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When doing business in India: Take it slow May 23, 2007

Filed under: Business Management — TSBL @ 1:39 am

By David Hannon — 7/13/2006

India’s definitely a hot-spot on the global sourcing radar. But buyers planning on doing business in India need to prepare for what experienced buyers call “Indian Standard Time.”

According to a recent Purchasing survey of buyers currently doing business with suppliers in India, the pace of business—and life in general, for that matter—is slower in India and delays and interruptions are accepted in the culture. Buyers say Indian society in general and its business world lacks a sense of urgency present in most other regions.

“Indian companies miss deadlines,” says Anna Sharda, strategic purchasing manager at Pentair Water in Garden Valley, Minn. “I have worked with companies where the prototypes may be two to three weeks later than the promised date. And it’s difficult to understand because the promises were made daily, along the way. This has, at times, cost our company customers and sales.”

One buyer responding to the survey says, “[Indian suppliers] lack a concept of time. The time from factory to my door is currently seven to eight weeks and when you add in the three months leadtime for the order to leave the factory, I have to order five to six months ahead of demand.”

Frank Busby, director of strategic sourcing at Cybex International in Medway, Mass., says the term “ship date” is used differently in India than it is in the U.S. “Ship date means the time it is finished at the factory—that is not the same day it will ship out of the factory, though. I have seen as much as four weeks delay from the ‘ship date’ until it is actually on board a steamship.”

What’s behind the delays?

But the lack of urgency among Indian companies should not be confused with a lack of desire to get business. Most buyers doing business in India say the suppliers are eager to do business with Western companies, but other issues tend to delay projects.

According to ExecutivePlanet.com, “Indians appreciate punctuality and keeping one’s commitments. However, many visitors to India find it very disconcerting that often Indians themselves are quite casual in keeping their time commitments. One of the reasons for this is that in the Indian mind, time is generally not considered as the objective yardstick for planning and scheduling one’s activities. Rather, for most Indians, the plans and schedules are contingent on other people and events, and therefore can—and do—get changed.”

Religion, for example, plays a much bigger role in the average Indian’s life than it may in other countries. “They have a religious holiday for everything in India,” says Glenn Scott, vice president of supply chain at Berlin Packaging in Chicago. “I am amazed at how many days they are closed with no production taking place.”

Brian Yoder, a purchasing agent at Weaver Leather in Mt. Hope, Ohio says he was surprised at how much religion enters the business world in India. “I was in Kanpur last year and I was traveling with a supplier and we were in a hurry to get to the airport,” says Yoder. “Still, the supplier had to stop at the bridge over the Ganges River to drop coins into it, because that is a holy river to Hindus.”

Umesh Munjal was born in India and now works in purchasing for Hella Australia. He currently works with five Indian suppliers and says, “The issue of time management needs to be detailed with Indian suppliers. Most of them understand time management but simply do not plan accordingly.”

To avoid major delays, Sharda recommends: supplier audits, getting references from other companies, and starting business small with a new Indian partner. “Frequent visits to verify the progress on the project is going well will help keep the project on time. The best way to avoid delays is work closely on a detailed timeline for the project, but do so with an understanding of that supplier’s capabilities. Sometimes asking the right questions will help you set goals for the project.”

Also, U.S. buyers doing business in India are often struck by the emphasis on family in both business and personal life. Many businesses are still family-owned and operated. Munjal points out that family ownership does not mean they are not professionally run. But it does mean there is a more intense loyalty between employers and employees than Westerners may be conditioned to.

Jude Magima is executive vice president of supply chain for Dabur India, a company based in New Delhi. He doesn’t feel that Indian businesses work as slowly as U.S. buyers feel, but he does offer some suggestions on how to get the point across.

“If time is a concern, then the buyer should make it clear to the Indian that he would like to start meetings on time,” Magima says. “Ask the Indian politely to plan for traffic delays and other issues. We find that Americans often want to use an informal approach for formal things, which gives an impression that informality is acceptable to the Indian. This leads to the mismatch in expectations.”
Language

According to the U.S. Commercial Service, English is the most important language for national, political, and commercial communication in India. The major official language is Hindi, which is the primary language of 30% of the people. There are as many as 20 languages spoken in India in total.

While nearly all Indian businesspeople speak English, their accent or version of English may be difficult to fully understand. Smokey Aumond, a procurement manager with Water Wonders of Santa Maria, Calif., says the pace of Indian English is a challenge at times.

“One of the hardest items to overcome is the speed of the Indian English when the seller gets excited,” he says. “Wow. No stenographer could keep up or follow what is being said.”

As one may expect, certain slang expressions don’t translate well with Indian businesspeople. As one survey respondent says, “They seem to adhere to more proper English than we in the U.S. do, likely because they were colonized by the British.”

Learning a few basic Indian greetings can help break the ice and win some smiles. The term and action “namaste”—a greeting—is formed by pressing the palms together (fingers up) below the chin and nodding the head. When greeting superiors or to show respect, a slight bow is added.
Negotiations

Negotiating with companies in India can be a different challenge. Negotiating is a large part of Indian culture—much more so than some other countries. (Westerners don’t negotiate at the supermarket, where Indians often do).

“We Indians love to negotiate and are the most argumentative people in the world,” says Magima. “From negotiating the traffic to groceries, the typical Indian’s life is filled with negotiation. Knowing that, the best way to negotiate with an Indian is silence. Nothing is more frustrating for an Indian than a deal getting done through long interludes of silence.”

Magima also says many Indian suppliers feel buyers are corruptible. To avoid this, the buyer needs to “make his position clear in the beginning.”

Parag Parikh works for Ingersoll-Rand India and says often prices for products in India are governed by local market prices which vary widely, rather than using a global benchmark price. “Also there are high import duties and taxes in India which add to the cost while demand for many materials is increasing,” he says. As a result, long-term contract pricing is difficult to get in India.

“You should not confirm in advance when you expect to depart with your suppliers,” says Scott. “If you do, you will find the hard business discussions won’t take place until right before your announced departure time. Build time in at the end for negotiation.”
Before you go…

About one-quarter of buyers said they consulted an Indian friend or business associate before traveling to the region. Very few (4%) said they brought someone who has been to India before while 8% said they took a class on the culture or business environment in India. Most said they simply read travel books. Scott recommends the book “Kiss, Bow or Shake Hands: How to Do Business in 60 Countries,” by Terri Morrison, Wayne Conaway and George Borden.

Women are still relatively new to the business world in India and are treated somewhat differently than women in Western businesses. While shaking hands is less common among men in India, it is rarely done with women. TIP: When meeting an Indian businesswoman for the first time, wait for her to extend her hand before shaking it.

Many buyers traveling to India for the first time are struck by two things: the crowded nature of the country and the in-your-face poverty that results. Busby points out, “the poverty is not hidden as it is in China.”

Another survey respondent says, “Be prepared for your personal space to be invaded. People just get much closer in India than they do in Western countries.”

As with many underdeveloped areas, some regions of India require travel by train rather than car due to the conditions of the roads. And Yoder says, “Don’t be surprised when you see livestock roaming free in city streets.” Magima points out that because cows are considered sacred in India, they are allowed to have the run of the place.

DOs and DON’Ts to doing business in India

DOs

* DO expect delays—in the office, on the roads, in the airports
* DO clearly define the scope of a project and deadlines
* DO routinely visit or check up on the status of a project
* DO expect your personal space to be violated
* DO expect infrastructure challenges from IT to logistics
* DO expect to find highly qualified, professional employees, especially in high-tech

DON’Ts

* DON’T point
* DON’T shake hands unless asked to (especially with women)
* DON’T give alcohol as a gift
* DON’T expect to seal the deal in a bar or restaurant
* DON’T stare
* DON’T expect e-mails to be returned instantly
* DON’T order beef

On the Web

* Services rule: a breakdown of the Indian supply market.

India is still a service-heavy economy. Services account for nearly half (46.4%) of the economy in 2000, while industry and agriculture were 27% each. In 2004, India exported $15.56 billion worth of goods and services to the U.S. and imported $6.09 billion.

Source: U.S. Commercial Service, http://www.buyusa.gov

* Holidays: India’s holidays can impact the pace or completion of a project. Below is a short list of some of the important ones:

Republic Day  January 26
Holi March 15
Ram Navami April 6
Raksha Bandhan August 9
Independence Day  August 15
Gandhi Jayanti  October 2
Idu’l Fitr October 25
Other Hindu, Sikh or Muslim festivals such as Pongal/Makar Sankranti, Idu’l Zuha, Dussehra, Deepawali, Muharram, and Guru Nanak Birthday are celebrated annually. It is advisable to contact the local Indian Embassy/Consulate to find out the holiday list for that particular year.

Source: ExecutivePlanet.com and U.S. Embassy

* IBM makes $6B investment in India

IBM announced in June it was tripling its current investment in India to $6 billion by 2009 and IBM will spend the money on developing services for telecommunications companies and on facilities in Bangalore from which engineers can automate management of computer networks for clients around the world, Palmisano said in a statement today.

India generated $510 million in revenue for IBM last year, Doug Elix, senior vice president of sales and distribution, told analysts in Bangalore, according to a regulatory filing. That’s the first time IBM has broken out its revenue from the country.

Dell, the world’s largest PC maker, said in March it plans to double the number of workers in India to 20,000 in three years. Microsoft said in December it plans to almost double its workforce in India to 7,000 in the next two to three years.

Source: Reuters

* Salary comparison: A quick look at U.S. vs Indian salaries and why India is so hot.

According to India’s National Association of Software and Service Companies (www.Nasscom.in) India will produce 382,000 engineering graduates this year. The average software programmer salary in India is $7,500 a year, compared with $65,000 in the U.S., according to consulting firm NeoIT.com. That rate is rising as more companies start and expand operations in the country.

* Let’s do lunch…or not: Tips on business lunches in India.

Business lunches and dinners are not as common in India as in the U.S. and are typically considered more formal affairs. In fact, Jude Magima, executive vice president of supply chain for Dabur India, says “Avoid a meal to do business simply because the average Indian is not as comfortable with cutlery as Westerners. Most Indians even today present a sorry sight at a dinner table where you have to eat with knifes and forks, which makes them very edgy and insecure leading to a meal getting wasted and a deal [going bad.]”

Source: http://www.purchasing.com/article/CA6350545.html

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2 Responses to “When doing business in India: Take it slow”

  1. One mouse click often leads to another fine blog. Like yours – Thanks.

  2. PurchasingFan Says:

    Purchasing magazine is now out of business and part of the reason is because people were stealing the content and posting it without permission. Equivalent to stealing a car off a lot–manufacturer incurs the cost to produce it you get the benefit free. Thanks.


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