Every time an MNC exits India, for any of its own reasons, markets go aflutter. A prime question then arises: Are these exits primarily a result of any deficiencies within the Indian market, or do they reflect the challenges faced by these companies in navigating the intricate business landscape of India?
Recently Disney had announced its exit from India. The global cement major Holcim had exited a year ago. Some MNCs exit only specific lines of business; Citibank exited its Indian retail banking business, after many decades of presence here.
The answer is not straightforward. India is as good a market, as any other, with its challenges and opportunities. No capitalist business enters a market for altruism. And today, brands exit markets or manufacturing operations for several reasons, many times not even linked to the market they are exiting.
The reasons can include regulatory issues, compliance challenges and costs, ease of doing business, accessing other large market volumes in the manufacturing vicinity, insufficient business volumes, etc. Capex-heavy industries like manufacturing or capital-heavy sectors like banking could also mean not having sufficient capital in their main country of origin, some of these MNCs will be forced to withdraw from other markets, including India.
Complexities Of The Indian Market
India, with its 1.4 billion consumers, continues to be an alluring prospect for those who have invested the time and resources to comprehend its unique dynamics. Moreover, the per-capita PPP income of US $7,100 signifies considerable room for business growth and expansion in decades ahead. However, treating this vast population as a single, homogenous entity is a fundamental mistake. It is one that many MNCs make, and is just as bad as how many homegrown brands err as well.
India, as a consumption market, is a collage of diverse cultures, languages, and consumer behaviours, each pincode offering a unique complex market with distinct and stratified nuances. It is very moody, just as a pre-teen; you can’t admonish the child for any gaps.
Understanding and appreciating this diversity is essential for any business aiming to succeed in this market. The conversations that oversimplify India as being akin to mini-Europe, are great wine-n-cheese starter talk. But within each of those mini-Europes, in India, there are varieties of countries of varied cultures possessing disparate and dynamic wants and needs of consumers.
This makes achieving success in the Indian market anything but straightforward. Foreign companies contemplating entry into or expansion within India should prepare for an arduous journey, marked by the need for continuous adaptation and fine-tuning of their strategies. Now, what defines the winning strategy in this complex and ever-evolving marketplace? If there can be even one.
How To Succeed In India
India’s diversity, in terms of language, dialects, age, life-ideologies, culture and consumer behaviour, demands a hands-on approach. Companies that have thrived in India are those that have demonstrated a deep understanding of local nuances and invested in building strong relationships with stakeholders, from customers to government bodies.
Regulatory hurdles, bureaucratic complexities, and a rapidly changing business environment are challenges that foreign companies must navigate adeptly. This necessitates a long-term commitment and a flexible, adaptive strategy. The "one-size-fits-all" approach does not apply in this diverse and dynamic market.
But then, this is the same operating-hymn for any company operating in India. At times, one would feel that MNCs get more special favours and policy-hearing from governments, than the domestic brands.
Firstly, patience is paramount. India is not the market where one can expect quick victories, and even if you did win, it’s no indicator of its sustainability. Expectations should be calibrated accordingly, as the notion of a vast market can be misleading. To prosper, a company must be clear about the specific segment it aims to serve.
The prevailing belief that Indians are solely price-driven, leading to lower margins compared to developed markets, is often challenged. Empirical evidence suggests that Indians are value-conscious, not solely price-sensitive. Premium-pricing based solely on being a foreign brand won’t find many takers.
Embrace Diversity, Cultural Values
Business managers must also acknowledge the diversity within their customer base. A value-conscious, bargain-seeking customer in one product category may well be a lifestyle shopper in another. For example, someone who diligently seeks discounts on electronics may simultaneously splurge on high-end fashion.
This dual identity underscores the complexity of consumer behaviour. To effectively engage and retain such customers, businesses should avoid pigeonholing them into predefined categories. Understanding that customers can have diverse preferences and value systems is key.
Lastly, sensitivity to the unique needs and cultural values of the workforce is crucial. Investing in talent, cultivating trust, offering broad exposure, and respecting hierarchy are imperative. To succeed in India, stay invested for the long haul, make it your home, and learn every day and from every stakeholder interaction, especially what your successful competitors do.
Success in India is not measured in quarters but in chapters. To navigate its diverse landscape, one must write a compelling story of patience, adaptation, and respect for its intricate nuances.
Srinath Sridharan is a Policy Researcher & Corporate advisor. X: @ssmumbai. Ajay Nanavati is Former Chairman, Syndicate Bank; Former MD, 3M India. Views are personal, and do not represent the stance of this publication.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
