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Marketing to India: The New Frontier for American Business

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In 2007, American exports to India increased an astonishing 73.4% over the previous year. India is already among the top 20 trading partners for the United States and will rise to the top 10 in the next decade. Indian entrepreneurs have just begun unleash their prowess in an economy that began to liberalize in 1991, 13 years after China's did.

If you had any doubt in India's potential, the groundbreaking $1.2 billion deal between Hollywood legend Steven Spielberg and Indian billionaire Anil Ambani (worth $42 billion according to Forbes magazine), should get your attention. Ambani is investing $500 million to help Spielberg and friends make DreamWorks SKG a private, independent company again.

Marketing executives and entrepreneurs alike have rushed to China in the last decade. Yet, today, India offers an excellent, although somewhat misunderstood, alternative

As home to Asia's oldest stock market and the world's largest democracy, this country of 1.1 billion holds enormous profit potential for companies and executives alike. But only if they go in with the right attitude and an open mind.

Let me shatter some myths and then share a few nuggets from my many years of helping Americans win in India.


The Myths

Myth: There are 350 million middle-class Indians waiting to buy my goods and services.

Though the Indian government may legitimately claim that a third of its population is "middle-class" by its own standards, it's ridiculous to base a marketing plan on an imaginary 350 million Indians with single-family homes complete with white picket fences, 2.1 cars, and a dog.

By American standard, there are probably only around 60 million Indians who qualify as middle-class. Now that that is still a huge market and you can't ignore it.

Some of these 60 million Indians are ready to send their son or daughter to an American college (more college kids come to the US from India than any other country); and it's those 60 million Indians who are buying their first cars (from GM, or Ford, if not Suzuki or Hyundai). Some of those 60 million Indians want to take a vacation to Disneyland. Or eat at Subway Sandwich. Or fly in a Boeing airplane.

McKinsey and company predicts that by 2025 there will be 500 million middle-class Indians. But let's be realistic about our current projections; it's not 350 million Indians who can afford this sort of consumption just yet.

Myth: Indians speak English, so I will have no trouble selling in India.

First, 90% of the Indian population does not speak English fluently. Second, there are 23 distinct, "official" languages spoken in the country. Bengali is as different from Malayalam as French might be from Turkish. Third, the way people speak English in India might confuse you even further.

For example an Indian may send you an email that goes "Vide Annexure B of the vakalnatama sent to you a fortnight ago, please sign the same and return in the attached franked envelope." To translate "Indish" into English, refer to my company's website http://www.amritt.com/IndianEnglish.html .

What it is more important to understand is that Indians think differently from Western people. For example, time is viewed as cyclical and plentiful, and punctuality is not held in the same high regard as in the West. Experts call this view "polychronic time," as opposed to the way time is viewed in the West, where we are slaves to Microsoft Outlook's calendar function.

Many Indians value subtlety and indirect communication, and often find the blunt American way to be jarring, almost crude. Americans sometimes mistake this subtlety for weakness or deceit.

Myth: Since India's legal system is based on a British foundation, similar to the American system, I can be assured that my contracts will protect me.

It is true that protection for confidentiality and intellectual property is quite high in India compared with other emerging economies. However you cannot make the leap that Indian courts offer you (or anyone) much in terms of real protection.

Lawsuits can take years to come to trial and a decade or more to reach a decision. Appeals are frequent and relatively inexpensive. Collecting on a judgment is another long road.

For most pragmatic business people in India, protection in the form of strong trusted relationships (cultivated over time) is as important as signed contracts. Invest in those relationships and nurture them. It can be quite profitable in India.

Nuggets of Knowledge: The Six Cs in India

In my book, Doing Business in 21st Century India, I talk about the six Cs driving change in middle class India.

  • Credit, which became prevalent among consumers only in the last 15 years is a key driver.
  • So are Cars, but the societal impact is different from post-war America's; most Indians who can afford cars can also afford chauffeurs, given low labor costs in India. So, comfortable back seats are far more important to Indian buyers.
  • Condominium ownership is driving a whole new market for goods and services that work well in compact, vertical living; urban land is too scarce for most Indians to own a single family detached home.
  • Indians are beginning to take vacations (known as Chhutti) for recreation; in years past an Indian would go on either a pilgrimage or a visit to stay with cousins, aunts, and grandparents. Today's Indians look forward to weekend motel trips, and weeklong vacations to Switzerland. Throngs of tourists from India also visit Niagara Falls, Disneyland, and San Francisco.

Two of my six Cs have exploded beyond the middle class in India:

  • Cable television is now watched by over 100 million Indians. Viewers young and old depend on TV for their brand information, and you if you visit India you will find creative and edgy commercials in multiple languages. Virtually all advertising in India is produced locally: politics and religion are not taboo in India, even in commercials. Condoms ads are not controversial in a society that most outsiders consider quite conservative.
  • But cell phones are causing by far the greatest impact on Indian consumer today. As India leaps across the United States and China in new cell phone connections for 2008, a whole new class of consumers is acquiring modern technology for the first time. Remember that as the installed base nears 300 million, virtually everyone who got a new phone in the last year has never had a landline or a television or a personal computer. So the cell phone is a transforming social influence in their lives, in ways that marketers and sociologists have not even begun to fathom. India has the lowest calling rates in the world. Unlike the US, incoming calls are free and most accounts are prepaid. Poor people can get a cell phone and most charges are paid by the calling party.

American companies can thrive in this dynamic environment, provided they know how to understand India and Indians. And this is never easy for any outsider, since the country is so diverse and complex. But the rewards are huge to those who can invest the time and hire the guidance.

Remember that Americans, American brands, and American companies are welcomed in India today. The Pew Center's latest Global Attitudes Survey confirms this: 63 percent of Indians have a positive feeling toward the United States. Only 41 percent of Chinese do, according to the same survey, released earlier this year.

Go forth with an open mind and inquisitive heart, and you will find unparalleled opportunity in 21st century India.

Note: Gunjan Bagla is offering a free webinar on Business Opportunities in India on Thursday, October 30, at 10 am Pacific Time (https://www1.gotomeeting.com/register/298208533) and again at 1 PM Pacific Time on the same day (https://www1.gotomeeting.com/register/510837336). To register for these webinars, click on the links.


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Gunjan Bagla is Managing Director of Amritt Inc., an American consulting firm which helps companies to succeed in India. His book Business in 21st Century India: How to Profit Today from Tomorrow's Most Exciting Market is published by Hachette's Business Plus.

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Comments

  • by Ranjan Tue Oct 28, 2008 via web

    This is an insightful article. Is it possible to talk to you outside this forum on possibilities of working together in India? My email address is ranjanpaul@airtelmail.in Thanks.

  • by Rima Tue Oct 28, 2008 via web

    I found that article quete interesting, but I am not sure if it is that true. The most population in the US colleges are from India than any other contry's.

  • by Dr Dakshinamoorthy Kuppusami Wed Oct 29, 2008 via web

    It is exuberataed the need of the hour i.e. "with right attitude and open mind'. I feel that Indians are generally longing for external source rather develop thro'their indigeneous and to extend support for the development of their nation.

  • by AmEeRkOm Wed Oct 29, 2008 via web

    The most population in the US colleges are from India than any other contry's.
    i dont think so

  • by Rajesh Kumar Thu Oct 30, 2008 via web

    Interesting article. It is important to highlight another aspect of India - diversity. We are a multilingual country with food, dressing, art and culture varying every few hundred countries. That is what makes marketing in India a true challenge. The economic profile is just one aspect.

  • by Lieca Thu Oct 30, 2008 via web

    I currently started a distributorship in Inida, and I have to say there is so much potential within this country its quite exciting. I appreciate the insight this article brings considering our business relationship is still new and we are both still learning. I have already sent it to her as an FYI

  • by Urja Thu Oct 30, 2008 via web

    i think it has lots of potential considering the change in culture,,, from earn now and spend later to earn now and spend now...

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