Selling and Operational Adaptation in India
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India Selling and Operational Adaptation
Apart from adapting to the Indian culture, you may find yourself having to reassess the way you traditionally operate and conduct business in India. Here are some things to think about when you're planning to expand a business in India:
- Will you be able to easily obtain the raw materials you require?
- Will you be able to import all the materials you need?
- Will you be able to find skilled workers in India?
- Will you be able to take current employees, if needed?
- Are you obliged to employ nationals?
- Are you prepared, if necessary, to increase workforce and productivity?
- Are you familiar with the laws, regulations and trade barriers that could affect your business?
Selling and getting your goods to market
To improve the chances of successful business expansion in India, you need to consider a few key issues. Sales presence, for instance, should be a top priority. Will you sell directly? Will you trade over the internet? Perhaps trade shows are more suitable? Could you benefit from a local partner who knows the market? Here are a few fundamental choices:
- Get yourself an Indian distributor who has a proven track record of selling on a local or national level.
- Find sales agents who can either sell your products or services, or alternatively acquaint you with potential clients or customers.
- Joint ventures with local companies have gained in popularity, primarily because of their knowledge and established presence in the market. It is often a pricey option but lessens the risk.
- Set up an office in India, ensuring maximum control on all operations. This is obviously the most expensive of all your options.
When considering the distributional needs of your business, it is essential to account for the logistical factors which could affect it. These include things, such as:
- Your goods: are they fragile, expensive, perishable? Do they need to be kept at a certain temperature?
- Are your goods live, or considered dangerous, and, if so, can you meet the requisites of customs and excise, or health and safety?
- How regularly will you deliver? Daily, weekly, monthly? Can you find a distributor who can accommodate this?
- Can you foresee the dates / times you'll need to distribute?
- Have you worked out the transportation costs? Air freight and couriers are fast, but also the most expensive forms of freight.
- Reliable and invariable collection and delivery times, which offer accurate predictability and time-traceability
- Awareness of transit times so you can plan around them
- Freight security
- Fuel price fluctuation
- Effect of congestion or delay
The infrastructure of a country could prove integral to the success of your business. Consider logistical reasons that your business found domestic prosperity: was it the ease of which you could run it? Reliable distributors, maybe? An efficient transportation network?
It is important to contextualise these issues with the country you are expanding to: ultimately, can it offer the same logistical benefits? Since the economic liberalisation of the 1990s, development of infrastructure within the country has progressed at a rapid pace, however several aspects of transport are still riddled with problems due to outdated infrastructure and a burgeoning population. India's rail network is the longest and fourth most heavily used system in the world. The growing international trade towards the country is putting strain on the ports. Indian overburdened airports are currently getting a makeover, thanks to modernisation work and greater investment.
In India about 95% of the foreign trade takes place through the port. There are twelve major ports: Kolkata (including Haldia), Paradip, Vishakapatnam, Ennore, Chennai, Tuticorin, Kochi, New Mangalore, Mormugao, Navi Mumbai, Mumbai and Kandla. Other than these, there are 43 minor ports which handle cargo. India has also an extensive network of inland waterways in the form of rivers, canals, backwaters and creeks. 5200 km of river and 485 km of canals can be used by mechanised crafts. Cargo transport in an organised manner is confined to a few waterways in Goa, West Bengal, Assam and Kerala.
There are more than 20 international airports in the Republic of India. The Indira Gandhi International Airport and the Chhatrapati Shivaji International Airport handle more than half of the air traffic in South Asia.
Traditionally, wholesalers are used for selling low-value directly to retailers and, occasionally, the public and businesses. It is an economic way of targeting and reaching vast numbers of people quickly, and frees you from the burden of contacting retailers individually.
Distributing products in bulk not only means products sell faster than one-at-a-time, but it also allows your business to grow at a quicker rate.
Dispensing products and collecting money is generally considered more manageable and easy than dealing with a variety of customers. However, both the wholesaler and retailer will add their own mark-ups, meaning your profit margin will be less than full potential.
Just like with distributors, do some meticulous research into the wholesalers available. Here are some things to think about when choosing an appropriate wholesaler:
- Their client base: a healthy wholesaler-retailer relationship can only increase sales
- Will you want to limit sales only to retailers that suit your product's image?
- How well-established is the wholesaler? A national presence could help bring your company to the forefront of the market
- Will the wholesaler appreciate your product? If it already sells a competing product, how will it negotiate pushing yours too?
- Will you have a say in the price the wholesaler sets for your goods?
- Will the wholesaler do its best to promote your goods to its clients?
- How will the supply exchange operate? Minimum order levels / resupply?
- Will you be restricted in any way, such as limitation on distributing through alternative channels?