Samantha Schmidt, The Business Journals for HSBC
India has the world’s second-largest population and a booming economy, so it only makes sense that U.S. companies want to learn how to do business there. But with all of India’s opportunities come several distinct challenges for U.S. companies that want to enter the market.
Here are three key lessons for doing business in India.
Catering to Indian consumers:
India has a population of more than 1.2 billion people, but many of them are low-income and live in rural regions. This has caused many Western companies to make substantial changes to how they usually do business, Haley said.
For instance, companies such as London-based Unilever have adjusted their packaging to offer their products in single-use package sizes – an ideal marketing strategy for low-income consumers.
Indian consumers can also be rather sensitive when it comes to food services, Haley said. Since 80 percent of the population is Hindu — and many Hindus abstain from beef — companies need to avoid anything that resembles a beef or beef bi-product in their food.
Western companies often fail to focus enough attention on making sure proper infrastructure is available for their needs in India. More than a decade ago, India unveiled the Golden Quadrilateral highway system, which wraps around the country’s circumference, but only a small portion of it carries four-lane traffic.
The primary concern with Indian infrastructure is its port system. Many ports in India do not have water deep enough to run efficiently. Shipping products requiring refrigeration or heating can also be problematic, Haley said, because many ships may not have the necessary capacity.
Companies need to make sure the port they are using is equipped properly for their products, and is conveniently located for their investment.
Working with the government
Like many Asian countries, India’s state and provincial governments often hold considerable power. Companies need to work with these governments to get deals approved, and they need to make an effort to show government officials their projects will be bring jobs and taxes to the region.