As India continues its relatively rapid economic growth, its market potential is gaining the attention of corporate boardrooms across the West. The relative ease of repatriating profits from India has kept sophisticated investors excited about the long-term opportunity there.
Here's a gist of information which is relevant to our prospective clients when expanding their presence in India.
- The reality is that approx. 40 to 60 million Indians have spending power that is equivalent to the middle class American consumers, by most metrics that western companies may consider useful.
- That is still a very large market and the good news is that for many products, this market is relatively untapped by your competition.
- Whether you are selling to businesses or consumers, you are well advised to consider the specifics of the Indian environment before picking one of your pre-existing products and offering them to Indian consumers.
- Frequent power outages and voltage fluctuations make stressful demands on many products that need electric power.
- Ambient heat, humidity and rain can render other products ineffective unless they are redesigned for tropical conditions.
- If you sell a consumer product, keep in mind that the extended family is an important social unit in India and products are often shared across a much larger number of individuals than in the other parts of the world. This can be important whether you sell cars or candy.
- If you sell a business service or product, consider that your product may experience much higher daily utilization as Indian executives try to maximize their return on investment; for example by running machines in multiple shifts or over seven days a week.
- The recent economic boom has launched a few million Indians into the upper economic class by any standards.
- There is often a tendency among the newly rich to spend this wealth lavishly.
- To some extent, there is a tendency toward conspicuous consumption on special occasions such as weddings.
- Other affluent consumers simply want enjoy the best that the world has to offer.
- A global company recently introduced a high-end entertainment system into India, with the intent of selling primarily in business applications. They were pleasantly shocked to find that about a third of their first-year sales resulted from affluent consumers equipping their homes and sometimes their vacation properties as well, with the same system.
- In a recent survey it was found that 71% of Indians have a positive attitude towards the foreign goods. This number was only 52% at the turn of the century. Today more Indians feel positively about the foreign products.
- In contrast, only 42% of Chinese harbor positive feelings about the foreign products.
- In India, global companies and their brands are valued and welcomed today. Many of your competitors do not yet appreciate the potential of this untapped goodwill.
Don't dream about entry into India without a joint venture partner
- If this was ever true at some point, it's no longer necessarily the case. JV partners can add tremendous value in many cases.
- But in India, we've seen many deals where a local JV partner became a hindrance. It may be harder at first, but don't rule out the possibility of going it alone.
In summary, look carefully and look beneath the surface. You are likely to find success faster and deeper with your Indian initiatives as a result.