21 November, 2012 - 18:03 By News Desk

Eight mistakes UK companies make going into India

 Shai Vyakarnam, director of the Centre for Entrepreneurial Learning (CfEL)

Guest blog by Shai Vyakarnam, director of the Centre for Entrepreneurial Learning (CfEL), Cambridge Judge Business School

India has finally come on the radar of an increasing number of UK companies because of the excellent diplomatic work and evangelising activity of the UKTI, the UK India Business Council, all the big professional organisations and of course the growth of interest in the glamour of Bollywood.

Increasingly I meet business people who have been to India at least once – with their backpacks – back in the ‘80s and ‘90s. Gone is the generation that grew up in India on Military Cantonments that complimented me on my command of English. What a relief!

With this generational change – is there also a greater commercial awareness? Have we moved on from the business skills of the East India Company?

This may be a bit anecdotal but here is my take on the mistakes that I have seen UK companies make when wanting to enter Indian markets. The notes are based on a sanity check with Dr Uday Phadke who works actively in this area as chair of AcceleratorIndia.

1. UK companies seem to be waking up to the size of the Indian market opportunity but still really look at India as an outsource destination. That is yesterday’s story.

2. Those who do “get it” do not as yet understand that getting into the Indian market requires a different approach – it is not just about finding a distributor, a warehouse and negotiating around exclusive or non-exclusive deals. Market entry needs to be more sophisticated.

3. Boards are impatient for results and need to show deals but they do not allocate sufficient resource to first understand the market deeply, construct the value proposition and build relationships. Indian customers need a compelling story – just like any other – but their needs are different and they work both rapidly with decisions and slowly with actions – so one needs to learn fast/slow behaviours!

4. Fear of IP theft – well this may well be true – but India has different social and ethical needs in the sense that monopolistic prices by Multinationals is no more tolerated in India than it is by the EU Commission or by UK taxpayers. The mistake is not about IP strategy as much as it is about speed of action.

5. Perhaps the most common mistakes are “I know a man….” ; “My accountant told me….”. India is a country in which relationships are important but they need to be with people who deeply understand how to construct the value proposition for your business, how to develop the business model that will appeal to your board and to your customers.

6. Another favourite is the one about going on a Ministerial delegation! I think one makes connections that have more value in the home market than in the proposed destination! They are no substitute for truly understanding and investing in the market place.

7. UK companies still obsess over the USA and will overspend on getting regulatory approvals. Many firms have died on the shores of the USA – but still the firms persist. Looking west originally was to find a route to the East – there are easier routes now!

8. Possibly the error which is hard to fathom is that there are at least two Indias – there is the old India – slow, corrupt, colourful and much written about by prize winning Indian authors. Then there is the modern entrepreneurial India – professional, demanding, worldly and able to “adjust” with the old and these are the movers and shakers who are affecting the lives of millions. They are not to be confused with the opaque group of billionaires who look modern but are part of the old India.

The purpose of this article is to flag up issues that have arisen. Solutions on a case-by-case basis of how to avoid mistakes and how to benefit from entering Indian markets need to be developed with expertise and deep dives into the market.

At headline levels my recommendation would be to truly understand the market potential for your products and services in India. It is a large market.

Find a champion who will lead the charge and will understand the fast/slow approach you need. You will certainly need to allocate budget and ensure that the partners you find in your “go to India” strategy are not only those you can get on with but are also those who have a real understanding of the markets, customers and value chains.

You will need some level of expertise to refine your value proposition and perhaps re-craft your business model.

For some companies the choices are between a mediocre existence – in mature and declining markets – or jumping to growth markets. If you need to do the latter – prepare for the jump!



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