india market entry asiabiz strategy

8/6/2019 India Market Entry AsiaBIZ Strategy

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ASIABIZ STRATEGY PTE LTD

Vision: Best Asia Market Strategy Advisor

IE Web#1: India Market Entry – by Mr. Lawrence Yeo, CEO and Principal Consultant

Tel: (65) 6788 5052 | Fax: (65) 6281 5210 | Registration No.: 200201610C| 10 Anson Road, #18-21, International Plaza, Singapore 079903

Email: [email protected] | Website: www.asiabizstrategy.com | Skype/Oovoo ID: asiabizstrategy

© 2011 Copyright AsiaBIZ Strategy Pte. Ltd. All rights reserved. No part of this document may be reproduced, stored in aretrieval system or transmitted in any form or by any means, electronic, photocopying, recording or otherwise, without priorwritten permission from AsiaBIZ Strategy Pte. Ltd.



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India Market Entry Strategy

Diversified Asia can be a strategic planner’s nightmare as it contains 60% of the world’s populations, hasmore than 600,000 communities and has numerous sub-cultures. With improving Asian economies and

growing investor interest in Asia regional expansion, more companies are now evaluating India’s market

attractiveness and feasibility of entering and investing in India. Like China, India’s fast -growing economy and

big potential market size glimmer and shine tantalisingly to investors. Again like China, foreign companies

also can lose big in a big target country. Below are some guiding points to consider when developing an

India market entry and expansion strategy.

1. Macro Environmental Analysis.

a. Regulatory Environment: Indian policies and regulations tend to change rapidly amid a slow moving

bureaucracy. As such, foreign businesses need to constantly monitor and update these and perhaps spend

time with their state policy maker as part of their KYR or ‘Know Your Regulator’ efforts.

b. Market Analysis: Go local. Like Asia, India is a hugely diversified country with over 600,000 rural

villages. Investment climates and political environments across Indian states are mixed. A “bottom-up” state

by state consolidated approach is best, not simply copying-and-pasting from HQ onto the India context.

c. Strategic Intent: When assessing the India market size to estimate market demand potential, a key

strategic intent is whether the investing company wishes to adopt a single or multiple market strategy i.e. to

serve only the local India market only or the intent is to concurrently serve both the local market as well as

the global re-export market. The intent shapes the strategy. A multiple market entry strategy can accept a

moderate India market size and market growth as the investor can compensate that with the bigger re-export

market. If this is the intent, than treating India as a manufacturing hub to serve other markets makes financial

sense.

2. Demand-side Analysis (customer behaviour and characteristics). Conduct a thorough KYC or ‘Know

Your Customer’ study. Knowing key demographic factors is critical, especially since India has a very big

scattered base of low and medium end segments living outside its 6 big metropolitan cities (Delhi, Mumbai,

Bangalore, Hyderabad, Kolkata, and Chennai.

3. Supply-side Analysis (Production & Competition). With local India components and supplies costing

lower than using imports, India supply chains and production need to be tweaked to increase the use of

more India supplies. For Pricing, go low but not the lowest. Setting the lowest price points need not capture a

leading market share away from Indian competitors since Indian customers are also willing to pay a premium

for added value and good quality. Hiring local Indian CEOs and managers who are familiar with localbusiness cultures and target markets is almost a must-have.

4. Site Selection and Distribution Analysis. For factories, stores or offices, site characterization is

affected as location selection criteria need to take into account India’s under -developed road infrastructure

and distribution network. Businesses should change their location preferences to more sub -urban locations

and smaller tier 2 cities and also to depend heavily on third-party logistics. Contrary to imagining having a

single grand all-India distribution network system or distributor, entrants should also search for and evaluate

several state-level distributor partners who know their state well and who are already successful in

distribution in their respective state. Choosing several of these state distributors and having an in-house

channel manager to manage them increases the success rate of distributing your goods across India.



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5. India Market Strategy. Foreign businesses can sustain a competitive advantage by choosing a cost

leadership, differentiation or focus strategy individually for each state. It is hard to generalise which one is

superior as much depends on the target state’s characteristics. However, investors should anticipate

changes in the state business environment and then adjust their strategy to accommodate them.

Finally, I coin the term “Inception India”. The movie “Inception” tells of a story within a story, down to 4 levels.

Likewise, India has markets within markets, cultures within cultures. Foreign businesses should therefore

stay flexible enough to adopt non-rigid processes, understand their target states and markets well and be

able to make minute changes to accommodate diversifying and changing conditions. Otherwise, one may

end up like Inception’s ending, spinning and making losses endlessly and in bewilderment.

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Lawrence Yeo is CEO and Principal Consultant of AsiaBIZ Strategy, a Singapore-based strategy consultancyproviding Asia market research, market entry strategy and export/FDI promotion services. Website:www.asiabizstrategy.com

india market entry asiabiz strategy

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