Almost Over With Recession?
I am back from Mumbai, where I spent an interesting few days over last couple of weeks. My work happened to be in the same neighbourhood where my brother lived, in Powai, and which I visited several times since April 2008. This time, visiting after a gap of a few months, I noticed several new restaurants, including one by Sanjeev Kapoor, the celebrity chef, which has come up near Mainland China in Powai, a chain restaurant which has already made its name for great quality food. On the other side of the road, there were another very expensive Kebab outlet. I stopped by at the Crossword outlet which I used to frequent, but noticed that they have also opened another extension outlet only a few yards away, near the Rohtas Hotel, where we enjoyed an expensive, yet delicious and enjoyable, buffet lunch. However, all the while we were driving in and around this locality, the talk centered around Recession. It was a touch ironic that we talked about job losses and the slowdown in recruitment business in a setting which showed little signs of distress or slowdown.
However, there is no denying that the slow down is for real. Back in Croydon, I know a number of shops on our High Street are closing down. In fact, the Christmas shopping this year has become very much deal-centric: There are many deep discount deals and attractive prices than the last year. This is a touch worrying, because last year, this time, we were officially in recession. This year, with France, Germany and European economies starting to post GDP growth, we are hoping to be out of recession soon, if not already. It just seems that the message itself is no comfort to the High Street shop-owners. They are facing a make-or-break Christmas and there is an openly acknowledged nervousness about it. For many, if this Christmas fails, there will be no waiting for the end of recession.
When speaking to Indian Executives, I did bring this up as an example of the shift in the global economy. It is still growth and confidence in India, while one experiences the slow death of degeneration in Europe. The business confidence is high in India and what I was mentioning is part of conventional wisdom: So, I was well received. The vibrancy of Mumbai was all but apparent. The infectious optimism caught up with my Irish colleagues too and soon, we were talking about various new opportunities that we should be pursuing. After a long time, we were talking about three to five year plans, not just day-to-day survival. For once, the talk about India becoming a superpower by saving money did not dominate discussions. It actually had a subtle, different, tone: The markets are shifting and suddenly, buying in England and selling in India is becoming good business.
Indeed, this was not just India. I went on to Manila to meet a group of investors based in Malaysia, who are now expanding their business. The optimism about the future was plain to see. There are new projects, large projects, on the table for discussion. Excited investment bankers, a rare thing nowadays in Europe, are on the table. So are businessmen wanting to do the deal and move forward. Koreans are back, I was told, and all the various outlets in Manila which solely serviced Korean clientele are cleaning up their shop-windows again. 2009 seems like a bad dream, and people are waiting to bury this with Christmas soon. They can't wait to get to 2010.
Then, there was this odd call from South Asia as I returned home. A very respectable education brand is up for sale, as the investors in the business lost money in other related ventures and are wanting to make up through selling equity in the core business. Despite the distress call, the asking price is still huge - a clear statement of confidence in the attractiveness of the ongoing business, buoyed by the demographic dividend most of the South Asian nations now enjoy. The sale offer is quite unthinkable in its content - this is one of the best known and most successful brands in the country - but, yes, economic cycles have made this possible. But, the person on the other end of the line as confident as ever, he does not mind putting up his own money if a suitable overseas partner can be found, because he thinks it is a huge opportunity. I was less than optimistic - I was thinking about the quantum of money that will be required to buy into the business - but only till this morning, when I spoke to one of my Investment Banker friends who knew the country. His Middle Eastern clients may indeed like it, he said: They are looking for such assets to invest in as they diversify their portfolios post-recession.
But, for all the optimism in the air, I had a few sobering experiences too. There are many faces, too many faces. The Spanish shopkeeper in London who is thinking of taking up a job; the Irish newsagent who went bankrupt one evening and took his life the next; Cheryl in Baguio who is waiting for an opportunity for, what seems to be, a real long time; the Indian middle managers who are struggling to come in terms with salary freezes and disappearance of good times; My friend in Kolkata who sees no future in the city and waiting to liquidate his business. It is not an unmitigated disaster: there are people who were nudged out of their cushy jobs by this recession, and suddenly, they found what they always wanted to do in life, and thriving now. But, they are lucky and rare: more people seems to be giving up, sinking deep in despair, in alcohol and in wayward life, or in meaningless anger about all things present.
However, inside all of it, all the good things and the bad things, people who are happy and who are despondent, I saw one thing which is not going to happen: A return to business as usual. The people who failed believe that it would soon be over; the people who are failing are trying to hang on by the skin of their teeth. People who are doing well or expect to do well expect the slowness of the economy to be over soon and a return to normalcy. This is what we are trained to expect: Just that it does not seem to be possible any more.
The life after recession, it seems to me, will be a different beast, from whatever we have known before. For all the confidence in South Asia, it will not be an easy straight line return to prosperity. The recovery will be nuanced, painful and long drawn. But, if we get the wrong message, this is not necessarily a bad thing. Our history shows that these are periods where creative minds reign supreme and new possibilities are created. All the great, innovative companies today came out of difficult times. So, I am full of optimism and full of foreboding at the same time. I know the path ahead of us is getting clearer, but just that it will still need us to be brave, patient and creative.