Australia’s Cotton On enters India market

Cotton On, Australia’s largest fashion retailer, has made its entry into the Indian market through online shopping platform Myntra.

This is a smart move – low cost, quick results and great active market researh.

The brand plans to compete with the likes of H&M and Forever 21 in India, by opening its flagship store — either in Delhi or Mumbai — in the third or fourth quarter of 2020.

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AVS Global Network, a retailer of global fashion brands that focuses on retail through digital platforms, is responsible for launching Cotton On in the country.

AVS Global Network has managed to secure an exclusive contract with online retail platforms Flipkart, Myntra and Jabong to sell Cotton On products in India for the next year and a half.

Cotton On Group was established in 1991 and is present in 19 countries including New Zealand, South Africa and Singapore, with about 1,500 stores across the globe.

The Australian giant has eight brands in its kitty, namely — Cotton On, Cotton Kids, Cotton on Body, Factorie, Ruby, Typo, Supre and Lost. Each one of them caters to a different market segment.

Cotton On is testing the Indian waters by selling its products online before investing in stores.

I like this strategy for India, China and other South-East Asian countries – they are increasingly buying apparel online, compared to other Western markets.

Perhaps online is your starting point for India too?

What will PM Modi do for India in his second term?

What will Modi 2.0 do for India?

With the world’s biggest democracy opting for stability and returning the Narendra Modi Government for a second five-year term, all eyes are on what will Modi 2.0 do?

Here are some actions to look out for. As my friend Amith Karanth from India Australia Exchange Forum says: “Modi will also pull some surprises”.

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Looking ahead at Modi’s priorities

Health – telemedicine, more doctors, increase immunisation

Education – Modi wants India to have a top 100 global university – he will deregulate many top universities to allow this improvement

Add 50 city metros

Inclusion – banking for all, reduce poverty to single digit

Employment creation and lifting farm/shopkeeper incomes will continue to be a focus

Building more infrastructure

Devolving more responsibility and power to the state governments, extending the level of competition between them and empowering local leaders

Streamlining the GST, which was a minor miracle itself, but has multiple complexities

While privatisation of government institutions such as banks and more is needed – this might remain in the “too hard basket” in term two

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Looking at what Modi has already achieved

Moves against corruption such as demonetisation (one of his major surprises), reduction in cash and movement towards digital payments

Introduction of a GST, arguably the world’s biggest tax reform – meaning the central and state governments are now awash with funds and can now do things

Focus on startups and cheaper loans for SME’s has created real growth in new enterprises

National campaigns such as “Clean India” have begun the big job – providing access for many millions to toilets is just one of the outcomes

Some reforms to the insolvency and bankruptcy has increased confidence in doing business

Modi has been a relentless global salesperson for India and attracted record foreign investment

India’s infrastructure has changed massively in five years – with more to do

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Global Purchasing Power is moving to Asia

The biggest nation on Earth, China, is expected to keep its top spot as the country with the largest purchasing power on Earth and is on track to almost triple its purchasing power by 2030, according to an analysis by the British Bank, Standard Chartered.

India will almost quadruple its purchasing power, moving to rank 2.

China will double the USA while India will beat USA by approx 50%.

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In the case of Japan, the country is expected to lose 5 ranks and emerge as the country with the 9th highest purchasing power worldwide.

Developing economies like Indonesia, Turkey, Brazil and Egypt are set to move into ranks four to seven respectively, toppling the reign of countries like Japan and Germany, which are still growing their purchasing power but at a much slower rate. The U.S. is expected to only drop one rank to position 3 but is grappling with slower growth.

In summary – an amazing outcome for Asia – especially China, India and Indonesia.

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How is your Asia engagement strategy going? Time to begin, change or reinvigorate? Get good advice so you avoid the mistakes of many before you.

Are you ready for the facts on how much India has changed?

(Based on an article by Monika Halan, consulting editor at Mint and writer on household finance, policy and regulation)

Indian elections have just opened – so, how long does it take to find out if your name is on the Indian electoral role? Go to the Election Commission site, it asks you to SMS to check if your name is on the list—thirty seconds later, you will get a confirmation that your name is or is not there. Things move fast in modern India.

As Monika Halan writes – “Most people get their Provident Fund (PF) balance on SMS too. Also, the passport and visa processes are mostly all automated and keeps us well-informed about the progress of the process.”

So, what else works fast and well in India?

The metro network where it exists, in cities like Delhi and Kochi, is superb.

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Getting or renewing a passport used to be a total nightmare a decade back. Enter private sector plus technology and the average time it takes for the passport application process is 30 minutes to under 4 hours. The passport reaches home by courier in a couple of days. At every stage, you get an SMS informing you what will happen next.

What about getting a driving licence? At least in Delhi, the process is mostly painless—online form filling, and 30 minutes to three hours of time in the local office. The licence reaches home in just a few days – according to Monika Halan.

Property registration used to be a nightmare. But Halan says “That again is a breeze. Again, a mix of technology and processes has reduced transaction time and pain hugely.”

Payments is the other huge success story of modern India. Forgetting your wallet at home is no big deal anymore. The money is in the phone. In a wallet, on an app or available through mobile banking. Riding on the backbone built by the National Payments Corp. of India (NPCI), transaction options and ease are both world-class.

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So how long does it take you to get a Wi-fi connection? How long does it take you to open a bank account? At least in the big metros, a Wi-fi connection happens within a day. Opening a bank account takes lesser time. The average time for these services in most developed countries is much longer. In most of Europe, for instance, it takes at least a month to get both these services.

Modern India is fast. Click on “buy” at 11pm and hear the doorbell ring at 9am the next morning.

A huge shift has happened in India and even Indians have failed to notice. The mix of technology, competition and cheap labour – plus reformist governments – means modern India has some of the simplest and fastest processes in the world.

All of this in just over a decade.

Time to catch up with what is really happening in modern India?

How China and India differ in the consumer goods market

India’s share in the consumption of consumer goods is expected to double by 2030 and favourable demographics (youth) will soon take it ahead of China in regional market dynamics, according to a report by Credit Suisse.

Interestingly, in India it is the home-grown brands like watchmaker Titan, hosiery company Rupa and another watchmaker Sonata which are gaining the most out of this propensity to spend in India.

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However, India is at a comparative disadvantage vis-a-vis China because of factors like less urbanisation, high concentration of urban pockets and lower enrolments in higher education.

It said in 2015, China had 150 million more people in working age than India, while by 2045, the northern neighbour will have 300 million less people than India in the bracket.

Additionally, China will also have to grapple with ageing related issues by 2045, it said, pointing out that the Communist country will have 350 million people aged over 65 as against 200 million in India.

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It marked out the apparel and meat sectors as the ones with ‘high’ growth potential as the per capital income of the country grows, followed by beverages, cars, cereals, personal computers, smart phones and education with ‘medium’ growth potential, while healthcare, consumer credit and tourism were the ones with ‘low’ potential.

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From a consumption perspective, the Chinese prefer more of travel and entertainment-related options, it is staples that dominate the Indian story, the brokerage said.

India scores over China when it comes to spending intentions, the brokerage said, pointing out that the desire to spend is declining “more broadly” in China.

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India’s Bajaj Auto to jump into electric vehicles next year

Pune-based Bajaj Auto is planning to make a foray into electric vehicles (EV) next year and is hoping to build market share in India, its Managing Director Rajiv Bajaj said Monday. The new marketing slogan is “The World’s Favourite Indian”.

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The company plans to launch electric version of its quadricycle Qute along with electric three-wheelers next year.

He also said the company would bring KTM-owned ‘Husqvarna’ motorcycle brand to the Indian market this year with “half a dozen” products in the pipeline.

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Bajaj said the company has leadership positions in over 20 overseas markets such as 70 per cent share in Bangladesh and around 50 per cent in Nepal and Sri Lanka and it would like to replicate this in India.

“We would like to be a little more successful in the domestic market than we have been so far in the motorcycles market,” he said.

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In India: “We have only 20-21 per cent share. We think now the time has also come that after having done a good job overseas, after having huge dominant position in India in three-wheelers, it is about time we make the same impact in the domestic motorcycle segment in India as we have done across the world.”

Other big motorcycle makers in India are Yamaha, TVS and Honda.

Bajaj also has a partnership with British niche bikemaker Triumph.

Apple could be a case study in how not to do business in India

Apple is struggling with its iPhone in India and has not adapted to the Indian market, while Oppo (China), Samsung and Nokia have.  Noticed the Oppo logo on the Indian cricket team? Oppo from China is branding the Indian cricket team – smart positioning.

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India is estimated to have 39 million new smartphone owners this year, according to eMarketer. More than 75% of the smartphones sold in the country cost less than $250 and 95% cost less than $500, analysts estimate. Most sales are less that $300 and come from local, unaffiliated shops in the countryside, where the majority of Indians live.

Among Apple’s current lineup, its lowest-priced phone in India is the iPhone 7, which typically costs around $550.

It is missing the target market on price, positioning and product – the features list is not right for India.

To succeed in India, you need product and marketing for India – that is the message of the Apple failure. Of course, the obstacles to the traditional Apple model of fully owned and branded stores are immense in India – so Apple needed to look for a new innovative model, but missed this boat.

The company hasn’t had the successes of fellow U.S. tech giants, who have found ways to claim some of India’s hundreds of millions of new consumers. Amazon.com Inc. has become a leading e-commerce player in the country. Alphabet Inc.’s Google and Facebook Inc. dominate online advertising. Netflix Inc. and Match Group Inc.’s Tinder are already among the biggest earning apps.

With 1.3 billion consumers, the country is the world’s biggest untapped tech market.

Just 24% of Indians own smartphones, and the number of users is growing faster than in any other country, according to research firm eMarketer.

The number of iPhones shipped in India has fallen 40% so far this year compared with 2017, and Apple’s market share there has dropped to about 1% from about 2%, research firm Canalys estimates. Some analysts call it a rout.

The list of market entry errors by Apple is impressive – wrong pricing in a price sensitive market, reluctance to change its traditional business model for selling the iPhone, rather than make a range of handsets, it has prioritized a limited number of coveted products, sold at high prices. The iPhone’s software features, like iMessage and AirDrop photo sharing, aren’t as big a draw for emerging-markets buyers, who often use Facebook and its WhatsApp messaging service to connect with friends and consume news and other content.

While competitors reacted to local consumer concerns—increasing battery life, for example, and offering less expensive models—Apple took an inflexible stand on its pricing and products.

The thing Apple is missing as it searches for market share in emerging markets is that if you can make it in India you can make it in the rest – Indonesia etc.

Meanwhile, competitors like China’s OnePlus, Xiaomi Corp. —sometimes called “the Apple of China”—and BBK Electronics Corp.’s Oppo and Vivo flooded India with smartphones, many of which cost less than $200. Some signed on Bollywood and cricket stars, among India’s biggest celebrities, to promote their products – and Oppo is on the cricket team shirts.

Unlike Apple, which typically spurns market research, competitors have conducted extensive on-the-ground research in India into local consumer habits, quickly incorporating functionality like special cameras for taking better selfies.

Now, that’s how you get into India – do your homework including market research, adapt to the market, make connections with existing sales and distribution channels, maximise what you can make there, utilise the local selling formats, adjust your product features and pricing and then link marketing plans with what works locally – cricket and Bollywood.

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6 trends to watch for India in 2019

1. Politics to dominate

Internal politics will dominate India with a general election due in May 2019. The Modi Government won in 2014 with a slogan of “good days are coming” but higher inflation, declining rural incomes and lack of jobs are all hitting government prospects, while the big unknown is the huge number of “first time” voters – India has 20 million young people turning 18 each year which means there will be around 100 million first time voters.

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Modi has so far appealed strongly to young voters. However, state elections show that the Indian voter is now harder to predict. Most predict Modi will be returned but with a reduced majority. But when the world’s biggest democracy votes, politics becomes the theme of the year.

2. Trade deals point to stronger region

India has a growing number of trade deals that place it at a point of influence in the Indo-Pacific Region and there is a growing prospect of countries such as India, Indonesia and Australia leading a stronger Indian Ocean grouping. Of significance is the Regional Comprehensive Economic Partnership or RCEP (a trade alliance currently in negotiation among 16 countries in Asia and Oceania) which India could join in 2019 – perhaps a long shot but one to watch.

3. Fashion, weddings and pride

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National pride has been growing (some call it Hindu pride, but it seems broader) and so we can expect Indian fashion, traditions and weddings to be bigger than ever – the wedding planning industry will be booming but fashion and festivals not far behind. The trend in India is to combine modernity with preservation of the past – a great balancing act. Another result is that well placed local brands – if marketed well – will attract huge consumer interest. And any year now the west will become very interested in “all things Indian” which is good news for Indian fashion, music, films and dance.

4. Economy and shares to grow

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Despite trade and currency wars slowing global growth, Moody’s and others predict continuing Indian economic growth and shares to remain buoyant for 2019. However, keep in mind shares have been booming – the Nifty 50 Index (the largest 50 stocks in India) rose from 7000 points at the end of 2015 to 11,750 points in September 2018. That is a growth of 57% in the market in just three years. It seems the psychological touch point is 10,500 for the Nifty – above that and shareholders will have a good year. Below that and watch out.

5. Business opportunities abound

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Healthcare for India has got to be one of the world’s biggest business opportunities with massive growth prospects for healthcare clinics and online service delivery. When you consider 60% of the people are rural but 80% of healthcare is urban (and not meeting demand there) so there will be a big rural boost. Agribusiness is strong with specific areas to watch – dairy, butter/ghee, strawberries, button mushrooms, salad supplies and alternative production such as hydroponics on urban fringes. But really, growth opportunities are everywhere as domestic demand soars – tourism (domestic and global) and education (including western immersion tours for Indian uni students) are top growth areas.

6. Energy up

India is a global leader in investment in alternative energy and this will gain ground with solar, wind and biomass to surge ahead. All of which makes the proposed and controversial Adani coal mine in Australia more of a mystery.

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10 reasons every business can find a market in India

To understand what a great long-term opportunity India is, consider these facts:

  1. The numbers are on your side:  564 million below the age of 20
  2. The middle class is growing: 600 million growing middle-class, saving rates have tripled in last 12 years
  3. The mindset is right:  adaptability, competitive, entrepreneurial, believes in “learning, earning and spending”
  4. Challenges lead to opportunity:  mainly in areas such as transport and agricultural infrastructure, medical, power generation & distribution, education, healthcare
  5. Eating and drinking is changing: food & Beverages: food processing, food packaging, food warehouse and transport, health drinks
  6. Homes are stylish: home decor products, kitchenware essentials, bed and bath
  7. Paying for Healthcare: diagnostics and testing, medical equipment, health supplements, clean air and water products
  8. Consultancy Services are flat out: engineering, business development, product development, security analysis, accounting
  9. Infrastructure is big ticket: waste management, solar and wind technologies, temperature-controlled warehouses, air and noise pollution control technologies, towing trucks, and automated parking lot equipment.
  10. “Franchising” is popular: Top sectors with franchising opportunities are Education and Healthcare due to a huge mismatch between supply and demand now and in the coming years

Time to find your niche in India?

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Why everything you know about Indian tourism is wrong

Two recent major research reports show the high impact Indian tourists are having – with good news for the Asia-Pacific region.

The latest research published by Colliers International, ahead of Arabian Travel Market 2019 (ATM), showed Indians just love travelling west to Dubai and the gulf – the number of Indian visitors travelling to the Gulf Cooperation Council (GCC) nations over the coming five years will create an extra 10.8 million room nights, as Indians are among the world’s highest spenders per visit made abroad, according to new data.

The report predicts around nine million Indians will travel to the GCC states by 2022 37 per cent of India’s total outbound market with business, place of work and leisure underpinning this demand.

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But it is not just the gulf – numbers are up everywhere. Indian outbound tourists will account for 22.5 million worldwide tourists in 2018, with reports from the UN World Tourism Organisation (UNWTO) estimating this figure will increase by 122 per cent to reach over 50 million by 2022.

Adding to this, Indian tourists are among the world’s highest spenders per visit made abroad, with visitor spend expected to increase from USD 23 billion in 2018 to USD 45 billion by 2022.

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There has been a huge amount of research and attention paid to the growth of outbound tourism for China, but a report issued last week from Tourism Research Australia looks at the current status and potential of the Indian market for tourism in Australia.

India has a population of around 1.3 billion, with consumer spending forecast to reach $3.6 trillion in 2020 – almost four times 2010 levels.

Between 2000 and 2015, outbound tourism grew more than four-fold to 21.8 million departures. The UNWTO predicts that by 2020, there will be around 35 million outbound departures from India – that is an average annual growth rate of 12% between 2015–20.

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Indian tourism to Australia has grown even faster than the overall rise in outbound tourism from India, with a 6-fold increase between 2000 and 2015. Between 2005 and 2016, visitor arrivals from India grew by 299% to reach 262,300 – almost six times faster than the 51% growth in total inbound arrivals to Australia over the same period. Spend growth was even more impressive, increasing 350% to reach A$1.2 billion in 2016.

Using visitor numbers as a measure, Indian visitation to Australia is in about the same position as Chinese visitation was in 2004. India’s per-capita GDP is now at about the same level as China’s in 2005, so if GDP and tourism follow the same upward trajectory in the next decade in India as occurred in China in the last decade, then India has the potential to become a very important market in the future.

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TRA’s latest forecasts (TRA 2017) predict that arrivals from India to Australia will grow at an average annual rate of 8.7% between 2016–17 and 2026–27 to reach 642,000 visitors.

It is good news, but where you have a high local Indian population, a significant proportion are VFR – visiting friends and relatives. This means their economic impact is constrained. More than 40% of Indian visitors in 2016–17 were here for VFR purposes, relying on their hosts in Australia for accommodation, food and travel costs.