Executive Briefings

Chasing Opportunity in India Requires Local Knowledge

The shining glass building that houses the offices of ICI India would blend in perfectly in a U.S. suburban office park. But it's located in Gurgaon, India, a so-called special economic zone more than an hour's drive from Delhi. Inside an air-conditioned office, while sidewalk vendor's carry on a lively trade in the midday heat, Sandeep Batra is explaining the peculiarities of the Indian paint business.
"We don't sell our paints through big retailers as you would in Europe or the U.S.," says Batra, the urbane CFO of Imperial Chemical Industries' Indian operations (British ICI is a subsidiary of Dutch chemical company Akzo Nobel). "We sell through mom-and-pop shops in the markets."
To do so, ICI must persuade storeowners to make a costly investment: a tinting machine that enables them to mix the full range of ICI's paint colors. And because the company sells through hundreds of tiny shops instead of big home-improvement centers, ICI needs 60 warehouses in India instead of the 1 or 2 typical in most countries, as well as a sales staff many times bigger than the norm.
Such deviations from ICI's usual way of doing things cost money, but Batra and his colleagues in Gurgaon have learned how to overcome objections. "Our business situation is impossible to explain to someone who has never visited India," he says. "So when the CEO or any other senior visitors come, the first thing we do is take them to the market. We take them to the shops and to the warehouses where we sell materials. That's a very different India from what you see in this office. Once we do that, we never have any difficulty explaining about the need to put these tinting machines in, or the need to have feet on the ground, or whatever else is required to chase the opportunities we have here."
Source: CFO

The shining glass building that houses the offices of ICI India would blend in perfectly in a U.S. suburban office park. But it's located in Gurgaon, India, a so-called special economic zone more than an hour's drive from Delhi. Inside an air-conditioned office, while sidewalk vendor's carry on a lively trade in the midday heat, Sandeep Batra is explaining the peculiarities of the Indian paint business.
"We don't sell our paints through big retailers as you would in Europe or the U.S.," says Batra, the urbane CFO of Imperial Chemical Industries' Indian operations (British ICI is a subsidiary of Dutch chemical company Akzo Nobel). "We sell through mom-and-pop shops in the markets."
To do so, ICI must persuade storeowners to make a costly investment: a tinting machine that enables them to mix the full range of ICI's paint colors. And because the company sells through hundreds of tiny shops instead of big home-improvement centers, ICI needs 60 warehouses in India instead of the 1 or 2 typical in most countries, as well as a sales staff many times bigger than the norm.
Such deviations from ICI's usual way of doing things cost money, but Batra and his colleagues in Gurgaon have learned how to overcome objections. "Our business situation is impossible to explain to someone who has never visited India," he says. "So when the CEO or any other senior visitors come, the first thing we do is take them to the market. We take them to the shops and to the warehouses where we sell materials. That's a very different India from what you see in this office. Once we do that, we never have any difficulty explaining about the need to put these tinting machines in, or the need to have feet on the ground, or whatever else is required to chase the opportunities we have here."
Source: CFO