The Elephant and the Dragon: A Book Review

The Elephant and the Dragon: A Book Review

In Robyn Meredith's own words, "This is the story of how India and China are changing their destinies and, with that, changing the world's” (page 11). A quick read, Meredith gives us perspective into the struggles both China and India have endured to have the present economic opportunities, and what it means to Americans. China and India had and have very different leaders, as polar opposite as Gandhi and Mao, yet their rise to global stardom is similar.

Meredith describes the shift of China and India into power frequently as a tectonic shift; one which the ramifications are not completely understood or predictable. She presents a strategy for “the rest of us” to survive this post-Cold War reshuffling, but her delivery came a little late and vague for my taste.

Robyn Meredith has written a nine chapter, concise clue into the global reshuffling of business power we're seeing, feeling and contributing to. In her first few chapters, she explains why China and India are now available and structured to do global business. In China, from the rule of Mao with years of starvation and the impact that went along with it, to its current day growing class stratification and separation. In India, she explains the choice to embrace free trade and to follow China's footsteps out of poverty.

Some say there must be a storm before there can be calm, or that if times get bad, there is opportunity in that crisis for times to then get good. I try to look at George W. Bush’s time in office the same way; if he had not created such a political and economic mess, we may not have had the momentum to elect president Barack Obama, our first multi-racial president with the middle name Hussein. For China, their storm was provoked by steel-driven Mao Zedong, and their calm (a stretch, yet still using the metaphor) is their present day success.

In 1949, Mao announced the formation of the People’s Republic of China (PRC) to the rest of the world. Mao died after 27 years of rule. During his time in power, much of the country starved to death and there was no economic force behind the PRC. Meredith describes how the once sleeping and starving country has picked itself up and latched onto the global need for cheap manufacturing. This major change is still just a decade deep.

In 1991, after the assassination of Gandhi, India began taking steps towards political and economic reform. The country was declared in a state of financial crisis, and veered away from its self-imposed economic exile. India passed laws granting job guarantees to workers, making it hard for business to hire and impossible to fire workers, adding a unique and troubling dynamic to its business practices. They also received permission to import and export duty free and could then buy imports cheaper. Also, the government took away duties on software, leading to a revolution in the Indian computer industry. India eventually turned towards China’s success for inspiration, though India’s rise to power has not been as smooth as China’s. Meredith states “Indians joke that India is like a drunk walking home: it takes one step forward, then two steps sideways, but eventually makes it home” (page 54). Nonetheless, change is apparent in India… it used to take a decade for a phone installation… parents would put their children on waiting lists so they could have one when they married! Now, their wireless network is stronger than the that of the United States, with 80 million cell phones purchased per month.

China has wooed foreign companies to build factories on its soil and has set up such an export friendly infrastructure, businesses often times cannot afford not to do business there. Companies like Wal-Mart have made massive deals with companies manufacturing in China to get the lowest price. Their mission is to bring the consumers the lowest price possible, yet the manufacturing company is the one who absorbs the price cut, and American owned Wal-Mart keeps most the profit. With a flooding of manufacturing companies in China, the way we make, ship and receive products has been revolutionized. Relating to the U.S., Americans are more expensive to pay; with more expensive costs of living, and companies are not willing to pay more to keep earnings localized; we are in a landslide of job loss. Some of the Chinese population is getting rich quick, while Americans are losing their jobs, their pensions, their retirement money… but a few Americans are getting rich, really rich.

Interesting to me was how India first stepped up to bat in the global business game. Americans were scared of Y2K and needed a ton of help changing computer programs from 2 to 4 digit year codes. American companies enlisted the help of Indians to make this switch and were delighted by the cheaper rates and well educated professional service, so they started to transform their business plans to include India. This concept was not new, Mexico has been the source of cheap labor for decades, but we were now considering cheap but educated technological labor. After the initial taste of cheap and well educated labor, the flood gates opened.

Meredith’s chapter named “The Disassembly Line” I enjoyed, but it was frustrating to read. She talks about how many countries one product visits throughout its production. The concept is captured with the last sentence in the chapter, "these days, most clothing is far better traveled than its wearer." The sad part to me is the amount of resources, especially fuel we are wasting globally by this concept of the disassembly line.

India’s culture is in the process of revolution; women are choosing for themselves whom they’d like to marry. China is saving more money than we are; they are creating pensions and retirements as ours are vanishing. Americans spend more than we earn.

What Meredith’s book helped reiterate is that we are running out of resources! This global structure is depleting the earth, using much more energy than needed to make big businesses rich. We know that all nations benefit from free trade, but the balance is shifting so quickly and with so much intensity, the U.S. is on the threat of repeating the great depression.

The Relevance of The Elephant and The Dragon:

This book was one of the two to choose from but not the one recommended to read... I understand why. From working on the pre-Chindia assignments, I had already learned a lot of the information presented in this book. Yes, China and India are rising super powers, Zakaria already showed us this, as well as case studies on Wal-Mart, Infosys, etc. Meridith’s chapter on “geopolitics mixed with oil and water” is relevant to the planet in terms of resource depletion and the environmental and economic consequences. The resources necessary for these rising countries will strain the environment. Resource depletion will also create economic burdens on those who have been encouraged to live a more western lifestyle. There simply will not be enough to go around and support these new global economies.

What Robyn Meredith Did Well:

I liked reading about why China and India are rising to the top from a historical point of view. Their past was necessary to spur their momentum and begin the sprint to the top. Although I did not find Meredith to be the most creative writer, she is consistent and her verbiage flows very well. The chapters were cleverly titled, and true to her journalistic style, she had some great quotes. I liked how Meredith pointed out the source of education of most of the Chinese and Indian business leaders mentioned was the U.S.

What Robyn Meredith Could Have Done Better:

In the grand scheme of things, America has been a leader for a minority of time... I would have liked to see that put into perspective a little better. Also, Meredith does not go into much detail about how this global shift relates to all of us, until the very last chapter. As an American, I would have liked to see how things relate to the country I'm living in, and I assume the country she was addressing in her book. The book is subtitled: The Rise of India and China and What it Means to All of Us. United States aside, she didn't really address any other countries. I would assume that other people around the globe are interested in this shift in power, and think to themselves that they are included in the all of us too!

Her suggestions posed in the last chapter were:
1. Strengthen the educational system
2. Strengthen the economical foundation
3. Foster innovation in technological fields
4. Focus on creating jobs, even as it increases support to those losing jobs
5. Strengthen our infrastructure

She first claims 1, 2, 3 are the answer, then recaps with 5, 1 and 2 are the answer, and then adds in #3 again. Meredith goes on to say that its time to recognize American standards of living are too high. I’m sorry Meredith, but I would like a bulleted priority list and some specific how-to instructions. The answer to how to stop as Morgan Stanley’s Mr. Roach put it, “the inevitable global labor arbitrage” (page210) is not simply by finding jobs you cannot deliver over a wire. To me, this is the meat of the meal; this is the subtitle of the book, this is the purpose for writing the book. I would like a little more of a plan… more than 26 pages at least. Her writing in this chapter especially was repetitive. I’m not certain what exactly she was trying to get across.

In Closing:

Both China and India have spent upwards of hundreds of billions of dollars on improving their infrastructures. They are looking to physically and monetarily strengthen their countries. They have also both also invested in higher education. These two countries are racing forward after being so behind, but the U.S. is watching it happen passively, with a select few making major profits, and many more losing their jobs. In addition, the impact on the environment has the potential to be devastating.

Meredith quotes both Indian and Chinese businessmen saying that Americans have nothing to fear, and that we should count on the resilience of the U.S. economy. I wonder if, two years later, they would have the same comments?

Although Meredith's style was easy to read and quite captivating, this book is somewhat elementary. There were a few new concepts I appreciated the exposure to, and the historical briefing was good, but this is a clear jumping off point. Perhaps a Fall quarter book review or a preliminary requirement to entering the MBA program. I will recommend this book to others, but probably those without much experience or current interest in global politics. Maybe times are moving so quickly, this book was cutting edge when it first came to market a few years ago, this is quite a possibility... nevertheless, a good read.

Meredith, Robyn. The Elephant and The Dragon. New York, NY: W.W. Norton & Company, 2007.