Tuesday, May 29, 2007

Corporate diplomacy: Posco of South Korea

Posco’s people diplomacy in India

From the Statesman

Posco of South Korea seems to be doing all the right things for its $12 billion massive steel project in India, if you look at it from a global prospective. But the company cannot afford to say that resistance is futile. It must continue its people diplomacy, catering to people at the bottom of the pyramid, so that its success becomes a business model for other multinationals.

In China, Posco would have faced no problem at all once the government had given it the green signal. The Chinese government would have simply moved the troublesome people out of the way and shut them out of the media view and the world, which explains its rapid industrialisation and export-oriented economic growth at more than 10 per cent annually. China’s one-party authoritarian government does not owe any explanation to the people.

In India, it is not only the government but opposition too that needs to be convinced by global corporations planning to set up their manufacturing plants, especially if they necessitate dislocation and dispossession of the local people. Unlike India, China is a corporate state, the state as a single mega-corporation that brooks no opposition and must succeed in its economic goals. India is a people’s state, where there is a hundred-year tradition of political agitation and direct action.

So it will be naive to think, for example, that the ruling communist party of West Bengal has the same control over the Bengali mind as the Chinese communist party has over the Chinese mind. That explains the trouble at Nandigram, where violence erupted killing 14 people on 14 March for the simple reason that the state government’s decision to acquire 22,000 acres of land to build a petrochemical hub including a shipyard was not based on persuasion but coercion. For three decades, the communists have been ruling the state of West Bengal and they have gotten used to getting away with whatever they did.

Don’t get me wrong. West Bengal needs to industrialise rapidly to create job opportunities, especially for its youth, and keep its fleeing brainpower in the state. Nor will anyone disagree with chief minister Buddhadeb Bhattacharjee that industrialisation in the state is irreversible, but that should have been said and done three decades ago when his party took power in the state.
A man in a hurry should not forget where he came from.

In Singur, Tata Motors is building a small car plant on 997 acres of farmland and there too there have been serious protests. A farmer is reported to have committed suicide a few days ago. Every political party is shamelessly trying to take advantage of the tense situation and jockeying for a better position in local elections. But no one can escape the hard facts about India that it is an over-crowded country. There is a paucity of land.

Turning fertile farmland into factories is not only a socio-economic challenge, for global companies waking up to the advantage of cheep labour at the bottom of pyramid it is a diplomatic challenge too. The Tatas’ massive project by all accounts will stimulate economic growth opportunities in West Bengal, as it will happen in Orissa once Posco learns and practices lessons in people’s diplomacy.

Let’s look at Posco. Its reputation as a global steel maker is unquestionable. Its steelworks at Pohang and Gwangyang in South Korea produce 31 million tons of varied steel products annually that feed global demand in 60 countries. The South Korean company touts that its Indian subsidiary will “build one of the world’s most competitive steelworks with advanced technology and stable iron ore supply from captive mines, together with the economic development of Orissa.”

Posco uses all the buzzwords that the Indian news media, business school graduates, and globally conscious intelligentsia want to hear: “Sustainable competitive advantage”; “the steel industry as the locomotive for economic growth” to “catapult India into a steel superpower.” For a moment, my pride soared to dizzy heights when I saw India rising on steel girdles. And that is what happens to a person like me who has been away from India for decades until I began to visualise the sprawling steel expanse with captive mines, captive port and captive infrastructure from the point of view of a small betel growing farmer with a piece of land that might be taken away from him (Remember Bimal Roy’s movie Do Bigha Zameen?).

Posco and Tatas and other multinationals that want to build manufacturing plants should look at the bottom of the pyramid. That is where the government should look at before it agrees to projects at special economic zones and understand that the opposition is not against industrialisation but to building factories on fertile farms. Farming is a highly valued way of life in industrialised Japan, the United States and Europe. Ask a Frenchman to give up his farm! Fortunately, Posco has been taking the right steps in committing to maintain the local culture by providing the betel growers alternative land sites. One should not underestimate the place of betel in Indian culture.

Mr Soung-Sik Cho, Posco-India chairman-managing director, was quoted saying: “Posco-India strongly believes in growing together with the community, it will make all possible efforts from its side to ensure that the betel vine cultivators are not only relocated properly but also enjoy a better environment by all means.” I have not heard such gentler and kinder words coming from the mouth of chief minister Bhattacharjee.
A politician in a hurry should not forget his democratic manners.

The Centre’s new policy allows companies to negotiate directly with landowners, but that will be watched by public interest groups to assure that there is no exploitation as companies negotiate with tribal and other people at the bottom. Posco’s intentions sound wonderful; consider, for example, the company celebrating Orissa’s **Utkal Divas**, and providing free training to youths from displaced and affected families for employment; guaranteeing employment to all displaced families for which vocational training programmes will be imparted regularly. And the company’s commitment to preserve the waterfalls in the Khandedhar mining area by turning it into a tourist spot, if it is allowed to develop the mines. The Tatas and West Bengal chief minister need to show the same sense and sensibility about the people at the bottom of the pyramid.

(ND Batra teaches communications and diplomacy at Norwich University. He is the author of Digital Freedom

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