Business innovation and trade in India

Smart phone connections to the Internet are among the business innovations developing in India. “India is a hot spot for business research and development activity,” according to USC professor Gerard Tullis.

Tullis spoke during the 3^rd annual India Trade Conference held in the Los Angeles area and cited various business innovations: the Tato Nano car for $ 2,500, low-cost prostethics and micro-finance programs generating $5 billion in business from loans of only $200.

“The speed of innovation in India is astounding,” said Peggy Johnson, Qualcomm’s Executive Vice President of India and the Americas.

She told the more than 140 attendees, gathered on the Southern California Edison campus in Irwindale, California, that the need for affordable prices and demand for mobile phone devices are driving Qualcomm’s innovation in India.

India is the world’s second-largest wireless market behind China, averaging 20-million new subscribers per month. Mobile cell phone service costs only a half-cent a minute. Johnson said wired internet usage struggles in India so the future for Internet access in the country is going to be wireless.

She cited figures showing that personal computer penetration is low with only one PC per 50 people in 2007 which increased to one PC per 30 people in 2009.

“The prediction at Qualcomm is we won’t be talking about the number of PCs, but we’ll be talking about how they’re connected. Mobile devices will be the first way in which they’re connected,” said Johnson.

She said 127 million people in India are Internet capable.

The rate of growth is forcing innovative solutions. Johnson said Qualcomm has 1,000 engineers in India and a focus is meeting consumer demands for energy efficiency in phones.

She said the mobile platform is the biggest platform humanity has ever had available. Johnson is bullish on the use of mobile devices globally. She described how she was in Africa and Masai warriors were using cell phones to assist in their search for grazing land with cattle.

“If you put a cell phone in someone’s hands in rural India they now have a means to sell their goods. [mobile devices] will have a huge impact on the world’s economy.”

She said in urban areas, people have an insatiable appetite for information and the challenge is making mobile devices affordable for everybody. “The Indian government saw the demand for data coming.”

Johnson described the demand as “a staggering load on the local networks’ market; yet the telecomms are doing a beautiful job.”

The mobile market demand in India is expected to grow 346 times in the five-year period from 2009 to 2014.

India ranks 15^th among countries with the most Facebook users and ranks 2^nd globally for number of Orkut users.

Holly Vineyard of the U.S. Department of Commerce said India is the largest emerging market and one of three top priority countries for her agency. She cited President Obama’s trip to India as a significant step to further open trade between India and the U.S.

The U.S. Department of Commerce and the U.S. Commercial Service offer low-cost advice to help businesses in the United States learn how to import and export goods and services globally.

“There are a lot of opportunities [for trade in India], but you have to keep your eyes open,” Vineyard said at the India Trade Conference.

Vineyard described how business opportunities in India are available in the smaller cities and rural areas. Her agency has an initiative that supports commercial ties beyond major metropolitan areas in India.

“We’ve told Indian businesses for years don’t just go to New York or Washington, D.C.,” she said, “We’re telling U.S. companies to go beyond New Delhi and Mumbai.”

The goal of the U.S. Department of Commerce is to make sure U.S. companies are positioned to work with those growing sectors and growing populations. She mentioned challenges facing companies includes lax oversight of intellectual property rights and an infrastructure being stretched to meet current international business demands. She said the World Bank currently ranks India 133 out of 183 countries for the ease of doing business.

Improvements are being made. The Indian government plans to modernize 35 airports, Vineyard told attendees, and add another 300 aircraft to handle increased business travel and improve shipping logistics.

Another solution is a working CEO forum where chief executive officers in companies from both countries meet to create better working trade arrangements.

A skateboard company that successfully used the services of the U.S. Commercial Service is Street Surfing headquartered in Newport Beach, California with over 20 employees. Street Surfing earned the Commerce Department’s Export Achievement Award.

Paul Watson, vice president of Street Surfing Americas, said they utilized the Commerce Department’s Gold Key program to begin selling skateboards in India and reach the “young, hip demographic.”

“We were intent on finding business opportunities for Street Surfing worldwide. We looked at the large number of youth in India and started doing our market research. The Commerce Department advised us, got us some appointments, and helped get it done.”

Watson said Street Surfing promotes skateboarding in India’s sports schools. “There was a lot of doubt that you could sell skateboards in India, but we proved them wrong.”

Watson said his company spent a year researching and making plans to enter the market. They chose working through the sports schools and the staff coaches since the retail channel is not strong. Sports schools will have up to 2,000 students attending.

“Understanding the culture and knowing the people is key,” said Watson. “You have to understand their challenges.”

Among the cultural differences noted by workshop panelists: Indian workers place emphasis on quality work instead of rushing to meet deadlines while American workers are much more deadline conscious and may sacrifice quality to have complete a project.

R Sampath of Quanta Consulting, conference organizer and co-sponsor, said companies need to have a “traveler mindset versus a tourist mindset” when researching business opportunities in India.

“A tourist wants their world wherever they go,” he said, “while a traveler adapts to local conditions and wants to learn about them.”

Sampath recommends that U.S. businesses plan to take time in building trusted business relationships.

Southern California Edison hosted the India Trade Conference. SCE President John Fielder opened the conference by discussing his company’s approach to meeting future energy demands created by increased use of electric vehicles and demands for solar power.

Fielder mentioned SCE works with 1,000 personnel in India, mostly in the Information Technology (IT) space. He told me his IT staff in the Los Angeles area will code during the day, ship their work to India where coding is completed overnight, and then receive updates in the morning when they arrive in their LA offices.

When I asked if such outsourcing hurts the California or overall U.S. economy, Fielder told me “this is a worldwide economy and it’s an excellent way to supplement our work force.” He said the Indian work force is quite talented and he sees work increasing between India and the United States.

Gerard Tellis called India “a land of a million innovations.” recommended that U.S. companies looking to enter the Indian market look at how they can re-craft or re-position their products.

Tellis said companies are forced to create “frugal innovations” and ask “what can the consumer afford?”

While the United States clearly remains the market leader in business research and development, Tellis noted a trend in “reverse innovation” – bringing innovation from India to the United States.

Key India facts from the conference and around the Web:

• India’s population is 1.1 billion people
• Nearly half of people in India are younger than age 30
• Young adults who are educated are making up to 10 times their parents’ wages
• India is the second largest exporter of textiles in the world, said Frances Harder of Fashion Business Incorporated who spoke at the India Trade Conference. She also said retailers are buying smaller amounts from India more often.
• Tradition plays a big role in India, said Gore Datta, also a conference speaker. “Don’t expect people to call you by your first name.”
• Datta also said “don’t expect to fly into India, do business, and then turn around and leave. Building relationships takes a long time compared to American standards.”
• Ports on the west coast handle around 70% of India’s container traffic
• “India is a great place to do business,” said Peggy Johnson, “don’t give up if you run into roadblocks.”
• “People in India have a great heart,” said Paul Watson, Street Surfing.
• India is attracting increased investments from Australia, according to the University of Sydney
• India has risen in life insurance markets from 10^th to 9^th position, bypassing Taiwan according to a report on SiliconIndia. http://www.siliconindia.com/shownews/India_rises_up_in_the_life_insurance_markets_ranking-nid-69377.html
• India continues to move forward with market-oriented economic reforms and has achieved average growth of about 9 percent over the past five years, notes U.S.-based Heritage Foundation. Yet, its economic freedom is hampered by on-going corruption and labor freedom is especially weak.

• Aerospace exports from U.S. to India are traditional successful exports, but alternative energy technology demands are growing

• Exporting to reach the affluent young adults is a market opportunity for U.S. companies.