Tuesday, January 31, 2006

Sideswipe

This cryptic road sign at Waitangi, Chatham (Rehoku) Island, appealed to Peter J. de Lange

By Ana Samways

Adult nappy sales in China are booming as millions prepare for marathon train journeys to be with their families for New Year. Finding a vacant toilet is often impossible during journeys that take as long as 30 hours on overcrowded trains, says the Australian.

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Last time Eddie visited Holland, various homes around the town he stayed in had a national flag and an old schoolbag hanging from the flagpole. "I was aware that the Dutch display flags at every opportunity - national feast days, Europa Cup soccer, weddings, 25th anniversaries, welcoming Olympic medal winners back home - but I had never seen an old schoolbag tied to them. Apparently the schoolbag is hung on the flagpole when one of the youngsters living there passes their exams."

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When faced with an evening pre-dinner work-social with drinks and a combination of healthy and not-so-healthy nibbles, Caryn Zinn recommends cutting back, not cutting out ... "Usually: four sausage rolls (480 calories), six sushi rolls (218), three glasses of wine (300). Total: 998 calories. New plan: one sausage roll (120 calories), five sushi rolls (180), one Diet Coke (0), one glass of wine (100) and one lime and soda (30) ... "

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Some chronic street alcoholics can make up to 30 trips a year to Seattle hospitals. Officials estimate they cost the city up to $100,000 a year each in jail stays, hospitalisation and emergency services. So the city has decided to house up to 75 of them in their own apartment building. Medical workers will be on hand, but residents will be allowed to come and go as they please and to drink on premises. Neighbours say the building, which hasn't yet opened, has already hurt their property values. (Source: Reason.com)

John Armstrong: Fitzsimons calls shots in race for co-leader

The hurt is still there, but it is time to move on. Jeanette Fitzsimons is gently, but firmly prodding Green Party colleagues to focus on life after Rod Donald.

Nearly three months after his shock death, the party is still paying homage.

There was a tree-planting ceremony in Marlborough the weekend before last to mark Donald's longrunning campaign to close the Government's satellite eavesdropping base at Waihopai. And more tributes flowed at the party's annual policy conference last weekend in Whangarei.

However, this time the tributes came from delegates from the regions who felt they had not had a chance to pay their respects - rather than being another outpouring of grief from the party hierarchy.

Even so, Donald's replacement as male co-leader is still four months away.

That delay has pluses and minuses. The long run-up to the election at the party's main conference in June will guarantee the minor party plenty of the one thing it craves - publicity.

Fitzsimons' fears - probably unfounded - are of a repeat of Act's bruising leadership battle two years ago.

More likely, the Greens' election will become a surrogate debate over strategic direction. It is unlikely to become as acrimonious as Act's contest.

Fitzsimons, sole leader in the interim, is in a position to exercise huge influence on that debate and the outcome of the co-leadership contest.

Her stocks have never been higher. She shrewdly gave the party plenty of time to grieve over Donald. She has earned huge respect for her dignified shouldering of the extra burden heaped on her by his death.

She has been surefooted in carrying the party through its darkest hour.

She is now using her influence to jolt the party to address long-neglected weak points. For example, her speech to the policy conference was blunt in telling rank-and-file members they had become too reliant on the party's MPs and the resources that flow to the party from being in Parliament.

The big talking point, however, is her strong hints that the new co-leader comes from outside the caucus.

She insists these are not hints and that she is simply detailing the qualities she thinks the party should be looking for, while scrupulously avoiding naming suitable names. As she says, she has to be neutral. After all, she has to be able to work with whomever wins. But it is a tricky balancing act.

Fitzsimons has said it would be "good" to have someone who could build the party outside Parliament, while she concentrates on the Greens' work inside Parliament.

She also believes the party is looking for someone who will be the "new face" of the Greens. Someone who can see the "big picture" and help others who are "trapped in their special issues".

Her job description fits Russel Norman, the former campaign manager who has just been appointed the party's development co-ordinator, a role which will see him working with grassroots members.

Other names being floated as potential candidates from outside the caucus include GE-Free New Zealand spokesman Jon Carapiet, Wellington activist Roland Sapsford and former Greens national co-convener Dave Clendon.

Significantly, Fitzsimons' terms would appear to rule out Nandor Tanczos, one of the two male members of the six-strong caucus, the other being Keith Locke.

Mr Tanczos, however, argues that the party's strategic direction should determine who leads it - not the other way around. Will he be standing? He isn't saying - not yet anyway.

Editorial: Another slap in face by America

One day last week the United States Embassy in Wellington circulated to news services an item it thought "might be of interest". It was a State Department report of a briefing by the US Trade Representative, Rob Portman, on the Bush Administration's plans for more free trade agreements with selected countries this year.

One of them was likely to be South Korea, the US's seventh largest trading partner. Another was Malaysia, a fast-growing Asian economy. A third could be the United Arab Emirates, in line with the Administration's goal of a Middle East free trade area.

Mr Portman also expressed hope that obstacles for free trade agreements with Egypt and Switzerland might yet be overcome, and that despite congressional elections this year Congress might approve agreements with Peru and Oman as well as World Trade Organisation accession agreements with Kazakhstan, Russia, Ukraine and Vietnam.

Reviewing ongoing negotiations towards free trade agreements, Mr Portman described those with Panama as "very close". Those with Ecuador and Columbia were "intensive", and he denied reports that talks with Thailand were not going well.

This was indeed of interest to New Zealand because, of course, this country was not mentioned. But what was of even more interest was the fact that the US Embassy should alert us to it. When a response was sought from our Trade Minister, Phil Goff, a spokesman insisted that New Zealand's exclusion from the list was not a slap in the face. The US had issued a similar list before the election last year and New Zealand had not been on it, he said, as if that made a difference.

It is a slap in the face, and the State Department has gone to some trouble to ensure we receive it. The fact that it did the same thing just before an election in this country, risking the charge of interfering in our politics, shows the lengths it will go to make evident its continuing pique at our now 20-year-old nuclear policy.

But the list, and our exclusion, also underlines the Bush Administration's attitude to free trade agreements, which is to use them for purposes that have less to do with trade than with US diplomatic and strategic purposes.

That being the case, New Zealand has less reason to regret its exclusion. These free trade agreements contain limited benefits to the less powerful partner, as Australia's agreement has demonstrated. The much greater concern to this country is that these deals might distract the United States from the far more important task of working to a conclusion of the World Trade Organisation's Doha round. That is the only forum that offers any prospect of progress in reducing agricultural protection across the board and advancing the interests of all countries equitably and of the global economy as a whole.

Thankfully there is no sign that the tiresome nuclear dispute has damaged our ability to work with the US in the WTO and other forums. Nor did it reduce intelligence co-operation between us on the evidence of material recently found among the late David Lange's papers. This column has long acknowledged the right of the US to reduce defence co-operation with a country that would not play its part in a nuclear deterrent. But ever since the US declared that its surface fleet would not routinely carry nuclear weapons the dispute has been ridiculous. As ridiculous as New Zealand's continuing ban on nuclear-fuelled ships. The US weapons declaration effectively ended its neither-confirm-nor-deny position and it means any of its oil-driven warships could come here.

But stubborn pride persists on both sides. Like most old feuds it has ceased to have much practical importance, but it continues to poison the air needlessly in a relationship that matters.

Barry Rubin: Naive to expect a softer Hamas

A few months ago I was invited by an embassy to meet a delegation to discuss European policies toward Hamas and Hizbollah.

"Before I decide," I asked, "tell me what you think about this issue."

"Oh," replied the diplomat, "we've already decided to deal with them."

"If you already have made up your minds," I answered, "why should I come to talk about it?"

The European Union is preparing to do business with Hamas despite being on its list of banned terrorist groups because it worries that "heavy handed actions by the EU could prove counterproductive, pushing Hamas further from the political mainstream".

In other words, if the EU is tough on Hamas it might become radical. Why, it might even demand Israel's destruction, dispatch suicide bombers, and be anti-semitic. A lot of people have made up their mind based on some principle of inevitable moderation: if Hamas gains power it will forget about terrorism and settle down to creating jobs and building a peaceful Palestinian state. And if this does not happen, the naive of the world will ignore that fact.

Every time Hamas stages a terrorist attack, calls Jews the offspring of pigs and monkeys, or demands Israel's extinction, these naive people - Lenin called them "useful idiots" - will use this as proof that more must be done to persuade it to be moderate.

The fault is always with the West and Israel, not the extremists and murderers.

Haven't they learned anything from saying the same stuff about the PLO, Fatah, and Yasser Arafat and then seeing it didn't happen?

Ah, but the New York Times has already answered that question in a December 22, 2005 editorial: "Letting Hamas run is the lesser evil because any movement, once in power, is compelled to supplement its bluster with deeds. That's what happened to the Palestine Liberation Organisation, which once seemed even less acceptable than Hamas."

There are two bizarre notions in this. First, it is certain that a movement in power must perform well rather than stir up people with talk of revolution and destroying one's enemies.

It is hard to believe that in a world which has seen communist and Nazi regimes - or those of Saddam, Islamist Iran, or the Taleban - that a sane person could say such things.

Second, to use the PLO as one's example passes into the realm of satire. In fact, a dozen years after the Palestinian Authority was formed, experience shows the exact opposite: a regime more interested in carrying on violent struggle than serving its people's needs.

Indeed, the PLO stayed in power because it combined bluster with deeds of incitement, intransigence, and terrorism. It may be ousted now only by those whose bluster is louder and whose deeds are more terrible. Why should we believe that Hamas will behave otherwise?

There's wishful thinking. Or in the Times' words: "We can only hope that if Hamas wins a share of power, Palestinians will expect the same of it as they did of the PLO. If the Islamic militants persist in provoking Israeli incursions, roadblocks and assassinations, their welcome will soon wear thin."

I hope so, too. But I wouldn't risk the lives of millions of people on that hope. Perhaps we should hope that Osama bin Laden comes to power in Saudi Arabia as the most effective way of defeating international terrorism.

Perhaps the Times' editorialists don't read their own newspaper. On January 8, Steven Erlanger reported the statement of Khaled Duzdar, a Palestinian analyst at the Israel/Palestine Centre for Research and Information: "Anyone who thinks Hamas will become pragmatic if they win and it will be easier to settle the conflict is unrealistic. Hamas will never change its charter or agenda."

The International Crisis Group in Brussels says of Hamas that since Palestinian nationalists cannot make peace, "The international community's best remaining option is to maximise the Islamist movement's incentives to move in a political direction through a policy of gradual, conditional engagement."

The report explains, "There are risks, but the West needs to adopt a policy of gradual, conditional engagement to encourage Hamas to choose politics over violence by giving it a stake in stability and emphasising the political costs of a breakdown."

Somehow I don't think the risks are going to be borne by the analysts sitting in Belgium.

How do you prove that the assertions about a moderate Hamas are false? You can quote a ton of Hamas statements and documents that they will continue terrorism and never accept Israel. You can look at their daily violent acts. You can examine precedents- the PLO, communist regimes, fascist parties-which prove that moderation is not inevitable.

You can do a sophisticated analysis to show that Hamas has become strong precisely because of its militancy and promises of total victory. You can suggest that extremists may believe their ideology, mean what they say, and cannot be bought off.

Is it really so hard to understand that a group which calls for genocide against Jews, extols terrorism and demands a Taleban-style regime for Palestinians is not about to become moderate? Apparently it is.

* Barry Rubin is director of the Global Research in International Affairs Centre. His latest book is The Long War for Freedom: The Arab Struggle for Democracy in the Middle East.

Michael Richardson: Iran has friends in high places

The European Union and the United States face an increasingly difficult task in winning international support - especially from key states China and Russia - to report Iran to the United Nations Security Council over suspicions that it is developing nuclear weapons.

Underlying the disarray are conflicting interests between Western powers and countries like China and Russia that do not want to alienate Iran.

The issue will come to a head when the 35 states on the governing board of the International Atomic Energy Agency, the UN nuclear watchdog, hold an emergency meeting in Vienna this week. Beijing wants to prevent the destabilising spread of nuclear weapons and protect its generally good relations with the US and the EU.

But it also wants to nurture close ties with Iran, an energy supplier that is viewed as increasingly important in keeping the Chinese economy revving strongly.

Moreover, China - which champions multipolarity to offset dominant US power - sees Iran as an attractive partner, given its independence from the American sphere of influence and its proximity to the energy-rich Persian Gulf and central Asia, as well as its own wealth of oil and gas.

Iran is the world's fourth largest exporter of crude oil and has the second biggest gas reserves after Russia.

China is the second largest importer of oil after the US.

Supported by the US, the three EU nations - Britain, France and Germany - that have been trying to persuade Iran to abandon its plans to master the technology for enriching uranium, an avenue for making nuclear weapons, are consulting Beijing, Moscow and other key IAEA board members on a resolution to refer Iran to the Security Council.

This followed Tehran's removing IAEA seals from three nuclear research facilities, ending a two-year suspension of activities.

Australian Foreign Minister Alexander Downer says Canberra believes that reporting Iran to the Security Council would strengthen the IAEA's power to investigate Tehran's nuclear activities thoroughly. Most other board member-states, fed up with Iran's record of broken promises and its nuclear concealment over two decades, are also expected to vote for referral.

Russian President Vladimir Putin has said his Government's position is close to that of the EU. But China and Russia are reluctant to move quickly on any move that could lead to imposing sanctions. As permanent members of the Security Council - with the US, Britain and France - China and Russia have the power of veto.

Beijing and Moscow say more time is needed for discussion and that hasty action would provoke a hardline reaction from Iran.

Like China, Russia is keen to develop its extensive energy, military and commercial ties with Iran and is building Iran's first nuclear power plant at Bushehr.

The 1000-megawatt plant is expected to start generating electricity late this year and Moscow expects to get follow-on contracts.

Despite US objections, Russia agreed to sell advanced mobile surface-to-air missiles and other defence equipment to Iran.

Tehran insists that its nuclear programme is purely for peaceful purposes. But Mohamed ElBaradei, the IAEA head, has said that after three years of intensive investigation his agency is unable to confirm the peaceful nature of the Iranian nuclear programme.

He did not rule out the possibility of a secret nuclear-weapons programme and said he would not extend the March 6 deadline for his report on Iran to the IAEA board.

The best hope of defusing the crisis appears to be Russia's offer to form a joint venture with Iran to enrich uranium on Russian territory for use in Iranian reactors. Talks on this plan are not scheduled to resume until after the IAEA meeting. Although Iranian officials previously insisted that any enrichment should be done in Iran, the secretary of Iran's Supreme National Security Council, Ali Larijani, said Tehran now has a positive view of the Russian proposal and would hold further talks.

China must be hoping Iran will accept the Russian plan, which has US and EU support. Acceptance would allay international concern over Tehran's nuclear ambitions and probably halt Iran from being referred to the Security Council by the IAEA for possible sanctions - unless persuasive evidence emerges of a clandestine Iranian scheme to make nuclear arms.

* Michael Richardson, a former Asia editor of the International Herald Tribune, is a senior research fellow at the Institute of Southeast Asian Studies in Singapore.

Mathew Ingram: Apple core becomes the sound of music

If any company is on top of the world right now, it has to be Apple. And the company's current success is all the more stunning because it was in such bad shape a few years ago that many felt it would never recover.

In fact, Dell founder Michael Dell famously said in 1997 just after Apple co-founder Steve Jobs returned to the company that if he were at Apple he would wind the company up and give the money to shareholders.

Jobs referred to that comment recently in an email to Apple employees, and if he gloated a little bit, that's understandable: on the day he sent the email, Apple's market value - its share price multiplied by the number of shares outstanding - had passed Dell's (although it has since fallen behind the PC maker).

At its current level of about US$72, Apple's share price is almost twice what it was a year ago, and has risen by more than 600 per cent in two years.

The engine behind all this growth is no secret. Over the past four years, the entire world has gone crazy for Apple's iPod in all its forms, from the original music player to the latest ultra-slim Nano and the video-playing iPod, and hundreds of millions of digital songs (and now TV episodes and videos) have been downloaded from its iTunes online store.

These two forces have helped to drive Apple's sales and profit up at an incredible rate. In the latest period, revenue rose 65 per cent to US$5.75 billion ($8.44 billion) and profit climbed by 92 per cent to US$565 million.

That worked out to 68USc - substantially better than the 49USc the company had told investors to expect. It shipped a staggering 14 million iPods in the quarter, up by more than 200 per cent from the year-earlier quarter. And sales of the company's Macintosh computers rose by about 20 per cent, with about 1.25 million shipped in the quarter. For many, this growth was further confirmation of the so-called "halo effect" - in which the popularity of the iPod rubs off on other Apple products.

There's just one problem with all this growth, however: some investors and analysts are wondering how much longer it can continue. The company is already the leader in digital music players, with about 90 per cent of the market for hard-drive-based players and more than 80 per cent of the market for MP3 players overall.

With that kind of stake, some wonder how much growth there is left. Apple no doubt has other products up its sleeve, but the stock has been trading based on the guaranteed growth the iPod has been producing. What will fill that gap in the coming quarters?

Despite the big numbers, there wasn't much celebrating in the wake of Apple's quarterly results. In fact, the stock fell by about 5 per cent after the announcement. In part, that is because the company's outlook for the current quarter was weaker than most analysts were expecting.

Apple said it expects to make a profit for the second quarter of about 42USc a share, but Wall Street was projecting a profit of about 51USc a share. A stock trading at the kinds of levels that Apple's has been - 35 times projected profit per share - doesn't usually react well to that kind of change in guidance.

Apple said the main reason for the cautious outlook was the shift it is making from using IBM processors in its laptops and desktops to using chips from market leader Intel. Some customers who are in the market for a new computer are likely to wait for the new models come out, analysts said.

"We did see what we think was a bit of a pause from some customers associated with the Intel transition," Apple's chief financial officer Peter Oppenheimer said after the quarterly report.

Some investors are worried about more than that. The main concern is that Apple's business still consists primarily of selling computers that have enjoyed fairly high profit margins, and produce lots of cash flow. Digital music and video players have become a much larger part of the company's business, but that market is much more competitive, and as a result the pressure on prices is much higher. Some analysts are worried about what that means for the future of the company's cash flow.

"Historically the Mac has been the primary revenue generator," analyst Nittin Gupta of Yankee Group said. "At this rate of growth, the Mac is not going to be their primary revenue driver."

Unless sales of Macs increase even faster than they have been, Apple could be trapped by slower sales of the iPod and lower profit margins. And investors who have been riding the soaring share price won't like that.

The only problem with being on top of the world, it seems, is that once you're there everyone starts worrying that you're going to fall off.

Kelvin Chan: Outsourcing to UK still seen as good idea

Outsource2New Zealand may be gone, but some Kiwi software companies have not forgotten about the IT outsourcing market in Britain.

Black Coffee Software, one of five founding partners behind Outsource2New Zealand, decided to forge ahead with plans to expand in the UK even as the group initiative floundered.

"I think everyone would have benefited [from O2NZ], provided they worked together as a unit. Great in theory but not always achievable," said Alison Swaby, business development manager for Black Coffee in London. Swaby added the company decided on a different approach "based on experiences that came out of O2NZ".

When Black Coffee executives visited the UK last year, "it encouraged them to say 'we'll put the money down and say we'll go for it ourselves'. So far so good," said Swaby, who set up the company's office in London's Canary Wharf financial district last November.

At about the same time, the company won a $300,000 contract from Cambridge-based Wax Info, which specialises in electronic book libraries - its second UK contract.

Another O2NZ partner company, Synergy IT, also has an office in London.

The end of O2NZ is a curious blow to New Zealand's attempts to sell itself as a competitor in the tough world of global IT outsourcing.

The global market for offshore information technology services is around US$150 billion to $180 billion ($220 billion-$264 billion), according to a recent estimate by management consultancy McKinsey & Co.

While much of that is for huge, low-cost contracts such as operating a big company's entire IT department or data or call centres, there is still room for New Zealand to compete.

Experts said the country had myriad advantages - and one big disadvantage - in winning higher-end, specialised contracts, precisely the kind of work O2NZ was set up for.

Swaby and outsourcing experts said New Zealand had a definite edge in the UK because of strong cultural links and a good reputation.

"People worry about things like security these days, they worry about getting results for the right money," Swaby said.

"A couple of people have mentioned that New Zealand offers an environment of integrity and business ethics ... Kiwis [also] have a reputation for very high productivity."

Ajay Bhalla, an assistant professor at City University of London's Cass Business School, agreed New Zealand offered a good business environment.

"For British companies, New Zealand would always offer a great environment in terms of business environment, and the financial structure and infrastructure," said Bhalla, who teaches global outsourcing to MBA students.

"When we talk about business environment, we talk about political environment and security of intellectual property."

Another selling point for New Zealand, and the reason it first targeted the UK, is the close cultural links between the two countries.

Swaby said Brits usually appreciate working with Antipodeans. Many "either fell in love with the country while down there or worked with Kiwis before. There's an inherent feel-good experience to working with a Kiwi. There's a level of trust between the UK and New Zealand that is priceless," she said.

But it goes beyond just warm, fuzzy feelings, IT outsourcing experts say.

Peter Ryan, a Montreal-based outsourcing analyst at Datamonitor, who was based in London until six months ago, said cultural links definitely help when it comes to getting foreigners to understand how your business works.

"In London there are lot of New Zealanders who move to the UK and then move back. There's a tremendous affinity between the UK and New Zealand," he said.

Stephan Bullas, managing partner at Ecode, the European Consortium for Outsource Development, which assesses outsourcing locations for clients, said the fact that English was the native language of both countries also helped when it came to things as prosaic as instruction manuals.

"Where I think New Zealand can score amongst countries is, user documentation can be done in the natural language and business presentations can be done in the natural language," Bullas said.

Costs were also rising in places such as India and South Africa because safety was such a big concern that extra money had to be spent on things such as driving employees to and from work, Ryan said.

"One of things you find about places like South Africa is, can people get to work on time, without fear of assault?" he said.

"Getting to work in Auckland on public transit would be much safer than in Johannesburg. That feeds into cost."

On the downside, some saw New Zealand's distance from Europe and North America as a handicap.

"No matter how good a supplier company is, and this is particularly so in the IT industry, the client always needs to regularly visit," Bullas said.

To ask an executive to travel two or three times further to New Zealand than to India or Eastern Europe "really does make a big negative".

Still, New Zealand had a real shot at the global IT outsourcing market, especially if it concentrated on higher-value niche projects, Ryan said.

"If they can position themselves as a location of very high-end, high-value work, that's exactly the type of work they'll be able to win," he said.

"If, say, I need 500 people to work in the back office to do cheque clearing for a large bank, it's just not going to go to New Zealand," he said.

On the other hand, "if you need a dedicated team of 50 developers to work on a high-end project, yes, I think it would be an outstanding location."

But small companies far from the world's big business capitals don't have much of a chance of catching the attention of big companies. Something like O2NZ might actually be exactly what's needed.

"For small individual companies, it's too much of a marketing investment to get on the radar screen of big American or UK companies," said Simon Bell, director of global business policy council at A.T. Kearney - especially when they're competing against the likes of Infosys, which employs 46,000 software professionals.

Bell said he had been working on helping set up similar groups in other countries.

Bullas said he also recommended that countries in eastern Europe, many of which had joined the EU recently and had small populations and small numbers of IT graduates, should band together to form a trade group to tackle large contracts.

Bullas, who had not heard of O2NZ before, said: "Probably New Zealand needs to do the same thing. Right now they're small niche players at the other end of the world, they'll have no chance."

For the moment, Black Coffee is going it alone. Swaby, a locally hired Brit, essentially works alone in the London office, which has room for up to five staff, and more people may come over to work as required.

She said that New Zealand's distance could sometimes be an advantage when working with Wax Info. Because the countries are 11 hours apart, when one is asleep, the other is working.

"Wax said to us that they love the fact they can send all the problems at 5pm to New Zealand and at 9 o'clock the next morning they can come back with solutions."

Paran Balakrishnan: Indians developing a taste for the finer things in life

Time magazine once labelled him the Sheikh of Chic. And Sheikh Majad al Sabah, a nephew of the Emir of Kuwait, is definitely one of the most astute businessmen in that small, oil-rich country. He has turned his Villa Moda luxury stores into exclusive palaces where you can shop for everything from Fendi to Ferragamo or just plain old Gucci.

Al Sabah is spreading his wings and moving out of the sheikhdom to Mumbai, India's commercial capital. He has seen India's newly affluent in shop-till-they-drop mode at his glass-fronted Kuwait boutique and reckons that business will be good in this teeming metropolis.

But being a smarter operator than many others, he's acutely aware that luxury boutiques are still slightly out of place in a country where vast swathes of the population subsist on a few rupees a day and are firmly below the poverty line. So, at a recent conference on selling luxury in Mumbai, he vowed tearfully that 5 per cent of every sale would go to the poor.

Al Sabah's charity pledge is novel for India and it may give him a certain unique selling proposition. But he's just one of a host of luxury manufacturers who have suddenly zeroed in on the country as its economy racks up scorching 8 per cent growth.

Recently shoemaker to the smart set Jimmy Choo announced that he will be high-stepping to India. Other luxury vendors looking at the numbers include Gucci and British player Asprey & Gerard. Big names such as Chanel and Bvlgari had splashy launches to open their boutiques a few months ago. It has become almost de rigueur among the smart set to own at least one piece of Louis Vuitton arm-candy.

Ferrari, the last word in automobile one-upmanship, is powering its way to India this year. It will join other road monsters such as Porsche, which launched in 2005. For the truly rich, Bentley has just opened a showroom in Delhi, and its sales so far are promising. If you aren't in a league that can fork out six-figure dollar prices, there are other smart cars such as the Audi A4 - a competitor to the Mercedes C-Class - which just hit the roads this month at the Delhi Auto Show.

Luxury brands and boutiques are a part of the retail landscape in most parts of the world. But India is a country brought up since Independence in 1947 on a mix of Gandhian asceticism and tough rules that strictly curbed imports.

More crucially, most Indians - even the ones in top-level jobs - earned far less than their peers in the developed world and couldn't afford the trinkets and baubles sold in places such as Bond Street, Place Vendome or Rue St Honore.

Now India is playing catch-up with the world. The job market is booming, headhunting is the order of the day and so everyone is taking home chunkier paypackets. In some sectors, the transformation from the relative poverty of the past is quite startling. India's top software company, Infosys, has in the last decade created several hundred dollar-millionaires with its stock options. Similar scenarios are being played out at other high-tech companies.

So what's the best way to demonstrate that you've arrived? How about carrying a Louis Vuitton briefcase with the linked LV logo emblazoned all over it? Nothing discreet about that. Alternatively, on a grander scale, how about steering a course through India's wild traffic in a Bentley Azure? A Bentley will still turn eyes in a country that, through the 1960s and 1970s, had only three types of cars on the road. The most famous one, the Ambassador, was based on an early 1950s Morris Oxford, and it's still being made just outside Kolkata.

All the luxury brands that have made their way to India in the past two years are reporting blockbuster sales growth. Louis Vuitton, one of the early movers, says business is booming. Danish tech company Bang & Olufsen has been here seven months and says its plasma TVs and top-of-the-line sound systems are flying off the shelves at a speed it never expected. Even the Bentleys and Porsches are attracting plenty of prospective buyers kicking tyres at showrooms.

But selling luxury in India can run into unexpected complications.

How about holy cows for a start? That's what you might find roaming about some of Delhi's supposedly smart shopping complexes. Some of the city's older markets haven't been scrubbed and smartened up for the 21st century and are far too grubby to be selling Louis Vuitton and Prada.

Alternatively, how about retreating to the new glittering shopping malls that are sprouting all over Delhi, Mumbai and other Indian cities? The shopping malls are attracting hordes every weekend, but the luxury brands reckon these surroundings are still too plebeian.

The only refuge for these brands is in the five-star hotels of Delhi and Mumbai, where there's a glittering ambience to match the products on sale. But there are only so many five-star hotels to go round.

Some smart Indian entrepreneurs are about to solve this retail environment problem by opening what they call "luxury malls", which will house a mix of expensive Indian and foreign products.

How far will a socialite walk to buy her Jimmy Choos? And can you drive a Maybach down Delhi's chaotic streets where unscratched autos are a rarity? In this age of conspicuous consumption, it seems there's no dearth of rich Indians eager to join the global party.

* Paran Balakrishnan is associate editor of the Telegraph in Kolkata and has also reported from London on British and European Union affairs. His column will appear fortnightly in the Business Herald, alternating with Dan Slater's Eye on China reports.