Marvin Hough, Telfer School of Management

1
Assessing Your Companys 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 EDCs 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
Indias Growth on the World Stage
2002
2050
GDP USD trillion
GDP USD trillion
China
US
US
India
Japan
Germany
Russia
China
UK
Japan
UK
India
Brazil
Italy
Germany
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
  ST
• 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 buyers 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?
Rank Rank City, State
1 Ludhiana, Punjab (easiest) 10 Mumbai, Maharashtra
2 Hyderabad, Andhra Pradesh 11 Indore, Madhya Pradesh
3 Bhubaneshwar, Orissa 12 Noida, Uttar Pradesh
4 Gurgaon, Haryana 13 Bengaluru, Karnataka
5 Ahmedabad, Gujarat 14 Patna, Bihar
6 New Delhi, Delhi 15 Chennai, Tamil Nadu
7 Jaipur, Rajasthan 16 Kochi, Kerala
8 Guwahati, Assam 17 Kolkata, West Bengal
9 Ranchi, Jharkhand
Source Doing Business database. Source Doing Business database. Source Doing Business database. Source Doing Business database.
11
12
The Need for Innovative Thinking
2500.00
35.00
13
Top 10 - Considerations for Doing Business in
India

1. 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.
2. A strong relationship network is key
   Relationships are important to verify
   information, understand government policies,
   identify tomorrows opportunities, resolve issues
3. Timelines Understand that things just take
   longer to transact even if approvals are in
   place. Indians act on their own time schedule.
4. Scope of the market The sheer size and enormity
   of Indias social challenges should not deter
   you.
5. 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. Dont 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. Dont
  assume a smiling face means acceptance. Stress
  your common aims
• Indians are inclined to say yes to anything (
  Its 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.
• Dont 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

24
Canadian Representation in India
25
Sources Canadian Trade Associations

• Canada-India Business Council www.canada-indiabusi
  ness.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_at_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
  Ps -product, price, promotion and place.
• Who can help Canadian firms succeed in the Indian
  market.
• For more information contact [phone] ext
  2396
• nationalcapitalindiaforum_at_telfer.uOttawa.ca

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