Marwari business model

[nrupatunga]

The Marwari business model-I

The Marwaris represent the only business community one would truly call pan-Indian.

For a cluster of Bania/Jain merchant castes originally from the Marwar (Jodhpur), Bikaner and Shekhawati desert tracts of Rajasthan, their sinking roots into the business landscape covering virtually the whole of the country is a remarkable phenomenon.

Till around the 16th century, the Agarwals, Oswals, Maheshwaris and Khandelwals of this belt – loosely clubbed under the appellation of 'Marwari' – were confined to their homeland as local traders and money-lenders, if not army provision suppliers and financiers for various Rajput princely regimes.

The latter role was crucial in expanding their footprints to other lands. As ration suppliers and paymasters, they often accompanied Rajput units attached to Mughal armies, which, in turn, opened up avenues for setting up shop all over the Gangetic plains and the Deccan.

From the 18th century, there were Marwari bankers financing even the assorted independent, yet cash-strapped, principalities that had arisen from the ruins of the Mughal Empire. Thus, the Jagat Seths became treasurers to the Nawab of Bengal, just as the firm of Gopaldas Manohardas bankrolled the Kingdom of Benares, and the Ganeriwala and Pittie families ingratiated themselves with the Nizam of Hyderabad. Typically, they lent against the security of ijara or land revenue-farming rights assigned for a particular region.

But the real impetus to Marwari outmigration came during British rule. By the early 19th century, they were significantly present across Delhi, the grain markets of Hapur, Khurja and Hathras in western Uttar Pradesh, and the river ports of Farrukhabad, Mirzapur, Patna and Bhagalpur along the Ganges.

This process gathered further steam with the coming of the railways, as the community spread itself to Kolkata and beyond to Bangladesh, and from there, up the Brahmaputra valley into Assam and across the Bay of Bengal into Burma. Within this overall eastward direction, there were sideward forays into Jharkhand, Orissa, northern Bihar, Nepal and the highlands of Jalpaiguri, Darjeeling and Kalimpong. Another large migration stream was to Central India (especially the princely states of Gwalior, Bhopal and Indore, and also Chhattisgarh), Vidarbha and the Maratha hinterland. Some of it spilled over to the Deccan, before trailing off to a trickle at Madras and Mysore.

 

[nrupatunga]

The Marwari business model-II

Having a business presence spanning much of the subcontinent is a feature that has distinguished the Marwaris from other prominent trading communities.

The latter — the Parsis, Sindhis, Gujarati Banias/Jains, Lohanas and Bhatias, Nattukottai Chettiars, Punjabi Khatris/Aroras or Muslim Memons, Khojas and Bohras — have historically had more geographically concentrated inland operations: Some of them had predominantly overseas mercantile or investment interests.

The ability to draw on extensive pan-Indian bazaar connections made a huge difference during the interwar years, more so with the Great Depression. It tilted the balance against foreign trade, in favour of those whose business activity was largely domestic-focused.

Exemplifying this trajectory was Ramkrishna Dalmia, arguably the greatest Marwari businessman before Independence.

Ramkrishna Dalmia's case is illustrative on three counts. The first, of course, is the raw drive and venturous spirit of a first-generation entrepreneur it highlights.

The second is the role of kinship and community ties, a valuable resource pool not available to every aspiring tycoon. Dalmia benefited from learning the ropes under an uncle, well entrenched in Kolkata's Marwari trading circles.

The third element was the extent to which Dalmia's business operations remained grounded in the bazaar.

 

[nrupatunga]

Continuing from part 2 article.

Two major limitations of Marwari, or even Indian, enterprise in general.

The first has to do with entrepreneurial zeal and 'animal spirits', which, in most family-owned businesses, tends to disappear along with the founding patriarchs.

The second limitation flows from an inability to transcend the bazaar that provided the basis for capital accumulation for most Marwari firms (unlike for say, an Infosys or Dr Reddy's Laboratories). But innovativeness in trading and financing – where there's probably not much JP Morgan, Goldman Sachs or even Walmart can teach our Banias — is inadequate and certainly cannot substitute for knowledge of the factory floor and production processes.

 

[Simple_Guy]

Evolution of risk-taking Marwari businessmen

 

[Singh]

Personal Anecdote: My Great Great Grandfather used to deal with Marwaris. He even knew their secret trade language.

 

[Simple_Guy]

Marwaris in Punjab

 

[Simple_Guy]

Gujarat's business community has always influenced history and culture of the land. The language too is not an exception. Despite having multiple sources of origin including Sanskrit written in Devnagari script, Gujarati is distinct due to its non-use of a head line or 'shirorekha'. Researchers say accountants or bookkeepers decided to shun the line to make writing fast and comprehensive.

Gujarati business community and Gujarati language

 

[Simple_Guy]

What keeps the Marwaris thriving?

 

[tarunraju]

Any business model is deemed "successful" when it's effective at tax-evasion.

 

[amoy]

Interesting! That makes me relate to Chinese Shanxi merchants community (Jinshang). Firstly as local traders, pawnshops and money lenders, they emerged as army provision providers in Qing Dynasty's wars with Mongol and Russia.

They later became financiers for Mongolian princes. With broad trading/financial network from all over China to Russia Jinshang were able to issue bank notes (yinpiao) as a prototype for modern banking.

They also developed a secret business language and special anti-fake marks on bank notes in absence of modern tech,.

The most prominent may be Kung, Chiang Kai-shek's in-law, who once was ROC finance minister.


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[tarunraju]

Interesting! That makes me relate to Chinese Shanxi merchants community (Jinshang). Firstly as local traders, pawnshops and money lenders, they emerged as army provision providers in Qing Dynasty's wars with Mongol and Russia.

They later became financiers for Mongolian princes. With broad trading/financial network from all over China to Russia Jinshang were able to issue bank notes (yinpiao) as a prototype for modern banking.

They also developed a secret business language and special anti-fake marks on bank notes in absence of modern tech,.

The most prominent may be Kung, Chiang Kai-shek's in-law, who once was ROC finance minister.


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Do they continue to have influence over modern PRC politics?

 

[amoy]

Do they continue to have influence over modern PRC politics?

old Jinshang (Shanxi merchants) declined becoz 1. unable to keep pace with changes brought up by influx of western capital after opium wars 2. loss of key markets Outer Mongolia (secession) and Russia (revolution) 3. continuous warlords infighting during ROC.

now new Jinshang are mainly nouveau riche mostly engaged in coal mining. political imfluence - many are implicated in bankruption or corruption scandals of high ranking officials lately.

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