Between the Indian customs department and the Chinese “kidnapping” traders, it’s the Indian businessman who is getting sandwiched!?

The recent case of Indian traders being kidnapped in China has opened up a can of worms. Apart from the case revealing weaknesses in the Chinese judiciary (as I had highlighted in an editorial a few weeks back), it has also brought out in the open something that traders from India () were facing for a long time but not speaking about openly. The big trade that happens between India and China is through the scores of wholesalers operating out of wholesale markets in India like the Sadar Bazaar in Delhi. These are not the big guys who prefer getting into litigation that easily; they also aren’t amongst those who operate with lawyers and bigger paraphernalia. These are smaller traders, though huge in numbers, who go to Chinese towns like Yiwu in particular and pick one or two containers of goods worth Rs.30 lakh to a crore once every quarter. And they now fear entering China. The question is why? Can one incident of kidnapping shake up an entire community of traders, especially when China is such a good bargain for them? Or was this not that stray an incident after all?

Consider the case of Manish Rewari. He has been doing business in exactly the same town of China for years now. And swears by the advantages that China gives him in his business as he shows off a fascinating watch that he is wearing while narrating his story! He had first seen the same watch in a wholesale outlet in Karol Bagh (). The shopkeeper quoted Rs.22k as the best price for the watch to Manish. Not be outdone like normal customers, this China believer – in his next trip to Yiwu – went around various shops and found out exactly the same watch. And the price for a single piece was Rs.2.5k; and for bulk order of more than a hundred pieces, Rs.1.2k per piece. A watch enthusiast, he picked up only one watch for his consumption.

If that sounded nice, just a trip before this particular trip, Manish’s experience was not as good. He used to work with a Chinese agent then. During his previous trip, he had struck a small deal and purchased goods for Rs.75k through the said agent. The agent took the money, delivered him the goods, but never paid the original seller. The next time, when Manish came and tried to directly deal with the seller, the moment he provided his old receipt with the previous agent’s name to show the price at which he had bought the goods in the previous trip, the seller pounced upon him. His grudge was that he had not received the money for that particular transaction. Manish very courageously tried to defend himself by saying, truthfully, that he had obviously paid up for the same. This he did despite knowing “that they [the Chinese seller] could pick him up and make him disappear”. His reasoning clearly was of no help because soon, there were scores of the seller’s people and henchmen who came from all around and surrounded Manish. Sensing trouble, Manish approached the nearby police, who in their very usual unfriendly manner told him in Chinese that they were there to protect only the interest of the Chinese. That’s when good sense prevailed. Manish knew that he had come for just three days and had a lot of deals to strike. And this would only get messy. And spending a few days in jail like a few others he had heard of was not a great idea. Manish grudgingly agreed to strike a deal with the disgruntled seller, and paid fifty percent of the pending money again as settlement (since it was too small an amount) and fortunately got away.

This year, however, Manish is not ready to go to China anymore; well, almost. He now works through an Indian agent. The recession hasn’t been great for businesses and he fears that even the Indian agent might not have paid up properly to the Chinese sellers (though Manish has paid his entire pending Rs.37 lakh for his last imported container). The fear is that the Chinese sellers might again pounce on him. “It’s undoubtedly a fearful situation. The question of safety for the foreign trading community is totally missing despite us being such regulars and buying so much from them. There is no helpline. And they are just not ready to listen to our version. Someone messes up and someone else pays for it. The recent kidnapping has only brought to highlight the fears and trauma people have been going through for a long time despite doing big business there,” he says, elaborating further. He says something more that has been haunting a lot of Indian professionals in Gurgaon of late, due to a new phenomenon I had outlined, again in a previous article of mine, on how Chinese companies are now doing business in India only when they are allowed to get Chinese workers here (in effect, easing out their employment problem through projects in India).

The grudge the people working in Gurgaon have – as they see scores of Chinese people all around them working on various projects – is that not only are we allowing Chinese people to take our jobs, we’re also accepting their behaviour to simply look down upon Indians despite working in India itself (rightly or wrongly, is another question of course). Manish says exactly the same, “We do so much trade in China but they just don’t treat us with enough respect and that is a key reason behind this high handed semi mafia behavior.”

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

IIPM Best B School
IndiaManagement Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
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Second time lucky but determined not to lose first spot again

When GM went broke four years ago not many gave it a chance to spring up a fight and come back from financial rehab. Those Cassandras are now eating their words as the former lumbering auto giant strikes back with a vengeance.When GM went broke four years ago not many gave it a chance to spring up a fight and come back from financial rehab. Those Cassandras are now eating their words as the former lumbering auto giant strikes back with a vengeance.

A lot has changed for General Motors (GM) since it went adrift in rough seas that threatened to dash its corporate ship against dangerous waves just four years ago. In the summer of 2008, about a year before GM became a ward of the state, its chief executive Rick Wagoner was desperate to catch at straws in a futile bid to avert his company from going belly up. The financial results for the 2008 spring quarter left no one in doubt about GM’s bleak prospects: a $15.5 billion loss, its third worst in a century. GM’s revenue in North America had fallen $10 billion — a breathtaking 33% — from the year-earlier quarter. And for the first time, after donning the mantle of being the No. 1 car maker in the world from Ford in 1931, GM lost that coveted position to Toyota. In the midst of a significant downturn in the American and global economy, Toyota raced ahead of GM in global car sales, selling about 620,000 more vehicles in 2008 than GM’s 8.35 million.

But the worst was yet to come. Finding itself at the end of financial tether, Wagoner flew into Washington D.C., cap in hand, to ask for $10-12 billion of easy loans from the Federal government to bail out his cash-strapped company. But his demeanour - flying in a private luxurious jet at the company’s expense - rubbed many in Washington the wrong way. Sensing that GM was fast on its way to go kaput, the Obama administration had the good sense to push through some painful but imperative decisions. In quick time Wagoner was booted out and the doddering company was offered a lifeline in the form of government bailout funds after being put under bankruptcy court protection. GM - which hadn’t made a profit since 2004 - declared in its filing that it had $172 billion in debt and $82 billion in assets. Its market capitalisation, having plumbed the depths of investor confidence, stood at $2.21 billion in March 2009 when Wagoner departed. The value of GM stocks had cratered to $3.62 as against the trading levels of above $70 when Wagoner had joined as CEO in June of 2000.

Wagoner’s exit did not exactly move GM away from over the hump. Through the initial months of restructuring, the company became a revolving door for a succession of CEOs who drifted in and out without leaving any mark or making an impression. It was only after Daniel Akerson - GM’s fourth CEO in just under 18 months - arrived in September 2010 that the company once again rediscovered it automotive mojo and competitive gene. Since then the automaker, which had lost about $100 billion in the years before its 2009 bankruptcy, has been consistently profitable. In the latest quarter (Sept-Dec. 2011) for which results are available, GM made about $1.7 billion in profit, besides having already repaid $24.1 billion of the $49.5 billion in federal government aid it had received. But the biggest icing on the cake was that GM’s worldwide sales rose 7.6% to 9 million vehicles in 2011, helping the auto major to once again grab pole position as the world’s No. 1 car seller (a position it had ceded to Toyota in 2008). That’s surely a remarkable achievement for a carmaker that looked completely down in the dumps until two years ago.

The uptick in sales came about on the back of the strong showing by its flagship Chevrolet brand, which sold a record 4.8 million vehicles last year (even more than total sales of brands like Nissan and Honda). European carmaker Volkswagen was the second-largest seller of vehicles worldwide whose sales rose 14.3% to 8.2 million vehicles followed by the likes of Toyota, which expects its 2011 sales to come in at around 7.9 million vehicles, down about 6% from 2010. Analysts attribute GM’s recent swell performance to its strong US and China operations. Being the two biggest markets for carmakers today, GM has done well to wedge the China market open in its favour by collaborating with its local partner (SAIC Motor Corp), a strategy that has paid off handsomely. In 2011, GM sold more than 2.5 million vehicles in China, registering an 8.3% increase from the previous year. In its North American home market, GM clocked sales of over 2.5 million vehicles at a 13% growth trajectory last year.

According to Jeremy Anwyl, Vice Chairman of Edmunds, an automobile industry information website, GM was lucky to have come out of its bankruptcy and consequential restructuring at a time when global market conditions were once again turning favourable for the automobile industry. “The bankruptcy allowed GM to cut costs and fundamentally restructure its operations from a cost and incentives perspective. GM came into a growing market with a lean inventory and, at the same time, it introduced impressive new products such as the Chevy Cruze.” What also helped GM pip Toyota to the post was the fact that the Japanese car maker could not exploit the tailwind of growth and the resurgence in the global car market as it was badly kneecapped by supply-chain and production glitches at its plants, arising due to the double whammy of the tsunami and earthquake that struck Japan early last year.

But despite making the most of the opportunities in the past year, the real test of GM’s ability will be to consolidate and expand its market share without diluting its profitability. With Japanese car makers like Toyota and Honda emerging from the shadow of last year’s contretemps and players like Volkswagen and Ford stepping up on the throttle, can GM continue its alpha dog run in the industry? Already, Toyota has come out with its sales forecast of 8.48 million units for the current year, Volkswagen is pulling out all the stops to top the industry league tables by 2018 and Ford is on track taking its One Ford strategy to the next phase that might give it a fair shot at becoming market leader. In other words, GM is up against the most competitive automobile market in its history and its ability to continue delivering stellar results is bound to come under increasing strain. “Ford, VW and Hyundai are some of the toughest players there are and they lead by dint of their product line-ups. GM has to push harder to get ahead of the curve to compete head to head with these companies in all market segments globally,” says Laurie Harbour, President, Harbour Results, an industry analyst.
         
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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting

“A customer’s lifetime value is our focus”

Marketing in the financial services sector is tough currently, but Ajay believes that ABFSG can keep its ship steady and on the move.

Ajay Kakar has a rich background in financial services as Head-Branding of Reliance Capital and also in PR as he was also Country Head of Oglivy Public Relation (apart from simultaneously being the head of their financial services group) before joining the Aditya Birla Group’s Financial Services arm. In this interaction with mona mehta, he talks about his strategies to ensure better penetration for the company’s products in a cluttered market:

How is the marketing of ABFSG products taking off at a time when the Indian economy is facing one of its toughest times; be it rising inflation, falling Sensex, impact of the sovereign debt crisis in Europe and above all customer confidence?
Aditya Birla Financial Services Group (ABFSG) is a virtual brand, representing all financial services businesses of the Aditya Birla Group. At ABFSG we are committed to meeting all the felt and unfelt needs of our target customers. And today, as a significant non-bank, our 7 companies help us address nearly all such needs of mass India, short of core banking. We are fortunate to be in a category (money) that is the base need of every citizen across the globe. And therefore, we look at India’s underpenetrated financial services industry as an exciting and limitless opportunity. Every economy goes through seemingly uncertain times, but when you see the larger opportunity, such times are just minor dots in the life of an industry. Also, do remember that in moment of doubt, you need a doctor the most. And so it is with our category. We continue to reach out to our target customers with solutions that best meet their need. Towards this end, we are blessed to have a pedigree that represents one of India’s most trusted brand names - “Aditya Birla”.

How is the integration of your various financial services benefitting ABFSG in generating targeted revenues? What is the strategic roadmap ahead?
While we are a broad based financial services player, we have chosen to adopt an integrated approach towards our target customers. And we believe that this unique approach is beneficial to all our key stakeholders, be it our employees, customers or shareholders. To deliver on this approach, we have set up a unique structure with 4 key functions (HR, Risk & Compliance, IT & Operations and Marketing) driven by a cross ABFSG perspective. Our ambition is to come across as One virtual brand representing many businesses – a brand that speaks like one, looks like one and acts like one. This approach provides simplicity and convenience for customers. For our employees, we provide a world of career opportunities across businesses. And our shareholders benefit, as we offer solutions to customers across their life cycle. This approach helps us optimise our customer acquisition costs while maximising cost efficiencies with an integrated approach to our operations and back end costs.

What, according to you, is the most effective marketing approach for financial services specific to India today? How is ABFSG leveraging that tool?
With a heavily underpenetrated market, we focus not only on maximising our market share, but also on expanding the market. Just as an example, after more than 47 years of existence, mutual funds only enjoy a 5% penetration. And life insurance has an under-15% penetration. Today, we enjoy the trust of over 5.5 million customers. But while expanding our customer base, our energies are also focused on maximising the life time value of our existing customers. We are in a category that sells “trust”. To that extent we are unique from most categories that you can touch, feel, sample or taste. Trust is not built over night. And therefore we need to move beyond an “IPO/NFO” approach of need based advertising i.e. when we need to advertise. We need to engage our target customer throughout his life cycle and be there for him more so in his moments of need. At ABFSG, therefore, we track the customer through his life cycle with our category and brand. And we are always seeking newer ways and opportunity to engage with him. Therefore, we do not restrict our marketing spends to mass media campaigns alone, but also on being a part of the customer’s world 365 days of the year by capitalising on every customer touch point.

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Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM in the league of best management institutes of India.....
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM RANKED NO.1 in MAIL TODAY B-SCHOOL RANKINGS
Planman Technologies

Omni’s nano curse?

Maruti has been trying to position omni as a multi-purpose vehicle for some time now – perhaps it’s time to dedicate the product purely to the commercial segment

For generations, Maruti Suzuki has been the vehicular lifeline for millions of middle class families in India. Two cars, namely India’s first hatchback Maruti 800 and the multi-utility vehicle Maruti Suzuki Omni from the 80s, have been the longest running models on the Indian roads. But the days have changed, and the automaker has shifted from a virtually no competition scenario to a market marked by cut-throat competition put forward by a number of global brands like Volkswagen, Honda, Chevrolet and Toyota. But a product like Omni is still the most viable value for money buying proposition, leave the Nano. But is it now time perhaps to question the way Omni is being positioned – as both a family vehicle and as a business vehicle? Is Maruti Suzuki really reaping the benefits of such a positioning?

The current Omni TVC (see some of the TV grabs given above, where the positioning is clearly an attempt to make Omni be viewed as a family car than as a pure and proper business vehicle) perhaps personifies this change, which attempts to position Omni as a multi-purpose vehicle (MPV) that can be used as a commercial vehicle as well as a passenger vehicle (Maruti Suzuki still addresses the Omni as a ‘van’). For that matter, a look at the past few Omni campaigns reveal that Maruti Suzuki has been trying to play on the emotional quotient associated with Omni for the Indian consumers. How successful has been Maruti till now in its Omni battle?

Well, going by data available with SIAM, while total units sold by Maruti Suzuki in its multi purpose vehicles category (Omni, Eeco) in August 2010 were 14,157, the same in August 2011 stood at 12,500, down by nearly 12%. Of course, one could mention here that the industry in itself has been slowing down due to the general rise in interest rates and drop in consumer savings. Add to that the plant lockdown that have occurred due to worker unrest at Maruti. But despite that, if one were to look at the aggregate sales of Maruti Suzuki from April 2011 to August 2011 under the concerned segment, the figure actually went up by 8.7% year-on-year to 66,628 units from 61,295 units in the same period in 2010. A detailed view at monthly sales indicates that it was the month of May when Maruti sold the most number of cars in this segment, 15,545.

For more articles, Click on IIPM Article

Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM in the league of best management institutes of India.....
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM RANKED NO.1 in MAIL TODAY B-SCHOOL RANKINGS
Planman Technologies

"Is Branding Yesterday , Passe , Dead ?"

4PS B&M Consulting Editor Endeavours to Unravel a new-age, Revolutionary, Path-Breaking Philosophy put forth by an Ad Guru that Puts The Age-old and much-revered concept of Branding to Sleep… Well, at Least if you Believe us Blindly !

Branding, for decades, has been hymned, celebrated, exalted, venerated and worshipped as the gospel truth by any marketer worth his FMCG lapels! The high priests have pronounced that the ‘Brand’ is ‘God’ and the ad executives, GCROEs (God’s Chosen Representatives On Earth!). For decades, the ‘brand’ has been acknowledged as the single most important aspect of business. Its success equals the business it drives. Branding’s prime objective remains the same – to make a product look distinct & different from competition and epitomise the vision & values it represents to gain that decisive cutting-edge lead.

The textbooks, to gloat over it, pronounce its value, power and criticality in no uncertain terms. Author Sanjay Tiwari in his much acclaimed book (The Uncommon Sense Of Advertising – Getting The Basics Right) offers his informed take in style: “Brands rule the world of marketing today because they rule the world of consumers today. They have not only changed the way we shop & buy, or consume, but have also had a profound effect on the way we live. Just count the number of brands you interact with since getting up in the morning till you sleep in the night.”

For some of us, he says, it might be more than the number of people we interact with in the same time. We don’t drive cars any more; we drive our Mercedes, Hondas & Toyotas. We don’t wear shirts, jeans or sneakers, but wear our Arrows, Allen Solleys, Levis, Wranglers, Nikes & Reeboks. We don’t drink cola, eat chips, burgers & chocolates, rather we drink our Cokes & Pepsis, eat our Ruffles, Pringles, McBurgers & Kit Kats. The brands that promise us a unique offer of utilities, benefits, values, personality traits, images and associations, that will satisfy our given needs (functional or emotional) and that we can relate to (consciously or subconsciously), are the ones that we identify with and show preference for. Therefore, more often than not, the brand (and its promise) extends beyond the product core. Successful brands often transcend their physical existence, take on a life and build relationship with their consumers. The positive experiences, values & associations that consumers perceive the brand brings to them leads to fulfilment of their expectations. The feeling of fulfilment becomes the reason for the success of the brand, and the basis for the relationship.

Ultimately, building brands is about running a marathon. And it makes huge business sense to invest in brand building. In fact, strong, reputed brands have a lasting bond with their consumers. Their brand loyalty is very difficult to break. The loyal consumer base raises the entry barriers for the competition and enables the company to enjoy benefits like premium pricing and sustained market share over longer periods of time. All these put together result in the brand being able to leverage in equity with the consumers and reap long-term profits for the company.

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Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM B-School Detail
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM in the league of best management institutes of India.....
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM RANKED NO.1 in MAIL TODAY B-SCHOOL RANKINGS