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The 4 paradoxes of doing business with India

Slow and Fast

We think you need to commit three years to building business in India – but when you first go be ready for anything because demand can be instant. Or not. A careful understanding of the market and assessment of whether it is right for you is essential.

Price and Relationship

We know Indians chase a bargain. But price alone is not enough for longevity in India – you need to build relationships. I would build the relationship first, because anyone can undercut your price.

Status and Money

Status in a hierarchical society such as India is paramount. But now so is money. Making it. Showing it. If your product combines status and money it is a good fit. When there, be careful to fully respect the status of whoever you are dealing with.

“India” and “Many Indias”

India is not one market – it combines many languages and cultures, with people in one part of the country not even being able to understand people in another part. We begin by understanding the regional differences between north, south, east and west – but this is only the beginning of drilling deep to know who you are dealing with and who you are targeting. Beware someone who promises to take you “across India” in one major campaign.

Step one is to get some good market research – the only safe and sound beginning. Add to that some cross-cultural training.

Time, knowledge and patience are the keys.

Stephen Manallack speaking at Australia India Business Council function

Melbourne is home to many Indians

India is now the biggest source of migrants to Australia, and most come to my city, Melbourne.

Australia is really a “nation of migrants” because all citizens apart from the original indigenous inhabitants came here as migrants.

There are around 170,000 Indian born people here – with many more “Indian-Australians” who were born here. This makes up 3% of our population.

Diwali is a huge celebration in Melbourne – pictured is Federation Square

50% are families with children and 46% have Australian citizenship.

25% are professionals.

Melbourne is a popular choice for Indian students and tourists.

The Indian community is a big part of making Melbourne a diverse and multicultural city.

Many business and community functions are held in Melbourne for Diwali – seen here from left are Stephen Manallack. Preeti Daga, Molina Asthana and Anoushka Gungadin. At back are Ian Nathaniel and Michael Moignard

New airport for Navi Mumbai on the way

India’s infrastructure major, L&T (Larsen and Toubro), has bagged the contract for construction of the Navi Mumbai International Airport.

The company did not provide value of the contracts but said the orders fall under “major” category which ranges between US$ 715.40 million and US$ 1 billion.

Navi Mumbai (shown in these pictures) is a part of Greater Mumbai and is a planned satellite city.

This second international airport for bustling Mumbai is no small venture – it is being developed to initially handle a capacity of 10 million passengers per annum. The project will subsequently be enhanced to handle 20 MPA.

Regular visitors to India will notice constant upgrades in infrastructure – infrequent visitors will be amazed at the global quality of many Indian airports.

What is the great legacy of the west?

For over 200 years the west has dominated. Economically strong, trading nations, global defence forces. It is a good time to ask – what is the great legacy of the west?

The Age of Enlightenment, time of reasoning, power of science, all were revived by the west. This is the view that together we can solve problems.

Free market economics – has shown how to lift people out of poverty and share the wealth – not perfect, but probably the best model.

Psychology of the positive – anything is possible. Contrast this with “fatalism”. Love this “can do”.

Good Government – the west leads in healthcare, infrastructure and education – and in the west people receive lots of government sponsored information and practical ways to live better. Of course, not perfect.

This is a legacy that will impact on those emerging leaders such as India and China.

The changing mindset of India

The mindset of India has split into two camps – one, the traditional, opposes spending and innovation – the other, entrepreneurial, chases innovation and adventure. It can be tough to navigate.

I was talking to an Indian colleague the other day about collaboration around Hydroponics – growing vegetables and some fruits in a liquid solution combined with various forms of protection such as glasshouses.

This is ideal for India – does not need good land, uses less water, produces the same quality 365 days per year and so on. Plus it grows crops that India’s growing urban populations demand – fresh capsicums, lettuce, broccoli, cucumber and strawberries.

But the early India response is an insight into the competing mindsets.

From one quarter of traditional banking, no thanks, it would cost money to install. Forget the benefits. Forget the competitive advantage. If it costs money, NO.

From another side of the India mindset comes an enthusiastic response – an entrepreneurial and CSR view. This can make money plus help poor rural farmers and poor rural women. So, YES.

As an optimist, I am guessing the YES side will win on this one.

The Australian Government is probably facing this varying mindset as it seeks to heavily promote Australian coal exports to India.

Yes, our coal can provide India with uninterrupted power, increasing efficiency and quality of life (and add to the already overwhelming pollution).

No, it would cost money and we put up with interrupted supply anyway. And, No, because we do not have the distribution network so alternatives such as solar are attractive for rural villages (even if interrupted, “it’s better than nothing”).

I am guessing that the NO side might win on the coal issue. But let’s wait and see.

Why is the west being so jittery about the rise of Asia?

Trade war on China. Military action here and there.

The west is jittery. Yet all we have is the return to the normal state of affairs – until exactly 200 years ago China and India were major global economies. Now they are again.

So, why is the west so jittery about the rise of Asia?

First, the west “won” the cold war against Russia without firing a single shot. Great victory – but the pride of that has become hubris and shows in a belief that only western liberal democratic countries can succeed. And here comes China. Not western, not liberal and not democratic. Jittery.

Second, 9/11 was a shocking event that dominated the mind of the west then – and now.

Wile we focused on 9/11, two things happened – rising China joined the World Trade Organisation and the lowest earners in the USA were hit by a 50% decline in income.

Hence – Trump. And hence, lots of jittery decisions being made throughout the west.

Can the west get back to rational, calm and innovative leadership? I hope so.

Thanks to Kishore Mahbubani for inspiring some of the above.

IndiGo is modern India – starting in 2006 and now the biggest airline

IndiGo airline is the story of modern India.

Now India’s largest airline, IndiGo expects to see a growth at 30 per cent a year over the next few years.

It is the largest airline in India by passengers carried and fleet size, with a 48.1% domestic market share as of June 2019.

Yet the company started flying in 2006.

IndiGo commenced operations on 4 August 2006 with a service from New Delhi to Imphal via Guwahati.

According to Dutta, chief executive of the airline, “We expect that half of that growth will go international, half will go domestic.” He is positive about the international operations of the airline.

The airline presently has around 238 aircraft in its fleet comprising of ATRs and narrow body aircraft. The airline is looking at wide body aircraft.

Modern India – things change fast.

Ho Hum! “Trade war” not worrying Indian companies active in China

Seems Indian companies active in China think that the USA-China trade war is all a bit “ho hum” – or maybe an opportunity?

Indian organisations working in China don’t expect any critical effect of the escalating trade war among Beijing and Washington on their business, a new survey conducted by the Confederation of Indian Industry (CII) has stated, including that most of the companies intend to put more in Beijing in 2019.

The survey of Indian organisations working in China indicates cautious optimism and certainty when contrasted with the past survey a year ago. “Most organisations don’t see a significant effect of the present trade situation between the US and China on their business,” said Mr Chandrajit Banerjee, Director General, CII.

In excess of 120 Indian organisations work in China separated from a sizeable number of merchants who have workplaces here; 57 of the organisations reacted to the CII poll.

As per the survey, two-fifths are considering inclining up their investment more than 2018. More IT and BPO organisations intend to make extra investment in 2019 contrasted with 2018.

My “top 10” of Indian companies active in China:

Adani Global; Essar; Jindal Steel & Power; Reliance ADAG; TCS; Tata Sons; Union Bank of India; Allahabad Bank; Bank of Baroda; Bank of India.

Also in China are Zee TV; Jet Airways; Apollo International; Ashok Leyland.

What is the “fourth industrial revolution” and why is India important?

The First Industrial Revolution introduced the use of steam power to mechanize production.

The Second Industrial Revolution saw a number of groundbreaking inventions in transport, telecommunications and manufacturing, including the use of electric power to generate mass production.

The Third Industrial Revolution brought the internet and other technological innovations, which have ushered society into the digital era.

Today, society is challenged by a Fourth Industrial Revolution, an age in which scientific and technological breakthroughs are disrupting industries, blurring geographical boundaries, challenging existing regulatory frameworks, and even redefining what it means to be human.

Emerging technologies such as artificial intelligence (AI), blockchain, drones and precision medicine are swiftly changing lives and transforming businesses and societies, inevitably posing new risks and raising ethical concerns. How can society ensure that its policies, norms and standards are able to keep up with these rapidly evolving technologies?

The World Economic Forum has chosen India as the base for its Centre for the Fourth Industrial Revolution – India is the world’s largest democracy having the second highest number of scientists and engineers – shaping the future.

7 Indian cities that provide alternative gateways to this diverse market

You should consider India as a ‘market of markets’. Your market entry strategy should examine where your value proposition best matches market opportunity. That opportunity may not always be in one of the six mega cities of India. Here are some alternative (out of left field) cities to put on your radar:

Vadadora

140 kms from Ahmedabad, big in petrochemicals (Reliance Industries), engineering, pharmaceuticals, plastics and IT – thanks to the vision and influence of the Confederation of Indian Industries which pushed for and got a Knowledge City there, it recently attracted a Mastercard technology hub. Expansion of highways linking it to Ahmedabad and Mumbai make it attractive.

vadadora2

Pictured Vadadora integrated air terminal – great connectivity to other cities

For the long term, the corridor between Mumbai and Ahmedabad is worth attention – with India’s first bullet train scheduled to open there in 2024. – long term!

Visakhapatnam

Known as Vizag this port city on the Bay of Bengal is part of the state of Andhra Pradesh, and is its largest city, acting as financial capital of AP. It is host to many industries, including steel, mining, and has a large naval and other port facilities. The city has very good port, air, road and rail connectivity, and as a result is growing fast – with four new towns on its edges and “Smart City” status.

Below – Vizag

vizag2

Mysore

Mysore could be seen as your gateway to Bengaluru – not as crowded and lower costs. Another benefit is the ranking as India’s second cleanest city.

mysore2

This ancient town is steadily being brought into the orbit of Bengaluru (just 145 kilometres away) with an upgrade of the road and communications links. Tourism, IT software development and education are mainstays of the economy here, plus the city is surrounded by four industrial zones, so it would be a good place to consider as an entry point to these sectors.

Nagpur

Nagpur’s claim to fame is its location – right in the centre of India. Apart from New Delhi, it is the only city with rail connection to all state capitals. This makes it an ideal place for logistics within the central regions of the sub-continent. It is located in the state of Maharashtra, but a few kilometres from Madhya Pradesh in the north. It houses the Multi-modal International Cargo Hub and Airport at Nagpur (MIHAN) project.

nagpur2

There is an opportunity to build a logistics base here. Companies including Mahindra Satyam, DLF, Sahara and Raheja all have bought land to create townships and there is a plan for Health City as a centre for healthcare. IT giants such as TCS and Infosys are building major centres here. It has also a tourism opportunity with tiger parks within striking distance.

Indore

If you are looking for a prize position on the Mumbai–New Delhi growth corridor (1,500 Kms., over 6 states, transport, “smart cities” and Japanese financing), and access to the transport infrastructure which links Mumbai and New Delhi, this would have to be on your list. Indore is a commerce and industrial city in Madhya Pradesh, strong now in IT (Infosys and TCS locating there) as well as a major healthcare and education centre.

Pictured below Indore

Indore 3

Pune

We take a different view and urge you to think Pune as an alternative to Mumbai, fast becoming a conurbation of massive size. Mumbai is fast, expensive, has massive population pressure, proudly 24/7 and you have to be fully ready to go before having a conversation.

pune2

Pune is a more affordable centre of education, manufacturing – with research/innovation of growing importance, and can be your more manageable and more liveable (along with Hyderabad highest ranking on Mercer 2015 Quality of Living rankings) gateway to Mumbai.

Gurgaon and Noida

Again, a different view – thinking of New Delhi, also think of satellite cities: Gurgaon (especially) and Greater Noida. Gurgaon is a diverse financial and industrial city and the Indian corporate headquarters of IBM, American Express, Microsoft, Bank of America and many more – 250 of the Fortune 500 companies are there. It was also one of the first offshoring locations thanks to GE. Good access to the political and decision-making heart of New Delhi – which is also impacted by major population pressure. Retail is significant in Gurgaon with 30 or so shopping malls.

gurgaon2