To avoid unpleasant surprises, a medium-sized company must make its market entry to India carefully. India is a very diverse country, it provides a cultural diversity that is comparable to that of the European continent. In addition to linguistic and cultural differences, there are also regional differences in interpretation of the law.
Before a company can plan its market entry in India, a thorough analysis of the regional markets is essential in order to select sales or production facilities optimally. Although many German companies have local partners in India, they are usually not able to realize the country’s full market potential as they are regionally bound and often successful only in their home town.
- The poor infrastructure is also a critical factor.
- Transportation is another problem while conducting business. About 60% of the goods are transported by road by means of trucks and the bad condition of roads don’t allow for quick movements. Normally, the allowed speed limit on these roads is 35 km / h.
- In addition, the bureaucracy is also highly irregular. What one needs to pay to enter different states in India may vary according to the rules posed by each state.
- Poor logistics is also another negative aspect. This could lead to lengthy processes and financial losses if the factory is already built, but important licenses have not been issued for production.
No matter how you want to enjoy a presence in India – through a joint venture, a branch office or a Branch / Liaison Office – the rules for establishing are mandated by “Ministry of Corporate Affairs”. Though they are quite clear and understandable, you could run into enormous problems when applying for and obtaining the relevant documents when you get down to its practical aspect. Very often the authorities may have to be bribed so businesses can make a smooth entry into the market. To avoid such situations, it is advisable to have a partner or a local service provider who is experienced in dealing with the authorities.
The woes of market entry don’t end there. Recruiting quality human capital is another hurdle to cross. German recruiters often complain of lack of educational qualifications, practical experience and skilled labor when it comes to recruiting employees. The graduates of prestigious universities are often hired by big corporations and big money is offered to them. Experienced managers who have proven themselves in western companies also require wages in accordance with western standards.
German companies are indeed sought after as an employer, but most well-educated Indians prefer to work in US / UK company or in large groups. The result is that German SMEs have considerable difficulties in India, especially when it comes to recruiting qualified employees even if they receive thousands of resumes. In such cases, headhunting becomes absolutely necessary to acquire human capital.
While educational qualifications are important, it is equally important to check the intercultural and interpersonal competence of the candidate. The chemistry between the prospective employee and the boss must be good as well. If the candidate has the desired qualifications, can fulfill the philosophy of the business in India and agrees with the core competencies of the company he is looking to work in, then he might be hired.
Entrepreneurs should be patient during his market entry in India. If you have zero entrepreneurial experience in India, it is therefore recommended that an experienced partner or service provider that supports the project with its know-how and local network must be hired.