What does McDonald's ‘McAloo Tikki’ burger have in common with 3M’s Car Care stores and the Toyota Etios? They are all global products introduced in India first by their parent companies, and then taken to other markets. The McAloo Tikki burger is now available in the Middle East and Singapore; 3M’s Car Care Stores have been introduced in Turkey, Thailand and Venezuela; and Etios, a car specifically made for the Indian market, is now being exported to South Africa.
It is India-first for many big companies, and then comes the rest of the world. Multinational companies from a variety of sectors have set up manufacturing units and R&D centres here. India’s rise has seen many foreign players rolling out specific products best suited, tried and tested for India, before taking the same abroad.
Market experimentation
Very recently, French car major Renault chief Carlos Ghosn unveiled a small car — Kwid — in Chennai, marking India as a launch market for the company’s latest offerings. Ghosn expressed that the car would be the game changer for the company’s fortunes in India, and added that the ‘global’ car would hit other markets as well. Renault is not the only foreign car maker to have launched a global product first in India. In the past, Toyota and Hyundai have done so with resolve.
Japan’s Toyota, the world’s largest automobile manufacturer, operating as Toyota Kirloskar Motor (TKM) in India, views the country as an important base. TKM launched the affordable sedan Etios in India in December 2010. “The Indian market is very important for Toyota’s success worldwide,” TKM Senior Vice President and Director (Sales and Marketing) N Raja told Deccan Herald.
With the huge potential of both capability and resources, India possesses the knack of becoming one of the key manufacturing hub locations globally. With the Make in India initiative of Prime Minister Narendra Modi gaining traction, companies are further motivated to strengthen their brands against the backdrop of Brand India.
Today, Korean car major Hyundai Motor India is the second-largest car maker in India, besides being the largest exporter of cars from the country.
The company has invested around $2.7 billion into a plant with a manufacturing capacity of 6.8 lakh units annually.
“Marking immensely successful world premieres, Eon, Grand i10, Xcent, Elite i20 and Active i20, Hyundai has strengthened its commitment to the Indian market offering modern-premium, world-class products,” Hyundai Motor India Senior Vice President (Sales and Marketing) Rakesh Srivastava said, referring to the company strategy of ‘Made in India Cars for the World’.
India’s the answer
So what drives foreign companies to kick-start global journeys out of India? Brand Union Managing Director Arvind Hegde said the story began way before when large IT MNCs (such as IBM and Accenture) began software development in India and serviced clients globally. “There are two aspects surrounding the Indian economy: Manufacturing and Services. And Brand India has three dimensions — availability of talent, ability to execute, and customer power. The last point is interesting. Indian customers are diverse at every level, and they have different demands at different price points,” Hegde said.
One reason why foreign companies find it worthwhile to launch some of their products here is the abundance of low cost labour, and also a steady supply of reasonably priced raw materials, which also turns manufacturing costs low.
“India is the most promising market for consumer products as it provides an optimum business environment. With over 65 per cent of India’s population below 35 years of age, manufacturers of consumer products must ensure high quality, value for money, and aspirational product offerings,” Srivastava said.
McDonald’s has understood the Indian palate well and customised its menu accordingly. Following the philosophy of ‘Think Global, Act Local’, the company developed ‘glocal’ products that were uniquely Indian in taste, some of which went to its global markets.
“We have also introduced the use of paneer and added tangy spices to our menu in response to customer preferences for familiar spicy flavours and vegetarian meal options,” said Amit Jatia, Vice Chairman, Westlife Development, the master franchisee for McDonald’s in South and West India.
Many concepts that gained leverage in India such as 3M’s Car Care Stores speak of India’s appeal of ‘If you get it right in a complex market like India, it will surely work some place else’. India is a country characterised by a DIFM (do it for me) paradigm, where customers are willing to pay for cheap labour to get a job done, unlike in the West, where DIY (do it yourself) prevails. This observation might have motivated 3M to open stores in India.
Hegde noticed that after all the moves made by foreign giants in India, the products that do go abroad after being launched here, end up in smaller economies, such as the BRICS countries, APAC, Middle East and Africa, and not the West.
This may be presumed as yet another proof of India emerging as an economic powerhouse, laying ground for new product development, becoming a market for other smaller countries, and finally, turning into a developed nation from a developing one.