Thursday, January 24, 2008

What It Means To Survive On $1/Day

A couple of us wrapped up our social enterprise adventure on a high note with a chance to apply what we learned over the course of our trip. We hired a driver to take us south of Chennai to visit fishing outposts and rural villages whose residents truly live on the bottom of the pyramid.

The villages we visited (Kuppaiyanallur & Poonthandallum), each of which is about 90 minutes drive from seaside resorts, lie squarely in India's extremely-impoverished farming interior. The access road was generally unpaved and often washed-out. Cash crop rice paddies and sugar cane fields stretch for miles, accented by the occasional crop of peanuts or vegetables. Upon our arrival, it was clear that these villages are much less fortunate than the eChoupal community we visited in Hathras.

Although the children are full of joy and the elders are hospitable and proud of their homes, the homes themselves are largely mud and thatch huts -- many of which are collapsing on one or more sides. On the ground outside of one home lay an emaciated grandfather, apparently too weak to eat. Even if they had money for a doctor, the nearest hospital is nearly 100km away. Ambulance services are unavailable and nobody in the village owns a car. The only road transport is a daily bus service taking commuters back-and-forth to Chennai.

We asked villagers what they need the most and they knew exactly what was lacking: jobs/education/clean water -- but mostly jobs. As we've seen elsewhere in developing regions, young wage earners are leaving the villages en masse and although they may send money home from their jobs in the city, they never bring productive jobs back to the villages. One such expat, Lawrence, who works at our hotel in Mamallapuram earns a healthy wage of 2000 rupees/month ($52) which is apparently enough to support a family and to send money home to his parents in Kuppaiyanallur. (His parents and sister must earn significantly less than this doing backbreaking labor on the crops year-round.)

A related problem in the villages is alcoholism. We met two mothers (of two and four children, respectively) who were supporting their families independently after the childrens' fathers had died of alcohol poisoning. Apparently, the lack of entertainment options in the villages, coupled with lump-sum paydays when crops are sold and cheap low-quality grain alcohol makes for a deadly combination for men in the villages around harvest time. Their widows receive no official support from the state or the village and they have no real hope of re-marriage. The women we met with were managing to feed their young families by weaving, but just barely.

So what are we going to do about what we've seen and learned? We wanted to give everyone in the village our card and to tell them that we'd be sending eChoupal, SKS, ICICI, FabIndia and LifeSpring to solve their problems in the following week, but we could make no such promises. Many of the companies we visited on our trip offer solutions ranging from microfinance & small business loans to sustainable local craftwork jobs that would greatly improve the lives of the Tamil villagers. Upon our departure, we pledged to do whatever we can to connect these companies and villages as quickly as possible. If you have ideas or would like to assist, we'd love your support!

As always, pictures tell the rest of the story:
Rice farmers bringing the harvest to the road to separate the seed from the chaff. We saw several methods in-use on our trip, ranging from manual separation to placing the dry rice stalks on the road for passing cars to roll across.

Goat herders dotted the landscape between farms. According to Lawrence, these landless herders are among the poorest residents of Tamil Nadu.

Lawrence confided that the man on the motorcycle was a moneylender who was making his weekly rounds to collect payments from villagers. The shouting between the lender and his (presumably penniless) borrower was heartbreaking. Although we did not find out how much interest was being charged on this particular loan, these sorts of lenders typically charge several thousand percent annually -- hardly a rate that allows borrowers to payoff the loan successfully -- but sadly these are often the only terms on which farmers can borrow.

Two monks standing proud near the entrance to a Hindu temple. Thirty seconds earlier, both had been talking boisterously on cell phones nearby.

A fisherman pushing his raft across the waterway between the mainland and an outer reef. This area bore the full force of the tsunami that made headlines in late 2004.

Family of five on a motorcycle going 65kph on the highway. This is proof that the Indian government hasn't invested much in its families (school, social security, health care). If it had, there would be better safety enforcement to ensure that the investment doesn't tip over and skitter across the pavement in a mass of blood and metal.

Mamallapuram is known for its ancient stone monuments. Although the brochure says that the carvings date back to the 7th century, it is clear that there has been quite a bit of upkeep and enhancement added since the tourists began rolling in.

Like many of the monkey handlers we'd seen previously, this man had trained his companion to do somersaults and dance... although it is clear from the expression on the monkey's face that the training regimen consisted of more sticks than carrots.

Professor Gita Johar's mother hosted us for an evening at her home in the Mylapore district of Chennai, complete with dinner and a trip to a local Indian dance performance. Dinner was delicious and we were thrilled at the opportunity to eat fresh vegetables for the first time in several weeks.

For those of you who have been wondering what to do will all that cow urine that keeps accumulating around the house, this poster outlines the curative properties of cow urea ranging from blood purification to bile stabilization and removal of kidney stones. Drink up!

Our final sunrise in India on the beach in Mamallapuram with Dimitra behind a fishing boat. Many of these boats were donated by western philanthropists and (oddly) German tech company SAP following the tsunami that devastated the local industry.

Be sure to check out pictures from the entire group online: We'll be adding albums over the next few weeks, so keep checking for updates through the end of February.

Also be sure to check out Dimitra's personal blog from the entire trip:

Nalladhum Nandri, (Tamil for "goodbye and thank you")

Thursday, January 17, 2008

Product Distribution & Differentiation

When we arrived in Mumbai, we were accosted by hordes of people selling multi-colored balloons, leather drums and other trinkets on the streets. While meadering along a single block it was common to be approached by three or more vendors hawking the exact same product or to pass a half-dozen shops selling identical scarves and pillow covers. This made us curious as business students: What causes these vendors to cluster together and how can a mid-block shopkeeper earn a profit if all of his customers have already had multiple chances to buy his products before reaching the doorway?

To a first-time tourist in many emerging markets (India, China, Russia) it seems that street-retail shops are a case study on the negative impacts that a lack of product differentiation and poor distribution. Merchants throughout Mumbai, Delhi, Hyderabad, Chennai, etc. all stock their shelves with virtually indistinguishable hand-chiselled stone elephant/Shiva/Ganesh carvings for tourists. Turnover at each individual store must be extremely slow, since no tourist is going to purchase a second carved elephant after he has already seen it in myriad other places. Do the shopkeepers realize that only a semi-unique product will sell? By selling the same item in multiple, proximate shops the sellers must compete for every sale, driving prices to the bone and squeezing profits for everyone. Why does it work out this way?

My hypothesis is that the vendors on the street have very little input into what they sell in their stores. Instead, they are given their wares by a local distributor (ie. cashmere pimp) who has little incentive to vary selection across his client shops. The distributor likely receives product in bulk and he is in charge of moving it as quickly as possible, while client shopkeepers pay him a fixed rate for each unit, keeping any profits from selling above that price. Thus, there is little incentive for the distributor to vary product among shops. He simply wants to sell as much as possible and adding another salesman may result in another sale, even if it squeezes the wage of that salesman to virtually nothing. (Even Vodafone seems to be in on this racket, since there seems to be a cell phone re-seller on every block even in the poorest parts of the slums.)

From a social enterprise perspective, this ensures that the small shopkeeper remains hopelessly marginalized and that any value created goes to the distributor and his higher-ups. Maybe it would be better for these salespeople if a large retailer (Wal-Mart?) were to enter the market and distribute products more rationally -- carved elephants only on every third block, with leather drums in-between? Such a retailer might even be able to restrict supply of the most over-produced items while introducing some new designs such as the intricately-carved stone figurines below:

If I'm wrong about how these items are produced/distributed, I'd love to hear how it really happens. Anyone?

The pictures that follow show some of our group as they tried to make their way back to the bus from a sightseeing stop. As we walked, nearly a dozen merchants swarmed with kitsch in-hand:
Mica learned the hard way that if you buy a postcard from one seller, his friends will know they've found a sucker and none will leave until they've sold you much, much more.

These vendors obviously know that Americans haven't been anywhere until they buy a t-shirt to prove it.

Sunday, January 13, 2008

Social Enterprise & Taj Mahal Photo Safari

Touring in Delhi and Agra was a bona fide photographic bonanza! We've visited a number of very successful companies that are rolling out sustainable, socially-responsible products to India's poor and we've also had a chance to pose in front of some of the richest landmarks in Asia. We also saw some dancing monkeys!

According to Gurcharan Das, the acclaimed Indian author with whom the group shared lunch in Delhi, the Gini coefficient (a measure of economic inequality) for India is lower than in most developed countries -- implying that in aggregate the poor earn a greater share of national income in India than in other countries. Although this may be true, I suspect that the statistic depend largely on the fact that the poor make up such a large percentage of the population in India and the wealthy/middle class are few in number (but growing). We have seen the disparity between the two classes firsthand throughout our trip -- both in urban and rural settings.

We noticed one particularly illustrative example of this disparity on our first day in Mumbai. During the afternoon, a poor Mumbaite offered to shine my shoes for 2 rupees (5 cents) -- easily a five minute piece of work, out of which he needed to pay for his own shoe polish and equipment. Later that evening, the group descended on a posh bar/lounge to rub elbows with Bollywood stars and other glitteratti. Cocktails at the bar ranged from 700 - 1500 rupees ($18-39), making a night of clubbing in New York City seem like a relative bargain. Assuming that the shoeshine guy could manage to drum up 6 shines/hour -- an aggressive goal -- it would take him 140 hours to earn enough to buy a cocktail! And perhaps most remarkably, nobody at the club was trying to haggle with the bartender as they would have with a street vendor on the adjacent block.

These sorts of disparities seem to be quite common in India -- largely because the gains from the recent economic growth have been falling almost exclusively to an urban elite and there are few government-provided social programs to take care of everyone else. Fortunately, many of the companies we've visited on the trip are working hard to develop new products and opportunities that will benefit those being left behind. Two examples that we've met with, eChoupal and 1298, really exemplify these efforts. eChoupal is a rural retailer / agricultural trader that supports Indian farmers throughout the growing season with know-how, seed and fertilizer and then guarantees them top prices for their produce once it is harvested, cutting out an often cutthroat middleman. Without sacrificing its for-profit motive, eChoupal is helping to sustain a very-difficult way of life for the rural poor. Similarly, 1298 is a for-profit ambulance service in Mumbai that has stepped-in to provide medical care where the government does not provide services (there is no state ambulance service in India). By charging higher prices of callers to the 911-model number (1298 in Mumbai), the company is able to make ambulances available for the truly poor at no charge. The biggest remaining problem for the firm is the difficulty of transporting patients to the hospital given the horrendous traffic in Mumbai!

The rest of the blog is just pictures from the past few days. Enjoy!
The entire group posed for an impromptu shot at the base of the Qutab Minar, a stone tower built in 1199 and maintained impeccably over the years. (The elderly bearded gentleman is not a business school student)

A dancing monkey with eyeshadow and facepaint. Although the monkeys were cute, they are obviously not being treated properly. Despite this apparent abuse, we readily handed the trainers some rupees. Frank noted the irony, saying "my name is Frank Buchanan and I support monkey torture."

A woman in the doorway at the eChoupal village

Mica smiling w/ family in the Village. You wouldn't believe there could be so many young kids in such a tiny village!

The ladies of Social Enterprise at Agra Fort

A mural at the bird hospital. Basically, they illustrated every possible way a bird could be injured. some were truly outrageous!

I'm a giant!

Posh nightclub photo-op

'Nuff said.

Sunset on the way to Hyderabad.

As always, I've uploaded some additional pictures of what we've been doing over the past few days. Since everyone on the trip is an incurable shutterbug, please stay tuned for links from many of the other group members. Cheers!

(P.S. Always a sucker, I gave the shoeshine guy 100 rupees for a fantastic shoe shine instead of the 2 rupees he requested)

Wednesday, January 9, 2008

Delhi - Greasin' the wheel!

Ah, Delhi! The captain of our plane described the city aptly in a thick Russian accent as we circled the skies above in position #86 for landing: "Zie condition in Delhi is smoke." As it turns out, this was an understatement. Upon first glance, Delhi appears to be an urban experiment in-progress, teeming with redevelopment and its by-products -- a familiar Indian trinity: traffic, trash and trade. And don't forget the smoke/smog.

Another interesting feature of Delhi (and much of India) is the need for businesspeople to grease the wheel when dealing with government officials. Our trip witnessed this firsthand after our bus attempted to make a U-turn on a busy four-lane highway. In addition to stopping traffic briefly, we were pulled-over by the Law. After about five minutes of negotiation, our driver managed to escape with a minor citation and a fine of just 100 rupees ($3). However, it cost an additional 500 rupees ($13) for the driver to convince the officer to omit from the report that we were travelling in a commercial vehicle. If the infraction had been cited officially on our bus, the officer would have been forced to suspend our driver's license and impound the vehicle for 1-3 weeks -- during which time it would have been impossible for the tour guide to make any money. One might call this a bribe, but I think it was simply a "pragmatic solution" given the huge disparity between the private and commercial vehicle code in India. (The picture is of the heated negotiation behind the bus. I'm posting the image only b/c the faces are indecipherable.)

Back in Mumbai, we took a number of tours through the developed and developing areas. This is a picture of a resident fishing on the highly-polluted coast not 50 yards from our hotel. About 35 paces earlier, I watched another resident trot up and dump a bag full of garbage into the ocean.

We also visited Gandhi's home in Mumbai after a refreshing yoga lesson. This is Andre sitting pensively on the ledge from which the Matatma inspired millions.

After visiting Gandhi, yoga and an acclaimed Indian revision of A Midsummer Night's Dream, we all got delicious yogurt on the street. Yum!

Two of our fine trip members (Geddes and Justin) hard at work on consulting case studies. Somehow, most first year students have found time to work on myriad cases this past week, both on the bus and on the water. Sweet!

We took a trip out to Elephant Island and got some great photos. But my internet connection is running out, so I can't tell you about them. Perhaps try following the link below?

If you would like to see more pictures of Mumbai, please visit the following site. Due to some computer problems (the light socket fried the transformer for our lone laptop), I've been unable to upload more-recent photos of Delhi.

Monday, January 7, 2008

Mumbai - Opportunity & Poverty

So much fun! (and some heart-wrenching lessons)

We've been in Mumbai for a few days now and the contrasts have been stark. On the one hand, Mumbai is a vibrant city with the high end lodging for visitors such as ourselves, but we have also had an opportunity to see first-hand the hardships faced by millions of have-nots who are trying to make their way in the Golden City.
Bony-cheeked women and children beg in the streets for change, while the din of new construction booms constantly overhead. Overall, the Indian people have been unbelievably welcoming throughout our visit. We have had an opportunity to visit Dharavi (Asia's largest slum, housing between 750K - 1 million residents in 240 acres) as well as several companies that are working to expand opportunities of those in Dharavi and elsewhere.

One of the most surprising aspects of the slums in Mumbai is that its residents have lived in the "city" for generations and they are remarkably self-reliant. In contrast to the homeless in the USA, the "pavement dwellers" of Dharavi are exceptionally productive. Although multi-generation families live in humble apartments of less than 200sf, they are also busy producing pottery for export and recycling the trash thrown away by less-industrious residents. Since the government of India does not provide a legitimate safety net, they have no other option -- but from what we gathered on our tour many of the residents are both happy and proud of their homes and their livelihood.

The pictures below illustrate what I mean:
Beadmakers/vendors show-off the best of their wares as an intermediate good for finished jewelery made elsewhere in Dharavi

A shopowner in Dharavi offers his wares to neighbors

When we arrived, a group of two children turned into twenty. They were happy to meet us and have pictures taken.

Clay pottery is formed, fired and sold out of a small potters' village in the center of the city.

All residents of Dharavi play a role in the community. This lady watches after the group of girls in the next photograph.

Girls of Dharavi, posing for a picture.

From our perspective, it seemed that everyone in Dharavi was working -- both young and old. Nobody asked for a handout. Of course, with no Social Security safety net, this is a necessity -- but the result was much more vibrant than many of us expected.

One thing that was truly sad was the sewage runoff area aside many of the slums. The waste water in the trench was atrocious....

... but even in this environment there was someone searching for something of value.

Recycling plays a major role in Dharavi, with the waste of the city taking new life courtesy of the residents (although to be honest the workers in these roles appeared much less jovial than those working in the pottery enclave).

Everyone working at the edge of the city.

Perhaps one of the most striking features of the city was the fact that a mere 100 yards from the entrance on once side of the street, they were selling SUVs to the tune of Shakira in a first-class retail strip mall. This is a common dichotomy in India, since the high-priced city is encroaching on the slums from all sides. The conflicts presented by these changes are myriad -- but we'll save that discussion for another posting.

If you would like to see some rough uploads of more of these photos, please visit: