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When India Kicked Out Coca-Cola, Local Sodas Thrived
- mtgx 8y ago> The Foreign Exchange Regulation Act of 1973 required many multinationals to hand over 60% of the equity in their local subsidiaries to Indian partners. Coca-Cola would have had to release its top-secret syrup recipe and IBM its computer codes in order to comply. Faced with an ultimatum from Fernandes, Coca-Cola—along with Mobil, Kodak, and 54 other companies—left. How interesting. Meanwhile, when China asks the same of foreign companies today, the foreign companies seem to offer half of the local subsidy and the entire IP on a silver platter. Just one recent example, but there are others involving Microsoft with Skype, Windows 10, and so on: https://www.theregister.co.uk/2018/12/10/qualcomm_layoffs/ https://www.theregister.co.uk/2018/12/10/qualcomm_layoffs/
- Cursuviam 8y agoChina is a much bigger market than India in 1973
- adventured 8y agoSpecifically in 1973 the US economy was 16.4 times larger than India and 10.3 times larger than China. Today the US economy is about 7.6 times larger than India and 0.5 times larger than China. India's economy was equivalent to ~$500 billion in 1973, inflation adjusted to today's dollar (per the US Govt figures). That would be good enough for 25th or so globally, behind Belgium. Not tiny per se, definitely small for what India's market is capable of. They're of course 7th now in national GDP, set to overtake France and the UK this year and move into the 5th spot behind Germany.
- seanmcdirmid 8y agoChina required 51-49 joint ventures; also this happened mostly in the 90s when the oppurtunities in China were more apparent. India is still a harder place to do business than China. In particular, their law on patent ownership is really harsh such that foreign companies will avoid filing for patents at all from India (if something needs to be patented, the filing employee has to transfer out of India first).
- mritun 8y agoWhat is the basis of your comment that for filing patents companies have to move their employees? Multitude of my coworkers in India who have filed and have been granted hundreds of patents would vehemently disagree with you!
- seanmcdirmid 8y agoI worked for a company (Microsoft) that did R&D in India as well as China. When we (coming from China) visited India, some of the employees there casually explained to me the problem with patents. The gist of it was that if Microsoft filed for a patent in India and that patent was used in say Windows, then India would demand that all Windows profits be booked in India, regardless of the rest of the IP used in it.
- unmole 8y ago> (if something needs to be patented, the filing employee has to transfer out of India first). That does not match my experience at all. I only had to sign some paperwork to authorize a patent agent to file on the company's behalf outside India. I work with people with several patents granted both inside and outside India and have never heard of anything of this sort.
- temp1928384 8y agoLet's be real...local or not soda is objectively terrible for you.
- sneakernets 8y agoHave you had real sodas? And by that I mean, the sour/salt kind? Sugar wasn't even added to many sodas enjoyed outside of medications until Coca-Cola, who then upped the amount of phosphoric acid instead of switching to something easier like citric acid.
- bluntfang 8y agodid you just no real scottmans soda?
- droobles 8y agoI quit soda this year, and it's been very difficult. Sometimes I just want to wash down a great meal with a tall, ice cold Coke. Hoping after being away from it long term I start to not want it anymore.
- wffurr 8y agoAdd a splash of juice to plain seltzer. It gives you that nice fizzy feeling perfect for washing down food, but with a fraction of the sugar of a coke.
- droobles 8y agoThank you for that tip, I'll have to try it!
- dnhz 8y agoI stopped drinking sugared sodas years ago. It's just not part of my diet, and I hate the residue it leaves on the teeth. But I'd have the same feeling if I couldn't have around one beer a week.
- 8y ago
- Andre607 8y agoReminds me of how when due to the Allied embargo Coca-Cola couldn't be made in Nazi-era Germany, so Coca-Cola GmbH developed Fanta: https://www.thelocal.de/20170523/fanta-how-the-nazi-era-drink-became-the-world-famous-brand https://www.thelocal.de/20170523/fanta-how-the-nazi-era-drin...
- cm2012 8y agoNormal economic theory says protectionism makes the pie smaller for everyone - since the best companies, with the most productivity, don't get to compete on a level playing field. But when the product is soda (bad for you), it's probably better to have less efficient/productive suppliers - you want worse and more expensive companies to be providing it.
- petermcneeley 8y ago"Normal economic theory says protectionism makes the pie smaller for everyone" Some odd wording. The theories would say that the TOTAL pie would be smaller. It makes no distributive claim.
- gizmo686 8y agoThis is a bit of a subtle point. In theory, free trade between countries A and B makes the pie larger (or, at least, no smaller depending on your precise model) for A and B compared to no trade. What is at issue is how the surplus pie is distributed. For instance, if you start off with each country having 10 slices, and trade creates an addition 5 slices, basic economic theory would allow for country A to end up with anywhere between 10 and 15 slices. What protectionism does, from a theoretical standpoint, is provide some control over the distribution of the surplass. Having said all of that, it should be remembered that we do not live in a spherical void. In practice, it is entirely possible for "free" trade to leave a country worse off then they would have been with no trade.
- deogeo 8y ago> we do not live in a spherical void This got me thinking how odd it is that economic theory only gets invoked in so far as it advocates free trade: https://en.wikipedia.org/wiki/Comparative_advantage#Criticism https://en.wikipedia.org/wiki/Comparative_advantage#Criticis...
- ves 8y agoI tried to work through a proof of “free trade makes the pie no smaller,” and it seems like it only works if you’re considering one good. I reasoned thusly: 1. Country A can produce good X at price p_a < price p_b the price at which domestic X is available in B. 2. No deadweight trade loss, so X is available at p_a in B 3. Thus for the same quantity n of X, B has a surplus of n(p_b - p_a). 4. But domestic producers of X have lost income, and if there isn’t something else for them to do, the total shrinkage in B’s economy may exceed the surplus (I haven’t worked out this term but it should be pretty easy), thus leaving B worse off. Factor in deadweight losses and free trade definitely could leave B worse off, by forcing some of its economy to be unproductive.
- jameane 8y agoThis makes me super curious about trying this Indian sodas. "Thums Up was the most distinct, being fizzier, spicier, and less sweet than the others"
- dman 8y agoIt is really good - try it out sometime.
- mav3rick 8y agoIt's in the Coke museum in Atlanta.
- alienreborn 8y agoAvailable in most Indian groceries or restaurants in US if you wanna try.
- jameane 8y agoI haven't seen it where I live, but I am now inspired to pay more attention to that portion of the menu. :D
- 8y ago
- TheMagicHorsey 8y agoIndia suffered economic malaise from 1975 to 1995 as a result of this and other protectionist schemes. As the economy stagnated the population continued to grow. As a result, there was a severe rivalry over resources in society. The real salaries of bureaucrats and private sector workers fell in real terms over those decades. And as a result of this corruption skyrocketed and India's public institutions were ruined. You should never go full socialist/protectionist in this way. India is a good example, even if you don't want to learn from Communist China pre-1980s or Russia in the Soviet era.
- seanmcdirmid 8y agoSocialism has little relation to protectionism; eg the current president of the USA is all for the latter and not at all for the former.
- xxpor 8y agoMarx was actually in favor of free trade: But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade. - Karl Marx, On the Question of Free Trade (1848)
- seanmcdirmid 8y agoI don’t think that disproves my point. You can be socialist and free trade or socialist and protectionist, without needing too much cognitive dissonance. Socialism greatly precedes Marx of course, whose contribution to it we typically call communism.
- briandear 8y agoSo in Marx’s view, free trade is actually a bad thing. He is for it just like someone might vote for termites if their objective is to destroy a building so they could have power over how it’s rebuilt and who gets to live in it. Good for him, bad for the building and the people currently living in it.
- adriveatrain 8y agoThey discovered what happens when you no longer sing the false song of globalism. Free Trade Doesn't Work. Ricardian economics is a trap. http://www.freetradedoesntwork.com/praise.htm http://www.freetradedoesntwork.com/praise.htm
- sctb 8y agoMaybe that's true, but let's please not go another round of thoughtless generic ideological flamewar. > Eschew flamebait. Don't introduce flamewar topics unless you have something genuinely new to say. Avoid unrelated controversies and generic tangents. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- sandworm101 8y agoI visited India many moons ago. The local coke replacement then was "Thumbs Up". Fyi if you are traveling in the developing world, Coke is your friend. They have a stringent water purification regime in order that their flavor remains consistent.
- hombre_fatal 8y agoThe same couldn't be said for big mineral water brands including the ones they own? Staying hydrated with Coke sounds awful.
- wnevets 8y ago> Staying hydrated with Coke sounds awful. but surely better than the alternative?
- indigo945 8y agoThe real advantage of coke is that it has a distinct flavor that is hard to copy due to their trade secrets. This makes potentially contaminated knock-offs easy to taste out.
- coredog64 8y agoWhen I was in Papua New Guinea, coffee made with tap water messed up my stomach. I switched to Coke as my morning sugar/caffeine hit and stopped having trouble.
- amanaplanacanal 8y agoWow! My intuition would be that water hot enough to make coffee would kill all the bad bugs. I guess not.
- AnaniasAnanas 8y agoIt is not only bacteria/parasites/viruses that can cause issues to your stomach. The minerals and other chemicals in the water play a role too.
- ryanjodonnell 8y agoThis is exactly what China has done with its tech industry - ban the foreign competition and allow the local companies to flourish. Not a bad strategy if you have a sufficiently large market.
- fouc 8y agoSouth Korea did something similar to heavily support their car manufacturer & electronics manufacturer companies. Hyundai, Samsung.. Population of 40 million and up.
- deleted 8y ago[deleted]
- DINKDINK 8y agoThe policy is called Protectionism (https://en.wikipedia.org/wiki/Protectionism https://en.wikipedia.org/wiki/Protectionism) and is a subsidy paid by local consumers to local producers. It biases local producers towards less naturally-profitable production and is a market shock whenever instituted or removed.
- LudwigNagasena 8y agoShort-term protectionism may be beneficial. And it is even more true in the world where you have to take into account geopolitics.
- deogeo 8y agoA subsidy that buys you increased local tax income, jobs, economic development, maintenance and development of knowledge, and makes you less vulnerable to foreign economic pressure.
- DINKDINK 8y agoBy this reasoning, an economy which banned all imports would thrive more than one where trade wasn't micromanaged. Do you believe isolationism is a wealth-maximizing strategy? >makes you less vulnerable to foreign economic pressure Should someone in the city block next to mine be allowed to sell in mine? How about the next town, state, country, continent? Where ever you draw the line is who you've --implicitly-- declared economic war with.
- sct202 8y agoThe end is interesting that after the protections were lifted, Thumbs Up and Limca were quickly bought out by Coca-cola for a paltry sum of money ($40m). Seems like all those protections were for nothing in this case.
- wutbrodo 8y agoImportant context is that 40m is an incredibly huge sum of money in the context of immediately post-liberalization India. Our intuitions aren't set very well for the kind of explosive economic growth that Asian countries saw post-liberalization, and it's easy to extrapolate backwards too cautiously to the price level of the early 90s.
- puranjay 8y agoFunny thing is that Thumbs Up remains, iirc, the second largest selling cola on the market, substantially more than Pepsi.
- amrrs 8y agoAn addendum that in South India, there's a brand called Bovonto (from Kalimark a very old desi brand) and it has really thrived despite the presence of Coke there. The reason I guess is that it's simply making available to appeal and making it appealing like these corporate brands. Availability in many different sizes and almost everywhere from a small petty (box) shop to a decent sized Bakery https://en.wikipedia.org/wiki/Bovonto https://en.wikipedia.org/wiki/Bovonto
- ssivark 8y agoBovonto and "paNeer soda" are two of my favorite drinks one finds in Tamil Nadu and hardly anywhere else! (both are Kali mark products) On a college trip to Rameswaram (southern Tamil Nadu) to watch the 2009 total solar eclipse, I got a whole bunch of friends (~20 people) to try out Bovonto, and boy, were they hooked! It's a pity that we couldn't find any once we left the region.
- amrrs 8y ago
- mmsimanga 8y agoHa, I have seen this story before. Zimbabwe my country of birth has screwed the economy so bad that no sane person/company is going to invest there. The result is most of the big players have pulled out and all manner of cottage industries have sprung up. I have watched a woman manually pack popcorn packets in her kitchen, all manner of workshops exist to repair electronics and car parts (I live in South Africa (SA) where the old part is mostly just thrown away). In Zim, people make bricks the old fashioned way with not a single piece of automation. Just shovels, wheelbarrows, brick moulds and mud. Without the big players small players can play a role. Zim has taken it too far though, making business conditions nearly impossible without bribes...
- sombremesa 8y agoIndia is the same way, no sane person should invest there. They sweetened the pot for the tech sector and then pulled out the rug from under them recently. Wasn't unexpected for anyone who understands Indian politics, but the foreign investors really got screwed. As for locals, greasing palms is the only way to get a business going. Or anything done, really.
- thaveedu 8y agoI would say things had changed in the past couple of decades with more public participation in democracy ,It is still not a absolute "land of law" but it is much better now and will outshine china due to democracy
- vkou 8y agoWill it? Do you have any evidence for this, or is this the same wishful thinking that was repeated about China for the last twenty years? Much to the disappointment of neo-liberals, we have discovered that there is no correlation between democracy, and economic development. Compare China and India, Cuba and Haiti, South Korea before, and after Democratic reforms... The form of government is tangential.
- 8y ago
- SilasX 8y agoWhen Austin kicked out Uber and Lyft, local ride-(hail|shar)ing apps thrived. https://www.bbc.com/news/technology-41450980 https://www.bbc.com/news/technology-41450980
- wavefunction 8y agoOne quibble, Austin didn't kick Uber and Lyft out, they refused to pay for fingerprinting ride-hailing drivers and suspended operations on their own accord.
- SilasX 8y agoTrue, I was just trying to maintain the parallelism with this title :-P
- cududa 8y agoEvery time I was in Austin I found the quality of drivers to be atrcious. Seriously the worst drivers in any of the dozen+ cities I’ve used ride sharing
- m3kw9 8y agoWhen you don’t have a giant corp who can lower price on what is basically a commodity, local people would win
- skizm 8y agoI mean, if you ban the largest manufacturer of any highly addictive substance, the next companies in line will obviously thrive, right? If you banned the sale of soda, local sodas will still thrive.
- astazangasta 8y agoI highly recommend the writing of Ha-Joon Chang, a heterodox economist, on this subject. He discusses how all of the advanced economies that now advocate free trade used protectionism to develop their native industry and gives the modern example of South Korea, which developed rapidly over 50 years by protecting its native industry.
- thaveedu 8y agoLucky for India , Soviet Union collapsed at the right time if not socialism would be still the norm and 1/6th of the world population would be still in abject poverty
- aluminussoma 8y agoThe article makes a bold and simplistic claim but in reality the economic transition happened for many more reasons that are undoubtedly complex. Overall it is an interesting article but be careful on basing too much analysis on it!
- lioeters 8y ago"Almost half the world — over three billion people — live on less than $2.50 a day. At least 80% of humanity lives on less than $10 a day." (According to a report from the World Bank, 2008)
- mehuln 8y agoThis story is so misleading that it's sad. I grew-up in the socialist India. It was called "the Raj." India was a social democracy from its birth in 1947 to 1991. It was on a verge of collapse as someone mentioned below, and IMF gave it a loan of $300M on a condition that it adopts capitalistic policies. Since then India has grown at a much better rate... Also, let me tell you about what state of Indian in 1994 when immigrated here as a kid: - We had three models of the cars - Fiat and Ambassador. These two had not changed its model for 30+ years. The new Maruti Suzuki was the third model introduced thru join-venture. Maruti was the first model with power steering. None of the available cars were automatic...most cars in India today are still not automatic as lot of those innovation never made it to India during the socialist Raj. In USA back then, there were at least 100s of models with far advanced technologies. We had 2 Tv Channels - DoorDarshan (government owned TV) and ZeeTV - which was introduced post 1991 when Government finally opened up allowed private TV channels. We had one government-owned airlines: Air India - that's it. It is still owned by Indian Government - they were recently trying to sell it but no one purchased it as its so badly run. It also doesn't innovate because it doesn't need profit to survive - government will keep funding it. Indian airports were dumps compared to today where they are finally international standards. Indian train system still doesn't allow private railroads, and yes, there's a reason why bullet trains never made it there. In order to get a traditional "wired" phone line, we had to wait for years. You filled out a form to get a phone line and years later they would call you and say... hey, you finally have it. Cell phone leap-frogged wired phone lines in India due to capitalism - basic communication wouldn't be there if it was still socialist Raj. You almost could not start a business in India as an entrepreneur to the scale that companies like PayTM, OYO, Ola Cab, Flipkart thrived. There were just too many laws that essentially disallowed any kind of competition to existing industries. --------------- Protectionism == no innovation. --------------- As Winston Churchill said: "The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries." Neither systems are perfect. It's really akin to picking your own poison. For me, personally, after growing up in socialist India, I love America, the freedom, opportunities, an opportunities it provides. And, here's the zinger... Thumbs-up would have thrived on its own had they just competed. It has the same taste advantage that Coca-Cola has in US market. Indians had been drinking Thumbs-up for years. It tastes different, and we liked it. We were used to it - after the novelty factor of Coca Cola, people just went back to Thumbs-up. It still thrives...
- Janeman544 8y agoTake that with a pinch of salt though. My village had a local soda factory. There was little oversight in terms of health and safety and the factory would simply pump ground water for their use. Bottles often were not cleaned properly. (In India soda glass bottles are always returned back and reused heavily.) When the pepsi and coke started fighting a bloody war one could buy a local soda 300ml for Rs 4 where as pepsi would sell their 200ml bottle for Rs 5. Yet people preferred pepsi. That caused the doom of the local company eventually.
- novaleaf 8y agoin 2012, a somewhat similar event happened in Thailand with Pepsi. Somehow the local manufacturer+distributor of Pepsi products didn't renew it's agreement with Pepsi, and as a result began distribution of it's own line of products "est". Here's an article about it: http://bangkokhasyou.com/what-is-est-cola/ http://bangkokhasyou.com/what-is-est-cola/
- aluminussoma 8y agoThere are Indian products that can be superior in taste to their Western equivalents. In my opinion, Thums Up and Limca are not those products. I'm going to pick a Pepsi or Coke if taste is the most important factor and I want a soda.
- markdown 8y agoI found Thums Up to be foul. Maaza (the mango juice) was my jam though!
- BerlinWall 8y ago> Yet when the Berlin Wall fell, East Germans ditched their Vita-Cola for Coca-Cola. You can still get Vita-Cola and Club-Cola in Berlin, it wasn't ditched entirely. People drink it for nostalgia. Coca-Cola tastes far better though, as do probably a dozen other brands on the market.
- charliebrownau 8y agoWho knew When the government excludes an American Multi national Global company from selling a product in a country Locally produced and made goods increase in sale NO FARKING SHIT btw the sky is blue
- flimPhlam 8y agoI thought soda was just a universal evil, and scourge of obesity? I thought unethically sponsored sugar science and metabolic cardiac lipid fear mongering were to blame for the big diabetes cover up, no? So, is this just more evil carbonated soft drink and beverage dogma as journalism rearing its ugly head? Are we to accept the idea that people want soda anyway, as the key take away from this article? Maybe we’re being led astray? Shouldn’t it be that people ought to know better? Even though the big companies are gone, shouldn’t people still cease the consumption of unhealthy foods? Why applaud this? If we recognize that it’s still happening, should it not be eradicated?
- thisisit 8y agoThere was also a MNC which did not leave the country and divested its share. That company was the Indian branch of Unilever called Hindustan Unilever Ltd. (HUL). It actually debuted on Indian stock market in 1977 at the price of Rs. 17 Today HUL is the largest FMCG company in India.