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Upgrading 'Made in India'

July 25, 2003

Bobby Singh is an Indian in Bangkok. He has built up a very profitable and growing tailoring business, with an international clientele, for his bespoken suits and shirts. If you visit him once, he enters your measurements on his computer.

You can then ring him from wherever you are and choose the style. He will have the suit made and delivered by air anywhere -- except to Indian destinations, because he does not want to deal with Indian Customs.

His prices are less than a third of those in London and half of what New York tailors charge, and his quality is as good as Saville Row.

Theoretically, India is a far better base for Bobby's business because everything is cheaper in India -- materials, labour, space. But Bobby does not find it attractive to set up shop here.

In Thailand, he can import any material freely -- fabric, threads, buttons, lining material.

He can outsource the actual tailoring job to a set of individual Thai tailors whom he has trained. They take the material home and return it to the shop within the day.

His customers can fly into Bangkok on business, order a suit, visit his shop for a fitting and have the suit ready the next day.

If people in Delhi, Mumbai or Chennai could achieve this level of quality and service, India could build a very large and profitable business in tailoring -- and create a lot of employment in the small-scale sector.

Bobby Singh's case may sound like an isolated story, but it is not.

For instance, India is a world leader in the supply of leather products, but you get better shoes in most other markets. India has traditional strengths in textiles, and plentiful cotton, but many other countries export more and higher-priced garments than India does.

So we have to consider why so few Indian companies and entrepreneurs have been able to penetrate the global market, despite the factor advantages available in India.

Some large companies like TVS, Hero and Ranbaxy have made the transition, but even they found it difficult to establish an international presence.

What are the drivers of change that can propel other companies to copy their achievement?

Raising the bar on quality: The mindsets of managers and of many levels of operators are still set in the chalta hai kind of standards that pass muster in the domestic market.

This mental block has to be broken. Fortunately, several Indian companies in the auto-ancillary sector have now shown the way, and many of them have benefited from Japanese or other international collaboration.

There should be no shame in engaging foreigners if that is what is required.

Even in cricket, we have seen the results achieved by a foreign coach and physical trainer being attached to the Indian team.

One of the effective ways of transforming the mindset of people in a company is for selected employees to be sent to see how the customer uses the product, and how our product compares with competitive products in terms of presentation, ease of use and customer delight, which can be measured only by seeing.

A medium-sized Indian company that I know has introduced a system of sending their shop-floor workers to see their products in use and visit with the user -- and also to see competitive products in use.

The effects have been dramatic. Today, the same shop-floor workers hold meetings every morning to discuss issues, and make suggestions on how to improve quality.

Investment in marketing: Indian companies have yet to accept that, for building their brands in international markets, they have to invest heavily in marketing, even at the cost of temporarily lowering profits, by treating marketing expenses as an investment in the brand.

Indian entrepreneurs tend to understand investment in physical assets (capital expenditure), but when it comes to marketing investment, they tend to balk.

For many Indian industrialists, marketing still means advertising. Many companies have yet to realise that marketing is not merely advertising.

It involves consumer research, product design, test-marketing, training and motivation of the sales force and distribution, plus a whole host of support activities. Advertising is only the publicly visible part of marketing.

When this whole array of activities has to be carried out in markets outside India, it is even more expensive and the risks greater.

Indian businesses have yet to become bold enough to spend on proper marketing, even when they have a good product.

Stricter monitoring of top management performance: Many of the 'owner' managers who still dominate Indian industry tend to be absentee masters or not fully committed to their companies. They are like the zamindars of nineteenth century Bengal and we know what happened to them!

If we look at successful international companies, the descendants of owner managers (like Ford or Suzuki) are fully involved in their companies.

In contrast, sometimes even professional managers in Indian-owned companies tend to imitate the zamindari style after a successful spell, as was shown in the recent Britannia example.

This is because in most cases there is no objective process for keeping them on their toes through continuous monitoring and evaluation of their performance.

To achieve this you need a board with at least some members who are experienced professionals and who have the courage to raise issues about the performance of even the CEO.

This cannot be done by board members who are virtually nominated by the CEO, as is the case in many Indian companies.

Presenting a new image of India: Each country has an image in international markets. Japan today stands for quality, Germany for dependability, and so on. Till not so long ago, Indian products were seen as shoddy and Indian businessmen as undependable.

This has changed somewhat due to the success of our IT companies and some of the better manufacturing firms. But the image of our manufacturing industry has still some way to go, in part because of the leftover impressions from our long history of the licence-permit-price control raj.

Today, we have a more liberal economy, but the old image lingers. One way to change this is to publicise the success stories. This has been done in the area of software and outsourcing of services, but not in manufacturing.

For example, one of the largest electrical equipment manufacturing companies in the world has, after a global sourcing search, selected a medium-sized electronic firm in Bangalore and will market the Indian company's product in the United States under their brand.

There will be many more such examples that the government and the chambers of commerce could highlight, to change the image of the country as a manufacturing source.

In the 1950s Japanese products were considered cheap and undependable. This changed dramatically by the 1970s, with the advent of high quality Japanese electronic products and cars.

The Japanese had no compunctions about learning from the Americans, who had occupied Japan after World War II.

In 25 years 'Made in Japan' became a passport to success. The South Koreans repeated what the Japanese did. Both countries benefited from a close relationship with the United States.

Even China began its transition to a manufacturing base for the world only after drawing closer to the US following the Nixon visit in 1971. Perhaps a closer alignment with the West is something we will have to cultivate.

If Indian industry and government agencies get together in an imaginative way, 'Made in India' can become a hallmark of quality in several industries, like leather, textiles, jewellery, silk and auto parts, where we have definite factor advantages but still lack the image, which has to be created through deliberate national policies.

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