With a population exceeding one billion (second only to China), the largest number of English speakers outside the United States, an emerging middle class, and 70 percent of its people under age 35, India offers vast potential for business growth and development. Western business investments in the country exploded in the last decade, from $1 billion to $30 billion.
But India is not the United States and taking advantage of its market potential requires a clear understanding of its culture and its people.
Kenan Institute News talks about the opportunities and challenges with IBM's Deepak Advani, who has led business development in India and China for both IBM and Lenovo for more than a decade.
Kenan Institute News: What do you feel is particularly important for Western companies to understand about India's culture in order to conduct business there?
Advani: India is in a unique position right now. It is a large country experiencing rapid growth driven by a young consumer demographic. It is opening up, and change is occurring. But any business hoping to operate in India must understand that India's civilization and history are centuries old, during which time there was not much change, until recently. The Indian people deeply value their history and are dealing with the rapid changes around them by blending tradition with modernity. To put it another way, India has one leg in the past and one leg in the future, and Western countries must respect this need to honor both aspects of the culture.
Another key understanding of the Indian market is that the people are cautious about spending and need to feel they are getting a good value for their money. They are not interested in frivolous products. Products and services need to be aspirational, loaded with good features at reasonable prices so they can feel good about having made the purchase.
Kenan Institute News: What are particular challenges international businesses might face while trying to set up or expand in India?
Advani: A common mistake made by multinational companies is trying to exert too much control from outside the country. In order to succeed in India, a company must have local knowledge and a competent local team and empower them to deal with the intricacies of Indian business laws and local customs.
Another challenge is that India is an enormous country where 16 languages and more than 3,000 dialects are spoken. It is not homogenous and can't be approached as though it were. Translations and marketing around local themes are important. Of course, campaigns need to be executed with care so global consistency isn't compromised for local relevance.
Kenan Institute News: What types of opportunities do you see opening up in India?
Advani: While many multinational companies are looking at doing business in India, there are also many companies coming out of India that are going global. These companies need employees with a global perspective, so there are good opportunities for talented people willing to live and work in India.
Kenan Institute News: What advice would you give to anyone hoping to pursue business opportunities in India?
Advani: While there is a global recession right now, companies still need to grow. Solid companies can make aggressive moves right now in India, taking advantage of the country's immense purchasing potential. It is just very important to understand how the Indian consumer thinks and to understand what is important to the people. Obtaining local knowledge is critical for any business to be successful in India.
From an employer's point of view, it is also important to make personal connections with local employees and take a true interest in their personal lives. Families are a primary focal point for most Indian people, and an employer's interest in them is appreciated. People must believe in your cause and then they will make a commitment to you.
Kenan Institute News: Are there business opportunities in India for smaller, more-entrepreneurial firms?
Advani: It's more difficult for smaller businesses to benefit from this trend. Unlike multinational companies, they don't have a local presence, which is critical to gain a deep understanding of the Indian consumer wants and needs. They need to find a local partner who can help them understand and serve the local market.
That being said, there are ways for small companies to benefit from the growth in India through careful planning. For example, a friend of mine in Michigan started a small consulting company a few years ago providing engineering services to U.S. companies. As his business grew, he built a satellite office in India. While the initial focus of his India office was to deliver services remotely, he soon expanded its mission to offer engineering services to Indian companies.
Deepak Advani shared insights on India at an April institute event.
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