Inter Link India  
The American Business Experiencein India
. : An Inter-Link India - Xerox Corporation Survey : .
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. : Be sure to Get the Full 200-Page Survey Report : .
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The Study… Why and How
  • 8 years after the 1991 liberalization and opening up of the Indian economy, and at the close of this century, there is a mixed perception of India, and of doing business in India.
  • What is the real business experience in India? Are perception and reality in sync?
  • What are American Business people actually experiencing? Why is the general press on India negative?
  • Does the real life, on the ground experience support past perception, or is there a new reality?
  • All these questions led us to ask those who are experiencing India, and those who should be India's harshest critics, and the most affected: What do they feel about doing business in India?
  • And who better than the American Businesspeople in India to ask?
  • This is a study of the American business population in India. Chief Executives of over a quarter of all American businesses participated in the study.
  • The study was conducted under the patronage of the American Embassy and various Indo-US Chambers (IACC, ABC, USIBC), to ensure objectivity.
  • The Study was sponsored and conducted by the Xerox Corporation and Inter-Link India, a consulting company specializing in helping foreign companies enter India and Asia.
  • From about 450 American companies, 118 company CEO's responded to a questionnaire, and in depth interviews. These responses form the basis of the study.
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Key Findings
  • Overall Experience: Overall Experience is Good! About 70% of all companies report as much success as, or better success than expected. They bettered their expectations in terms of market share, market growth, product launches, and profits.
  • Profits: India is a profitable place to do business! 78% increased profits in 1998, a recessionary year. Mean profit growth rate is 82% over 1997, and 200% over last 3 years.
  • Markets: The market is expanding! 95% report sales growth over 1998. Mean growth rate is 60% over 1997 and 150% over last 3 years (Companies reported 8% to 1300% profit growth).

    The market place is changing to a sophisticated, brand sensitive one.

    The market is highly segmented. While the market is very price sensitive (91% of the respondents said yes), two thirds stated that consumers are brand conscious. The customers desire value for money, but are willing to pay money for value!

  • Ownership: Most American operations in India are majority owned!           About 17% have minority share holding. 40% had 100% shareholding.
  • Investment by Sectors: Manufacturing continues to be the main area of investment! Of the total manufacturing, 69% is in the consumer goods sector and 23% in automotive.
    Manufacturing                5
    Energy                            29%
    Telecom                           5%
    Software/Computers        3%
    Banking                            4%
  • Products: Suit Products for India and Indian Market Segments! American Companies are finding that obsolete technologies do not work, and that products have to be modified for Indian customer needs, and to target segments beyond the limited tip of the pyramid.
  • Exports/Imports: American companies import into India far more than they export! American companies in India reduce the American trade deficit by importing more than they export. This is expected to change with indigenisation, and by the desire of American Companies to increase exports from India.
  • Overall Business Climate: State business climate is good! 93% of the American find the business climate in the states they are located in is fair to excellent.
    • Satisfaction Rating: Over 68% are satisfied! 68% of all American Companies are satisfied with their experience in India. Those in computer/software industry have a higher satisfaction rating. 83% of these companies are satisfied. Companies that entered in the 1980's have a higher satisfaction rating than those entering later.
    • Manpower: Rated as good to excellent! American Companies give a very high rating to Indian managers in quality, ethics and performance. They are grooming Indian managers for overseas assignments. Workers have a high rating, though lower than the rating of managers.
    • Problem Areas: Red Tape is the predominant issue! When asked to identify the single worst problem faced in India, 26% cite bureaucratic red tape. 23% feel high taxes are the major problem, while 16% state power shortages and 12% find corruption as the main issue.
    • Future Plans: Bullish on India, here to stay! 85% of the Americans came to India after being elsewhere in Asia. The main reason was the local market. However now, Americans are saying:
    • 90% will increase investment in India by 2000
    • 64% will develop India for export
    • 46% will develop India as a base for expanding outside of India
    • Indian managers will play a greater role in global management of American Companies
    • India will become a more important R&D center
    • More products will be developed for the Indian market. More state of the art products will enter India
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A real vote of confidence in India!!
  • The bonus of being in India, apart from the local market, is manager and manpower resource, R&D sourcing, using India as a service point, importation from USA, and to develop India as a source for cheaper exports, and for developing business outside India.
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India vs. China, South East Asia, Mexico and Brazil

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  • India ahead in most ratings given by Executives who have worked in other emerging markets: China scores marginally in political stability, market size, and is equal to India in corruption, India scores hands down in language, lower cultural differences, legal system, managers, manpower availability and quality, overall cost of manufacturing, overall cost of distribution, competition, and quality/price consciousness. 52% felt India has overall lower country risk, while 13% felt China is better. This trend is more or less repeated versus other emerging countries.
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What it Takes to Succeed: Lessons from the Front Line

People

  • Hire local managers, use their local expertise
  • Pick your people well, train them well
Business Processes/Practices
  • Don’t compromise your values
  • Leverage corporate capabilities smartly
  • Adopt processes, tools and techniques when proven internationall
  • Focus on costs, even as you grow
Market
  • Assess the real market potential vs. conventional wisdom
  • Create markets to tap latent demand
  • Educate customers regarding quality and life cycle costs
  • Adapt global distribution model to local condition
Environment
  • Know the rules, follow the rules, don’t take short cuts
  • Hire informed, experienced, competent consultants
  • Learn from fellow MNC's


Results Expectations

  • Have patience, no quick results
  • everage India for worldwide capabilities…sourcing, back-end operations, R&D
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Build an Indian Company with MNC Capabilities
Learn from fellow MNCs
And why a vast majority of the Americans are succeeding!!
  • You will discover that the majority of American Enterprises in India are successful…very successful, growing their business, earning profits, expanding their presence.
DISCOVER INDIA FOR YOURSELF! YOUR COMPETITORS ARE DOING JUST THAT!!
For a detailed report, please contact Inter-Link India. This priced publication will be available in the third quarter of 1999. Please email us for ordering the full issue, inter_link@vsnl.com


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Read on, for a sneak preview of the detailed report ...
THE AMERICAN BUSINESS EXPERIENCE IN INDIA

I. FACTS

  • Business Segments Wise Analysis Of Companies – By Years Of India Experience And By Level Of Ownership
  • Preferred Locations (Head Offices, Manufacturing Sites)
  • Major Reasons For Entering India
  • Company And Management Structure
  • Business Operations
  • Financials/Performance
  • Role Of US Company/Parent
  • Human Resources
  • Actual Performance Vs. Original Expectations / Projections
  • Indian Performance versus Parent Performance
  • Major Factors Affecting Better/Worse Performance
  • Future Outlook/Plans
II.PERCEPTIONS
  • Business Climate
  • Major Problems In State
  • Impact Of Indian Environment On US Business
  • Market Characterization And Perceptions Of US Companies
  • Supplier Base In India
  • Indian Managers/Workers
  • Opportunities For, And Hindrances To US Business In India
  • Comparison Of Products And Performance Parameters In The US Vs India
III. INDIA VS OTHER EMERGING MARKETS EXPERIENCE

IV. DOING IT ALL OVER AGAIN

  • Overall Experience Rating
  • Key Challenges
  • 2005 Vision of US Companies In India

Examples of information you can expect from the detailed report.

53% of the American companies are headed by Indians. When we look at expat CEOs, more foreigners than NRIs are CEOs. 33% were foreign CEO's, and 14 % NRIs.

0nly 14% of American companies are worried about sovereign guarantees, while 64% are not.

67% of American companies really consider fellow multinationals as competition, while 15% disagree.

When asked if Indian companies are afraid of multinationals, 46% of the American companies felt that this is significantly true. 23% feel that Indian companies are not afraid.

"IF AMERICANS FEEL INDIANS ARE AFRAID OF THEM, GUESS HOW INDIANS MUST BE FEELING…" IS THE PERCEPTION

And guess what, only 8% of all American companies are afraid of Indian companies, 46% most certainly are not afraid. This shows real confidence in the ability of the American companies to overcome Indian competition

89% felt Indian managers were important..more important than Indian JV partners.

100% said they would not scrap venture in India.

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QUOTES FROM CEOs

Economic & Political Environment

"The Economic fundamentals are very good … The problem is psychological fundamentals"

"Every one out there is selling …… Brazil, China, Czech Republic …… India seems to be saying stay away"

"The bureaucrats are a stabilizing factor"

Corruption

"Everybody reads in between the lines …. Nobody reads the lines themselves"

"Can do business above board, but it costs time cycles, and sometimes lost business"

Impact of the Current Government Policies

"Duties have been reduced from 120% to 35% to 15% within a 5 year period, but still among the highest in the world"

"Indian industrialists lobby for high duties … like to operate behind tariff walls"

The Indian Market Opportunity

"No Global Company cannot not be in India"

"Don’t go by the population numbers … conduct disciplined primary research to assess your market opportunities"

Customer Buying Criteria

"Communicating value is the biggest challenge we have"

Technology & Products

"1/6 of our worldwide R&D staff is Indian"

"Adapting to Indian conditions, however minor, is critical for success"

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