Fran O'Sullivan on business

Business analysis and comment from Herald columnist Fran O'Sullivan

Fran O'Sullivan: Time to smash some boundaries

33 comments

Joining Prime Minister John Key's three day mission to India has been a real eye-opener.

I've talked to plenty of Indian business people at international conferences, but nothing prepares you for their exuberance on their own home turf.

The energy is palpable, as is their love of business. Get the relationship right first and the deals will follow. It is a quite different mode from the more direct Kiwi style with our strong emphasis on transactional business.

Key himself was seen as a bit of a rock star by Indian business people I spoke with at a New Zealand High Commission reception this week.

They like his relative youth and respect his personal business prowess. Bringing Stephen Fleming along to take part in a well-publicised bout of "cricket diplomacy" was a touch of genius.

Peter Hassan - who chairs NZ Trade and Enterprise's Indian Beachheads programme - paid tribute to the "graceful" Fleming's ability to be a strong brand ambassador in India for New Zealand.

But after just two days in New Delhi it is not hard to see why surveys say Indian business people find their New Zealand counterparts a bit slow.

New Zealand business people from the 28 companies and organisations represented on the PM's mission relate how their Indian business partners will quickly pocket the initial deal and say, "What are we going to do next?"

It is not a bad problem to have but one that requires New Zealand business people to think outside the box and think fast.

If you can judge a country by the quality of its newspapers, then the strong emphasis on business and education in India's many English newspapers tells the story of a country that is thirsting for progress.

At a business seminar yesterday, presenters talked of how the growing empowerment of women is expected to spur the growth of their participation in the workforce.

Projections indicate there will be 400 million to 500 million people in the Indian workforce in 10 to 15 years, but if female empowerment takes off that figure might increase to 600 million to 700 million. The median age of Indian people is just 26. Parents believe their children are smarter in dealing with the world. Urbanisation will lead to an explosion in the number of major cities.

Corruption remains a major issue. It is seen as more problematic than in China.

International Business Forum chairman Sir Graeme Harrison points to figures which illustrate that while Indian politicians are low paid, many of them are millionaires within five years. But there is strong pressure from civil society to change this.

Business costs are also increasing faster than inflation.

But this is offset by the potential for massive revenue growth from India's sheer scale and surging economy, which presents an opportunity that is simply too big for well-prepared New Zealand businesses to pass up.

But they need deep pockets and to be prepared for what Kiwi ex-pat Chris White of Pepsi terms a "long-term burn".

Trade Minister Tim Groser relates that one of the major problems New Zealand faces in its relationships with massive countries such as India is trying to convince them that New Zealand is "not just about cows and sheep".

To counter this impression, the New Zealand business mission has a strong emphasis on niche manufacturers such as Rakon and Fisher & Paykel Appliances, ICT companies such as Finzsoft and eBus, and representatives from the export education industry as well as New Zealand's major commodity and food producers such as Fonterra, Zespri and the pipfruit industry.

Groser maintains the overriding factor in the Government's evolving India strategy is to get the India New Zealand free-trade agreement finalised.

Much of Key's own programme in India is focused on creating the right political environment so that the FTA negotiations will be stepped up to meet the March 2012 conclusion date that he and Indian Prime Minster Manmohan Singh have identified.

Groser's contention is that the FTA is structurally important for the New Zealand economy and the real key to a growing commercial relationship with India. Key points to India's high dairy tariffs (up to 60 per cent on some lines) as an issue.

But, says Groser: "The negotiations are moving along well ... It's not at the point where I, as Minister of Trade, need to start intervening personally to make decisions about compromises."

The second element in the Government's India strategy is to try to protect New Zealand's commodity-based trade from threats that arise "all the time" in the Indian market.

It's instructive that Groser made time to sort out some behind-the-border issues that have emerged for New Zealand commodity companies.

But the third strategic element is what really differentiates the Government's Indian strategy from efforts elsewhere. That is to try to push New Zealand's non-commodity exports into the Indian market.

Two MOUs (memorandums of understanding) signed in New Delhi on Monday underlined this trend. Global IT services provider HCL Technologies - which wants to place more investment in New Zealand - signed an agreement with Finzsoft Solutions to deliver high tech solutions to the region's banking and finance sector.

New Zealand's Medtech Global will work with India's Rajiv Gandhi Cancer Institute to digitise its medical records and install software that helps health providers deliver quality care through the functionality of its clinical applications and patent management systems.

The challenge is to develop a trade in sophisticated exports in parallel with New Zealand's commodity exports. Groser emphasises New Zealand has a great future with its high-priced, high-value commodity exports ("the world needs them and more of them").

One of the problems New Zealanders face in doing business with the emerging global economic giants such as India and China is "filling orders".

In a paper for NZTE, Deloitte's Alasdair MacLeod identified the need for New Zealand's smaller exporting industries to create "proxies for scale". In China that might involve creating a New Zealand appellation to act as an brand umbrella for the many competing wine exporters.

In India, our education exporters need to come up with creative solutions so they can accommodate the vast demand.

At yesterday's business seminar it was clear New Zealand business people do face challenges getting to grips with the Indian business culture.

"I do not think it's politically dodgy to admit we are weak in this area," Groser says. "We have a number of Indian business people on the delegation.

"But it is better to admit up front that very few of us deeply understand the Indian business culture and then start to set about doing something about it."

- NZ Herald

Have your say

We aim to have healthy debate. But we won't publish comments that abuse others. View commenting guidelines.

1200 characters left

Sort by
  • Oldest

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_n4 at 23 Aug 2014 11:38:05 Processing Time: 572ms