Success in the market of the future in India
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Experts assume that India will be the biggest economy in the world by not later than 2050. The present population of 1.2 billion people is growing by some 18 million a year, and 50 % of the population are under 25 years of age. “The demographic development is associated with an enormous market relevance for the future,” says Guido Christ, Deputy Chief Executive Officer at the Indo-German Chamber of Commerce IGCC in New Delhi, the partner of NürnbergMesse for BioFach India. The favourable general economic conditions are accompanied by positive forecasts for the development of the organic sector.
(Picture: GDP growth rate of emerging contries 2010. India ranks on the second place behind China and in front of Brazil and Russia)
The Indian government supports organic agriculture with its National Program for Organic Production NPOP. Many farmers are converting and the domestic demand for organic products is also growing. The co-organizer of BioFach India, the International Competence Centre for Organic Agriculture ICCOA, expects the area of organically farmed land to grow by 65 % in 2010 – from about 1.2 billion ha in 2009. Domestic sales of organic products are to rise to some 15 billion Indian rupees (about 250 million euros) by 2012. According to experts, the total market volume for organic products reach approx. 40 billion rupees by 2012, about 656 million euros. (Picture: The International Competence Center for Organic Agriculture ICCOA expects an enormous growth for organic land)
India’s Prime Minister Manmohan Singh is striving for two-figure economic growth, from which all classes of the population are to benefit. The primary goals are further economic liberalization and infrastructure development. The forecast growth of over 8 % promises an appreciable upturn for 2010. “India has survived the economic crisis well,” assesses India expert Guido Christ. The low dependence on exports coupled with the growing domestic demand are real advantages. In a monitoring survey by the Chamber of Commerce in November 2009, more than half the German firms said they wanted to increase sales by 10 to 20 % in 2010, and some 20 % of them are even aiming for 20 % more sales. Germany is one of India’s top ten trading partners. India had 200 million households in 2000, and this figure could rise to as many as 250 million by 2015. The middle class is growing all the time and the spending power is increasing. About 25 % of the population currently have about 2,000 to 4,400 US$ available per month.
(Picture: The next generation should be better off. India's middle class is growing)
Basis for success are market analysis, intercultural knowledge and experience. According to Guido Christ, the strategic aspects for international companies wanting to develop the Indian market of the future include the growing, increasingly prosperous middle class, the young overall population structure and the market size of more than 1 billion people. He does, however, always recommend answering a few key questions and taking the special cultural features of the country into account before potential market entry.
(Picture: Some marketing channels for organic products already exist - eg. shops of the Navdanya initiative of Vandana Shiva)
According to the expert, a sound market analysis particularly includes thorough research into whether a good potential demand exists for the product or range in India, and the extent to which the recipe, package or marketing concept must be adapted. A company must also decide whether to set up its own production in the country, enter a joint venture or – initially– sell the products via an exclusive partner. Today’s most common model for market entry for selling consumer goods is to use an Indian distributor that works on his own account or on a commission basis. For capital goods, however, IGCC recommends either founding your own company or choosing a suitable joint venture partner. Guido Christ, who has known the Indian market for 20 years, certainly advises having a reliable partner in the country: “The knowledge of the market and local trading customs is essential. It is also very helpful to understand the various dialects and be familiar with Indian traditions.”
(Picture: Raj Seelam of Sresta. The company produces a wide range of organic products, which they distribute through their own chain 24-Lettred-Mantra and other channels)
The good image of “Made in Germany” and the reduced import duties are real advantages in trade with India. Nevertheless, the expert from the Indo-German Chamber of Commerce warns not to expect quick success. Christ recommends planning on a more long-term and sustainable basis. This particularly includes observing the intercultural aspects. “Status, origin, education, traditions, religion, national pride, hospitality and respect for elders are values that count in India,” explains Christ. These must be respected if a foothold is to be gained in the country in the long term. The special challenges relating to business relationships with India include the overloaded and often lacking infrastructure and widespread bureaucracy. When it comes to obtaining licences and approvals, companies should certainly have lots of patience and cooperate with Indian partners. (Bild: Tradition plays a very important role in India)
The exhibition duo of BioFach India and India Organic lines up in the Bombay Exhibition Centre for the second time from 7–9 December 2010. The exhibitors at BioFach India present certified organic products. India Organic is a platform for pavilions organized by the Indian states to present their organic agriculture and organic product marketing activities. It also offers scope for small-farmer associations whose production is still in the process of achieving full certification. (Picture: Opening ceremony of the previous event India Organic in New Delhi 2008)
Other BioFach events:
BioFach and Vivaness, Nürnberg: 16.-19. February 2011
BioFach Japan, Tokyo: 21.-23. September 2010
BioFach America, Boston: 14.-16. October 2010
BioFach America Latina and ExpoSustentat, São Paulo: 3.-5. November 2010
BioFach China, Shanghai: 26.-28. May 2011