Can Bajaj Catch Up With the Hondas and Yamahas?

I was reading a book titled India Unbound by Gurucharan Das and on the 16th page of the introduction part, I read this interesting comment on Rahul Bajaj. I am not going to interpret anything from it. Just a food for thought…

The dilemma of Rahul Bajaj is typical of the old companies. Bajaj is the clear leader in the world’s second-largest scooter and two-Wheeler market. Yet he is unable to take the next step, which is to become a global player. He has the world’s lowest costs; he has successfully withstood the challenge of japanese competitors on his home ground; he is cash rich – making more profit than all his competitors put together.

But he exports only 3 percent of his output. Despite his awesome advantages, Bajaj does not have the confidence to take on the Hondas and Yamahas in the world market.

A decade ago, no one would have even thought of criticizing Rahul Bajaj for not thinking globally. Government rules did not permit him to have a foreign operation, or buy equity of a foreign company, or import components at a reasonable tariff, or expand capacity at will, or buy new technology without a lengthy approval process.

Rahul Bajaj had a purely “local” mind-set of a shortage economy. He sold everything he produced, because demand was always ahead of supply ­for a decade, there was a ten-year waiting period for his scooter. Thus, he never developed marketing or product development skills.

Rahul Bajaj is a creature of Nehruvian socialism. The legacy of forty years of a closed economy has caught up with him. He is the symbol of the “old” India, hobbled by poor infrastructure, obstructionist bureaucrats, high tariffs and interest costs, and a “factory mind-set.”

As with Bajaj, the older Indian groups are creatures of a system they did not create. They do not have the skills to succeed in the global economy. Eight years into the reforms, they are still floundering.

Success in the global economy needs three things: massive investment in human resources, a passion for product improvement, and a deeply caring attitude for customers.

These companies are smart and they understand this. Then why haven’t they acquired these skills? The answer is that it takes time to change from doing what you have been doing successfully. But time is precisely what they do not have.

Quote from: India Unbound by Gurucharan Das

Do you agree with Gurucharan Das? Yes? No? Why? Also please note that this book was written in 2002. A lot has changed now. But somethings never change. (I did not say it, he did!)