The $10 Trillion Opportunity : Chinese and Indian Consumer Markets
MUMBAI, October 11, 2012 – With the middle-class populations of India and China approaching a billion, it is important to understand the needs and wants of the consumers to enable Indian and multinational companies to operate and grow successfully in these countries. Exploring this, Asia Society India Centre hosted a discussion on India, China and The $10 Trillion Prize with Michael Silverstein, Senior Partner and Managing Director at Boston Consulting Group; Abheek Singhi, Partner and Director at Boston Consulting Group; and Adi Godrej, Chairman of Godrej Industries and President of the Confederation of Indian Industry; Moderated by Patrick Foulis, India Business Editor of The Economist.
Singhi explained that the prime movers of the Indian and Chinese economies, the consumers, are driven by “a sense of optimism, hope and aspirations.” He noted that multinational companies are successful either in India or in China, but rarely in both, as both these countries are unique. He also revealed that both Indian and Chinese consumers place importance on education as well as brands. Foulis highlighted the changing roles of women in India and China, to which Silverstein revealed that “Indian women are among the happiest women in the world, they’re happy with their families, husbands and children.” He also added that for India to achieve a much higher growth rate, the Indian government must encourage women to work, and must provide education and day care services.
Silverstein highlighted that India’s per capita incomes are a third behind China’s, as in “the late 1980’s, China encouraged foreign direct investment, controlled the number of industries and decided that as a country, it was going to move against the world and it did so with force, with power and with direction.” He also added that there is a general view that the Chinese markets are growing faster and consumer products face very few restrictions from the government. In response to Foulis’s question on the long term economic trends and the general mood in India, Silverstein argued that Indians see a bright future for themselves, “they understand that if they apply themselves, if they have ambition, energy and education, there are opportunities.”
Godrej emphasized that the economic slowdown in India should not be interpreted as ‘structural shift’ in growth but “a cyclical change partly because of the global situation and mainly because of our not taking some of the steps which could have helped it.” He also firmly believes that through good reforms and the leveraging of opportunities, India can achieve strong long term growth and can even overtake the size of the Chinese economy in a few decades. Godrej added that India did a very good job getting out of the 2008 financial crisis and sees a similar recovery for the current economic downturn and argued that the goods and services tax reform is extremely important to get India back to an 8-9% growth path. Silverstein also noted that India’s economy is “large enough to take some hits and come back fast.”
Foulis emphasized the difficulty faced by industries in trying to break their products down to the bottom of the income pyramid, to which Godrej responded, “there are 800 million mobile phone users in India today, very clearly it has gone to the bottom of the pyramid,” but cautioned that success there requires an evolving business model. Godrej also revealed that 75% of Godrej’s profits come from the bottom half of the income pyramid and added that “until about 15 years ago, most folks in rural India were barely able to keep body and soul together, now discretionary income is rising considerably.” On Godrej Industries’ successes abroad, Godrej added-“we have expanded only in the developing world, not the developed world because in consumer products, we think our competitive abilities in the developing world is much better and we have been very successful in being able to add value to these acquisitions.” Singhi foresaw high-end companies entering the Indian market becoming the successful ones.
Responding to Foulis’s question on whether western companies were taking a disproportionate share of the boom, Singhi said that although there are several successful multinational companies in India, there are also enough examples of successful Indian companies such as Dabur, Godrej, Marico and Amul. Silverstein also commented on China’s attempt to develop its own Ivy League university system and added that Indians should also be doing more to create a world class education system in India.
Reported by Mayanka Singh Nongpiur, Programme Assistant, Asia Society India Centre
Video: Highlights from the programme (10 min., 40 sec.)
The programme was part of the BusinessAsia series, which highlights new developments and best practices in the corporate and economic world that bolster notions of corporate citizenship, including engaged leadership, innovation, and corporate social responsibility.
The programme was presented in partnership with The Boston Consulting Group and Harvard Business Publishing. Outreach partners for the event were the World Trade Centre Mumbai, All India Association of Industries and The Collaborating Chambers.