Profiting With Public Relations

Courting The World's Next Super Power - India

Here is part two of my interview with Rafiq Dossani , an expert on Indian Affairs, executive director of South Asia programmes at Stanford University. His latest book on India "India Arriving: How This Economic Powerhouse is Redfining Global Business", provides us with insider's view of what is happening in India. 

1.       Can you talk about the entrepreneurs in India, are they different from US/UK entrepreneurs? What lessons can each learn from each other.

In terms of the ability to take risk or plan ahead, the entrepreneurs of India are similar to their western counterparts.  The difference between them is in: (a) project management.  Indian entrepreneurs tend to be less comfortable with teams and delegation; they also are weak in global project management skills. (b) small business has historically been dependent on large businesses to survive, such as fulfilling a vendor relationship to a large business client.  The concept of a small business supply chain is still new to India.

2.        What are some of advantages of doing business in India rather than China?

The quality of professional services is far better in India.  There is also a greater respect for the rule of law, for example, in the protection of intellectual property.

The other main advantage/disadvantage is that India has a better developed civil society.  If civilian organs like the media or unions can be managed, they offer excellent leverage for marketing or recruitment.  On the other hand, if not managed well, they can be obstacles.

3.        Is the legal industry in India open to doing business with smaller/medium sized law firms?

The legal industry in India lobbies hard (and, so far, successfully) to prevent western law firms from opening up in India.  This forces the western law firm to collaborate with an Indian partner.  Yes, they are open to working with the small/medium law firm.

4.        Can you give me a couple of examples how how India is redefining global business?

In certain fields, such as software, doing without Indian vendors is not thinkable.  In other fields, the localization of business to the cities and small towns and away from the large metropolises, is a very interesting trend that has led to the provision of very cheap, efficient outcomes.  The obvious example is cellphone services, where 6-8 providers compete in each location.  The outcome is the cheapest phone service in the world.  India adds 3.5 cellphone users per second, well ahead of China.

5.       Are the opportunities only for large and  medium sized firms? What if the small firms want to do business? Where do they start?

Large firms are no longer the driver of the Indian economy.  Since the reforms of the 1980s and 1990s, SMEs drive India's growth.  My advice is to pick a field which is not dependent on superior infrastructure but requires superior talent; and which does not depend on economies of scale to thrive but on upgradation of human capital within the firm (i.e., the potential for a steep learning curve)

A very big thank to Mr. Dossani for being so generous with his time.

Courting The World's Next SuperPower - India

    With unprecedented levels of growth for several years, an economy poised to grow at 9% in 2008, matched by its growing middle class, a huge youth population, it is no surprise that a number of books on India have appeared in the marketplace.

    Rafiq Dossani, an expert on Indian Affairs, executive director of South Asia programmes at Stanford University, has had a fundamental role in helping introduce progressive reforms in India. He gives us the insider's view in his book: "India Arriving: How This Economic Powerhouse is Redfining Global Business".

I had the opportunity to interview Mr. Dossani on this fascinating subject. The second part of the interview will appear on Friday.

1.        What are some of the pitfalls that foreign companies (medium sized companies) make when they are exploring their options of doing business in India. 

There are two cautions I would offer.  The first is that the initial, or startup, costs are high relative to western startup costs.   These include infrastructure costs and services costs.  For instance, the costs of renting space consist of more than just the monthly rent.   Deposits, usually of up to a year's rent, are common.  In addition, deposits are required for accessing utilities. 

The second is services costs.   Due to the need to register with regulatory authorities, especially if a Mauritius registration is needed, the cost of services (both regulatory and associated legal fees) tend to be high.  Indian legal fees can be as high as western legal fees.

2.        What are some of the romantic notions that westerners hold on it when they start doing business in India? Does this help or impede their success?

The knowledge of English and access to advance professional services are the (mostly) accurate assumptions that westerners begin with.  The inaccurate ones can be more frustrating: the poor quality of infrastructure, the difficulty and high cost of accessing talent and the high startup costs are the main ones.

3.        In which industries/sectors do you see growth in India?

India's growth is driven by domestic demand for utilities, infrastructure and services, such as banking services and real estate.  It is less of an export or manufacturing story, unlike China.  So, the sectors which feed domestic demand are the growth areas.

In services: consulting services, financial services, legal services; in infrastructure and utilities: road building, housing, electric power, telecommunications.  Of course, some sectors that are geared to exports, such as IT, continue to see high growth.

4.        How do westerners navigate through the different levels of bureaucracy?

The bureaucracy operates at different levels.   A westerner's initial contact with the bureaucracy is likely to be at the level of the state rather than the national government.  This is because of India's federalized system.   Bureaucracy at the national level is more straightforward, whereas in the states, the bureaucracy is of varying quality. 

Some states, such as Maharashtra, are relatively advanced and have simple rules.   The bureaucratic encounter also depends on the work to be done.   For eg., the bureaucracy for registering a firm to begin operations as a service company is not oppressive, whereas it can be very difficult to navigate bureaucratic hoops if manufacturing operations are to be established.

It is probably best to appoint a legal advisor early on and rely on the advisor to manage the bureaucracy.

The second part of this interview will appear this Friday.