Internationally, many companies have struggled to enter the Indian market, some have failed to establish themselves and many have gone back or just succeeded in niches; but yet, many others have achieved market leadership. Amid this paradox, the question arises, why does one fail or what is it that is required to thrive in the Indian market? Let’s explore…
One reason cited by Flipkart cofounder Binny Bansal in a CNBC report, is the inability of foreign companies to deal with India’s unique environment, as well as the frequent policy changes by the government. India is definitely a very different market than Western markets.
“For Flipkart, we had to start our logistics arm on our own, which is something you don’t see happening globally. So, you have to do things in a different way because of how the market is structured. That ability to learn to ‘do things on your own’ and scale up ‘becomes an advantage for Indian start-ups, (which) can compete better’, he added.”
Accessing the Indian market requires an understanding and analysis of the consumption pattern/preferences, the kind of successful distribution network, the sales channels and of course marketing strategies which are all evolving constantly.
Besides, it is equally essential for pricing and labelling, and protection of intellectual property. This is true of many brands who have faced copy-cats coming up in the market leading to undesired consequences. However, as experts suggest, these issues could be effectively handled through an Indian channel partner or distributor.
Speaking specifically about three international cleaning products companies that have been eyeing opportunities in India, these have tried three strategies. One of the companies toured the four regions in India, meeting distributors to ascertain their potential, and is yet to find a suitable partner even after two years. “We want partners who have sold similar machines in specified market segments. We don’t want to experiment with freshers or distributors who have no hold on these markets.”
Another foreign company has an official stationed in India to locate reliable partners but has already made inroads through agents who buy machines not in volumes but as per requirement scattered through the year. This, to an extent has worked in establishing the brand; however, even after five years, the brand is yet to take off. The third foreign company that has been sceptical in locating agents or partners, has been closely watching the market needs and customising its products to suit Indian needs. Now, with increased awareness, it has entered the Indian market with just one partner and has already sold its first machine without any delay. “We will now look at manufacturing in India.”
Experts caution that the choice of potential agents should be based on understanding relationships and personal meetings. It is recommended to ensure partner’s credibility diligently.
Today, several market segments have deployed lowcost machines manufactured in China and other countries, primarily due to the cost factor. Laundry, one of the leading start-ups booming in India, is experiencing heavy investments in low-cost machines initially. Getting machines at much lower price, and either using or selling them at a margin, is an old practice that is flourishing. More so, lately, suppliers are procuring machines from other countries with their own brand label at low costs.
As discussed earlier, understanding the market is important. “It is essential to identify the target market and find good partners who know the local market well and are completely acquainted with procedural issues. Foreign investors should also explore various market options in India that could include forming subsidiary relationships or joint ventures with an India-based company,” to quote from the portal export .gov.
“Some of the important points for market entry in India are: understanding the diverse market and strategies toward specific regions and income groups (i.e., target segments); crafting offerings according to the target group in order to gain early acceptance; considering the large informal sector in your planning; approaching the market consistently; obtaining mandatory licenses and approvals; and understanding that import procedures are one of the key issues for first-time exports to India. Proper documentation and understanding of the Indian import procedures will help ensure smooth entry of products into the Indian market.”
Another interesting report from McKinsey for multinationals shares, the key to reaching the next level will be learning to do business the Indian way, rather than simply imposing global business models and practices on the local market. It’s a lesson many companies have already learned in China, which more multinationals are treating as a second home market. In India, this trend has been slower to pick up steam, although best-practice examples are emerging.
In the present Indian user market scenario, facility services are getting more excited with technology-based solutions to meet service requirement. Definitely, failure to obtain required manpower could be directly related to rising demand. Though, FM today is considerably overworked with managing multiple properties with much wider roles to play. But is there much of innovations happening in the cleaning market? The advent of AI, IoT, block chain, apps and so on has changed the demand pattern, buying preferences and approach to solutions.
How much of these technologies are indigenously available, how much will get imported or how much will get adopted in technology transfer is a matter of time. India could account for more than 20 per cent of global revenue growth in the next decade. In other words, the future of many multinationals depends on their ability to succeed in India. (McKinsey)