Expect the unexpected in India

MICHAEL FOREMAN
Last updated 05:00 13/07/2014

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India presents a huge opportunity for Kiwi firms, but businesses that are looking to break into this vast market should be prepared to overcome some daunting obstacles.

High tariff barriers, bureaucratic delays and even marauding elephants were among the hazards of doing business in India that were outlined by speakers at last week's India New Zealand Business Council summit.

A common theme was companies venturing into India should be prepared to deal with the unexpected.

Fisher & Paykel Appliances international chief operating officer Andrew Paykel said his company had spent 18 months studying the Indian market before launching a range of kitchen appliances there.

"We looked at our competitors, how the brand would translate into that market and our price positioning," Paykel said.

The company established a local liaison office to support its distributors, hired an Indian celebrity chef to act as a "brand ambassador" and made sure that a service network was in place before it starting selling products.

"We were focused on the premium end of the market, so our service had to be first class," Paykel said.

But F & P's careful preparations nearly came to nothing when it discovered that the pots and pans used in India were unlike any the company had previously encountered and were incompatible with F & P's stoves.

Paykel said F & P was able to overcome the problem with some hasty modifications to its cooker tops but the experience underlined the importance of understanding local customer needs.

Despite facing tariffs which still average around 40 per cent, India has become an important market for Hamilton-based animal management and security company Gallagher Group.

Gallagher global security manager Curtis Edgecombe said the company's security products now protect around 1000 sites in India. But a herd of elephants nearly put paid to Gallagher's first foray into the country in the early 1990s.

Gallagher's first electric fencing contract in India was to protect a series of plantations from the attentions of elephants that were roaming freely nearby, Edgecombe said.

But Gallagher, which has pioneered the use of electric fences for livestock control, was soon to discover that Indian elephants were much harder to deter than sheep or cattle.

"The elephants were so smart that they learned how to pull up the fence posts without getting a shock," Edgecombe said. "Others used large tree branches to knock the fences down."

Warren Young, collaborative marketing manager at Zespri International, said Zespri exported more than 500,000 trays of kiwifruit to India last year and was expecting to double that volume by 2018.

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Zespri's sales were now growing faster in India than more established markets, Young said, but the company had been required to abandon its usual marketing methods to make headway in India's unique retail environment.

Only 10 per cent of the outlets for produce in the country could be described as "modern retail", Young said, and the overwhelming majority were traditional "kiranas" or local neighbourhood market stalls.

Of the 12 million kiranas across India, very few are self-service, so customers have to specifically ask the stall keeper for any purchases they want to make. Clearly this disadvantages products that are new to the market, Young said.

Zespri's answer was to target kiranas and street vendors with point of sale display competitions that offered prizes such as freezers which would be useful to kirana owners.

Online media has also been an important component in reaching such a widely dispersed sales channel, Young said, and Zespri has hired a local chef "The Turbanator" who promotes kiwifruit on YouTube videos.

"The good news is that there is a move to modern retail, it will move to 15 to 25 per cent in the next five years," said Young.

- Sunday Star Times

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