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Marvin Hough, Telfer School of Management Montreal - Oct 25, 2012

Assessing Your Company’s Readiness for India . Marvin Hough, Telfer School of Management Montreal - Oct 25, 2012. My Experience. B. Comm – MBA – University of Alberta AIESEC Traineeships – Denmark, Belgium

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Marvin Hough, Telfer School of Management Montreal - Oct 25, 2012

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  1. Assessing Your Company’s Readiness for India Marvin Hough, Telfer School of Management Montreal - Oct 25, 2012

  2. My Experience • B. Comm – MBA – University of Alberta • AIESEC Traineeships – Denmark, Belgium • EDC Career – 30 years – Assignments in Credits Insurance, Financing, Risk Analysis, National Business Development and International Business Development • - Business Development in Canada - Ottawa, Toronto and Vancouver • - International Business Development assignments: • India ( DFAIT assignment), • China –( establishment of EDC’s first representation ) • Mexico ( EDC Chief Rep) • Regional Vice President, IBD for both Asia Pacific and Latin America • Telfer School of Management – 2008 - Present • EMBA/Undergrad Teaching and EMBA International Consulting Trips ( China, South Africa, Brazil) • Executive Programs – India Forum, Focus India Program

  3. India’s Growth on the World Stage 2002 2050 GDP USD trillion GDP USD trillion China US US India Japan Germany Russia China UK Japan India UK Brazil Germany Italy Brazil France Russia Italy France GDP per capita 000 USD GDP per capita 000 USD Bubble size corresponds to GDP size Source: Goldman Sachs Economic Paper # 99; BCG analysis Slide Source: Alan Rosling of Tata Sons

  4. Canada Needs to Focus on India • As a partner in the global knowledge economy • Indian objective to obtain access to proprietary S&T • As a collaborator in infrastructure development • Indian objective to invest heavily in domestic • infrastructure investment over the next 10 years • As a market for Canadian commodities & value added products and services • Indian objective to obtain long-term access to natural resources and energy security • As an investor and receiver of investment • As an outsourcing center and link to global supply chains

  5. Canadas Trade Strategy for India • Achieve the signing of the Comprehensive Economic Partnership Agreement • Increase bilateral trade to $ 15 billion within 5 years • Increase investment flows, focusing on Infrastructure and Capital Projects, Science and Technology, Energy and Education • Make Canada an attractive trading partner and establish a “ Canada Brand” • Double Indian students in Canada within 5 years • Continue to promote Canada as a science and technology partner • Expand multilateral engagement with India in forums such as the WTO and G 20

  6. Canada – India Bilateral Trade • Most Promising Business Sectors: • Agriculture, Food and Beverages • Service Industries and Capital Projects • Information and Communication Technology (ICT) • Oil and Gas Equipment and Services • Electric Power Equipment and Services • Aerospace and Defence Source: Global Commerce Strategy and DFAIT Office of the Chief Economist, based on statistics from Statistics Canada

  7. Indian Business Environment Accelerators English language Liberalization and market reforms Strong private sector Intellectual Power and Innovation Cost-competitiveness of labor for services Cost of operations Common law legal system Developed banking sector & capital markets Offshore outsourcing center Increasingly attractive foreign investment destination Increased integration into the global economy Decelerators Inadequate Infrastructure Distance to market Knowledge barriers Price sensitivity – buyer’s market Up-front cost to develop relationships Red tape ( India ranks 122 out of 181 countries in ease of doing business) Onerous labour regulation Bureaucracy and corruption in public sector High tariffs, non-tariff barriers, custom processing delays Tax rates and regulations Security Issues * As per Price Water House Coopers (2003)

  8. India - What are the challenges?

  9. Business Culture Time as soft and elastic Subject to distractions, interruptions Overlap talk Ascribed Status Special privilege Clear Authority figures Direction and Relationships Tradition is critical and valued Time as rigid and exact Focused, concentration on Task Sequence talking, turn taking Achieved Status Earned Accomplishment Shared Authority Consultation and Teamwork Tradition is interesting

  10. World Bank Report Sub-national Doing Business in India Report 2009 • 7 topics measured in India: • Starting a business • Dealing with construction permits • Registering property • Enforcing contracts • Trading across borders • Paying taxes • Closing a business Data were collected with the help of 280 private sector contributors and 230 public sector officials 10

  11. Doing Business in India – Where is it easiest? 11

  12. The Need for Innovative Thinking $2500.00 $35.00

  13. Top 10 - Considerations for Doing Business in India • Local presence is very important - To help you through the challenges including getting through the significant number of government permits and licenses – even now after liberalization. • A strong relationship network is key – Relationships are important to verify information, understand government policies, identify tomorrow’s opportunities, resolve issues • Timelines – Understand that things just take longer to transact even if approvals are in place. Indians act on their own time schedule. • Scope of the market – The sheer size and enormity of India’s social challenges should not deter you. • Willingness to provide technology and knowledge transfer will increase your attractiveness as a business partner.

  14. Top 10 - Considerations for Doing Business in India 6. Important to be mindful of local sensitivities (e.g. religion, caste, and Indian pride - Indians do not like to be spoken down to by the West) 7. Power/Infrastructure bottlenecks – Pay special attention to ensuring that you have reliable sources of power and back-up plans 8. Corruption remains an issue that can slow down approval processes 9. Labor issues can be a serious challenge 10. Competition is already tough – Remember that India has a very competitive offering including from domestic suppliers in most sectors of the economy

  15. Tactics - Doing Business in India • Focus on Indian culture and draw on cultural training and the Indo-Canadian community in Canada. Realize that in Indian culture face to face meetings are crucial in developing long term business relationships and trust. • No decision can be more important than the selection of your local partner(s)/agent(s) – due diligence is critical – make sure claims are checked out. Don’t assume that one agent can be effective on a national basis. • Western concepts and off-the-shelf solutions do not work in India, targeted and client specific proposals and solutions do. • Be particularly mindful of pricing considerations and realize that Indians are very price conscious – know what your competitors are offering and their approach to pricing • Doing business with the public and private sectors need different approaches. Developing a proposal for the public sector requires careful consideration of specifications, local content requirements, the approval process etc. Multi-point lobbying often required

  16. Tactics - Doing Business in India • Show the commitment of your CEO to India, the proposal and your counterpart and realize that the decision making process is usually very hierarchical • Prepare your proposal to meet local challenges and marketing needs. Price, quality and the overall advantages of your product over the present products in the markets should be part of your project proposal. • Leverage relationships of others including Canadian agencies and associations, Indo-Canadian community – eg EDC relationships • Training and Transfer of Technology will be important parts of a business proposal and should be carefully considered and appropriately highlighted. • Be mindful of the potential to work with your buyer or partner on other projects and that “relationships” are broader than transactions.

  17. Negotiation • People may tell you what you want to hear. Don’t assume a smiling face means acceptance. Stress your common aims • Indians are inclined to say yes to anything ( It’s up to you to figure out if they can actually deliver on their promises) • The most senior person will make the decisions. If he is not at the meeting, you are at the early stage of negotiation. • Don’t lose your temper as that means you lose face and are seen as untrustworthy. • Concessions are expected in price and terms. Expect them in return. • Politeness, praise and respect are important • Don't assume anything - find ways of checking progress without causing the other party to 'lose face'.

  18. India Readiness Assessment • Management Commitment/ India Champion • Researched the Opportunity and Completed the Environmental and Target Market Scan • Consulted with key specialists in Canada and India – Trade Commissioners, EDC, Legal and Tax experts, Financing, Consultants • Financial Commitment for Market Research and Travel next 2 – 3 years • Indian Cultural Training or Exposure

  19. India Readiness Assessment • Completed Skills Audit – including India cultural and market expertise • Plan for securing and maintaining local agent, distributor or partner • Decided on degree of technology transfer • Risk Management Strategy – including credit risks, political risks, security risks • Draft India Business Plan

  20. Drafting the Business Plan • Table of Contents • Executive Summary • Corporate Profile and Nature of the Business • Management and Human Resources • Environmental and Target Market Scan • Market Entry and Marketing Strategy • Operations Overview • Financial and Risk Management Strategy • India Readiness Assessment • Conclusion and Recommendation • Bibliography • Appendices

  21. TFIP Environmental and Target Market Scan • Environmental Scan • Market Size, Composition and Growth • Political Characteristics and Stability • Cultural and Linguistic Issues • Government Policies Affecting Business • Legal Issues • Costs and Resource Availability • Commercial Infrastructure • Geographic Factors Target Market Scan • Customer Profiles: wealth and ability to pay • Product /Service Fit with Customer Preferences • Strength of Demand for Product/Service • Competitive Barriers to Entry

  22. Sources – Canadian Government Sites • Department of Foreign Affairs and International Trade www.tradecommissioner.gc.ca • Export Development Canada www.edc.ca • Industry Canada www.ic.gc.ca • Canadian Commercial Corporation www.ccc.ca • Canadian International Development Agency www.acdi-cida.gc.ca • Business Development Bank of Canada www.bdc.ca • Statistics Canada www.statcan.ca • Trade Team Canada www.exportsource.ca

  23. DFAIT – www.tradecommissioner.gc.ca • Select - Country Info –Market Reports, Asia Pacific, India • Aerospace Sector Profile - India  2011/01/04 • Defence and Security Sector Profile - India  2011/01/04 • Agriculture, Food and Beverage Sector Profile - India  2011/01/05 • Automotive Sector Profile - India  2010/12/29 • Life Sciences Sector Profile - India  2010/12/30 • The International Education Market in India  2012/06/04 • Studying in Canada - Frequently Asked Questions and Answers from the High Commission of Canada, New Delhi  2011/11/02 • Guidance on the Submission of Study Permit Applications  2011/10/25 • Canadian Universities: Generating Science and Technology Opportunities with Indian Companies and Universities  2011/10/12 • Education Sector Profile - India  2010/12/30 • Electric Power Equipment and Services Sector Profile - India  2011/01/04 • Environmental Industries Sector Profile - Inde  2010/12/15 • Life Sciences Sector Profile - India  2010/12/30 • Information and Communications Technologies - Software and Services Sector Profile - India  2011/01/04 • Telecommunication Sector Profile - India  2011/01/04 • Metals, Minerals and Related Equipment, Services and Technology Sector Profile - India  2010/12/30 • Oil & Gas Equipment & Services Sector Profile - India  2010/12/28 • Transport Infrastructure Sector Profile - India  2011/01/04 • Financial Services Market Sector Profile - India  2010/12/29

  24. Canadian Representation in India High Commission, New Delhi Consulate General, Chandigarh Trade Office,Kolkata Trade Office in Ahmedabad Consulate General, Mumbai Trade Office, Hyderabad Trade Office, Bangalore Consulate, Chennai

  25. Sources – Canadian Trade Associations • Canada-India Business Council www.canada-indiabusiness.ca • Indo-Canada Ottawa Business Chamber www.icobc.org • Indo-Canadian Chamber of Commerce www.iccc.org • Canadian Society of Customs Brokers www.cscb.ca • Canadian Chamber of Commerce www.chamber.ca • Canadian Manufacturers and Exporters ( CME) www.cme-mec.ca • Canadian Association of Importers and Exporters www.importers.ca or www.caie.ca • Canadian International Freight Forwarders Association www.ciffa.com • Asia Pacific Foundation of Canada www.asiapacific.ca

  26. Sources – Indian Government Sites • High Commission of India, Ottawa www.hciottawa.ca • Directory of official Indian Government websites www.goidirectory.nic.in • The Directorate General of Commercial Intelligence and Statistics www.dgciskol.nic.in • Directorate General of Foreign Trade www.dgft.delhi.nic.in • India Brand Equity Foundation (IBEF) www.ibef.org • India Finance and Investment Guide www.finance.indiamart.com • Ministry of Commerce and Industry – www.commerce.nic.in

  27. Sources – Indian Trade Associations • Federation of Indian Chambers of Commerce and Industry www.ficci.com • All India Association of Industries www.aiaionline.org • Associated Chambers of Commerce and Industry of India www.assocham.org • Confederation of Indian Industry www.ciionline.org

  28. Sources – International Organizations • Dun and Bradstreet www.dnb.com • International Monetary Fund www.imf.org • Economist Intelligence Unit www.eiu.com • International Chamber of Commerce – www.iccwbo.org • Multilateral Investment Guarantee Agency ( MIGA) www.miga.org • OECD www.oecd.org • CIA – www.cia.gov • World Bank www.worldbank.org • World Trade Centres www.wtca.org

  29. Telfer Focus India Online Program • The Telfer Focus India Online Program is a • comprehensive web-based program for business executives offered by the Telfer School of Management at the University of Ottawa. It is comprised of three parts: Session 1 provides an introduction to business opportunities and challenges in India; Session 2 offers a comprehensive review of business intelligence and guidance on key aspects of doing business in India and Session 3 engages you in developing a Strategic Business Plan with advice and feedback from the program experts • hough@telfer.uottawa.ca

  30. National Capital India Forum – Feb 21/2013 “Adapting your Business to India” • The Telfer School of Management at the University of Ottawa and the Sprott School of Business at Carleton University in collaboration with Sponsoring Organizations presents the 2013 National Capital India Forum. Topics of the Conference will include: • The current economic and political situation in India and the implications for Canadian companies. • The state of Indo-Canadian commercial relations and the significance of the proposed Comprehensive Economic Partnership Agreement (CEPA). • The need for adapting your Business Plan and approach to India from the perspective of the 4 P’s -product, price, promotion and place. • Who can help Canadian firms succeed in the Indian market. • For more information contact:(613) 562-5800 ext 2396 • nationalcapitalindiaforum@telfer.uOttawa.ca

  31. Are you ready for India? Marine Drive, Mumbai, India

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