July 23, 2013
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India's tourism slogan, "Incredible India," is an understatement. The world's second-fastest growing economy, India is home to nearly 1.2 billion diverse people who speak more than 20 languages. The South Asian sub-continent is also home to some of the world's biggest metropolises, which are international hubs of culture, cuisine, finance, technology and filmmaking.
For U.S. small businesses, India offers tremendous opportunity. According to McKinsey, India's consumer market is expected to quadruple over the next 20 years, growing to become the world's largest by 2025. Even amid the global economic downturn, the International Monetary Fund predicts India's economy will grow by 6.5 percent in 2010.
The U.S. Commercial Service, which helps American companies export to India, says that now is the time for companies to begin exporting around the world. With the potential for a sustained growth of 8 percent to 10 percent over the next couple of years, India is only going to be a more competitive market in the years ahead.
We hope that this edition of UPS Snapshot for Small Businesses will inspire you to unlock your potential in one of the world's most incredible countries.
Dan Brutto
President, UPS International
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PBD Worldwide
Picking the right partner is critical
Steve Hochradel
What? PBD distributes education media, such as books and DVDs, to schools and professional development centers around the world.
Where? Accounting for approximately US$4 million in annual sales, India is Georgia-based PBD's third-largest market.
Who? Steve Hochradel, assistant vice president, distribution.
Please give us an overview of your company's business in India. How did you start doing business there?
PBD is a fulfillment house. We manage warehouses of textbooks, CD ROMs and DVDs, and ship them to our customers, which are professional education centers, in India's main cities. We started doing business in India because our customers needed us to be there. In the last two years, professional development centers have been growing in India along with the nation's workforce. To handle this demand, we partnered with UPS, which has a strong presence in India, to help ship our orders.
What do you consider to be the biggest benefit of doing business in India?
India offers great growth opportunities, and it's easier to do business there than in many other international markets. India has a high population of English speakers, which makes it easy to enter the market, negotiate with vendors and partners, and set up operations. You also don't have to worry about producing a product line in multiple languages. It's a great, important opportunity market for your business.
What are some of the obstacles you have faced in India?
When setting up shop in any new market, you have to adapt to a different way of doing business. In India, business tends to go at a slower pace. Things just take longer. It's important to account for that so neither you nor your customers are surprised.
What advice would you offer other businesses to help them manage their shipping costs?
Call someone who's already set up in India. You need a partner who understands the specific challenges of shipping in the market. Because we picked a partner we'd already been working with, we've been shielded from a lot of the problems or issues out there. But beyond avoiding issues, having the right shipper can help you improve your customer service, giving your business a competitive edge.
Based on your experience, what general advice would you offer companies that are thinking about doing business in India?
Get to know the market. There's a wealth of information available online that can help you with the ins and outs of doing business in India, and teach you the right way to negotiate with prospective partners, which is really important.
For more information on exporting to India, visit www.export.gov/india/index.asp
In India, one size doesn't fit all. The sub-continent is a melting pot of nearly 1.2 billion people who hail from different religions and speak different languages. Despite these vast regional differences, there is some common etiquette that's important to follow to make your business operates smoothly in India.
What's in a Name?
Business Basics
It is seen as a sign of respect to have the business card translated into Hindi on one side.
The Art of Negotiations
What to Wear
Outside the Office
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Lola Gulomova is from the Department of Commerce's U.S. Commercial Service in New Delhi, which helps companies enter international markets with services including market research, trade events and advocacy.
Why should U.S. companies consider doing business in India?
India has a huge, growing middle class that will be an important market for all businesses. Quite frankly, your competitors will be here tomorrow. So you'll have a tremendous advantage if you get here today. Most of all, India is a friendly place for Americans to do business. In general, Indians are highly educated and very interested in U.S. companies.
What is the biggest mistake you see U.S. businesses make when they go to India?
U.S. companies often don't have enough patience – setting up a business here takes time. India's economy is growing faster than its infrastructure. So you can't expect things to happen just as they would in the United States. A long-term strategy is critical.
What is important for U.S. companies to know before they go?
India has four distinct regions; it does not have a monolithic culture. U.S. businesses must realize how diverse India is and do their homework before they go. One size will not fit all. Don't just think "India is growing and we have to be there." A well thought-out strategy is vital.
Distribution and supply chain management also are critical. Traffic is heavy and roads between major cities aren't always good, so moving products can be slow – and expensive. Having a good partner to help you set up a solid distribution network is essential.
What do U.S. companies need to know about selling to Indian consumers?
Indian consumers tend to be very price-sensitive. They want the best products at the best prices. American companies need to examine their pricing strategies very carefully to make a profit, without pricing themselves out of the market.
What cultural missteps should U.S. businesses be wary of?
Indians are informed and well-educated. You will do well if you approach them as peers; never talk down to anyone. Good topics of conversation include family and culture, such as Bollywood movies or cricket. If you take the time to learn about the culture, that will generate a lot of good faith. And finding this information is easy. There are many English-language Indian Web sites, such as The Times of India and hinduonnet.com.
Also, understand that Indians don't like to say – or hear – the word, "no." If they are reluctant to agree to something, they will say, "maybe" or "God willing." American companies should interpret this as a firm "no."
What is the most important advice you would offer U.S. companies considering coming to India?
Before you set up shop, visit India. There are 29 states, all with their own regulations and ways of doing business. Choose where you're going to go carefully, do your homework, and think strategically about what your approach is going to be. Then find good partners and resources that will help you succeed.
U.S. Commercial Service offices in India can help your company develop a market entry strategy. USCS offices are in seven cities across India covering all sectors. For more information, log onto www.buyusa.gov.
Mark Khambatta, UPS's managing director in India, offers some logistics advice to help U.S. companies spread their wings to India.
Is it difficult and expensive for U.S. businesses to ship to India?
It's a myth that shipping from the United States to India is difficult. Today, it's very simple, fast and less expensive than it was even a few years ago. Customs tariffs and duties have decreased dramatically. And goods from the United States can be shipped to India just as quickly as goods from the EU, even though the EU is closer. UPS, for example, offers a two-day transit time to ship goods or documents from the United States to India.
Are there shipping challenges that U.S. businesses need to know?
Shipping within India – especially to rural areas – can be challenging. Smaller towns don't have airports, and roads are often in poor condition. This means that sometimes it can take longer to ship products within India than between India and the United States. What's more, intra-India shipping can be expensive. Most states have an entry tax, called octroi, which businesses must pay to transport goods through that state. To understand these unforeseen costs – and avoid them, if possible – it is critical for U.S. companies to work with a shipping partner that knows how to navigate intra-India shipping hurdles.
How should U.S. businesses choose a shipping partner?
There are three key questions that businesses should ask a prospective shipping partner in India:
What is UPS doing to help its customers navigate shipping hurdles in India?
UPS is dedicated to being a partner to U.S. companies doing business in India. Our goal is to give customers the most reliable services in the market and the widest range of shipping choices. Specific steps we take include flying our own aircraft to and from India so we can avoid delays common with companies that rely on commercial carriers. Through a successful joint venture with Jetair, India's premier domestic cargo airline, we offer our customers flights to 26 cities within India. And for intra-India shipping, we've forged an alliance with Air Freight Ltd., which gives us access to 200 cities through what's arguably the strongest ground network in the country. Finally, our proprietary technology allows customers to track their packages at any time, get customs information, and calculate total shipping costs – so companies have a handle on their business.
What advice would you offer U.S. businesses seeking to set up shop in India?
If you are seriously considering doing business in India, you must come here first. Visit the city or cities where you're considering setting up operations so you can better assess the business climate and consumer appetite. Most of all, understand that the potential to grow your business in India is as vast as the nation itself. If you pick the right partners, you can plant seeds today for a fruitful, long-term business.
Known to many as Bombay, Mumbai is India's bustling financial capital. Once a stronghold for the East India Company, a bastion of commerce under the British Empire, Mumbai has long been an international trade hub. On the shores of the Arabian Sea, Mumbai is home to India's busiest port and contributes to approximately 40 percent of India's foreign trade.
Today, Mumbai is home to an estimated 15 million people and is an epicenter of commerce and culture. The Bombay Stock Exchange, the oldest stock exchange in Asia and the world's largest in terms of the number of listed companies, is here. In addition to financial services, other large industries in Mumbai include film, textiles, plastics, chemicals, pharmaceuticals and shipping.
Mumbai's most important festival is Diwali, a Hindu festival of lights. Held in November, Diwali celebrates the victory of good over evil and light over darkness. It is a time when business associates exchange small gifts and boxes of sweets or dried fruits. It is considered especially promising to start a new business or seal a deal at this time.
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Hooray for Bollywood!
One of Mumbai's most famous exports is Bollywood, a massive film industry that is arguably the world's largest, churning out as many as 900 Hindi-language films per year. The name, Bollywood, is a combination of Bombay and Hollywood, and it is a fast-growing international phenomenon.
Bollywood films are known to be musical extravaganzas. They are colorful, elaborate and melodramatic, drawing from classic, epic Indian storytelling. They often are several hours long, and usually focus on a star-crossed love story.
Film has a long history in India. Silent movies were made in India in the 1920s, and when sound arrived, Bollywood movies were called "Bombay Talkies." International recognition came in the 1950s with the arrival of Satyajit Ray and his classic film, Pather Panchali, which won accolades at the Cannes Film Festival.
Today, top Bollywood stars include Aishwariya Rai, Shahrukh Khan and Amitabh Bachchan. Westerners can begin to get to know this film genre through English-language, Bollywood-style movies including Monsoon Wedding and Bride and Prejudice, an adaptation of Jane Austen's classic, Pride and Prejudice.
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