China, Japan and India – the new startup triangle

China is a major provider of funding and control of many Indian startups. In 2015, Alibaba invested in Paytm through its affiliate Ant Financial. In 2017, Tencent took major stakes in Flipkart and Ola.

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Japan is also a serious provider of funding in India. Japanese giant Softbank has invested over US$8B in startups in the country, with a goal of $10B by 2024 that now looks surprisingly conservative.

As a result of this “triangle”, India is currently home to 26 startups valued over US$1B.

Oyo Hotels and Homes is raising US$1.5 billion from founder Ritesh Agarwal, SoftBank Group Corp., and other investors as it expands into foreign markets such as the U.S. and Europe.

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Agarwal, 25, will spend $700 million to buy new shares in the company.

Indian edtech startup CollegeDekho, which helps students connect with prospective colleges and keep track of exams, has raised US$8 million in a Series B round.

Last October, Indian e-commerce startup Snapdeal raised US$627 million at a valuation of over $2 billion. In the same month, India’s Uber-style taxi service, Olaraised $210 million, while being valued at over $1 billion in under three years.

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India’s largest online retailer and version of Amazon is Flipkart which recently raised another US$700 million at over a $11 billion valuation.

India’s online restaurant guide, Zomato, recently bought US-based Urbanspoon for over $50 million—one of the largest acquisitions by an Indian startup.

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India’s Silicon Valley – Both Koramangala in Bangalore and Hiranandani Powai (pictured below) in Mumbai – are becoming thriving ecosystems to nurture startups in India.

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Things are changing in modern India – and the “triangle” of India, China and Japan is playing a big role in the change.

 Time to look again?

The world has been changed by Gandhi – celebrating 150 years since his birth

History recognizes Mahatma Gandhi (1869-1948) as India’s “Father of the Nation”.

But he has been the “Father of Change” throughout the world.

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Peaceful freedom campaigners such as Nelson Mandela, Martin Luther King and Tibet’s Dalai Lama owe much to this great man.

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I am pictured visiting the Gandhi Ashram in Gujarat

In my own generation it was our opposition to the Vietnam War that led us to study Gandhi and his methods of non-violent protest. In this way he inspired young people in the 1960’s in Australia, USA, Canada and more.

I especially love his message encouraging tolerance: “As long as you derive inner help and comfort from anything, keep it”. He said: “The golden rule is to test everything in the light of reason and experience, no matter from where it comes.”

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Some more Gandhi messages for specific sectors:

Communities: “The weak can never forgive. Forgiveness is the attribute of the strong”.

Leadership: “I suppose leadership at one time meant muscles; but today it means getting along with people.”

Careers: “The best way to find yourself is to lose yourself in the service of others.”

Business: “A customer is the most important visitor on our premises; he is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so.”

Innovation: “Freedom is not worth having if it does not include the freedom to make mistakes.”

Education: “Live as if you were to die tomorrow. Learn as if you were to live forever.”

In our ever-busy lives, Gandhi is a role model in taking time out for the simple things. I saw this in bustling Mumbai at Mani Bhavan (Gandhi House), a three storey home with shuttered windows, a residence that Mahatma Gandhi was able to use. His room is simply furnished, austere. He would sit and read, spin cotton or talk to friends. It was his quiet time.

This was indeed the man who said there was enough in the world for everyone’s need but not for everyone’s greed.

No surprise then that Gandhi’s core approach to life was “You must be the change you want to see in the world”, a message very alive today as we seek to enhance our tolerant, multicultural communities.

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Indian middle-class consumers are spending big this festive season and online shopping is booming

India’s e-Commerce major Flipkart set record sales in the “Big Billion Days” launch of festival season online sales (Navrati and Diwali are in October).

Both e-commerce majors Flipkart and Amazon India had record transactions on their platforms on the first day of their annual festive sale, which started early on Sunday.

Flipkart is now owned by American retail major Walmart.

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Flipkart had demand in all major categories, including beauty, women’s ethnic wear, kidswear, sports, fast-moving consumer goods, baby care, private labels, and furniture on the first day of the sale.

High end phones are in demand – Amazon had big sales in premium smartphone brands OnePlus (pictured), Samsung, and Apple. Large appliances and televisions showed growth.

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The company said the largest number of new customers shopped for fashion, daily essentials, and consumables.

For Flipkart, travel was also the fastest-growing category which saw 12X growth over last year.

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Also, over 2.3 million consumers engaged with games on the platform. There were close to 10 million new app downloads in less than a month in the run-up to BBD 2019.

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Candles of the Diwali celebrations coming up on 27 October – a time of gift giving and family gatherings similar in scale to Christmas

Steve’s 7 tips for exporting to India’s middle class

  1. Find the affluent millennials

India is home to the world’s largest population of millennials—typically defined as those aged 18-35. At 450 million, these millennials are influencing the way Indians eat, shop, commute and buy, much like their global counterparts. They are the first upwardly mobile group in recent history of India – and will have an impact very like the way western baby boomers changed most things.

According to Santosh Desai, managing director of Indian Brand Advisory Group Futurebrands, Indians used to be “born something” but now can “become something”.

2. Drill down to the real middle-class market

We know India has 1.3 billion people, but if you think too much about this you will get nowhere. Drill down to find your market.

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For example, some estimate the “middle class” as high as 300 million. For me, this is way too high. Austrade takes a dimmer view – it estimates that there are approximately 30 – 80 million people in our target demographic, many of whom live outside Tier 1 cities. That’s a big range from 30 to 80, which shows that we just do not know. But for me Austrade’s numbers are too low.

Austrade looks for consumers that:

  1. can afford international travel to destinations like Australia;
  2. can afford to send their children for study abroad; and
  3. can afford to eat at high-end restaurants and hotels or eat significant amounts of imported food and wine at home

3. Think of India as many markets

Thinking of India as “one market” will slow down your impact and waste your marketing efforts. First, there is the divide between north, south, east and west. Then there are big metropolises (8-10) and hundreds of tier one cities (around one million plus). Then there are over 26 different languages, multiple food cultures, differing beliefs and interests. It is complex, so build that into your “many markets” strategy.

4. Consumerism is changing in India

India had just 9 Shopping Malls in 2007. There are over 350 Shopping Malls in 2019. Plus 85 new Shopping Malls will be built in the next 5 years = 435 Shopping Malls in 2025.

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Add to this that online retail is taking off, with Amazon and the local Flipkart leading the way.

Dr Mark Morley Trade Commissioner India Government of Australia makes a key point about opportunities for us: “Australia is well positioned with the Indian consumer. Across India, we have a great reputation for clean, safe and reliable supply. We are well known as a premium supplier of produce, and we have a global reputation for our quality brands.”

5. Thinking local is a good way to start

Especially for those in food, beverages, education and fashion, your beginnings for India can start right here in Australia.

About 650,000 Australians claim Indian ancestry, and we have over 65,000 Indian students here, which means a significant local market spending money. Add to that the growth in Indian tourists – up to over 300,000 per year and growing at around 15%. This gives you a good market testing opportunity.

6. Collaboration is the new relationship

If you just want to “sell” to India, sharpen your pencil and think short term – sooner rather than later, India will find an alternative to you.

To be in India for the long term, seek genuine opportunities to collaborate with Indians – once you and Indian collaborators are working together, your future is more secure. This is how Indians prefer to operate, so drop “transactional” thinking and focus on “collaboration” – it is the new relationship.

7. Give India the time it needs

Cultures based on relationship (collaboration) are slower to move, so give India at least three years. You might “sell” sooner, but for most this is a very short-term market entry approach.

Indian Government plan to allow foreign universities in India is a game changer

The Narendra Modi Government of India has taken steps to allow foreign universities to set up campuses in India – this will be a major game changer.

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The Bill aims to set up a single higher education regulator that will replace the University Grants Commission (UGC) and the All India Council of Technical Education (AICTE).

The Bill carries a clause stating that the new Higher Education Commission can permit “highly-reputed foreign universities” to set up campuses in India.

Skills and education are part of the focus of my mission to India in November – we will report back on this game changer.

My “shopping mall index” shows you must revisit India for consumers

India had just 9 Shopping Malls in 2007.

There are over 350 Shopping Malls in 2019.

Plus 85 new Shopping Malls will be built in the next 5 years = 435 Shopping Malls in 2025.

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That’s my “shopping mall index” That’s why you should revisit India.

India today is a heady mix of three powerful elements – an appetite and reality of rapid change, a young population and the Governments now have funds to spend.

Add to this that online retail is taking off, with Amazon and the local Flipkart leading the way.

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Dr Mark Morley Trade Commissioner India Government of Australia makes a key point about opportunities for us: “Australia is well positioned with the Indian consumer. Across India, we have a great reputation for clean, safe and reliable supply. We are well known as a premium supplier of produce, and we have a global reputation for our quality brands.”

One challenge for Australian businesses is to fully understand the market – and the answer is that hardly anyone knows what size the market is.

We know there are 1.3 billion people.

Within that, some estimate the “middle class” as high as 300 million.

Austrade takes a dimmer view – it estimates that there are approximately 30 – 80 million people in our target demographic, many of whom live outside Tier 1 cities. Thats a big range from 30 to 80, which shows that we just do not know. Austrade looks for consumers that:

  1. can afford international travel to destinations like Australia;
  2. can afford to send their children for study abroad; and
  3. can afford to eat at high-end restaurants and hotels, or eat significant amounts of imported food and wine at home.

The point is, we need more and better data.

But my “shopping mall index” should give you a reason to revisit.

And if you act soon but take a long term view, now is the time to start.

Uniqlo to open first Indian store in Delhi

Further evidence of rapid change in retail in India – On 4th October 2019, Japanese apparel retailer “Uniqlo” will open its first store in Delhi and as a part of its strategic roll-out plan, it will open three stores in the Delhi-NCR region by end of 2019.

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Ambience Mall, Vasant Kunj

The government has further improved sourcing patterns for the international companies that enter India through its single brand retail route.

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Mr. Tomohiko Sei, Chief Executive Officer, Uniqlo India, said, “We are very excited to announce the opening date today. We look forward to formally opening our doors to the Indian customers and offering Uniqlo’s high quality, highly functional apparel that we call LifeWear starting from Delhi at Ambience Mall, Vasant Kunj.”

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Happy Independence Day to young and vibrant India

On this Independence Day for India, 15 August, it was a privilege to attend the flag raising ceremony at the Indian Consulate in Melbourne (picture below).

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It made me reflect on one amazing statistic about India – more than 50% of its population is below the age of 25 (that’s 600 million) and more than 65% below the age of 35. It is expected that, in 2020, the average age of an Indian will be 29 years, compared to 37 for China and 48 for Japan.

This “Demographic Dividend” will drive economic growth and cultural change.

Happy Indian Independence Day!

Indian budget signals some shifts in education and skills training

The Indian Budget this month signalled continued commitment to free (free-er) market economy and was interesting in terms of education, skill development and related sectors.

The New Education Policy (NEP) is at the centre of reforms, set to bring major changes in school and higher education.

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Research is being given a big thrust with the National Research Foundation. Also, approx. US$60 million has been allocated to world-class institutions, signalling the continued thrust on excellence in higher education.

PM Modi is personally committed to having high ranking universities in India and some future deregulation is expected to allow greater global involvement – but nothing on this in the budget.

The finance minister also highlighted the ambitious Study in India programme, which has the potential to make India the hub of learning (again).

The National Sports Education Board is a much-needed initiative to promote sports amongst children who want to pursue that as a career.

We do hope the much-awaited Higher Education Commission of India (HECI) takes shape this financial year – still waiting on that one.

Family businesses in India are the world’s most upbeat

Family businesses in India are on a growth trajectory, with 89 per cent of them expecting to grow in the next two years, according to a survey.

The global survey, ‘Family Business Survey 2019’ by PwC, was done among 2,953 family leaders across 53 countries, including 106 family business leaders, between April 20 and August 10, 2018.

The survey has revealed that 89 per cent of family businesses in India expect to grow in the next two years, with 44 per cent of them looking at growing aggressively and 45 per cent expecting steady growth.

“Regulatory changes are getting family businesses to bring in order and professionalise the business, and disruptive technology is pushing them to transform. These new market dynamics are cultivating a renewed sense of ambition in family businesses, making them resilient in the face of change,” PwC India Partner and Leader, Entrepreneurial and Private Business, Ganesh Raju K said.

In terms of expansion, a little more than half of the family businesses are open to internationalisation, while 40 per cent are looking at diversification, the survey said.

Nearly half of the family businesses in India are open to mergers and acquisitions both within India and outside thus reinforcing the belief that inorganic growth will facilitate synergies and achieve incremental revenue, it said.

A lot of Indian family business owners are looking at private equity or venture capital funding or are looking at listing their business on stock exchanges.

Further, the survey said, more and more companies looking at professionalising their business functions are distinguishing between ownership and management as they feel partnering with the right talent might help family businesses to adapt to the changes.

About 73 per cent of Indian family businesses have the next generation working in the business and 60 per cent plan to pass on the management or ownership to the next generation.

It also found that 92 per cent of family businesses in India allow family members to work in the business. When it comes to spouses or partners, three-fourth of family businesses allow them to own shares and two-third allow them to work in the business.

BUT – there is some evidence the next generation of young Indians will want to branch out and create their own startups rather than the traditional path of joining the family firm.YoungIndians 2