Home » Bagana, Issue 5, Opinion

A Motionless Nation

[18 July 2011 | Ес далан зургаа]

After 20 some days and 150 some business cards from international professionals working in different sectors, we were back at the office trying to urge our clients to provide project-specific data. Unfortunately, almost every one of our compatriots was up to his/her neck in Tsagaan Sar festivities, telling us to relax; one of them even quoted a proverb that goes something like, “I’m proceeding along as Beijing stands still”. Oddly enough, we were still getting phone calls and numerous emails from our international counterparties.

Relating to our policy of “relaxation”, I want to re-tell a “not-so-charming” Christmas story for us all:

On one fine day in March 2000, a brief loss of electricity caused by a lightning strike knocked out cooling fans at a Philipssemiconductor factory in New Mexico and started a fire. The fire was extinguished within 10 minutes and damage had appeared to be limited to several thousand miniature components for mobile phone handsets. Philips had expected the factory to resume full capacity within two weeks, but it was later discovered that factory staff and firemen caused contamination in a much larger area where manufacturing facilities had to be spotless. When the full extent of the disruption came out, it appeared that Nokia, one of the factory’s two biggest clients, had a contingency plan available since the handset manufacturer closely monitored shipments and did on-site due diligence as soon as the first delay was reported. However the other client, Ericsson, did not have a contingency plan. That disruption of supply severely limited Ericsson’s ability to introduce new handsets to the market and its mobile-phone division reported a loss of 2 billion USD that year. In 2001, Ericsson decided to quit making its own handsets and established a joint venture with Sony in an industry where it had once been a leader.

Moral of the story: we are living in a business world that revolves at light speed.

As for us, products from our long-standing “champions” of domestic manufacturing go a long way during the holiday season. Black, white and yellow Chinggis vodkas made by acclaimed domestic “conglomerates”, all of which have collected dozens of prizes from international beverage exhibitions, are poured and drunk at every celebration. We like to claim that Mongolian vodkas are at international standards, only needed to be pushed just a tiny bit to conquer international markets. To look at the facts, it has been over eighty years since we started supporting our “champs” with our wallets and our health, just a decade or two short of the Russians. During this time, Russian manufacturers seem to have acquired great know-how and technical advantage in the field, while we are stuck at the same level. Of course one can argue that we didn’t have the economies of scale that the Russian manufacturers exploited. However, if that is true, no one would be able to compete with Chinese or Indian manufacturers in the consumer products field.

We are far behind in any field compared to most nations, and we try to justify our sorry state with the argument that our natural advantage is in the resource sector. Yet natural resources alone do not create value. Just look at Ecuador, Bolivia, Indonesia, Papua New Guinea and countless African countries that have vast natural resources, even when compared to us. As I have discussed in my previous column, commodities come with a wide variety of risks. There are hypes about us becoming a self-sufficient industrialized country using our commodity wealth, but just like we couldn’t compete with Smirnoff or Stolichnaya in the past, we are still not ready to compete in today’s business environment.

But still, we can try to acquire production know how on natural advantages that we have, including but not limited to mining sector. Just to exemplify, transporting coking coal costs at least double its mining cost, this fact alone can secure lower cost production if we could focus on developing value added production based on our coking coal resources.

As we merely spend what we gain, the following quote might exemplify our meager future: in the movie “Syriana”, Bryan Woodman says to a prince of an oil-rich country: “You know what the business community thinks of you? They think that a hundred years ago you were living in tents out here in the desert chopping each other’s heads off and that’s where you’ll be in another hundred years…” Nowadays, Beijing accelerates at light speed as we stand still on the ground. Even their trains go as fast as 335 km/hours…

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