Thinking about “getting into India”? Brush up on your cricket first says Kevin Kevany.
Attend any conference on exporting or business growth and count the seconds before someone, with a gleam in their eye and a knowing nod, mentions ‘China’. On cue, everyone in the audience lets out a muted sigh and wonders if it will ever finally happen for them.
Occasionally, someone might mention ‘India’, or if they are very sophisticated ‘Chindia’, as a joint market. It’s then that the thought crosses your mind that for every 10 people you know, nearly nine of them seem to be “doing things (seldom well-defined) in China”.
But, for us Kiwis, unlike our Australian counterparts, India seems to be a place that the big guys (coal, dairy, timber etc) rack up the frequent flyer points to. Why, when even a superficial glance at the similarities between New Zealand and India are almost overwhelming – while the very opposite applies to China.
Nitin Palande, brand ambassador for the India Brand Equity Foundation (IBEF), unsurprisingly thinks that Kiwis have “got it wrong”, but does not want to get into a comparison to China to make his case. He is also not overwhelmed by the ‘numbers’ that are put up to justify the focus on China. After all the authoritative BRIC* Report from Goldman Sachs predicts that by the third decade this century, India will be among the three largest economies in the world.
While he won’t (play the comparison game), the marketing machine behind India points to the US Department of Commerce’s ratings: India with a 19.3 percent return on investment and China and Thailand with 14.7 percent and 13 percent.
Even with those predictions and statistics, isn’t it just a fact that China is happening “now”, and India should come later?
The best response probably comes from Cisco Systems Inc’s boss, Dan Scheinman: “We came to India for the costs, stayed for the quality, and are now investing for innovation.”
Surely the innovation, the high-tech and the high returns would make India attractive to New Zealand’s SME sector?
Palande, ever-positive, cuts to the chase: “The world’s largest democracy has now come to the forefront as a global resource for manufacturing and services (emphasis on the first two points of difference to the unmentioned ‘rival’). Its pool of technical skills, its base of an English speaking populace, with an increasing disposable income and its burgeoning market, have all combined to make the country a highly desirable partner.”
He might have added: “Cricket, cricket, and cricket” – since that’s what everyone we spoke to for this story mentioned as a key part of social contact – and a shared heritage of British law to reduce the red tape which afflicts other countries.
Again, sticking with the theme of India’s national obsession, cricket, the greater certainty at law gave a number of people surveyed the courage to persevere when, as many noted, the going got tough.
And, of course, there is a significant Indian population in New Zealand, many of whom are second and third generation and a predicted opportunity in excess of US$500 billion across all sectors in the next five years, just to sweeten the pill.
Why so slow?
Given the above and the cultural and historical similarities, why has the relationship between the two countries been so slow in getting established?
“India has never, if you like, followed ‘the script’. Just when the world is ready to buy into its guise of modernity, it finds itself harking back to medievalism. Similarly, the moment it is in danger of being written off as a basket case, it stuns with its technological edge. It is a narrative that defies even the most ardent storyteller,” shrugs Palande with a telling point that describes the roller-coaster ride to the 21st century ‘to a tee’.
India’s trade and commerce minister Kamal Nath recently noted, without hubris: “The question for CEOs the world over is no longer ‘should my company go to India’, but rather “can my company afford not to be in India’.”
New Zealand companies like Fisher and Paykel Healthcare, Cadmus Electronic Systems, Gallagher Group, Vista Entertainment Solutions and the big one, Solid Energy, with NZ$100 million in coking coal exports have all broken-through into India to a larger or lesser extent.
It still does not explain why there is little to no action on the New Zealand SME (small and medium enterprise) front, given that people like Palande, Sarah Creagh of the Asia/New Zealand Foundation and Fergus McLean from the Wellington-based India-New Zealand Business Council are constantly handling requests from India to match up with Kiwi companies?
“So far there has been little to no bottom-up pressure on us from the New Zealand SME end,” notes Palande.
The Vista story
Vista Entertainment Solutions – which develops and supplies specialised software to the entertainment industry, essentially to cinemas (both multiplexes and single cinemas) enabling them to run virtually all their different business activities, from selling tickets, to paying royalties, to the sale of refreshments from one suite – commenced operations in 1995, employs 25 staff, and first entered the Indian market in 2000.
Their first sale was facilitated through their connections to Village Sky City Cinemas, says CEO and company founder Murray Holdaway. At the same time, a new Indian company contacted them on their website. The Indian company owners turned out to be three bright, young, well-connected MBA graduates, looking to develop their own business.
The relationship has been mutually beneficial. Today Vista software is sold in more than 20 countries, including China.
Holdaway, too, cannot understand the Kiwi preference for China.
“It’s a bit of a mystery. We trade in both countries and I can assure you that India is an infinitely easier proposition. Particularly in our type of business, where IP is fundamental, the fact that India’s legal system is based on the English system makes for greater certainty.
“It is more profitable than trading in China and you do not have that country’s graft problems with company officials. That’s something we have never experienced in India.”
“An extremely good local partner, well-connected, with the ability to manoeuvre through the red-tape which controlled the cinema industry at that time, was the key factor in our success. And I guess we got lucky too,” adds Holdaway modestly.
The Gallagher story
“India is an assault on your senses. You need a pioneering spirit and patience and tolerance to deal with the huge contrasts and extremes, but you can’t let this put you off. This shouldn’t be an impediment to doing business. Accept what you find, go with it and enjoy it,” is the official stance of the Gallagher Group, best known in India for their “software-intensive” Cardax access control system, managing more than 1000 gates for India’s biggest company, Reliance (the Indian giant has significant stakes in telecommunications, oil refineries, mobile phones, and many other industries).
The Kiwi company has also formed a relationship with an Indian company (IBX Gallagher) which makes components for Gallagher Group’s fencing products under contract. The Indian company has achieved excellent product integrity, in their view. Components are shipped back to New Zealand and then shipped around the world. Gallagher also sells components and finished product in India (including security fencing for the Indian parliament).
Sarah Creagh, the livewire Auckland manager of the Asia New Zealand Foundation, who has had independent experience in the Indian and Japanese markets, echoes the commitment shown by other successful companies in India.
“You have to love the place to do business really successfully. Yes, and cricket helps enormously. But you have to appreciate that India is not one market – it has 14 states and double that linguistically.”
The organisation she represents has done a great deal of research to back its own enthusiasm. Dr Andrew Butcher, its director policy and research ( Email: [email protected]) commissioned the School of Marketing and International Business at Wellington’s Victoria University to do a most valuable study on dealing with India (see sideboxes and links).
The tertiary opportunity
As you would now come to expect from India, it’s an ever-changing market. Unitec’s international marketing manager, Vivienne Kingsbury, has been in the game for eight years representing tertiary institutions’ recruiting drives. What advice would she have for smaller, independent skills training organisations looking to India?
“While the market has changed substantially in that period, it remains a ‘relationship market’ and is still one of our top three recruitment opportunities. Business and IT continue to dominate, but design, mass communications, horticulture and teaching have broadened the demand for our services.
“There is no market for New Zealand language institutes or even secondary schools. It remains a tertiary opportunity,” she cautions.
Another study, “2020 Vision”, by Dr Martin Cone and Fergus Mclean is also essential reading for the legion of readers of this article, who are (hopefully) going to be inspired to test the Indian market for their goods and/or services.
The final word from Dr Cone: “Even two years ago I was of the opinion that New Zealand had to engage with China. I now believe that we have an alternative in India, where the terms may be much more favourable to our interests. Compared to China, doing business in India is a walk in the park. China is a one party state that can be best described as a corporatist system of governance. It is, to a large degree, a closed system which tolerates limited pluralism (always on its own terms) designed to control the infiltration of a non-Chinese influence. Because the investment market in China has been dominated by ‘overseas Chinese’, they, to a large degree, make the rules by which the market operates.
“India, on the other hand, is a pluralist democracy in which the President is a Muslim, the Prime Minister a Sikh, the leader of the Congress Party is a Christian, and the immediate past leader of the main opposition party is a refugee from Pakistan. It also has the best outsourcing for medical care; banking services; call centres; software development; pharmaceuticals development in the world.”
Some helpful tips
• Find a reliable business partner, such
as a master agent or distributor, to
help you gain knowledge of the Indian
business environment and to draw on
connections with relevant decision-
makers and influencers;
• Build credibility and reputation quickly
– leverage from reputations developed
with customers and leverage off the
strong New Zealand brand;
• Visit frequently – regular face to
face contact with your Indian contacts
can motivate them and ensure they are
committed to you;
• Have an in-market presence – this can
be via agents or distributors, not
necessarily an office;
• Commit long-term – this may include
training local staff to meet your skill
expectations, and don’t expect great
growth rates initially, it will take time;
• Learn about India (read India: A Rising
Power at: www.asianz.org.nz/) NZB
(BRIC*: Brazil, Russia, India and China)
For additional info:
• Fergus McLean, Executive
Director, India New Zealand
Business Council, 04-4758955,
Email: [email protected].
• Nitin Palande, IBEF,
021 296 1931
• Sarah Creagh, Auckland Manager,
Asia NZ Foundation, 09 368 1435.
• Or read www.asianz.org.nz/files/India_