The new book by former Microsoft India chairman Ravi Venkatesan, Conquering the Choas: Win in India, Win Everywhere,’ has been creating a lot of buzz this week upon its release.
Composed of a series of interviews with the Indian regional managers of some of the largest multinationals, such as Nokia; Unilever; and Volvo, the book is said to offer one of the most honest accounts of India’s business environment, exploring why brands such as Apple have failed to match the success they have seen in other markets and outlining what foreign companies need do when expanding abroad.
Why is the Indian market so important
Despite waning in recent years, India is one of the fastest growing economies in the world.
However, speaking on the Today Program on BBC Radio 4 on July 22nd, Venkatesan said that the Indian market “which is often riddled with bureaucracy, corruption and bad infrastructure – is one of the biggest tests for any company.
That said, the prizes are huge. Profits aside, success in India provides a business model that will make breaking into similar markets such as in many parts of Africa or South America much easier. After all, as Venkatesan points out in the book, the next major wave of globalisation will centre around the middle class in these developing economies.
Why India is so hard to “conquer”
According to Venkatesan, succeeding in India is one of the hardest things in the world of business. Speaking on the Today Program on BBC Radio 4 on July 22nd, he said that the Indian market “which is often riddled with bureaucracy, corruption and bad infrastructure – is one of the biggest tests for any company.
Hugely successful and well-managed organisations such as Apple, Volkswagen and General Electric have all expanded into India but have found that business there has barely contributed to one-to-two per cent of their global profits, “akin to a rounding-off error”.
Venkatesan points out that these companies all based their expansion on the usual, low-risk plan that is to simply target the top of the consumer pyramid, instead to tapping into the less affluent mid-market that is always seeking investment.
When he joined Microsoft, Venkatesan said that the company had the same plan, merely targeting the top, before growth slowed dramatically before it started attracting consumers outside of big cities by restructuring its packaging and pricing structures.
The trick therefore is to offer a product with the same quality as elsewhere but at a fraction at the price. Speak on the BBC, Venkatesan pointed out that the British mid-size construction equipment manufacturer JCB have seen remarkable success after developing more affordable equipment for the Indian market.
Similarly, McDonalds spent five years developing a business plan for India, a country where much of the population are vegetarian, cows are considered sacred animals and disposal income is low. The fast food giant’s vegetarian and chicken recipes has seen remarkable success as a result.
Venkatesan’s secrets of success
Although there’s no single recipe for success, speaking to the BBC, Venkatesan pointed out to three important factors that determine success or fail.
First, companies must adapt to the mindset that they are in India for the long haul and won’t pull our as soon as the going gets tough. “Businesses must be willing to sacrifice short-term profitability for long-term leadership,” he said.
Second, companies need to adapt to India’s market. In a country of over one billion people, there’s little use in waiting for the market to adapt to you.
Third, and finally, it is important to have the right leadership on the ground. No company will succeed in a new market with a mid-level sales person in charge while every major decision is made back at headquarters, points out Venkatesan.
While these three steps won’t guarantee success, they will surely guide businesses in the right direction, in India and beyond.
Like Ravi Venkatesan, at Today Translations, our regional business heads also offer expert research advice for British businesses looking to expand into new markets, in India and elsewhere. We, however, also translate all the necessary documentation that you may need to open your business. Whatever you plan or incentive for expanding into a new market, Today Translations can guide you in the right direction, ensuring that product our services really speaks to your target market.