How to expand your business into the Indian Marketplace
“Going global” are two words every entrepreneur wants to say about their business. For small startups and emerging businesses, expanding globally brings unprecedented challenges which will tax the entire organization from the top down. The business must continue operations in their home country, while somehow diverting resources to expanding without any interruptions. The costs are high, but the rewards in terms of revenue, global awareness, and business glory are delightfully sweet. Below are tips to expanding your business into the Indian marketplace, which will give you valuable insight about what to expect as your business expands.
1. Do Your Homework!
To be successful with expansion you will need to know your audience inside and out. For expanding your business into India, this means understanding the nuances of the Indian culture. You need to perform a market segmentation analysis to determine how your product or service will fit into the local market. For instance, you need to know approximately 38% of the people in India live on less than $1/day. There are still obstacles with social and cultural acceptance of Western products, and penetration into rural areas can be difficult because of slow infrastructure growth. This also means you need to perform a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats analysis). It’s vital you understand the customer because mistakes can be unforgiving.
2. Develop a Plan of Action.
It’s recommended to not think of India as a single entity comprised of a homogenous people like Germany, or Australia. India’s constitution recognizes over 22 different languages, all with regional dialects and slang. It’s best to think of India as a collection of region states, each with their own customs and cultures which determine their perception of the world. Yes, communication has greatly increased the similarities between the different regions, but there are still many differences the people of India recognize. It’s recommended to develop a plan of action for each specific region of India in relation to the market segment you choose to approach. This means finding the appropriate partners and agents within each region who will best represent your company, and provide insight into the hidden etiquettes and practices of the locality.
3. Research a Headquarters In India.
We’re adding this because you may not want foreigners to run the Indian branch. As we mentioned in the previous point, there are many unspoken rules and practices for somebody outside the country to understand. This means it’s highly recommended to not launch a global expansion with only executives from the parent company leading the way. It’s also highly inadvisable to build a local team from scratch. We recommend finding an executive who has deep domain experience in the market to help build and mentor the leader who will operate in the Indian headquarters. Allowing your business to hit the ground running, quickly validate any assumptions, fail fast, and push through any last minute unforeseen obstacles. By building a headquarters in India you will promote local brand knowledge, goodwill with the Indian government (because you’re creating jobs for their populace), and a deep understanding of the marketplace which will inevitably help with future product launches.
4. Understand India Can Be Tough On Businesses.
This isn’t to say you shouldn’t try and expand into India, because the rewards for capturing market share can be in the billions, but know- India is ranked 130 of 189 countries in terms of ease of doing business by the World Bank. There are many reasons, but we’re going to give you the main obstacles to pay attention to. First, India has high tariffs and protectionist policies for foreign companies. In an effort to promote business from within, India has made it difficult for exporters and foreign investors with non-transparent tariffs and unpredictable regulations. India also values domestically manufactured goods with fears of American takeover. Second, India has decentralized power with decision making being done at the state level. Each state has different tastes of how much foreign business they will accept, and often you will need to lobby many politicians to get any progress made. This means a different strategy is necessary for every state in India.
This information will put you on the right path towards tapping into the vast Indian market place. It will not be easy, and you have serious work ahead in order to utilize the rising wealthy middle class, but the rewards will be well worth the effort. Remember to always do your due diligence, develop a plan of action, and execute, execute, execute! If you believe your startup is poised to be the next Indian household name, reach out to us. At the Tandon Group we’ve partnered with and invested in dozens of companies over the last two decades and have met with massive success along the way. We’d love to be your partner for the road ahead.