Business pitch in India
By Justin Wearne
Historic Chennai Cricket Ground, India: Test cricketer Darren Lehmann, looks on as South Aus-
My visit to
India was in
tralian Premier, (Hon.) Mike Rann, and a former Indian captain inspect the pitch prior to a friendly
game of cricket designed to facilitate trade between South Australia and India. Photo:Justin
Wearne, Sept 2005.
conjunction
with the South
Australian
Premier’s Trade
Mission
organised
by the South
Australian
Department
of Trade.
I am sitting in a 747 flying from Singapore to Sydney. The guy in front of me has
his seat as far back as my knees will let it go and I have my laptop open enough
for me to just make out the screen. I’ve just watched War of the Worlds on the
in-flight movies and I started feeling guilty about how time expensive travel is.
So I felt compelled to do some work no matter how inconvenient.
I am on my way back from India where I have been investigating opportunities for
a client. Let me share with you what I found out about the sub-continent. You
need to hear this. Let me give you a big tip; India will be on your scope before too
much longer. Why? There are over 1 billion reasons why. Read on.
My visit to India was in conjunction with the South Australian Premier’s Trade
Mission organised by the South Australian Department of Trade. The trip included
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the Minister for Trade, (Hon.) Paul Holloway, about 30 South Australian Business
People, and was facilitated by former Australian Test Cricketer Darren Lehmann
as a special envoy.
I will admit to
thinking of India
as a third world
country until
Maybe you are better informed than I am; but I will
admit to thinking of India as
a third world country until
recently when we made the
decision to look at export. I
was thinking ‘Middle East’;
Austrade suggested ‘Have
you thought about India?’
recently when
we made the
decision to
look at export.
Certainly, much of India is shabby compared to the West. There are still miles of
shanty towns. In Mumbai (Bombay) I drove past the largest slum in Asia. You
cannot believe how these people live. Rows of tin shanties butted together sharing dividing walls, rusted iron roofs trying to keep monsoonal rains out with plastic
tarpaulins held down by stones or lumps of scrap wood. No services. The toilet is
the side of the road.
By contrast, there are modern business centres complete with the usual tall buildings, road systems, modern communications and other infrastructure. Shopping
malls and supermarkets are starting to appear. Everything in the West is finding
its way to India. These modern features of the developed countries sit directly
alongside slum areas.
A common sight in India is a fine retail outlet boasting floor to ceiling glass with
stainless steel door and window frames, complete with showroom lighting. Staff
are well attired in suits. Alongside is a business housed in a dilapidated structure. Its proprietor can be seen squatting on the floor with a piece of metal held
under his feet. He is working on it with his tools. A hundred similar businesses
are visible on the same street. A cow saunters passed. Above the shops people
live in squalid apartments.
The bustle in the streets is
constant. Indian people at
all levels are industrious.
The streets swarm with enterprise. From the little girl
clutching a baby (a bloody
bandage cosmetically tied
around its forehead) tapping
on car windows begging for
money, the man riding an
ancient bike piled five feet
2
high with hessian, the trader selling machinery, to the computer programmer cutting code at a workstation in his office.
A quarter of the Indian population live below the poverty line. So where is the
business opportunity?
With a population of over 1 billion people, at least 750 million people live above
the poverty line. In fact some live way above it; there are more millionaires in
India than the population of Australia.
Lots of things are compared to us; one billboard I saw for a bank in India featured
a picture of the Opera House and read ‘More customers than the population of
Australia.’
The population in India grows by more than the Australian population every year.
See? If you think you have a market here, in one year in India the size of your
market could double if it isn’t 50 times the size already!
Why compare to Australia? Indian people are very aware of Australia, quite simply because in India cricket is a religion. I was touring India with Australian Test
Cricketer, Darren Lehmann who turned out to be a great attraction and an ambassador for business.
It was about
introducing
South
Australian
business
to India.
Darren’s role was Special Envoy for the South Australian delegation lead by the
South Australian Premier, (Hon.) Mike Rann. It was about introducing South Australian business to India. The trade mission culminated in a cricket match between the trade mission, Indian business people and celebrities; the South
Australian Premier’s VI vrs the Tamil Nadu Chief Minister’s XI. The cricket was
fun, the business was great. Either way it was a good pitch.
Most people in the street in
Australia would walk past
Darren; however in India he
couldn’t go anywhere
without people obviously
recognising him and
approaching him for his
autograph. Even in the
five-star hotels where we
were staying, waiting staff
asked for his autograph.
He is a cricket legend.
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Everyone who
you will want
to do business
with speaks
English.
Cricket of course was introduced to India by the British1. Indian people have a peculiar regard for the comparatively brief period that the English ruled. India is a
5,000 year old culture2. The English were only there for some 200 to 300 years3.
And while no one could blame the Indians for hating the rough handed way that
England invaded and plundered India’s wealth, the Indian’s are, to this day, very
fond of most of the things the English left behind. India’s independence from
Britain was achieved in 1947, peacefully.
And this is one of the reasons why India is so suitable for investigation for doing
business. English is the main language in India. Everyone who you will want to
do business with speaks it. A high proportion of people can read and write in
English4. Oh, yes even the people who live in the slums are now receiving
schooling.
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http://banglacricket.com/History/timeline.php It stands established that organized cricket in India began in
Calcutta (current Kolkata) in 1780, a major city of Bengal. Early English expatriates banded together to form the
Calcutta Cricket Club. With its tentative year of birth at 1780, the Calcutta Cricket Club becomes senior to the
Marylebone Cricket Club, which was established in 1787, by a clear margin of seven years. The London-based
MCC, which was till a few years ago the parent body of cricket, still holds an eminent position in the world of
cricket.
2
http://www.cia.gov/cia/publications/factbook/geos/in.html The Indus Valley civilization, one of the oldest in the
world, dates back at least 5,000 years. Aryan tribes from the northwest invaded about 1500 B.C.; their merger
with the earlier Dravidian inhabitants created the classical Indian culture. Arab incursions starting in the 8th
century and Turkish in the 12th were followed by those of European traders, beginning in the late 15th century.
By the 19th century, Britain had assumed political control of virtually all Indian lands. Indian armed forces in the
British army played a vital role in both World Wars. Non-violent resistance to British colonialism led by
Mohandas GANDHI and Jawaharlal NEHRU brought independence in 1947. The subcontinent was divided into
the secular state of India and the smaller Muslim state of Pakistan. A third war between the two countries in
1971 resulted in East Pakistan becoming the separate nation of Bangladesh.
3
http://www.hindubooks.org/sudheer_birodkar/hindu_history/landbritish.html From the 15th century onwards the
first European colonists had started visiting the shores of India. In the early 16th century, Portuguese rule was
established on the West coast of India at Goa. But the Portuguese did not succeed in moving deep into the
country, their domination remained confined to the coastal periphery. It was only the British who managed to
take on the mantle of administering the country from the Mughals. But the British ascendency which began with
the battle of Plassey in 1757, did represent the beginning of the end of feudalism in India. The century from
1757 to 1857 was the transitory stage from feudalism to the modern era. Thus in India, the decline of feudalism
did not entirely come about due to its internal decay it was largely mediated through the intervention of European colonialism.
4
http://www.cia.gov/cia/publications/factbook/geos/in.html definition: age 15 and over can read and write, total
population: 59.5%, male: 70.2%, female: 48.3% (2003 est.).
4
This is a good thing, because the native tongue in India5 varies every 50km in
any direction, with something like 14 main languages and many local dialects.
One Indian businessman informed me that ‘there are effectively over 2000
languages spoken, and they are not just variations; they are as different as
French is to Mandarin.’
The English also left behind an organised political and legal system. India is a
democracy. Indian law is very similar to British and therefore to Australian law6.
Their system of Government is based on two houses of parliament (the good old
Bicameral System of Government) and there is also a separation of powers
between the church, government, and the legal system.
India is where China was 5 to 8 years ago, with one big difference; English
language and a British based political and legal system.
Importantly
India’s
economy is
booming.
Importantly India’s economy is booming. Average GDP growth is forecast to be
at least 7% per annum for the next five years. Telecommunications alone has
grown by 45% in the last 12 months.
India has relaxed its trade barriers, reducing taxes and duties on foreign goods
and encouraging investment in target industries; IT, telecommunications, and
health in particular.
5
http://www.cia.gov/cia/publications/factbook/geos/in.html English enjoys associate status but is the most important language for national, political, and commercial communication; Hindi is the national language and primary
tongue of 30% of the people; there are 14 other official languages: Bengali, Telugu, Marathi, Tamil, Urdu, Gujarati, Malayalam, Kannada, Oriya, Punjabi, Assamese, Kashmiri, Sindhi, and Sanskrit; Hindustani is a popular
variant of Hindi/Urdu spoken widely throughout northern India but is not an official language.
6
http://www.cia.gov/cia/publications/factbook/geos/in.html Based on English common law; limited judicial review
of legislative acts; accepts compulsory ICJ jurisdiction, with reservations; separate personal law codes apply to
Muslims, Christians, and Hindus.
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SMS messages
cost less than
a cent.
Competition amongst Mobile telephone communication providers is so fierce
that the cost of calls is ridiculously low. SMS messages cost less than a cent.
Slum dwellers have mobile phones.
One important factor is that India introduced cellular networks comparatively
recently when networks had already been rolled out in the West; allowing companies going into India to use the best value for money systems and systems
that have already recovered their R&D investment.
And the population density in the major regional centres is so much more – well
‘dense’. Think about the huge cost of the mobile phone network infrastructure
required to service Australia. In India the same infrastructure that services a city
the size of Melbourne services 20 million people living in Bombay alone – in an
area less than half the size of Melbourne.
India’s GDP at US$3,319 billion ranks 5th in the world7. Five times the size of
Australia’s. Dear reader, where have you been?
India has the world’s largest film industry (yes, larger than the US) and the second
largest IT industry. The Indian people are very business and technology savvy.
Don’t under estimate the average Indian businessman. And certainly don’t underestimate the above average Indian businessman! They are intelligent,
educated (quite often in the West), deal oriented, and you need to be on your
toes. However, you will also find them to be courteous and welcoming.
Particularly if you open the conversation with cricket.
India has its own car industry.
My guess is that much of this
car industry was built by Indian
entrepreneurs buying the tooling
from defunct car factories in
Europe. Consequently much of
the fleet driving around looks to
be a nostalgic mixture of old
favourites made by Hillman,
FIAT, and similar.
Somebody mentioned that the Volkswagen Kombi is still being built in India but I
was unable to confirm this.
http://www.cia.gov/cia/publications/factbook/rankorder/2001rank.html India’s GDP in 2004 =
US$3,319,000,000,000 verus Australia = US$611,700,000,000
http://www.economywatch.com/indianeconomy/indian-economy-overview.html Economics experts and various
studies conducted across the globe envisage India and China to rule the world in the 21st century. For over a
century the United States has been the largest economy in the world but major developments have taken place
in the world economy since then, leading to the shift of focus from the US and the rich countries of Europe to
the two Asian giants- India and China. ‘An annual average growth of 7-8 % in the next five years.’
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India today is manufacturing many modern models. Around 700,000 new cars
are sold annually with sales growing by 17.7 percent over the previous year8.
There are both opportunities to import and export. There are many Indian
companies keen to develop an export market, and many goods being manufactured in India can be of high quality and very low cost.
Labour in India
is cheap
compared
to the West.
Labour in India is cheap compared to the West. As an illustration, a Business
Development Manager working for Austrade in India was discussing this point
with me ‘I must confess I was in a bit of trouble when I visited Australia and
staying in your hotels. I’ve never ironed a shirt in my life.’
He has a number of people employed by his household; somebody to cook,
another person washes dishes, their laundry is sent out, and somebody else is
employed to clean the house. This should not be taken as a measure of how
well paid he his, but how affordable they are.
I made the mistake of taking
enough white shirts to do
business for a whole week in
India, fearing the inconvenience
and cost of getting laundry done
by the Hotel.
In an Australian Five Star Hotel
you will pay up to $12.00 to have
a shirt laundered and Ironed and
you will have to work around
their timetable.
I discovered this by accident. Finding no iron in my hotel room I called the
concierge and asked for one to be sent-up ‘of course sir, but we can do this for
you. When do you need the shirt?’ Apologetically I explained that I was about to
attend a dinner and I would need it in about 30 minutes. ‘No problem sir, I will
collect your shirt right away.’ He did; it came back beautifully ironed. I swear
every button was polished.
They can offer this service because the labour is so cheap. They have the
people down in the laundry waiting in case somebody wants a shirt ironed. In
Australia you can’t afford to have people laying in wait. I had my shoes polished,
done, 10 minutes after I made the phone call.
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http://www.detnews.com/2005/autosinsider/0503/15/autos-117824.htm Car sales in April-February, the first 11
months of the current business year ending on March 31, rose 17.7 percent to 730,425 units from 620,705 a
year earlier.
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You try that in an Australian Five Star Hotel, they’d laugh at you (after you’d
hung up the phone).
Business
people in India
want to deliver
...the goods
and services
that the
growing middle
class want.
The proposition is quite simple.
India has a growing middle
class; people who want to work
hard, make money, and enjoy
life - consumers. Business
people in India want to deliver
to these people the goods and
services that this growing
middle class want. These
business people are potential
distributors.
So there you go. It’s a fascinating place. I thoroughly enjoyed my visit and I
think my client will eventually do well in India. I say eventually because the
three ‘P’s; persistence, persuasion, and personal contact are the fundamental
rules. One visit to India (or anywhere) does not an export market make.
Good luck and next time you see me I’ll tell you my favourite joke about ‘hunting
tiger in India…’ as recalled by an old colonel residing in a London club.
Justin Wearne – Principal Consultant
Justin is an industrial entrepreneur and marketer with over 30 years business
experience. For the past 15 years he has worked as a management consultant
through his firm JWPM Consulting, which he founded in 1994.
An accomplished business and marketing advisor, Justin has devised and
implemented many successful business strategies and marketing programs on
behalf of his clients.
Business owners and leaders find Justin to be a valuable resource thanks to his
ability to understand technical jargon across a wide spectrum of disciplines and
technologies, as well as having considerable experience with strategy,
management, and business processes. His ability to apply marketing in a
practical sense (i.e. to actually increase revenue not just talk about it) is pivotal
to his success as an industrial marketer.
As well as being the Director of JWPM Consulting and the start-up company
Red Button Technology, Justin is also a Member of the Australian Institute of
Management Consultants (AIMC).
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For an excellent snapshot about India visit…
http://www.cia.gov/cia/publications/factbook/geos/in.html
Here is an excerpt from that URL…
India's diverse economy encompasses traditional village farming, modern
agriculture, handicrafts, a wide range of modern industries, and a multitude of
services. Services are the major source of economic growth, though two-thirds of
the workforce is in agriculture. The UPA government has committed to furthering
economic reforms and developing basic infrastructure to improve the lives of the
rural poor and boost economic performance. Government controls on foreign
trade and investment have been reduced in some areas, but high tariffs (averaging 20% in 2004) and limits on foreign direct investment are still in place.
The government has indicated it will do more to liberalize investment in civil
aviation, telecom, and insurance sectors in the near term. Privatization of
government-owned industries has proceeded slowly, and continues to generate political debate; continued social, political, and economic rigidities hold back needed initiatives. The economy has posted an excellent average growth rate of 6.8% since 1994,
reducing poverty by about 10 percentage points. India is capitalizing on its large numbers of well-educated people skilled in the English language to become a major exporter of software services and software workers. Despite strong growth, the World
Bank and others worry about the combined state and federal budget deficit, running
at approximately 9% of GDP. The huge and growing population is the fundamental
social, economic, and environmental problem. In late December 2004, a major
tsunami took nearly 11,000 lives, left almost 6,000 missing, destroyed $1.2 billion
worth of property, and severely damaged the fishing fleet.
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