3. 3
Saturnian Reality: Shining Grid-
Lock
• Yes, money to be made
• And yes, money to be lost
Saturn is not all bad..
It helps us focus…
be realistic…
4. 4
India: “Successful” Entry?
Successfully Enter(ed):
• Revenue
• Profit
• Business Plan Objectives
Enter(ed):
• Treading water
• Cost Centre
• Breaking even or Stay Loss Centre
• Reputational Risk Impacted
LARGE CO. VS SMALL CO.
5. 5
Before you Enter India
• A relevant product, technology or service – that works
• A plan: sell in India, Manufacture & Sell in India, Export from India?
• Realistic estimate of resources needed: people, money and time
• Owner /Controller Involved. Internal politics
• Right man for the job – attitude, empathy, cultural awareness, integrity.
Knows your business, carries Internal stakeholders. Not necessarily
‘British Indian, not even ‘Indian’
• Discern between of “Indian Culture” & “Culture-driven Risks”
• Shiny Offices and Indian head-count – measure of Success?
6. 6
Enter the India Market
Two Sets of Factors will Drive a British Company’s Success
1. Bare-Minimum (“Admin”) 2. ‘Soft’ Issues- Culture Driven
• Cultures within Culture, Communities within
communities
• Community Allegiances
• Manipulation & local tactics
• Corruption, Bribery & UK Law
• Local Partners (business partners, employees,
agents) in practice
• Engagement Model impact
• Financial & Information Bleed
• Disputes & Tactics
• Products/ technology/ services
• India Market Research
• Partner selection flow charts
• Office space
• Headcount plan/ HR issues
• Legal & Financial Advice & DD
• Tax & Contracts
• Etc.
7. 7
Enter the India Market
1. Technical Factors/Steps (“Admin”) 2. ‘Soft’ Issues- Culture Driven
• Products/ technology/ services
• India Market Research
• Partner selection flow charts
• Office space
• Headcount plan
• Legal & Financial Advice & DD
• Tax & Contracts
• Etc.
Can be
Decisive
• Cultures within Culture, Communities within
communities
• Community Allegiances
• Manipulation & local tactics
• Corruption, Bribery & UK Law
• Local Partners (business partners,
employees, agents) in practice
• Engagement Model impact
• Financial & Information Bleed
• Disputes & Tactics
9. 9
India: “Successful”
Entry?
Successfully Enter
• Generate Revenue
• Make a profit
• As per projected business plan
Enter
• Treading water
• Cost Centre
• Just breaking even or covering losses
• Suffered reputational risks
Easy to enter the market. But have you “successfully” entered?
It is a “Big Deal” In India
80/20 Rule
Pareto Principle
• What are you getting
into?
• With whom?
• Where are they really
taking you?
10. 10
Foreigners in India
2. ‘Soft’ Issues- Culture Driven
• Cultures within Culture
• Community Allegiances
• Manipulation tactics
• Corruption, Bribery & UK Law
• Local Partner (partners,
employees, agents) in
practice
• Engagement Model impact
• Financial Bleed in
partnerships
• Information bleed
• Disputes & Tactics
• European Power co
• Midlands Wind Turbine SME
• Aerospace Major
• SME Architects firm
• Major European Clothing Brand
• European Looms Manufacturer SME
• European Electricity Infrastructure
Major
• Castings & Forgings SME
• European Biotech SME
• European Aerospace SME
• European Rail Infrastructure Major
• Security Technology SME
80/20
Pareto
Principle
11. 11
Grid-locked in India?
• Mislead on Opportunity
• Excluded from Customers
• Uncertainty
• IPR & Financial loss
• Entangled in Bribery& Corruption
• Reputation Loss
• Trial by Tabloid media
Consequences of Local
Culture Driven Manipulation
12. 12
This Biz Of Indian
Culture
• Holiday vs Business - When to wear the Kurtas & Saris
• Be ‘Hospitalitised’ – On Holiday
• 7 Day Crash Course in Indian Culture?
• Be Contrarian – Be English, German, yourself
• Culture & Cultural Risk
• Distraction – Stop Worrying, Keep in the Game
• Understand the local culture – to understand delays & complexities
• Risk of Manipulation in Negotiations
• Focus – who dealing with, where you are headed
• “Respect” is Universal to all Cultures
Culture
Worry?
13. 13
Your Choice of Market
Engagement Model/ Strategy
India has moved on since 1992
• Is a JV partner really needed?
• Is an “agent” needed, or even permitted?
• 100% Own Team – more appropriate?
YOUR DECISION WILL DECIDE:
• Import risk of manipulation & bribery
• Financial bleed? Will you be allowed to make money?
• Control issues? Will you have a real say in India?
• Exclusion from direct Customer Interface?
• Creeping re-negotiation of your business plans
• Vulnerability to protracted court disputes
Many Indian parties need
foreign partners to no
more than pursue
speculative adventures. . .
at the expense of the
western ‘partner’. . .
14. 14
Your Choice of Local
“Partners”• Local Partners, Agents, Employees, Advisors
• Legal & Financial DD limitations
• Attitude of Manipulation
• Attitude towards Bribery & Corruption, Financial Bleed
• Integrity: real reputation, pending corruption/ tax investigation
• Exclusion from Direct Customer Interface
• Community links of Partner: Information leakage & Collusion
• Most Listed Indian Companies – family Control/ Cliques, strong Community
allegiances
• Real Controller – Who are you really negotiating with?
• Undisclosed Promises to officials – UK Bribery Law
• Financial Bleed
• Previous treatment “foreigners”
• “Own Local Team” risk: Collusion by some Senior employees & local
Advisors
There will
always be a
good, right,
Indian partner
out there… find
him!
15. 15
Disputes & Extraction
Get your Engagement Strategy & Partner Selection Right
Get your Engagement Strategy & Partner Selection Right
Get your Engagement Strategy & Partner Selection Right
Get your Engagement Strategy & Partner Selection Right
Get your Engagement Strategy & Partner Selection Right
Get your Engagement Strategy & Partner Selection Right
Get your Engagement Strategy & Partner Selection Right
Get your Engagement Strategy & Partner Selection Right
Some Local ‘Partners’ easily resort to the deliberate (re)negotiating tactic of
generating ‘lock-down’ in the overloaded Indian Courts . . .
16. 16
Relationships &
Resisting Corruption
Good Relationships in India are:
• Not just about ‘Contacts”
• Not just about getting a “deal”
Solid Relationships may help resist Corruption
and
heavy-handed Partner tactics
IN INDIA, EVERYBODY
HAS ‘CONNECTIONS’,
CAN GET YOU A DEAL,
KNOWS SOMEONE. . .
17. 17
Influence Partner
Behavior
2. ‘Soft’ Issues- Culture Driven
• Cultures within Culture
• Community Allegiances
• Manipulation tactics
• Corruption, Bribery & UK Law
• Local Partner (partners,
employees, agents) in practice
• Engagement Model impact
• Financial Bleed in partnerships
• Information bleed
• Disputes & Tactics
• Make proactive effort to be Be
informed, use “Relationships”
• Subtle communication to
Partners & Stakeholders
• Deflect Partners from potential
manipulation, financial
leakage and making promises
to Officials
• Save the business relationship
Use the
80/20 Rule,
Navigate the
Grid-lock
Deflect
Potential Negative Behavior
18. 18
Summary Success
Factors
• Housekeeping: right product, right plan and right person
• Revenue: Not Losses In India = Successful Entry
• ‘Admin’ Steps: Starting Point
• Culture Worry: Be English, Keep Eye On the Ball
• ‘Partnering’: Only if needed; Own Team alternative
• Customers: Insist on Customer Interface
• Assess, Investigate: beyond Legal & Financial DD
• Discover: The real reputation & Community dealings of your local Partner,
Agent, Licensee, CEO, Lawyer, Accountant
• Subtle Influence: Deflect negative behaviors of Indian “partners”
Notes de l'éditeur
YES, I know, we are these days more used to slides of shiny Indian Malls and the the F1 Race Track in Delhi. We’ll get to that . . . !
Ladies & Gentlemen
WHAT DO WE EXPECT FROM “ENTERING THE INDIAN MARKET” ?
We seek, especially in these times of European and global crisis, to sell our products, technologies and services to India; or seek commercial benefit in some way from the resources – materials, people and know-how- in India.
We seek to take our business into India, by export to, or manufacture in, or export from India.
Bottom-line, we hope to add new revenue and make some healthy margins.
I hope in the next 20 min.s to leave you with some sense, rather than check-lists, of how you might be successful in this physically and culturally demanding market, that most conferences hail as “India Shining”.
When I was given this opportunity to speak to you, I strugged.
Which India am I to present to you – that you are supposed to “successfully” enter?
As a market opportunity, India is Shining
Literally Billions of £ needed in infrastructure development and services in every sphere – power, roads, buses, metros, townships, retail space and so on. Not to mentions aerospace and defence. Great.
Tata buys up JLR and other British companies. Great. Indian companies are getting impressive.
But how is all this relevant to you? The SME in the Midlands? How do you get to it, and successfully? this twin-speed, or schizophrenic Indian market?
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LET’S JUST DWELL ON THE THOUGHT FOR A SECOND…
But let me put some perspective on the idea of Grid-lock:
The picture is not about the Electricity sector.
It symbolizes 2 ideas:
1st The Indian opportunity –if India were not grid-locked, no market for our goods and technologies, nothing for us to sell or invest in..
2nd The idea of grid-lock represents the complexities of the system, the culture – the politics, the way the bureaucracy works, the cultures within cultures, the way local partners behave, the perpetual news- flow on corruption scandals
In other words, this Indian Opportunity is not for the under-prepared or the over-confident western company, big or small . . .
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In fact, let us examine what does or will “successful entry” into India look like for you?
Many western companies enter the Indian market, but not all enter successfully!
Sure they do enter. Just enter, and flounder as cost centers or loss centers for years, if they have not pulled out to lick their wounds in time. With limited resources – financial and people – SME’s have a much smaller margin for error than large companies that can write off losses in India and start again!
My topic today is “Successful” entry. I’d say if you end up with no revenue, profit as per your BP, and just remain a cost or loss center, all you’ve done is tread water.
I’d say financially measureable benefits must be the goal… and with that let’s
press on…
I bet all or most of you of you have been to Delhi or Mumbai. Bet you you stayed at the Taj..or the Oberoi? You’ve had the omnipresent chauffer-driven Toyota Innova to cruise you to your meetings in the safety of air-conditioned isolation.. Met the uncle and his niece of the local Indian party that wishes to impress you and have your business.
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BUT before we actually get to India, I want us to pause & reflect for a second: In my experience a large % of the success in India actually begins at home – here!
Many Indian Initiatives are still-born for internal reasons.
It amazes me how so many companies just swagger into India with great over-confidence, fail to understand cultural issues of the market, and designate the wrong people to lead their Indian entry.
Secondly, do you have something real to sell?
A few years ago a small tech co had the opp. Within 3 months to present its security device to the high powered technical committee of the Indian Home ministry. A moment that can take over an year to reach. Battery failed. Small co but the polite bitter politics of who was ‘running India’ ruined the plan.
Another large British company seemed paralyzed by internal control battle for who will be CEO of India Shining. A ping pong of different business plans and arguments. Now embedded in Indian litigation with customers.
It is better to stay away from India.
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But being optimists, lets get to India. The Oberoi and the Taj hotels we’ve all been waiting for….!
Hook … or Anchor?
The LHS box – the basic steps in entering India or any market. Irrespective of your strategic business model. Accomplishing these in India really in my experience puts you at the starting line on the road to success! The paper-work is done.
But, (rubbing my two fingers/ thumb) what about the business, the cash flow/ revenue, the profits. Will anything happen next? Or are you now content to announce on your web site that you are now “in India”?
Soft issues are not necessarily discoverable by formal LDD of FDD.
Fact is, that once you are set up nicely in your shiny new glass-fronted Indian local office, the ground reality is that the road to India shining is littered with local culture driven soft risks.
Most western companies fail here. Intellectually understand perhaps… but to grasp what’s really going on and the ‘creeping’ implications – very few do.
But - How many countries do we know with:
the size, population of India? The myriad of religions?
The sub-cultures within ‘Indian Culture’?
The complex Politics that control India’s democracy? The Power plays, the Culture of Influence on the decisions of govt. departments and agencies
the struggling Judicial System weighed under by its burden and the endless Litigation time-frames? The confusion of Rules and Regulations with Grey Areas?
How many markets do you regularly enter with the scale of Corruption scandals news-flow that has come out or India – in recent months alone?
You can easily enter this market, but have no clue where you stand!
Allocating 20% of your time, application of mind and allocation of resources to these questions – will produce 80% of the total success you achieve in India: A good chance of Revenue/ profit, with reduced risk of reputation loss through hidden actions of your local partners and employees
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Let me just pick some of the key headings which, in reality, will have the highest impact on your success or failure in India
Actually, I could jus call this slide: distraction by “Cultural worry”!
If you cannot getting get your mind around “Indian Culture” per se, and “Cultural Risk” in business dealings - you are likely to end up:
With the wrong partner With
the wrong market engagement strategy
Manipulated into unintended commitments or investment, and
Unintentionally involved in corruption & bribery incidents
14
Of course, you have a good contract, negotiated by your British law firm .
Of course, the Indian side should not indulge in creeping re-negotiations,
Of course, India has the rule of law based on the English legal system,
Of course you intend to enforce your rights,
Of course….. Of course……
But some local partners don’t care. If a foreign partner asserts its rights - or wishes to withdraw or go independent.
Indian courts are overloaded
Indian judges are competent and means well … but many lawyers specialize in deliberate protracted litigation tactics. A favored local “commercial tactic” for creeping renegotiations or pressurizing foreign partners
So choose your own lawyer carefully if it comes to it to prevent any collusion!
Don’t get too comfortable in your glass fronted shiny office or at the Taj or Oberoi!
Especially if it means increasing your success rate in India.
