大象传媒

Encouraging national business

• Robert Peston
• 5 Feb 07, 08:44 AM

Ratan Tata, chairman of Tata Group, the Indian conglomerate which has just bought Corus, made a which would have been startling if uttered by a British business leader. He said: "We all felt that to lose [the takeover bid] would go beyond the group and would be an issue of great disappointment in the country".

He was saying was that it was a matter of great national pride that an Indian business is acquiring the venerable steelmakers of the UK and the Netherlands. Or to put it another way, he is confident that the people of India are enthusiastically supportive of private sector businesses like his in their determination to conquer the world.

By contrast, British business leaders fear indifference or even ridicule if they make the case for why the success of their businesses here or abroad is good for the UK. The British way is to be anxious that if a business is doing well it must be because consumers are being ripped off, employees are being trampled or management is manipulating profits to inflate their own performance-related pay.

Now, of course, all these bad things are wreaked from time to time by British companies 鈥� and by Indian ones and US ones too. But even after Enron, Worldcom and Tyco, the default position in the US is still to give business the benefit of the doubt 鈥� though also to punish hard when that trust turns out to be misplaced. The default position in the UK, even among many professional fund managers who look after our pension funds, is to fear that most managers are 鈥渁t it鈥� in some shape or form, and either to go along for the ride by investing with nose held or slightly sneer from the sidelines.

This dour climate of opinion rather dampens the appetite for taking risks in British boardrooms. It is one of the reasons 鈥� though only one 鈥� why British companies are more risk averse than either overseas companies or private equity. So for better or ill, big British businesses like BOC and Corus are being taken over by considerably smaller ones like Linde of Germany or Tata Steel respectively.

Another great trend of our age is for business to leave the public arena for the anonymity of ownership by private equity. That鈥檚 happening all over the world. But in the UK, private equity often receives a particularly sympathetic hearing from directors of public companies, largely because they feel that the stock market is unsympathetic to any investment or reconstruction proposal that might have a depressing effect on short-term profits. And that鈥檚 why the private equity troika of CVC, KKR and Blackstone do not expect a hostile hearing as and when they actually put a financial proposal for a takeover to the board of J Sainsbury.

All that said, I am not minimising the wholly legitimate questions about whether the fruits of business success are being fairly shared right now. Nor am I arguing that Tata鈥檚 takeover of Corus is bound to be a success: in fact, there is a good chance that it overpaid in the heat of last week's auction.

But as a nation we should encourage our businesses to take risks and should cheer when those risks pay off. Otherwise those economies like India with a healthier attitude to their business stars will not only overtake us in the fast lane of economic growth but will subsequently leave us for dust.

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