Report from event regarding opportunities for Norwegian companies in India (part 1)

Hi everyone

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

Amit Kapoor

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

Karsten

Advertisements

14 thoughts on “Report from event regarding opportunities for Norwegian companies in India (part 1)

  1. Thanks keskelund (karsten?) , I Liked your article as well but you might not be well informed on some of the areas Kapoor was talking about and here is why

    comments to your blogpost nor2ind.wordpress.com/2013/06/17/report-from-event-regarding-opportunities-for-norwegian-companies-in-india-part-1/

    Point Nr 1) “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.”

    My response:

    The Indian IT industry directly contributed to roughly 5% of the GDP but has huge multiplier and accelerator effects (huge body of economic literature around this) on employment and output in the larger economy. It creates millions of jobs in the retail, real estate and other service industry to fuel growth. This has been studied extensively a sample here (http://www.indianexpress.com/news/it-sector-has-a-huge-multiplier-effect-on-economy/23849/). Smart governments use econometric models based on multiplier effects to select the appropriate industries for their economy (refer to the McKinsey report on Iceland – the choice between more aluminum smelting versus data centers)

    Point Nr 2) “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!”

    My response:

    Well this is the Norwegian Naivety that Rina Sunder talks about. India has the second largest English speaking population in the world

    http://en.wikipedia.org/wiki/List_of_countries_by_English-speaking_population

    Every major fortune 500 company has an R&D center in India as it is easy to talk to people and get around in the country. With dozens of languages most Indians know atleast basic english to communicate with each other and this is growing exponentially and will soon become the largest english speaking Nation in the world (http://articles.timesofindia.indiatimes.com/2005-11-11/education/27840263_1_american-english-foreign-language-largest-english-speaking-nation). On a side note Indian Americans have been consistently winning the spelling bee in the US for decades (http://blog.foreignpolicy.com/posts/2013/05/30/why_indian_americans_dominate_spelling_bees) and every major company in the world has call centers in India due to an english speaking work force.

    Point Nr 3) “Further on he said that Indians doesn’t make any innovation, they always try to take short-cuts.”

    My response:

    This is as dumb as it gets. One of the few countries in the world to launch satellites in space, sent a moon mission recently and built its own indigenous super computers when other nations denied access. GE ranks India as the sixth most innovative nation in the world (http://timesofindia.indiatimes.com/business/india-business/India-is-worlds-sixth-most-innovative-country-Survey/articleshow/11552847.cms).

    The world wouldn’t be what it is if it weren’t for India as stephen Knapp describes in this short summary

    http://stephenknapp.wordpress.com/2012/07/30/the-greatness-of-ancient-indias-developments-by-stephen-knapp/

    Indians do not take short-cuts but they innovate to solve their problems due to lack of capital which is called frugal innovation or grass roots innovation ( you should read 1) Fortune at the bottom of the pyramid, 2) Jugaad and 3) Reverse innovation ) example here (http://www.youtube.com/watch?v=V4_MeS6SOwk)

    Point Nr 4) “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.”

    My response :

    This is very well known debate in India , mobile hospitals / eye camps etc are common place, nothing new here. Part of a much bigger debate on managing complexity between centralization and decentralization.

    Point Nr 5) “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”

    My response:

    Yeah the shampoo packs are a classic example, again very old news , Prahalad talks about in fortune at the bottom of the pyramid. nothing new here.

    Point Nr 6) “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.”

    My response:

    Yes I have spoken about this extensively in my articles at DN. India is many countries (princely states that came together)

    Refer this : http://www.dagensit.no/article1825315.ece

    and this : http://www.dagensit.no/article2489851.ece

    and this : http://www.dagensit.no/article1987518.ece

    Point Nr 7) “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…”

    My response:

    This is not true , India has one of the highest number of US $ millionaires in the world but it also has a huge middle class.

    So in economic terms it is called price elasticity of demand and you can observe it in various industries such as Telecom in India. The minute you drop the price you tend to attract more customers, while this might not be true when you sell a Bentley ( so it is industry and product specific).

    The Nano was overbooked and so was the akash tablet which the manufacturers could not meet the consumer demand. The reasons for failure of the nano is due to huge cost increases driven by fluctuating prices of steel and rubber and hence they had to cut corners which resulted in a poor quality product and hence consumers switched to the next better product in the same category (the famous maruthi 800)

    So in summary this is why one should not give into sensationalism, there is a huge amount of naivety which is reflected in the way most Norwegians reacted to the talk and every Indian in the room knew what was going on with Kapoor’s talk (cheap sensationalism).

    So I hope you will get to read more I have huge collection of books on India (geopolitics, macro economics, technology, society ) I would be glad to share this with you and have already donated some to Uio and BI libraries.

    — Karthik

    Reply
  2. You may want to read some more on the perspectives shared during the talk in Norway in one of the pieces done recently with BBC available at http://www.bbc.co.uk/news/business-21156158 (Viewpoint: India is in danger of losing its competitiveness). You might also want to look at the piece titled prescription for growth on business models available at http://business.outlookindia.com/article.aspx?280749.

    For more detailed analysis you could look at my forthcoming book titled “The Biggest Story Ever Sold – India”.

    Reply
  3. Yes and as the BBC cautions ..

    “The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. ”

    🙂

    Reply
  4. Thanks for the report Karsten.

    The rumor of “the firework”, Dr. Amit Kapoor, reached me even before your report went live.
    As you know, I was not able to attend the seminar, so I will be careful on making to firm statements. Dr. Kapoor seems like a fresh breath in the debate, and I am not so concerned about all the facts & figures being 100% correct – or not. The points are good enough for all of us to recognize the actual landscape, as we know it.

    It’s good to see that the seminar and now your report creates some waves, and potentially good discussions.

    I welcome a lot more irony, and lot more focus on the not so brilliant sides of India. Doing business in India is extremely challenging. We all know it can drive even the most patient person mad. Still I have been into it for 14 years – and will be for 14 to come.

    Pretending things are perfect – doesn’t remove the challenges. That’s why it’s about time to be much more open about the well-known challenges. Using irony and humor will fit in very well. Why not join forces to improve things, instead of pretending everything is so incredibly great.

    Karsten, I am looking forward to chapter 2 of the report.

    Reply
  5. Trond the problem is not about things being perfect but about statements such as “India is a destabilizing force in some parts of the world ” and other baseless statements.

    Your inability to succeed in India shows your incompetence not the markets inability to accomodate foreigners, there are many people from all over the world who are running successful businesses in India.

    The point is not to speak untruths to sensationalize things, I hope you will get to learn more about the market over the years and come back and teach people in Norway about the “facts” you learnt in the market.

    Good luck

    Reply
    • Karthik, you are not helping your cause by coming across as arrogant, spiteful and just plainly distasteful in your rebuttal to Dr Kapoor and Trond Skundberg.

      Why don’t you let the audience decide for themselves about the merits of Amit Kapoor’s case instead of maligning him as a “soap salesman” etc in your blog? Lots of folks, including those that are highly successful, can relate to Trond’s frustrations of doing business in India. Let us not pretend that corruption, red-tape, nepotism, cronyism and politics are not strong indicators of how things get done in India.

      Reply
  6. DyslexicHippo (Amit Kapoor ?) All of that exists in India but the problem is he (you?) didnt speak about it but made blunt statements about things that I have explained. Red-tape, nepotism, cronyism and politics exists all over the world (including Norway). so the point is to not go on an India bashing spree and leverage it to build your brand but to make data driven sensible arguments that is useful for the Norwegian industry ( which I have done in my various articles, I am critical about things like corruption but I also talk about what needs to be done / how to find a way around it).

    If you are an intellectual and understood macro economics, geo politics, technology you will see the value in my rebuttal to Kapoor’s (your) points.But if you are part of the herd who doesn’t see reason / logic and just wants to follow the rest you might perceive this as not tasteful 🙂

    So if you want to vent your frustration get on a debate or talk to an India experts, Dont invite a sensationalist to satisfy your frustrations it is counter productive and you will isolate yourself like you have been doing with other nations of the world.

    BTW I did like your id DyslexicHippo 🙂 and if you wanted pointers on how to improve the presentation, I would be glad to help.

    Reply
    • Calm down. There may be a time and place for conniption fits but this does not rise to those levels.

      First of all, I am not Amit Kapoor. Despite what you think, I was not defending his views, or purportedly lack thereof, on macro economics in which you claim exclusive punditry. My point was – and I repeat it at the risk of re-stating the obvious – let the audience decide the worth of the speaker. Norwegians, by no means, lack the intellectual wherewithal to draw their own conclusions based on their own experience in dealing with Indians of all stripes.The merits of your rebuttal is not the point. The point is that it is not necessary. Going out of your way to dazzle us (or “the herd” as you so affectionately alluded to) with your “logic” points to an inferiority complex that goes into defensive mode at every perceived slight that could potentially tarnish the golden image of your motherland that you have zealously cultivated and nurtured in your febrile imagination.

      Being the only intellectual in Norway, I thought you would at least get that.

      As for your generous offer on pointers to improve presentation – thanks but no thanks. Isn’t it somewhat obvious by now as to who is in real need for some of that?

      Reply
  7. Karsten, very unprofessional to allow anonymous people to troll on the comments section. Good luck with your posts. This is my last comment. Cheers …

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s