheng Xiaoyu, executed in 2007 after a series of Made-in-China scares involving tainted food and drugs. Two people implicated in the tainted milk scandal, which left several children dead, thousands of others sickened and countries around the world shunning Chinese dairy products, were executed last November.

India, to its credit, rarely imposes the death penalty. But it rarely imposes any other penalties, either. The notoriously slow Indian legal system, where cases can languish for decades, makes it easy for corrupt officials to go ahead without any fear of punishment.


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China's Huawei Overcomes Opposition in India

In the U.S., Chinese telecom equipment manufacturer Huawei Technologies is encountering new opposition from Republican senators. Huawei has had its share of political problems in India, too, with New Delhi putting Huawei and Chinese rival ZTE on a blacklist earlier this year because security officials worried about the risk of Chinese infiltration. “The Indians are incredibly paranoid about China,” David Zweig, a professor of politics at Hong Kong University of Science & Technology, told me at the time. (Read that story here.)

But the Chinese company is making progress in overcoming opposition in that market, with the Indian government easing up on its ban. On Monday, Indian operator Tata Teleservices said it is buying 3G equipment from Huawei. This comes just a few weeks after Huawei announced an earlier deal with the Indian operator to provide CDMA equipment in Mumbai.

Indian security concerns aren’t limited to Huawei and other Chinese companies, of course. Look at what RIM has had to go through in order to keep New Delhi from kicking the BlackBerry out of India. http://www.bloomberg.com/news/2010-09-01/india-asks-rim-google-skype-to-set-up-local-servers-update1-.html Huawei’s breakthrough is probably a sign that the company made enough concessions to satisfy India’s security officials. It’s also a sign, though, that for all the rhetoric about the threat from China, Indian companies can’t afford not to do business with Chinese suppliers. As Insead professor (and sometimes Businessweek.com columnist) Anil Gupta told me a few months ago, Chinese equipment makers like Huawei enjoy a big price advantage over Western competitors. “We are talking about very competitive tech at 30% lower price; in a very capital intensive biz, that is important,” he said. As Indians look to spend to fix their woeful infrastructure, “India as market becomes the most attractive for capital goods from China. And because of China’s cost advantage, China becomes the most attractive supplier base.” For the two Asian giants, that co-dependence could help both countries put aside their past hostilities and work together.


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