All Day iDream About Capindalism

Hello my friend, capitalism, we meet again and this time, luring ADIDAS to India

Seems like now Adidas has a lot more in store to dream about other than sports, ever since it tasted the fruit of bringing capitalism to developing countries, like India. Many believe that just because the capitalist world is losing money on the other side of the world, it is diverting its focus towards rapidly developing countries. Through an insightful observation, it has also been deemed that whenever multinational companies go out of the way to accommodate their customers or cut down their costs to lower the price of their goods; there is always a catch. Surprisingly, Adidas recently launched trainers for only $1 in India, and to my surprise, they looked good and expensive.
For any envious layman – envious because getting a pair of Adidas trainers for just $1 is not even funny for it tinkles one’s buying taste buds – the purpose of coming up with such a scrumptious deal would seem like an act of social work. But the actual reason for the wise move, as also highlighted by the country head of Adidas, is to capitalise on the country’s soaring population (rightly put as Corporate Social Responsibility). The country head also added that, “Adidas can sell its trainers for $1 and can still make money”. Now, let’s unravel this mystery of possibility. Even if Indian labour’s basic pay is $1 per day, based on piece rate system, then also the company is not making ‘any money’ at all. There is no doubt that per unit cost to the company of producing these trainers must be low, depending upon the sourcing; the product must also be of low quality or the efficiency of the production unit must be giving a great benefit of economies of scale. Well, whatever the case, money making is only achievable if the company sells high volumes of these trainers because then only can it cover the costs and make profit.
The above mentioned analysis is just one side of the picture. The import taxes are so low and foreign investments policies in India are so welcoming that multinational brands are genuinely attracted towards the country. India is totally tuned into the incentives, rewards and profit motives of capitalism that it now accounts for at least four-quarters of India’s GDP.
The thought that India is expected to surpass China in the next few years might sound wishful to many of us, but this is what India is actually heading towards. India’s economy emerged from the global recession in better shape than China’s, despite its slightly lower growth rate. And, no matter what anyone says or believes, capitalism does provide answers to restore economic balance, if used in a right and constructive manner.
Today, interestingly, India is inventing its own form of capitalism, where the major dominance is of family owned businesses like Tata, Birla, Reliance, etc. Earlier, Tata had also launched the world’s cheapest car for $1200 in India. Similarly, Reliance also sold low-price cell phones to street hawkers and rickshaw pullers. I would reckon Indian capitalism as ‘Capindalism’, which is more of capitalism with Indian characteristics; in which profits are controlled not by institutional shareholders, but mainly by the state, or by entrepreneurs and their descendants. But that doesn’t imply that the MNCs are forbidden fruits; they still continue to enjoy their tasteful experience of bringing home, capitalism, just because Indian government is now focusing on cutting down on the ownership of the traditional family-run businesses that have taken over most of the market share for more than a decade now. So, hello my friend, capitalism, we meet again and this time, in our neighbourhood.

The writer is Sub-Editor, Profit. She can be reached at [email protected]