Takeovers and racial prejudice

Vivek Sharma
21 December 2007

Why do we Indians always assume racial prejudice when a foreign company spurns a takeover bid by an Indian company? Is it because we ourselves are prejudiced or because we are still insecure about ourselves?

Think of a young professional with a well paying job. Like most of his peers, he is highly conscious of his social image and buys only those brands which supposedly enhance that carefully nurtured image.

Now, consider a scenario where this young professional is shopping around for a new vehicle – an SUV let us say. Ever since he started thinking about a new car, he had in mind this SUV from a Japanese manufacturer. It is the right size, not too big or not too small, and the design elements fit the suave image he wants to project for himself.

Just before the visit to a dealer, he hears from a friend that the Japanese SUV manufacturer is now owned by a Chinese company. He is also told about a rumour that more than half of the parts in the supposedly Japanese SUV now come from China, though the price of the vehicle remains unchanged.

The Japanese company never made any money from the business, so it is possible that the new Chinese owners are trying to cut costs and make some returns from their investment. It is only a rumour, but could be true!

Will he still go ahead and buy the SUV? He may, because the brand remains the same and there are no apparent physical changes to the vehicle. But, he is very likely to delay his final decision to convince himself that it is still the best choice. Before he makes his decision, he may also look at other SUV models which he hadn't considered before.

Is there anything remotely racist in his behaviour? Can the Chinese company accuse him of discrimination on the basis of race or nationality?