As I wrote in a previous blog post, last Thursday I was at a seminar about opportunities for Norwegian companies in India. This seminar was indeed very exciting and it is even clearer to me now than before that Norwegian companies still have a lot to do in terms of taking their opportunities in India.
The seminar was opened by Professor Torgeir Reve from Norwegian Business School. He said that India do have an important role as a change maker in the global economy. Until now China has been known for manufacturing while India has been known for its service industry. Will this change?
The next speaker, secretary of the Ministry of Trade and Industry, Jeanette Moen started by mentioning chess, and the upcoming world cup match between Magnus Carlsen and Vishy Anand. This she said, is one of a very few examples where India and Norway actually compete. Except from that, the relationship between the countries is more based of collaboration. The Norwegian government launched their India strategy back in 2009 and from 2002 to 2012 the trade between the two countries has quadrupled!
After this introduction by the two Norwegian speakers the scene was handed over to two Indian experts in this area. First Anthony D’Costa Professor at Copenhagen Business School talked about drivers, trends and sectors in the Indian economy. He talked about the evolution that has happened in India since its first economic reforms back in the 1970’s. Foreign investment to the country has been tripled from 2005/06 – 2009/10. He also talked about the enormous talent pool that India have and that the service sector stands for about 1/3 of the export today. But he also pointed at some challenges for India:
– Import of oil is enormous. In order for India to continue to be competitive they have to think about alternative energy. It is too costly to import that much
– Most people in India is still employed in what he call the informal sector, which means that the work is not organized at all and that there is no security for the workers at all. 52 % of the workforce in India today is still at the agriculture sector
– Purchasing power is only at a very few hands
– India is ranked extremely low (number 134) in human development
He was followed by Dr. Amit Kapoor from the Management Development Institute in India. This guy was an absolutely firework at the stage! He used a lot of irony in his speech which leads to some other blogger writing a quite negative story about his presentation. To me his was just brilliant! He started off by saying that only 5 million people in India work in the IT-sector and that this hardly brings anything good to the country, but only to the few people who work in this sector and get their money from there. He also said that 95% of the population doesn’t know English, so that the idea of India being a country with a lot of English speakers is, well, bluntly, bollocks! Further on he said that Indians doesn’t make any innovation, they always try to take short-cuts.
But he also had some very interesting ideas about what are the biggest opportunities for companies that want to succeed in India. The biggest opportunity he said is the healthcare. Today India has a very rapidly growing number of people in their 40’s or 50’s that have good income and then a good fortune. They will be able to and willing to pay a considerable high amount for people taking care of their health when they get older. But as he stressed, it has to happen “the Indian way”. Huge hospitals are nice and fine, but the main problem with healthcare is not the doctors at the hospitals. The problem is the infrastructure. If you get a heart attack in an Indian metro you will probably die before you get to the hospital. He suggested that instead of building only big fancy hospitals there is a need to build smaller hospitals at the streets. Hospitals that people can actually reach quickly. This was one example of how your business plan has to be adjusted to the Indian market. Another example is the cigarette industry. For the many poor people in the country, buying a pack of cigarettes is a too big investment. It is then quite common to see small cigarette shops at the streets where people sell single cigarettes! Another example of the same is Unilever, a company that understood that they had to go away from their “selling in bulk” strategy and sell their items in small quantities. This was the only way to get success at the Indian countryside.
Dr. Kapoor also stressed the importance of not looking at India as one market. Your business strategy will have to be very different if your main market is the metro of Mumbai or if it is the rural area of Bihar. But, as he said, don’t try to promote your product as cheap! Tata Nano is an example of a product that failed because it was promoted as cheap. Indians are proud. Even the strugglers in Bombay will not accept to buy anything that is cheap. But if they can buy something that give good value for money, they will surely be more interested…
The first part of the seminar was nicely wrapped up by Harald Nævdal from Innovation Norway. He asked on important question: “Can Norwegian companies actually afford not to have an India strategy?” At the same time he stressed the fact that a successful entry into the Indian market will take time. Don’t expect to get success rapidly and immediately. But you have to start your planning now!
The seminar concluded with a panel discussion regarding how Norwegian companies can join the economic growth in India. Hilde M. Tønne from Telenor and Pål Helsing from Kongsberg Oil and Gas Technologies both have long experience from operating in India. I will write more about that second part in tomorrow’s blog post.
Any thought or suggestions?
Talk to you soon