Doing Business in India ver 2.0
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This is a part of the presentation I made to the executives who are doing MS-MMK in France and visiting ESSEC Singapore campus. The presentation paints only a partial picture of India and therefore ...

This is a part of the presentation I made to the executives who are doing MS-MMK in France and visiting ESSEC Singapore campus. The presentation paints only a partial picture of India and therefore should not be used as a guide to do business there. Nor should it be used as a manual to understanding India consumer, culture, legal system, or anything related to India. The standalone presentation is necessarily out of context. A discussion along with this presentation provides a more helpful exercise.

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Doing Business in India ver 2.0 Presentation Transcript

  • 1. Doing Business in IndiaChallenges to Marketers
    Prof Ashwin Malshe
    Presentation made to
    MS MMK Executives
  • 2. About Ashwin Malshe
    PhD (Marketing), MMS (Marketing), BE (Electronics)
    Seven years of industry experience
    Institutional sales
    Analytics
    With ESSEC since July 2011
    Multiple research interests
    Marketing strategy
    Marketing-finance interface
    Consumer behavior
    Social media marketing
    Blogging activities
    Micro-Positioning
    Flirting with Finance
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  • 3. Source of Data
    I use several sources of data to get the numbers reported in the presentation. Specific instances are noted on the slides. Wherever the source is not identified, the data come from the CIA World Factbook
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  • 4. The Story of IndiaA BBC – PBS Documentary
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  • 5. India – A Few Statistics
    7th Largest country by area - 3,287,263 sqkm (land and water)
    28 states and 7 union territoires
    2nd most populous country in the world – 1.2 billion est.
    Secular country
    Hindu 80.5%, Muslim 13.4%, Christian 2.3%, Sikh 1.9%, other 1.8%, unspecified 0.1% (2001 census)
    16 official languages!
    Hindi 41%, Bengali 8.1%, Telugu 7.2%, Marathi 7%, Tamil 5.9%, Urdu 5%, Gujarati 4.5%, Kannada 3.7%, Malayalam 3.2%, Oriya 3.2%, Punjabi 2.8%, Assamese 1.3%, Maithili 1.2%, other 5.9%
    English is the preferred language for most of the commercial and political purposes
    Parliamentary democracy
    Model borrowed from British. Prime Minister is the head of the government
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  • 6. Population Composition
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  • 7. Economy
    GDP
    PPP terms USD 4 trillion – 5th largest in the world
    Official exchange rate USD 1.6 trillion
    GDP real growth rate 2010 – 8.8% est. (World Bank)
    GDP per capita – USD 3,500
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  • 9. Culture
    Conservative in several aspects
    Women, by law, are at par with men. In reality they are treated less than equal
    Meritocracy is partially practised
    Caste system is weak in the cities but still manifests strongly in the smaller towns
    Families matter more than individuals
    Culture is more collectivistic than individualistic
    Common to see people taking into account the impact of their decisions on others in the family or even a larger community
    Many decisions become “family decision.” For example, buying a TV, washing machine, or a car may not be decided by one person alone
    Group vacations are common too!
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  • 10. Culture
    More tolerance towards nonconforming ideals
    As long as you don’t interfere with their way of life, tolerance to your practices is guaranteed
    India is perhaps the only country where Jews were not persecuted
    Zorastrians (Parsis), the original inhabitants of Iran, live in India without facing any pressure to relinquish their culture or religion
    E.g., on Japanese culture
    There prevails a general sense of inferiority complex due to British occupation
    Many cultural aspects change from state to state
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  • 11. Political Economy
    Socialism sympathetic policies
    • Early influence of Soviet Union
    • 12. A large vote bank resides in rural areas
    • 13. Agriculture sector is still the largest employers of the uneducated people
    Caste and religion politics is important
    • Election results are still determined by non-economic reasons
    Caste (reservations in education and government jobs)
    Minority religions may vote en-block
    Changes in caste and religious policies don’t need huge expenditure and the results are visible quickly in the form of higher percentage of votes
    Poor people vote in exchange of minor benefits
    • High levels of illiteracy and poverty combine to create a voter that can be manipulated easily by the politicians
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  • 14. Political Economy
    Corruption is growing in size
    A huge wealth transfer has been undergoing from the people of India to the government officials and leaders
    Corruption at multiple levels
    Ordinary people have to pay for the services that the government should provide them free of cost
    Government officials may collect the appropriate fees but then won’t deposit it with the government
    Ministers grant licenses to businessmen in exchange of partnerships, cash, or both
    Bribes are paid to cover up irregularities or even crimes
    Most of the ministers in power are hundreds and thousands of times richer than an average person in India
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  • 15. Political Economy
    Government favors rapid expansion of businesses in theory
    In reality bureaucracy has all but stopped the development in India
    Very low investment in infrastructure
    McKinsey Global Institute report identifies the challenges faced by India
    Weak regulatory enforcement
    Lack of desire to make sure that the regulations are enforced
    Corruption thwarts most attempts to enforce regulation
    Government provides inadequate resources to regulators
    Uncertain legal structure
    In modern economies legal protection to various contracts enables trade
    In India legal system is slow as well as corrupt
    Courts are overwhelmed by the pending cases
    Contracts are not easily enforceable
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  • 16. Characteristics of Indian Consumer
    Price conscious
    Rational
    Usually conducts research before buying
    Takes into account opinions of others
    My personal experience is that Indian friends on Facebook as more questions about which computer, phone, tablet, etc. to buy
    Try to be discreet with large purchases
    Potentially safety concerns but more importantly trying to avoid getting noticed even by the friends and relatives
    Tends to save more
    There is no social security system in India
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  • 17. Entering India Market
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  • 18. Entering India Market
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  • 19. Opportunities: Examples
    Telecommunications
    Infrastructure
    Consumer goods
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  • 20. Telecommunications
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  • 21. Opportunities in Telecommunications Sector
    Mobile banking and payment
    • Most rural Indians don’t have access to easy payment modes such as credit cards
    • 22. However, mobile phones penetration is deep in rural India
    • 23. Safe mobile payment systems are gaining popularity
    Reserve Bank of India has introduced guidelines for mobile banking
    Mobile banking transactions can be up to Rs 50,000 (USD 1,000) per day
    Small transactions don’t need encryption
    Mobile gaming and apps
    • Mobile gaming in India is expected to grow at 75% per year over the next 3 years
    • 24. Different estimates put the mobile gaming industry close to USD 1 billion by 2014
    • 25. IT giants such as Wipro and Infosys are entering mobile app business
    • 26. Outsourcing is now shifting to app development
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  • 27. Infrastructure
    MGI report covers many aspects
    Opportunities are high in the following areas
    • Transportation
    Subways
    Roads and bridges construction
    Shipping ports
    Airports
    • Power generation and distribution
    Energy prices are regulated by the government and weak contracts mean that these investments can be in trouble if prices change dramatically
    • Special economic zones
    • 28. Water purification, recycling, and distribution
    Industrial effluents
    Domestic sewage
    Standalone systems
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  • 29. Case Study: HUL Pureit
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