- 1 This article synthesizes an article published in French: Tastevin and Pliez (2015). It was translat (...)
1This article will explore how the Indian auto rickshaw’s introduction to Egypt helped establish a transnational supply chain, by analyzing unexpected continuities and connections between networks of people and places. My observations focus on large suburbs at the periphery of Mansoura in the Nile Delta, an area that, in only a few short years, transformed into an international commercial, and logistics hub. I examine how a single point on the map became connected with other, dissimilar locations: cities, repair shops, factories, roadside markets and international marketplaces, which themselves became obligatory transit points. I also explore how transnational trade careers are still developing within this system today.
2In Simbalawayn and Bilqas, Egyptians entering this new trade formed a closed circle of large-scale merchants with their Indian counterparts, supplying and selling Indian engines and components. Their business activities – importing for Egyptians, exporting for Indians – helped create a regional market. The distribution of the auto rickshaw throughout Egypt having been quickly monopolized, these merchants took over the spare parts market. The purpose of this paper is to retrace the development of the Indo-Egyptian business associations that enabled the first auto rickshaw imports (Figure 1). These associations lie at the crossroads of socio-technical networks and trade circuits, combining know-how with expertise in knowing-how-to-move.
Figure 1: Rickshaws in Egypt
Source: © Tastevin, 2006
3A few singular characters played key roles, coordinating with great precision the linkages of distant economies and cultures. These intermediaries are the focus of this article, which examines relational chains that are not yet stabilized (Grossetti et al. 2011) and analyzes the processes connecting India and Egypt. The pioneering story of Nayan provides the opportunity to study the origins of economic ties that lie outside formal frameworks, such as those found in the Global South (Berrou and Gondard-Delcroix 2011). However, in shifting focus from a local or national framework to a transnational market framework, new methodological problems arise, including the challenge of understanding modes of access to faraway resources, and more generally, the problems encountered by new entrepreneurs as they move people and merchandise across borders. It is therefore appropriate to address the topic using the ethnographic approach of practice narratives.
4The stories herein were most often obtained through biographical interviews; Nayan’s narrative is part of the oral and collective history of the auto rickshaw’s introduction into Egypt. “The unit of analysis is not an individual, family or organization, as is often the case in social science; rather it is a process that can involve a variety of individual or collective actors,” notes Grossetti (2011: 163) [our translation]. I also interviewed other participants to flesh out this syncopated and blurred story that begins in the year 2000. Instead of presenting a teleological history with a clear end in sight, I have chosen to illustrate the dramatic market penetration of this transportation technology by recounting all of its plausible beginnings. This allows us to sidestep a problem inherent in individual testimonials: the narrative becomes focused on a single person and his or her point of view. I have analyzed the origins of this phenomenon by locating, one by one, those rickshaw pioneers who are still alive and who are still in business, in order to understand, through their stories, the first rickshaw imports, first distribution attempts and first trade deals, thereby illuminating the South-South dissemination process.
5The goal is therefore not to explore established social connections but to examine them as they are being formed. Moreover, it is not the connections themselves that will be analyzed, but rather the points they connect and seek to connect, by situating them within a multi-sited geographical framework. Knowledge of the network’s territoriality is a fundamental issue for those individuals who work within it and poses a methodological hurdle for researchers seeking to uncover its origins. Although this project is heuristic, it has proved challenging to capture all the nuances, tangents, and interweaving narratives. From this point of view, undertaking genuine multi-sited research may be a fascinating endeavor but it is an incomplete process: it is constrained by the researchers’ ability to understand in detail the various sites studied and the contexts in which these economic exchanges take place.
6This paper examines the ways in which relational processes contributed to the development of transnational trade connections. These processes occurred in the marginal, out-of-the way spaces of the Egyptian state’s official international trade areas, defined as Port Said in the wake of the economic openness initiated by President Sadat in the 1970s and the ten port or urban free zones established by his successor, Hosni Mubarak. These processes reached all the way to India. Between the two states, inconspicuous associations developed between importers, traders, dealers, mechanics, Indian sub-contractors, export agents, freight forwarders, wholesalers, retailers, and drivers, forming a non-stabilized value chain. In small cities, the catchment areas of these importer-tradespeople became new trade hubs. Small cities became attractive trade scenes, anchor points for an apparatus that is local and transnational and connected to other trade centers from Cairo to New Delhi. Indo-Egyptian business associations developed prominent local spaces in boundless competitive spaces. Out of this international collaboration grew the idea to simplify the Indian offer; intermediaries attempted to negotiate exclusive supply agreements with Indian manufacturers to provide Egyptian buyers with generic rickshaw parts under a single brand.
7By closely following the path of Nayan, an Indian trader, between Indian and Egypt, we can understand how a new generation of entrepreneurs freed themselves from the link between migration and trade to engage in transnational exchanges on a fully global scale.
8Constantly shuttling back and forth between Mumbai and Cairo, Nayan always turns up when and where he is needed. He carefully plans his trips to Egypt – returning every three weeks – and is the first to intercept new merchants and seasoned entrepreneurs alike. He attracts newcomers. Nayan is in some respects the co-founder of a secondary supply chain of replacement parts. From wholesale textiles to mechanics, Nayan has developed an expertise that puts him at the center of a transnational logistics and commercial chain as one of the gatekeepers of the spare parts market. New merchants interested in exploring Indian technology begin by meeting him. In 2002, at the start of this wave, Nayan was providing letters of invitation for new Egyptians importers and organizing their first visits to India. However, it was a textile trader in Port Said who paved his early entry into the international trade of motorized rickshaws and their parts.
Figure 2: Nayan’s Office in Mumbaï
Source: © Tastevin, 2006
9Born in 1950, Nayan holds a bachelor’s degree in business from the University of Mumbai. After graduating, at age 21 he went to work with his father, the owner of a shop on NagDevi road, and machine tools and spare parts became his world. At first, he acted as a supplier for mechanics setting up and running shops in his neighborhood. Building on this experience, he followed his paternal uncle into the textile trade, choosing the Mulji Jetha market as their business’ location. Founded in 1874, it is the oldest textile market in India and remains the largest in Asia. At the time, Nayan, with help from his brother, started as a retail buyer and seller in the market. However, in 1974, eighteen months after it opened, the family business collapsed: the uncle had taken advantage of his two nephews’ inexperience. New to the business, the two brothers were easily confused by the store’s bookkeeping: entries, outputs, cash advances in the client column; delayed payments and small credits in the supply column. Wholesalers and semi-wholesalers advanced them merchandise, clients made deposits, but cash went missing. The uncle failed to make deliveries to clients and did not pay his debts. The liabilities quietly accrued one after the other, eating away at the business’ finances. The company, with its modest capital, teetered on the verge of bankruptcy (Figure 2). It took the brothers six months of hard work to reimburse their cheated clients and suppliers and resolve the issue; meanwhile they lost all their credit in the market. They could no longer count on payment facilities, those small deferments that helped them navigate their unstable cash flow and ensured the viability of their small retail business.
10According to Nayan, this “bad time” marked the start of his career. The betrayal of a family member inspired him to take the plunge into trade: “to learn to count on no-one but yourself when you depend on everyone else” [our translation]. After his family business collapsed (along with his reputation at the market), Nayan started slowly to rebuild, embarking on a journey that would eventually take him to Egypt. Over the next fifteen years, his company grew within the government-protected textiles market. By 1990, he had twenty-two employees. Amid the economic changes ushered in by the first structural reforms of the minister of finance, Manmohan Singh (in 1991), Nayan decided to expand internationally. He looked to Dubai, a major textile hub between Asia and Africa. As India opened its markets to the world, the Emirate began reaping the benefits. Dubai became a business destination, a hub for transporting and relaying wholesale merchandise – the anchor point for numerous interconnecting networks and the ideal place to set up a business exporting raw materials from India such as hemp, cotton, jute, linen, raffia, sisal, etc.
11Each year, the fairs that built Dubai’s reputation as a trade center bring together the regions’ top vendors, along with thousands of buyers. Since 1977, the Motexha Textile Show had become the Middle East’s largest exhibition of textiles, clothing, leather goods and fashion accessories. Dubai’s annual trade shows served as a platform for merchants wishing to make their name in external markets. Dubai was all the more attractive to new exporters in part because of Europe’s very restrictive travel policies. Getting to Europe required maneuvering through processes that were increasingly time-consuming, costly and uncertain. This was not the case for Dubai, a global airline hub boasting an easy-to-navigate urban mobility system and readily attainable visas.
12This smooth accessibility stood in sharp contrast to the difficulty new merchants encountered in establishing themselves. “No trust to new incomer” is how Nayan sums up his Dubai experience. Nayan, who knew no-one in the Emirate, decided to take along a colleague (covering all his expenses). It would take both of them to stand up to the hostility of the established merchants and overcome the poor reputation of Indian products. Although they lacked a sponsor, they easily obtained a visa. Their hotel served as their guarantor, with sponsorship just one of the many services provided. Upon their arrival, they were obliged to hand over their passports to the hotel. For ten days, Nayan prospected wholesalers in the city, wandered through the trade show and gathered information. Failing to secure a single order, he began to think he had made the trip for nothing. It was not until the last three days of the exhibition that he started to form his first contacts. Nayan decided to test drive an Indian reseller (who was well-established in Dubai) by accepting three loss-making orders. This would turn out to be Nayan’s first step in a strategy to gradually penetrate the export sector.
13The capital and know-how developed in the United Arab Emirates with respect to Asian imports/re-exports has already been extensively analyzed (Marchal et al. 2001, Battegay 2005). They allowed Dubai entrepreneurs to “respond to the need of neighboring countries to communicate with the outside world” (Lavergne 2002) [our translation], first on a regional (Persian Gulf, Iran, Iraq) and then continental scale (Arabic world and Africa) (Pliez 2010). Although a major center, Dubai is nevertheless merely one stop on the textile road and a waypoint on Nayan’s journey. Despite his inability to establish a foothold among the many Indian traders in the city, like many others he found a way to exploit the intrinsic weaknesses of Dubai, which is more a platform for meetings and for learning the ins and outs of transnational trading than it is a place of production.
14His foray into Dubai and its annual trade shows allowed Nayan to access the sub-regions’ consumer markets and identify a client base whose limited knowledge of India forced them to first rely on exclusive representatives who were already well-established in the Emirate. He quickly found it necessary to circumvent these expensive intermediaries by bypassing the Dubai platform, the central Asia-Arab trading point. Like other new, small-scale entrepreneurs entering the world of international trade at the end of the 1990s, Nayan benefited from a context in which intermediaries operated closer to supply points. A double movement emerged against a backdrop of stiff competition: on the one hand, importers from Africa and the Middle East were seeking supply contracts in Asia, while on the other hand, a global trade apparatus was being actively developed in places like China (Sun and Perry 2008, Pliez 2010), and India. Import chains were undergoing a rapid transformation: in reducing the number of commissions paid out, these intermediaries were able to serve a growing number of small trading groups that were eager to try their hand at small-scale transnational trading, often on an ad-hoc basis.
15These connections between the locations where merchandise was bought, sold, received and shipped, while very unstable, served to consolidate transnational trade routes and ultimately led Nayan to Egypt. Although he failed to establish himself in Dubai, he met a Korean trader there who introduced him to a man named Hosni, a major textile trader from Port Said, one of the main gateways of the liberal Egyptian economy. In 1998, an initial letter of introduction led to a meeting in one of the biggest port free zones in Egypt. At first, the two men could not come to an agreement. From the Indian’s perspective, the purchase terms of the first order – worth $100,000 – were unacceptable (a deposit of $25,000 and payment on delivery). Ultimately, the transaction closed two months later over the telephone, with the payment terms reversed. It was Hosni who would assume the risk in this transaction with his new associate, by paying three quarters of his delivery. From then on, Nayan remained loyal to Hosni, and vice versa. Between India and Egypt, they began trading kilometers of cotton and synthetic textiles by the roll, instituting a short import circuit.
16Their mutual trust established, they began expanding their network and its structure. In Simbalawayn, where the auto rickshaw first appeared at the turn of the millennium, a small-scale merchant named Ghazi was selling textiles as a semi-wholesaler and retailer. Ghazi had earned the respect of locals thanks to his connections to Hosni, a major trader in Port Said, the entry point for all textile imports into the country. The Indian origins of the auto rickshaw made it an affordable and attractive item. For three years prior, Ghazi’s Port Said connection had been doing business with India through his trusted contact, Nayan. Ghazi decided to gamble on the auto rickshaw, persuading Hosni to advance funds and mobilize his Mumbai supplier. For three months, Hosni put pressure on Nayan (his biggest export client) to supply Hosni with this new product. Hesitant at first, Nayan eventually yielded to Hosni’s pressure. Nayan was skeptical, but above all inexperienced in this sector. Feeling the pressure, he contacted an acquaintance who resold rickshaws on the Indian market. His first delivery to Egypt – eight motorized vehicles – would plant the seeds of a hugely successful business venture. When the first auto rickshaws hit the streets of Simbalawayn (where it all began), they caused a stir. Rumors started to spread. Other merchants wanted in on the action. This innovation led to an opportunity economy, with the chance to make and repeat a “coup” (Manry, 2001: 287) that hinged on identifying and locating potential Asian suppliers. This gave an advantage to already-established importers like Hosni, who mobilized their overseas contacts to find similar vehicles to satisfy Egypt’s growing demand for the Indian product.
17Simbalawayn is an unremarkable agglomeration of 100,000 inhabitants. Like other small regional urban centers, it is only marginally developed. Although it boasts an abundance of local businesses, it remains bereft of public services. Suffering from an acute infrastructure crisis and a chronic lack of funding, the district’s main towns are structurally under-equipped. Motorized rickshaws quickly filled a tacit mobility need in this neglected area, providing an innovative mode of transport in the most lucrative market segment. In Simbalawayn and then Bilqas, the vehicles provided a new service to marginalized city dwellers and dignity of work to those who operated them (Figure 3). The pioneering young commercial operators of these mini-taxis became a strategic link in the import chain, the pivot of local demand. Auto rickshaws represented an affordable investment for families, offering economic solvency to a young and poor population. An autonomous and independent service, auto rickshaws impacted the lives of most residents of small cities and peripheral suburbs, affording them unprecedented mobility. This Indian innovation immediately became popular with a large number of people (Tastevin 2007, 2012).
Figure 3: Auto rickshaws offer are quicker than walking and more efficient than horse-drawn alternatives
Source: © Ferhat al-Yatim, 2006. Note: This Indian innovation can be now be found everywhere on the road, disrupting regular car traffic. The vehicle has become a part of day to day life of urban Egypt. It responds to inhabitants’ need for speed and mobility in small cities that lack other means of transportation. An interstitial mode between other forms of transit, it flourishes in the blind spots of the transportation system. This rapid three-wheeled vehicle transfers riders between various segments of the transport network, providing an innovative service: the ubiquity of the auto rickshaw gives the population access to a motorized, urban, single-fare, point-to-point transportation option. The vehicle meets immediate demands for mobility within its optimal range (> 5 km).
18Nayan’s introduction to this new niche market began in the specialized streets of Mumbai. Like in Dubai, he started by pursuing tried and true supply sources. For Hosni, he purchased original parts through an approved distributor from the Indian company, Bajaj – now a world leader in the two-wheeler and three-wheeler vehicle market – and made forays into the local market for low-end and copy parts. His initial inexperience benefited Bajaj, with their standardized supply chain. Quality parts flooded Simbalawayn in numbers heretofore unseen by the city’s mechanics, who took to stripping the Indian machine for its components. This disassembly of vehicles, coupled with an abundance of original parts, helped build Egyptian mechanical know-how. A “genuine” part became the emblem of a “job well done.” But quality comes at a price, and it costs money to operate motor vehicles. From the first import, the ability to optimize profits depended on reducing the auto rickshaw’s maintenance costs. The huge influx of rickshaws was accompanied by a shortage of parts, and local bicycle repair shops began to dabble in repair, filling the maintenance niche. Although these local repair shops relied on certain factory-made parts, the attempts of small bicycle manufacturers to produce even the most basic replacement parts failed, spurring further imports. Repairs and restyling gave birth to a kind of maintenance economy, a parts market in which mechanics were now quality experts. Costly repair work was replaced by a lucrative parts trade requiring a reorganization of activities.
19Soon after completing his first deliveries, Nayan quickly stopped purchasing expensive parts from the manufacture (which decreased his profit margin) in favor of more attractive local suppliers. “Bajaj original is expensive, too expensive. How to supply quality at low prices? Between quality and price one has to choose, make compromises” (interview with Nayan in his Mumbai office, December 17, 2006). In abandoning the manufacturer, Nayan fostered the development of a parallel sector in which intermediaries proliferated as well as profits. The key was to get customers accustomed to a diversified and competitive market. The driving force behind this parallel supply chain was its ability to minimize maintenance costs and respond to drivers’ needs. The “just-in-time” management approach, though somewhat improvised, was also driven by demand and not by supply: it meant supplying and delivering in a short period of time those products that were ‘instantly’ required by clients.
20Parts had to be delivered not only whenever they were needed, but also at the best price. Price setting is a key component in markets with low solvency, such as those in eastern Egypt and the Nile Delta. It involves selling a large volume of parts at a lower cost to ultimately increase profit, which became the founding principle of the supply chain. Although this volume compensated for the small margin of profit, this strategy required a permanent expansion of the product sales market. ‘Corner mechanics’ took on a key role—they began to meet and orient the demand for small parts and cheaper maintenance costs, catering to the needs of small entrepreneurs. Rather than buying the standard “ready to change” blocks from Bajaj, mechanics preferred to simply replace defective parts. In this way, repair technicians became part of the networks that included the manufacturer, its equipment suppliers and local intermediaries. The supply of parts depended on a coordination apparatus that was just beginning to emerge.
21Depending on the local market for supplies came at a cost: Nayan bore the cost of early failures as he learned by trial and error, gradually gaining an expertise in the industry. His first four orders resulted in parts that were inadequate, unsuitable, obsolete or defective, as well as a few that did not even belong in an auto rickshaw. From the very first deliveries, a ‘floating’ inventory of unsellable parts began to accumulate, passing through the various steps in the chain, from novice supplier to novice supplier, each taking advantage of the other’s inexperience to sell back unusable parts during initial transactions. In the background of this burgeoning supply chain, these inconspicuous trades resulted in the circulation and distribution of useless inventory, byproducts of collective learning and the price of admission to the transnational parts trade. Between risk-taking and loss minimization, during this initial period, professionals assumed a notorious 5% loss per container for each transaction.
22Nayan is and has always been a trader. With the auto rickshaw, he merely switched gears while remaining on his previous path. Following a period of trial and error in the Mumbai market, after few orders and deliveries and some poor commission earnings, Nayan professionalized his practice by becoming a specialist. He was forced to find new sourcing far from the MJ Market where he first perfected his skills as a trader. Working in textiles, Nayan was accustomed to a concentration of suppliers and the proximity of intermediaries, with their inter-knowledge and physical presence. The spare parts trade called for a new approach; it required building a sustainable supply chain to avoid parts shortages. The limited size and financial capability of his shop did not allow him to store a large inventory, which meant that Nayan had to work on a just-in-time basis. “If an auto rickshaw’s connecting rod breaks down, the entire block has to be changed. I have to be able to supply individual parts at any moment.” (Interview with Nayan in his Mumbai office, December 17, 2006) [our translation].
23The fragmentation of intermediaries, the suppliers’ distance and their intermittent presence required the development of new competencies, and therefore, new connections. The logistics function depended on the flow of associated information, which was managed between India and Egypt through heavy use of mobile phones, text messages, and emails. Resources and organization had to be flexible: one had to be present without actually being there. Nayan became a relationship entrepreneur, redeploying his know-how upstream of the supply chain by forging connections with sector stakeholders: manufacturers, service providers and freight forwarders. For more than a year, he scoured the Indian supply market between Pune, Nagpur, and New Delhi, witnessing the emergence of a spare parts import industry and exploring the spaces of a rapidly expanding sector.
24Although there were 6,000 small and very small enterprises offering less-regulated services, providing Nayan with as many points of entry into the maintenance market, between 80% and 90% of parts were produced by some 400 suppliers. Armed with information from his wholesalers, Nayan toured industrial areas, visiting factories and meeting with small manufacturers, to select a roster of suppliers and make a catalogue of parts and accessories to export. He was able to create a smart mix of quality between the different categories of components: original Bajaj parts for the engine block, original parts from the company’s equipment suppliers for the rickshaw’s other key components (60%), and, finally, generic or counterfeit third-rate products for the rest.
25Delhi is home to the majority of Bajaj’s sub-contractors. Reduced production costs became the manufacturer’s mantra and its competitive advantage (Rarick 2004). At the end of the 1990s, under the son’s leadership, Bajaj restructured, delegated, and reshaped its production to meet international standards. The automobile manufacturer became an assembler, manufacturing less than 15% of its parts. It now had 210 major sub-contractors (as opposed to its previous 800) producing 85% of its parts. Factories and big industry players (CDI, Nippon, Swiss, LMT, Varroc) absorbed or replaced small manufacturers and their workshops. More than mere suppliers, specialized sub-contractors manufactured parts that were designed or developed in conjunction with Bajaj. Products were made by sub-contractors exclusively for manufacturer’s assembly lines (in Pune and Aurangabad) and did not bear their names. They had to ensure operational compliance and could not resell these exclusive parts on the local market. This concentration and integration of the supply chain resulted in a reorganization within the industry. The externalities of this process were decidedly positive for the now-certified manufacturers and large suppliers. However, SA 8000, ISO 9000 and ISO 14000 certifications did not negatively impact the smaller players. It is precisely the non-compliance of certain parts that makes them less exclusive, explains Nayan: “Based on its forecasts, Baja orders a certain quantity (say 10,000 pistons). Knowing the requirements of the product specification, a supplier orders the production of 11,000 pistons, out of precaution, to account for those parts that will be rejected by Bajaj’s quality control. So an average of 10% of production makes its way onto the local market.” (Interview with Nayan in his Mumbai office, December 17, 2006) [our translation].
26This surplus of parts rejected by the quality control department comprises a portion of the export trade of small entrepreneurs. Operating on the periphery of Bajaj and its sub-contractors, Nayan’s suppliers are predominantly small manufacturers located between Nagpur and Delhi, specializing in parts duplication. He has access to a stable network of 35 suppliers providing him with a catalogue of 600 stock numbers. Between India and Egypt, the flow of 126 parts – mostly copies – buoys his profit margin.
27Nayan’s alternative to standard quantities and generic quality highlights and contrasts the fundamental mechanisms of trade: scale and retail. “If retail is a way of breaking down, one must not forget it is also a way to manage quality, establish attributes, choose various labels – or features – to place on the product’s body”, analyzes Cochoy (2006: 28). “From this perspective, it is important to stress at what point the quantitative breakdown of a product into larger or smaller units also functions most often as a purely qualitative activity redefining a product’s attributes and destination” (Cochoy 2006: 28) [our translation]. By moving away from standard blocks to generic parts, and by playing both the wholesale and the retail games, Nayan planted the seeds for a clash between the small import-export teams and the mass distribution of Bajaj-Ghabbour in emerging African markets.
28From Simbalawayn and Bilqas to Mumbai (formerly Bombay) and New Delhi, new business networks are flourishing, enabling the transnational auto rickshaw trade. From import to distribution, from the profitable sale of spare parts to mechanical repair, from operation to cleaning, an entire world of small urban production now depends on this Indian invention that is helping to revitalize, from below, Egyptian cities caught in an infrastructure crisis.
29This intense commercial activity triggered by the rickshaw can be described through individual business operations that dissociate and unite, break apart and match up, disassemble and reassemble not only the constitutive elements of its mechanics…but also the segments of its customer base.…Because of their ability to judge the quality of proliferating parts, merchants play a key role as trade intensifies. With every transaction, these mediators of selection (Jeannin 1995) test and validate spare parts. Egypt-India trade partnerships construct prominent local spaces within boundless competitive spaces. This international collaboration inspired the idea to simplify the Indian offer; intermediaries attempt to negotiate exclusive supply agreements for Egypt with Indian manufacturers, pursue contracts with providers and endeavor to provide Egyptian buyers with generic rickshaw parts under a single brand. Business skills and family reputation are no longer the only markers that clients look for. Part commercial representation and part profit-seeking, these intermediaries build a shared identity, displayed on their packaging. New labels are appearing that certify parts compliance. This game of quality, of forging and forgery, represents not only an attempt to control the market, but also a way to invent new usages. Small actors compete for small market segments and, through their wide-ranging activities, contribute to the internationalization of the motorized rickshaw value chain.