As one of the world’s largest consumer markets, India offers huge opportunities for Australian companies but also major cultural challenges. After a memorable tour of India with a party of MBA students, MBA Director, Dr Sarah Kelly reveals some of the insights they gained.
Australia and India are both Commonwealth countries with a shared interest in cricket, but the similarities stop there. With over 1.25 billion people, India’s population is more than 55 times the size of Australia. This vast and hugely diverse country represents one of the largest consumer markets in the world.
Although rising inflation and interest rates have slowed down the Indian economy, growth continues at around five per cent a year. It is a very attractive market for Australian businesses, particularly since English is widely spoken, but there are major cultural differences and you will have to adapt your approach.
On our recent immersion tour of India, as part of the UQ Business School’s MBA program, our party was fortunate enough to meet people at every level – from prominent business leaders and diplomats to business school students and slum dwellers receiving aid from our designated charity. It proved an unforgettable experience and one which gave us a much deeper insight into doing business in India. Here are some of the things that we discovered:
- Send in the big guns
Indians are very conscious of status and are impressed by large groups of high-ranking delegates. If you want to be taken seriously, it’s not enough to appoint a salesman to be your company’s India contact – they like to see the CEO, the chairperson or, better still, the full board!
On our visit, we were accompanied by Michael Kasprowisz, the former test cricketer who is himself an MBA student and now acts as an ambassador for the Business School. He helped to arrange introductions to business people, companies and the High Commission in Delhi. We even attracted coverage in the press. Without his status in India, we would not have secured the same opportunities or profile.
- Business is personal
Indians expect to get to know delegates on a personal level before they do business. They want to hear about your family, your business, where you live and what you do in your spare time. From an Australian perspective it may seem like an excessive amount of small talk but don’t be tempted to rush negotiations, as it is an important step in establishing the relationship.
- Welcome to Indian time
Indians work to a very different timeframe and things that you expect to be done in a day can take months. Not only do they need to get to know you, but they also take as much time as they like to reach a suitable agreement. You certainly cannot go into an initial meeting expecting to come out with a signature. Timekeeping is relaxed and the traffic is so chaotic that even senior people are frequently an hour late. It’s a slow process, but if you can focus on doing one thing at a time, you are making progress.
- Growth of the middle class
India’s burgeoning middle class accounts for between 70 and 400 million people, depending on how the figures are calculated. Many are highly qualified professionals working in sectors such as engineering, IT, medicine and pharmaceuticals. This well-educated, sophisticated group are responsible for the majority of consumer spending and are therefore the key target for many companies entering the Indian market.
However the rise of India’s professional class means that the country is becoming increasingly competitive in knowledge-based industries, although there are potential skills gaps which offer opportunities for Australian businesses. While Indians are inventive, it is debatable whether there is sufficient emphasis on research and development. Governance and project management are other areas where overseas firms could contribute.
- Rise of the rural poor
By contrast, India also contains huge numbers of working class people, many living in less accessible or rural areas. Until recently they have been largely overlooked by marketers but are now following their city cousins and entering the consumer classes, buying goods such as toothpaste, deodorant and diapers and developing a taste for chocolates. The dynamics are different but analysts believe their share of the market will increase in the coming years.
- A vast and diverse market
One of the astonishing things about India is the sheer diversity with different cultures, religions, languages and dynasties all existing side by side. It is a real problem for the uninitiated as it makes it very complex to know how to approach business. One delegate we spoke to told us he had ten different religious groups within his own company.
- The challenge of corruption
Corruption is part and parcel of doing business in India and presents another challenge for Australian companies. Many companies use local joint venture partners to deal with these problems. Ravi Venkatesan, author of Conquering the Chaos: Win in India, Win Everywhere, says it is useful to have local employees who know how to get things done without paying bribes but says even the use of local companies is not without its risks.
- Adapting to the market
Many companies find they have to adapt their product in some way to suit the market. For example, Indians are very cost conscious and prefer to buy in smaller quantities. Shampoo manufacturers may sell in sachets rather than bottles, while a tobacco firm found it had to sell cigarettes individually rather than in packets. Chain stores have yet to take hold in India and, even in cities, people buy from local vendors because they know and trust them.
- A tech-savvy nation
India is a very connected nation in terms of access to the internet and other media. According to figures from the analysts Canalys, India is now the third largest market for smartphones after China and the US. Even walking through the slums we came across families with satellite dishes and DVD players that were recycled from the dump. Don’t be afraid to try using digital marketing to reach your target audience.
- A source of inspiration
India can be a culture shock, but it can also be a real source of inspiration. One of the things that impressed us most was the strong sense of optimism we witnessed. In the words of one of the MBA students, Mohit Rao: “India will forever leave an imprint on our minds. The hope and optimism of its people offered inspiring lessons we all took something away from.”