Every week, we will seek out expert advice to help a small or medium-sized company overcome a key issue it is facing in its business.
Karl Kenny has always followed one basic rule of business: Go where the growth is.
Since co-founding Marport Canada Inc., which develops and manufactures deep-sea technology, in 2003, he has opened offices in Spain, France, Iceland and the United States.
But, like a lot of business people, Mr. Kenny sees the developing world as the next big growth area. He’s specifically got his sights set on India, a booming country with more than one billion people and expected GDP growth of 7.7 per cent this year.
Marport’s main business is selling underwater sonar technology to commercial fisheries to help them catch fish, but it also sells devices to the military to help them search for underwater mines.
He wants to sell his product to both the defence and fishing sectors in India, but he’s going to focus first on the fishing industry.
“This is a huge demographic that’s eating more and more seafood,” Mr. Kenny says. “And the technologies they’re using are fairly old.”
Breaking into India is a lot different than selling into Europe, says Mr. Kenny, now chief strategy officer of the St. John’s-based company, which has 110 employees and $20-million in annual revenue. India is an unfamiliar culture and business is done differently there than in North America, he says.
He has sent staff on trade missions, but, beyond learning a bit more about India, he hasn’t been able to make the right connections.
Ideally, he’d like to set up an office in the country and make India a big part of his company’s growth strategy. The only problem is that he has no idea how to break into the market.
“India will be a powerhouse,” he says. “But we’re having a hell of a time figuring out how to get in.”
The Challenge: How can the company break into the Indian market?
THE EXPERTS WEIGH IN
Vijendra Gairola, Mumbai-based chief representative in India for Export Development Canada
It’s extremely important to choose the right partner. He needs a local agent to help sell his product. They know the regulations, which can vary from state to state, and they can negotiate with local vendors, something that’s not easy to do. But he has to do his due diligence to find the right one. Look at someone’s track record. Make sure they bring in adequate local experience.
Face time is also very important. He’ll need to make at least a dozen trips to India. Indians love to talk about personal stuff, and they like to build a rapport. E-mail is not the primary mode of developing a business relationship – it’s very different than North America – so he needs to be there. And send the top people. Titles are very important; it shows that you’re serious about doing business.
Kasi Rao, owner of Kasi Rao Consultants, a Toronto-based business advisory firm
Start the process in Canada by reaching out to organizations and trade associations. The first group to contact is the government’s Canadian Trade Commissioner Service. They’re quite active in India, so he should make them aware of his expertise. Then reach out to the Indo-Canada Chamber of Commerce, which focuses on small to medium-sized business. They’ll be able to connect him with powerful business associations in India, such as the Confederation of Indian Industry, which just opened a Canadian chapter. It’s these groups that will help you connect with local partners and they can offer advice on how to navigate the Indian market.
When he does eventually meet with potential customers, he should be cautious not to overinterpret positive signals at the start. There’s a saying in India “Guest is God.” They treat guests politely and many people misinterpret that. This is a relationship that needs to be nurtured at every level. The local partner can tell you whether you’re just pushing rope [or] if there’s actually something there.
Kalai Kalaichelvan, founder and CEO of Ottawa-based Eion Wireless. Nearly 80 per cent of business is in emerging markets, with 30 per cent in India.
To get into India, he needs to follow the three Ps: partner, price and patience. The first thing he’ll need is a local partner to help him sell his product. But he’ll also have to lower his prices. The country is a very price-sensitive market. They’re hard bargainers and want a cheaper price compared to many other markets. That’s a challenge we face – our products sell for less in India than the rest of the global market. But, the volume is there, so that makes up for the lower price.
Finally, he needs patience. It can take up to 15 months to close a deal. In our experience, when you first get there it seems like there’s a ton of opportunity and that they want your product yesterday. But then you have to deal with licensing issues and testing. So this isn’t going to happen quickly.
THREE THINGS MARPORT CAN DO NOW
Find a local partner
Partner with an India-based agent who’s familiar with the fishing industry. The agent can show you the ropes, explain regulations and nurture relationships on your behalf.
Connect with trade and business organizations
Contact Canadian organizations like the Indo-Canada Chamber of Commerce and India-based associations such as the Confederation of Indian Industry. They can put you in touch with partners and help you navigate the local market.
Indian companies want the best deal, so lowering prices could get a business into the market faster. Since it’s such a huge market, volume should make up for the difference.
Special to The Globe and Mail
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