27 July 2017
Plugging into the Indian Market
India is now the world’s top retail investment destination, overtaking China, according to the latest AT Kearney Global Retail Development Index. The electronics market, in particular, is very upbeat, with Chinese firms reportedly selling up to 60,000 units per month.
Hong Kong electronics producer Alco International Ltd, a wholly-owned subsidiary of Hong Kong-listed Alco Holdings Ltd, is among those seeking a slice of this huge market. The company teamed up with Indian mobile distributor company Josh Mobile to sell its Venturer LapTABs, which are Windows-operated two-in-one mini laptops.
“Josh Mobile is a young, dynamic company that has achieved a lot,” said Danny Yick, Managing Director, Alco. “We wanted to partner with someone that was strong in consumer distribution and local knowledge.”
“We were looking for some good brands for India,” said Deepak Gupta, spokesperson for Josh Mobile. “We wanted interesting products that would generate interest in the Indian market, products that were not available, or at least not available in the right price bracket,” added Aishwarya Sharma, Director, Josh Mobile.
With a 50-year history in consumer electronics, Alco began developing its own line of laptops and tablet under the brand Venturer in 2015. North America is its primary market, but in recent years it has cast its eyes on promising emerging markets, with India top of its list.
“Sixty-five per cent of the Indian market is under 35 years old,” said Mr Yick. The Indian market is young, dynamic and big, but also very brand-conscious. “They are more open to new brands than anywhere else in the world.”
But he emphasised that marketing is key to successfully penetrating the market, with companies committed to investing in raising brand visibility. “If the product has excellent quality and you employ good marketing and offer good after-sale support service, they will embrace that brand,” he said.
“The Indian market is very competitive,” said Mr Gupta. “You need to offer consumers good quality at a good price.” He noted that “dumping cheap products” no longer works for the Indian market, which has discerning and brand-conscious consumers who want value for money.
The Venturer LapTAB was officially launched in India last May, when it began selling at major online operators, including Amazon, Snapdeal and Flipkart. The tablet will soon be available at Indian retail stores, ramping up the number of models available by mid-October, in time for India’s Diwali festival.
Alco, meanwhile, will send a team to study arrangements for setting up a semi-knock down facility in northern India for local production. Assembling Venturer products in India will help lower Alco’s import duties by up to 10 per cent, savings that Mr Gupta said will be passed on to customers.
Josh Mobile will also offer a 10-day exchange policy and set up between 400 and 500 service centres across the country as a way of establishing trust in the brand.
Both companies say they are looking beyond a “buy and sell” relationship, by building a long-term partnership. “Rather than getting profit, we will focus on developing the brand. After that, profits will follow,” said Mr Gupta.
Alco’s major push into the Indian market comes at an opportune time as the government’s “Digital India” campaign gathers pace, aiming to give the general population wider access to the digital society.
With the LapTAB competitively priced under INR13,000 (about US$200), the company is poised to benefit from the government policy of making digital devices more widely accessible, particularly in classrooms.
As a local partner, Josh Mobile can help Venturer gain household-name recognition in India. “Josh is strong in consumer distribution and has strong connections with state authorities, helping to distribute our products online, at retail and at educational institutions,” said Mr Yick.
Another key benefit of this localised partnership is Josh’s ability to navigate the local bureaucracy. “The first hurdle for any manufacturing company like us is getting Bureau of Indian Standards approval, which requires lots of local knowledge and daily liaising with local laboratories,” explained Mr Yick.
For his part, Mr Gupta said that Alco’s professionalism, reliability and track record of developing quality products are what made it an ideal partner for Josh Mobile.
The goal now is to sell between 50,000 and 80,000 units in the first year, a target Mr Gupta said he’s confident of attaining. He noted that computers remain a hot commodity in India, with popular Chinese mainland brands now being significant sellers.
Venturer plans to capitalise on the LapTAB becoming a new category in the Indian market. Following the recent launch of its basic model in India, Mr Yick said the company plans to release new models every six months, with the next one scheduled for 2018.
Understanding the Indian Market
With its large, young consumer base and widely-spoken English, India is an attractive market for companies like Alco. But Mr Yick advised prospective companies to do their homework first.
“India is not one big market, it’s culturally diverse,” he said. “You need to start in one region, and the best place for that could be New Delhi, which is considered the ‘heart of India,’ and the most cosmopolitan.”
“India is a huge, tough market,” explained Mr Gupta. “Every big player wants to enter the market and Indian companies want a good brand to be established with them.”
It’s a sentiment shared by Mr Yick. “You need to do your research, know your customer and understand the market. But most importantly, you need a good local partner.”