International Business : Indian Summer – Land of opportunity

When Gallagher Group first made its foray into the Indian agricultural management market in the early 1980s, vital part of its new business involved setting up electric fences around plantations to keep hungry elephants out.
Using tried and tested techniques, the company’s representatives set up the fences, only to find that keeping elephants away from vital crops was little different from fencing off sheep and cattle. The elephants would simply wrap their trunks around the fence posts and walk backwards, bringing the whole fence line down. little bit of lateral thinking was needed to solve the problem, and Gallagher hit on the simple solution of wrapping the electric wire around the post itself. After this, the elephants soon learned their destructive trick was not going to work any more, and moved on.
Setting up and sustaining business on the Indian subcontinent will be fraught with its own unique challenges like intelligent elephants, but the opportunities and capabilities of the Indian market have become too strong to ignore, and more and more Western eyes are turning in that direction.
Locally, there has been strong discussion of free trade agreement between India and New Zealand and it is one many businesses here are keen to see developed. India had GDP growth rate of 9.4 percent in 2006-2007, making it the fastest growing in the world. Incredibly, India will soon overtake China to become the world’s most populous nation, with middle class in excess of 200 million and more billionaires than Japan.
India’s massive internal market is progressively being opened to foreign business and three quarters of all Fortune 500 companies are now actively engaged there. It has population that is becoming more urbanised each year, and while less than third of all Indian currently live in the cities, rapid economic growth in the major centres is fuelling massive internal migration, creating major infrastructure opportunities. India was New Zealand’s 23rd largest export market in the year ended June 2008, with primary commodities still dominating New Zealand sales to India.
The opportunities in India are there for the taking, and closer look at India’s markets, the possibilities, the pitfalls to avoid and the Indian method of doing business were the focus of recent business forum held in Auckland. At the forum, representatives of India’s business community and local companies who had made the foray into the market there, gave their views and tips for the future.
One piece of advice that came up often during the forum was the benefits of perseverance. While the Indian scene is rapidly evolving one, New Zealand companies should not expect instant results. Gallagher was represented at the forum by the company’s security management systems business development manager, Ian Meadows, who manages the Cardax partner network throughout West Asia, India, Pakistan and the Middle East. He said that while Gallagher’s initial moves into the Indian market began in the early ’80s, it was another 10 years before the company began racking up significant sales.
He said that while companies were now used to lead time in business dealings of couple of months or year at most, its Indian success was result of decade of effort and showed the value in company founder Bill Gallagher’s ongoing belief that there was business in that part of the world.
“You have to really believe in what you are doing and keep at it. You may get knocked back, you may head up the wrong avenue, but you have to just keep going. It really is about perseverance. We do quite nicely in India now and have lot of significant business there, but it didn’t come easy. It took lot of effort and lot of visits, and sometimes you come back feeling bit disheartened, wondering what was the point in going, but you just have to go back again and keep going.”
Meadows told the forum attendees that he had been travelling to India for business deals since 1994 and he had personally witnessed improvements in the country’s infrastructure. While ATMs are now readily available throughout the country, Meadows said this wasn’t always the case, and cited two-hour meeting at an Indian bank which was necessary to sort out some traveller’s cheques.
Power supply was also not guaranteed when Meadows first went to India, and he said it could sometimes get little difficult conducting businesses in 45-degree heat when the air conditioning went out.
But with the Indian government putting more effort into infrastructure, coupled with an increasing rise in education and literacy levels, the impact of these problems has been greatly reduced. IT and electronics knowledge is widespread, and communication technology has also been dragged into the 21st century. While there were few options outside the phone and telex machines in the past, options such as email and teleconferencing are now readily available and widely used.
For business looking to use these improvements in infrastructure and the favourable economic outlook to make its mark in India, there are many options available. Several of the speakers at the Indian Business Forum, including Boston Consulting Group Asia Pacific managing director Andrew Clark, recommended that for small- to mid-sized company, entering the market through partnership or joint venture was the most practical option, although it was stressed that establishing successful joint venture still required lot of upfront homework and planning.
These partnerships can arise through the usual networking methods, but they can also come through unexpected avenues. For Gallagher Group, it saw an opportunity with local partner when it discovered that the company had reverse-engineered Gallagher’s products.
“We sent some product over, and then it went very quiet,” said Meadows. “Bill then found they had reverse-engineered that product and were trying to make it locally. So being an entrepreneur, Bill went over to visit them and told them he could show them how to make it better, and then to make it for him and he built relationship out of that. And we’ve had that relationship for many years now.”
Meadows added that even with local partner, there was still the need to make regular market visits and anybody looking at the Indian market needed to be prepared to invest time and money to build relationships and brand recognition, especially when the differences between the country’s various districts meant company could have huge brand in one area, but still be unknown in others.
Venkat Raman, editor of Indian Newslink, also gave forum attendees number of helpful hints for dealing with Indian business. These included sorting out the arrangements as much as possible in advance, establishing familiarity with potential partners and clients through email and phone before making the physical trip, seeking out as much information as possible from other businesses which have made the leap into the Indian market or organisations such as New Zealand Trade and Enterprise, and ensuring that all the necessary homework is done, as Indians love the details of any deal.
While Raman, Meadows and other speakers at the forum all saw India as growing powerhouse on the global economic stage, they also conceded there was one thing guaranteed to slow the country down temporarily: cricket.
“One of the first projects we were involved in over there was fast-tracked and high-pressure job that had to get done,” explained Meadows. “So we were working every hour we could fit in, until the match between India and Pakistan came up. So on the day of the match, one of the engineers rang me up and said we shouldn’t bother coming in today.
“And I asked him what he meant, we were on deadline here, we’re going to get killed by the client if we don’t finish. And the engineer said nobody was going to take any notice of anything else that was going to happen that day. And he was right, it was all about the cricket. And that’s the only thing that will slow d