Category Archives: India

Dell’s Guide to Growing in India

In four short years, Dell has risen to become the number one supplier of desktops, laptops, and notebook computers in India, going from sales of only 79,244 in 2007 to over 1.1 Million in 2010. This is more than HPs market share of 1 Million and Lenovo’s market share of about 600,000. So what did Dell do to rise to the top, acquiring year-over-year growth of 55% along the way? This recent article in Fortune on “how Dell conquered India” provides some interesting insights.

So how did Dell do this?

  1. They set up a factory in India.
    This cut local delivery time by 50% while improving profitability.
  2. They changed the model.
    While online worked great in North America, exclusive outlets worked much better in India. Once a customer selected a product, it was then delivered to their door (which saved on warehousing costs).
  3. They borrowed from the insurance model.
    Rather than use the established national, regional, and local retail distribution model, they determined that the insurance model fit best with their exclusive outlet / build-to-order strategy and used it instead.
  4. They extended the on-site service model to small businesses and retail customers.
    This gave them an edge over the competition.
  5. They built a core team in India focussed on growth.
    They were sure to recruit the best not only from other Dell international divisions, but from rivals (like HP and IBM) and retailers (Unilever, Whirlpool, and Airtel) who had experience in the India retail market.

In otherwords they:

  1. Established a local presence,
  2. Adapted to the local retail market, and
  3. Handed the reigns over to a team that understands the Indian marketplace.

While it will take a lot of work to brew up this recipe for success, it’s not a hard one to understand. To do well in a region, whether you are buying or selling, you need to go local, adapt, and work with the right partners who understand the region.

Does Tata Have a Rival in Ford?

When Tata introduced the Nano back in 2009, it caused a global sensation with its attempt to create a new market for low-cost automobiles among a population that, up until recently, could only afford motorcycles. It’s been slow to take off, with a one-month sales record of slightly over 9,000 units, and a low of 589 units last November, but it now has about 70,000 Nanos on the road in India, which isn’t bad.

On the other hand, the Ford Figo, which was introduced last March, and which is already the 5th best selling car in India (behind three Maruti Suzuki models and one Hyundai), has already sold more than 60,000 units (OneIndia.in) within 10 months of launch and is being prepared for export to 48 countries (rushlane.com), including South Africa and Nepal.

Seems the Figo is poised to overtake the Nano, selling almost as many cars in less than half the time. Is this the beginning of a new era for Ford? The car might cost about 2.5 times that of the Nano, but it is comparable in cost to the Indica, its Tata equivalent, and doing much better. What do you think? Will India go cheap, or save for a better car? And if they save, and Ford grows, will Ford India become a top global exporter of low cost cars with the Figo? And what will that do to global automotive supply chains?

How Is The “New India” Shaping Up?

The New York Times recently ran an article on The Ideas Shaping a New India that got my attention. Given that so much of our supply chain, especially in services, is now dependent on India, and that India is poised to become the 3rd largest producer of GDP by mid-century, it’s important that we have a good handle on where it’ s going — especially since it’s now been twenty years since India began to open its doors to the world and loosen the economic controls on its own citizens. As a global trading partner, India is grown up — and now it has to make some adult decisions (and stop simultaneously exhibiting the bravado of needing nobody and the hunger for recognition from those it claims not to need).

So what has, and will continue to, turn the new India new? According to the author of the article, who has spent years traveling in, and reporting on, the country, these are the five prevalent ideas that are going to influence the shaping of India this decade.

  • Class is a Situation
    In early India, class was not circumstance, but identity. It was who you are from the moment you are born until the end of time. But today’s generation sees class as a transient situation that can change. Take Infosys for example. This global Indian juggernaut that has adopted the mantra of “no caste, no creed, only merit” and is changing the game for a new generation.
  • A Bed is For Two
    In traditional India, the focus was on the family unit and not the individual — every Indian was part of a clan (and the clan came first in the economy of guilt and sacrifice that has traditionally held Indian families together). In comparison, today’s generation often looks upon family as a support network but identify themselves as individuals first, family members second. Some even see family as a hindrance to achieving their dreams. Today’s generation, for better or worse, believes that the best approach is for you to take care of you and me of me.
  • English is Passé
    While Indians are still passionate about learning English, as they want to be part of the global marketplace, they no longer want to be English. They have their own traditions and manners that date back to thousands of years before the earliest English customs, and they are quite happy with them. (The oldest recorded town in Britian, Colchester, is a mere 1934 years old. In comparison, India has the oldest city in the world, Varanasi, which is over 5,000 years old.)
  • Plastic is Better Than Gold
    Traditionally, the Indian economy revolved around gold, which represented solidity and security in a culture that feared the future and sought insurance against it. Today’s generation, which associates more with credit and debit cards, is building a culture where to swipe a plastic card, rather than stash gold, is a psychological bet on the future instead of a hedge against it.
  • Modernity is Best Served Traditional
    India is a model of forward movement in which the past retains the upper hand and the future stands on the defensive that assumes,against all odds, that the traditional and the modern are ultimately compatible.

In other words, as India matures, it is going to try and blend the individualistic forward-looking Western culture with its family-focussed backward-deference Eastern culture to create a new, modern, culture that will, hopefully, embrace the best of both worlds and allow it to easily do business with the West and the East. If they succeed, we may again see a time where the bulk of global trade passes through India. (Though, hopefully, this time it won’t be through a single trading company. As much as Sanjiv Mehta might like to see the East India Company rise to glory again, I don’t think any single company should ever have the trade monopoly that the East India Company had in the 1700’s.)

America and India Respond to Rising Food Prices

America: Let’s introduce S. 510, a bill so poorly designed that not only will it fail to increase food safety (as the FDA doesn’t have the budget to properly enforce it), but it will increase food prices even further as most small food producers, farmer’s markets, and organic growers in particular will not be able to afford to comply and go out of business (which decreases the food supply and increase prices).

India: Let’s open vegetable sales counters (IndiaEveryday.in) in an effort to make sure our own people can afford to eat despite the spiralling prices of essential commodities and vegetables (as it’s unconscionable that our own people can’t afford onions).

What response do you think is better?

It’s Good That Asia Is Rising

A lot of people are scared about the rise of China to the 2nd largest producer of GDP and the expected rise of India to be the 3rd largest producer of GDP by mid-century, but I’m not. It’s a good thing. The truth of the matter is that, for the last decade or two, the US share of Global GDP was too high. If a single country controls more than 25% of the GDP, than any significant changes to its economy are going to have drastic ripple effects across the globe.

Look at the recent recession. It’s not only the US that was affected — it was all of North America. Then it rippled across the pond to Europe (as most big multinationals have a big US and European presence). And even New Zealand and Australia felt the tail end of the shockwaves. Only Asia survived relatively unscathed, and only because they had a growing economy that resulted from over a decade of heavy investment by the US (and Europe) before the US recession.

So, needless to say, I was annoyed when I saw a recent article in Atlantic Business that asked if if “the Canadian Economy [is] Weakened by its Southern Neighbor” because only someone with their head in the sand for the last 20 years would think otherwise. Every time the US goes down, it takes us with them. They are both our next-door neighbour and biggest trading partner, with 10 times our population and 10 times our GDP. Canada might be the 10th largest economy in the world, but since 70% of our exports go to the US, if we lose 10% of that because of a major US recession, 7% of our GDP is at risk overnight — as it is for any small economy that is dependent on the economy with the largest GDP in the world — an economy that is roughly 3 times that of the next largest economy.

As Asia rises, not only will it minimize the impact of any one economy on global GDP, but it will start buying from us as well as selling to us, and redistribute the wealth back home. If China was going to control the US share of the economy in the near future, then maybe there’d be cause for concern, but right now, the rise of Asia is a good thing. The balance is going to eventually minimize the risks of a meltdown due to a recession in any one economy, and that is going to provide more stability (and predictability) to our supply chains.