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Exclusive interview with the founder of China-India Foundation (1/2)

Interview with Ashish Dhawan, Philanthropist and Indian Private Equity Legend

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{{{Kushal Prakash & Gian Marco Brizzolara}}}

On December 5, Ashish Dhawan held a fireside chat at Schwarzman College in Tsinghua University, Beijing. After the chat, the ChinaTech blog team sat with him to hear his thoughts on the cultural and economic aspects of China India collaboration, and the opportunities it presents.

We split the interview into two parts—in the first part we talk about the potential for collaboration between India and China, and how this collaboration would look like on the new technology frontier. In the second part, we ask Mr. Dhawan whether India can match up to China in the high-tech and manufacturing sectors.

Biography of Ashish Dhawan

Ashish Dhawan is the Founder and Chairman of Central Square Foundation (CSF), one of the largest philanthropic foundations in the field of education in India. He spearheaded the launch of Ashoka University, India’s first liberal arts university in 2014. In 2018, he founded the China India Foundation to foster a fruitful relationship between both countries.
Previously, he worked for twenty years in the investment management business and ran one of India's leading private equity funds, ChrysCapital. In June 2012, he left his full-time role at ChrysCapital to start CSF. Ashish is an MBA with distinction from Harvard University and a dual bachelor's (BS/BA) holder with Magna Cum Laude honors from Yale University. He is on the India Advisory Board of Harvard and a member of Yale's Development Council.
He serves on the board of several non-profits including Akanksha Foundation, 3.2.1 Education Foundation, Teach For India, Centre for Civil Society, Janaagraha, India School Leadership Institute, and Bharti Foundation.

Interview

1. How did you come up with the idea of the China India Foundation, and what kind of impact do you see the foundation making 10 years down the line?

I came up with the idea largely because of two reasons:

A. The Significance of China and India in the Future

I was a student of Economic Development and it is evident that whilst China and India grew at a very slow pace for 150 to 200 years, both countries have started performing well in the recent years—China earlier, India following soon. As we get into the second half of the 21st century, both countries are going to be the key hubs –China already has a very evolved infrastructure in place, India is soon getting there, although 15-20 years behind China. With these countries together being home to about 2.7 billion people, and the world moving to Asia at a rapid pace, these two countries need to get along better. It would be disastrous for the world, as well as both these countries, if they don’t. Hence, there is a strong need to start thinking about it strategically. Even if we don't get along too well geopolitically to start with, there needs to at least be a dialogue in place. It is crucial for them to know how to talk to each other, and have some level of trust.

B. Wrong Perceptions

I visited China 21 years ago, and it shattered a lot of myths regarding the country. I don't know about the millennial generation, but my generation grew up with perceptions around the 1962 Sino-Indian war, accompanied by deep distrust. However, when I came to China, I found that a lot of what I believed was simply not true. At the same time, there was a recognition that we are both an old civilization—some people knew about Buddhism, philosophy and other similar things. So, in a way, the actual reality was much better than the perception and I felt a clear need to bridge the gap. Fast forward to the present times and the situation is no different—despite the internet, despite more flights, etc. the gap is as wide as it used to be. Frankly speaking, the situation may be marginally worse. On the one hand, the rapid rise of China and the failure of India to do the same, has made China believe that India is chaotic and “may not succeed.” On the other hand, India is skeptical of China trying to geopolitically exert its influence. The press and media is making the situation worse.

Signs for Hope

It is not that there are no positive signs. Capable young people are now looking at China for education and work. Look at it this way, and it is an interesting moment of transition in the history of both these countries. However, there needs to be a long-term investment in that hope. And it also needs to evolve from just having a dialogue to a more serious engagement, resulting in deeper appreciation of each other in areas that are not a zero-same game—like tackling the defining challenges of humanity as a whole.

2. So one of the areas of collaboration could be in the space you deeply engage with, in India—the education space. What are some of the recent developments that you see in the Ed-tech space in both China and India?

I think there is a lot happening in the space in China. Core education is still not that much impacted by technology: the transaction in the classroom could become tech-enabled, but it would not replace human teachers teaching classes. Test prep, however, is normally the place where technology is adopted first. Between the high school and the college, people are willing to pay a lot, to be able to jump over the discontinuity. Consequently, the test prep market is a huge one. Tutoring, especially online tutoring, forms a major part of it.

Another huge market is for early childhood education. Earlier, parents did not have too many options to educate their kids at home at an early age. Today, many resort to the default option of using devices, with more parents wanting their children to learn while having fun. This presents a big opportunity in the space.

The other big opportunity is college education. Though at present education in colleges takes place physically, we will see that over time college education will shift to being availed remotely. This will eliminate the need for students to be present in classrooms physically, while enabling them to get their degrees along with pursing a profession. There are very interesting models around it, and it's already happening in China in a big way—when you see the numbers, you will find that it’s a very interesting development. India is witnessing similar developments in the space.

The disruption in the higher education space is also very likely, due to the tendency of the employers to emphasize on the skills, rather than worrying too much about whether or not the individual has physically attended a school. This phenomena has been widely seen in the field of IT certification. In India, many people have started going to these platforms to train themselves. In China, the disruption has already happened in a big way.

3. What is your impression of Chinese investment in Indian tech firms? Do you think that these investments can pave the way for a better integration of both the countries?

It is worth noting that at present, most Chinese investments in Indian ventures are minority investments. This allays the common fear in India that Chinese VCs are controlling the Indian tech firms. In return for having Chinese companies acquire minority stakes, Indian firms are getting a lot of technical knowledge transfer. If C-Trip owns 10% of MakeMyTrip, they can exchange their experience and undergo a process of mutual learning, which allows the Indian companies to catch up faster. The learning experience of someone doing it in a different context is invaluable. The tricky part of the story is, when these companies mature, they may find the Indian government (very much like the governments in the US and Europe) being skeptical and cautious about large stakes in these companies being owned by the Chinese firms.

4. Do you think the governments are too cautious?

On this front India has been reasonably open. There have been no barriers to Chinese companies, whether it's Xiaomi, Alibaba or Tencent. I think the only question that is being asked (much like in other regions like Europe) is regarding the data privacy. The idea of personal data being controlled by foreign companies is being looked at with skepticism. In this regard, India is a little bit in the same situation as the Europe countries, where search is dominated by Google and social media by Facebook and the likes. Areas which are more physically close to local businesses, like e-commerce and modern services will be handled with caution. There would be vigilance when it comes to everybody buying out everything, and for sure India will be very cautious with issues like data privacy.

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