The Prime Minister, in his maiden Independence Day speech, made a clarion call to position India as a manufacturing hub. He said: ‘Come, make in India and sell anywhere in the world’. But perhaps that only tells us half of the story.
Of course, India wants to be positioned as a manufacturing hub where foreign investors invest in India and set up manufacturing facilities in India. However, the country aspires to be more of a producer rather than a consumer. More emphasis is been laid on creating and nurturing intellectual property in this country.
A panel consisting India’s 12 leading CEOs discuss with CNBC-TV18’s Shereen Bhan about the global aspirations of Indian brands and how MNC brands are adopting to the culture of India and what are the lessons that Indian brands can learn from MNC brands who of course expanded into different geographies across the world.
Below are excerpts from the discussion:
Q: Is that a reality check Martin. Before we talk global can we at least talk about creating competitive world class Indian brands who first cater to the domestic market?
Martin Sorrell, CEO, WPP: Well, we have our top 50 here, that is the reason I am sitting in front of you being asked provocative questions because we have our top 50 and a large proportions of top 50 brands are not MNCs, foreign multinationals, guiding multinationals; they are domestic companies that have been very successful in an Indian context and are becoming increasingly successful on a worldwide context.
Just one point to make about that, and in fact one of the surprising things about our research on the top 50 Indian brands for the first time is that such a large proportion of them are local brands. We focus on the listed sector because those are the only statistics that we can get or have been fully audited whereas the unlisted private sector is not a sector where we can get the data. So it is a little bit skewed that way but the remarkable thing is the strong Indian brands that are in that top 50 and I anticipate that there will be even greater. One other point. 1.2 billion people in India, CNBC globally celebrated its 25th anniversary.
Q: We are on the verge of celebrating 15 years here in India.
Sorrell: Congratulations but you did 25 years forecast and that forecast shows that China would be the largest economy in the world, US would be second, India would be third but India would be the most populous country in the world with about 1.4 billion in 25 years time on the assumption that China one baby policy doesn’t shift anymore than that. If that is the case, it gives Indian companies a massive opportunity as long as we can shift the basis of consumption, as long as we can increase the lower middle class and middle class because as you said to me what is the primary driver of the success of the domestic companies and foreign MNCs, it is the growth of lower middle class and the middle class just as we have seen in Brazil, just as we have seen in Russia and just as we have seen in China.
Q: You believe that Indian companies or Indian brands today are poised to be globally competitive and globally relevant?
Sorrell: Far be it for me to give any of the people in this room who are far more illustrious than me any advice but here goes, the advice I would give is, if I am a domestic brand exhaust the opportunities domestically first because global expansion as the ITC comments indicate is nit easy. We have got people who have expanded already globally but whether you do it organically which is stronger than acquisition but more difficult and takes longer time, whether you do it organically or by acquisition the first thing is to exhaust the – let me just give you an example from China. China mobile is up to about 950 million users growing still by about 5 million a month. They bought Pakistan Telecom and I remember asking the previous chairman why was it that you bought Pakistan Telecom because it was 10 million subscribers – 2 month subscribers and what he said to me was it was a mistake. The reason it was a mistake because at 950 million there is 1.3 billion of them and they have more than one mobile phones. So, it is not capped at 1.3 billion as the potential market and exhausting that was important. So, first of all examine what is happening and look at the growth or the potential growth in the Indian markets since the early 90s. It has stuttered a bit in the last 2 or 3 years but we all hope post Modi in the election that it will regain its mojo and grow even faster.
Q: Pawan Munjal, I want to pick up on the point that Martin Sorrell made here today that brands that have succeeded or achieved a dominant position in the Indian market place are perhaps best poised to look globally and that is exactly what you are attempting to do with Hero Moto. You have decided to go the organic route, you are looking at setting up facilities and making your foray first into the easier market some would say, markets like Latin America, what has the experience been so far and do you believe that you have exhausted the domestic opportunity and hence the time is right for you now to look at global markets?
Pawan Munjal, VC & MD, Hero MotoCorp: We have not exhausted domestic opportunities. We continue to explore and go out there into the Indian markets, deeper into the rural markets and small towns. So, Indian market continues to grow and there is still a lot of potential. However, we are in a dominant position in the Indian market and this was the right time for us to go into the international markets.
We are going into the easier markets per se right now, LatAm and Africa, from my point of view low hanging fruits. In addition, we can take our current products, take these products into those markets without major changes, without major modifications. So, far the going has been good and we are not just going the organic route, we are also looking at acquisition opportunities.
Q: What kind of acquisition opportunities would you be looking at? Are you looking at acquiring manufacturing facilities, are you looking at acquiring brands?
Munjal: Both, acquiring facilities who have a good brand, that is what we are looking at. For instance, in Argentina that is what we are trying to do but in Columbia we are going the organic route, we are putting up a factory there, we are manufacturing and we are doing very well so far.
For full interview, watch the video