Tuesday, February 28, 2006

Less Likely to Have a Civil War or Be on the Losing Side of a World War Than is China

Capitalism and Cow Worship
by Sala Kannan

[I recently spoke to] Perumal, our old cook from India.

As youngsters growing up in India, my mother always warned, "Perumal won't be here forever, you girls have to learn to cook." She worried that hiring help around the house was getting increasingly difficult. No one wanted those jobs anymore. What would we do if Perumal left? [...]

Perumal worked for my family in India for 26 years, [and now works for a restaurant in Malaysia at a much higher salary, to put his daughter through college. Said he], "maybe I'll come back to India someday and start a restaurant. It's not like before, you know. Everyone wants to eat out these days. I'll start a nice vegetarian restaurant." [...]

Perumal is right about it not being like before. The Indian middle class has grown so affluent that they can easily afford to eat out more often compared to a decade ago. In fact, according to a McKinsey report, the Indian food industry grew faster than the information technology industry over the last 10 years.

The fast food industry in India is even bigger business. India's fast-food industry is growing by 40% a year and is expected to generate over a billion dollars in sales this year.

Perumal is also on the money with his "nice vegetarian restaurant" idea.
My [former] cook, who has never set foot in a school, who knows nothing about marketing, has got it right.

Let me explain. Consumerism is big business in India. There will be 628 million middle-class Indians by 2015. And already, their net income has doubled over the last 10 years. Obviously, every multinational company now wants to sell in India. Some companies have failed and others succeeded.
The ones that failed did so because they were not sensitive to the cultural factors that affect consumer behavior in India.

Kellogg's introduced corn flakes in India in 1995. But the product failed miserably. It achieved less than 20% of its initial sales target. How could Kellogg's have gone wrong? Corn flakes are cheap, more and more Indian women are working and don't cook breakfast anymore, and people want a nutritious yet quick meal, right? Kellogg's seems like the perfect answer. [...]
Why, then, did Kellogg's suffer years of losses in India? [...]

Indians consume differently. Just like how what people buy in any country is defined by local culture. [...]
And in this case, Indians like HOT milk in their cereal. Kellogg's cereal is made for cold milk and didn't hold up to hot milk. It became soggy. Nobody wanted to eat it. For years, Kellogg's struggled in India. It was only after revamping its product and making a cereal suitable for hot milk that Kellogg's became profitable in India.

So here are some cultural quirks multinationals should keep in mind when marketing in India:

1. Indians like hot cereal.
2. Most Indians worship cows; part of the country is vegetarian.
3. Indians don't kiss (at least not in the movies).

It was point No. 2 that my cook Perumal drove home. You see, not only are many of us vegetarian, we are a cow-worshipping, non-beef-eating lot. About 20% of India's population is completely vegetarian, and about 82% does not eat beef.

Yet McDonald's revenue in India has grown a whopping 50% annually since 1997. How does McDonald's, the world's largest BEEF-based food chain, thrive and flourish in cow-revering, vegetarian India?

Enter the Maharaja Mac. A 100% ground lamb burger served with lettuce, tomatoes, special sauce, cheese, onion and pickles on a sesame bun. Other items include the Chicken Maharaja Mac, the McVeggie and the McAloo Tikki (with potatoes). The vegetarian items are advertised with a "100% pure veg" stamp on them.

Seventy-five percent of the McDonald's menu in India is Indianized. In 2001, McDonald's also introduced the Veg Surprise burger, a veggie burger with Indian spices. Not surprisingly, sales volume shot up 40%.

As for the flagship Maharaja Mac and the McVeggie, not only are they profitable, they are also politically correct burgers. Indian political activists are always eager to protest again so-called "cultural imperialism." And foreign-based fast food chains are easy targets.

Take KFC, for example. After an ambitious start in the late 1990s, KFC scaled back its expansion plans after major protests. KFC was accused of using illegally high amounts of MSG and frying its chicken in pork fat (India's 150 million Muslims don't eat pork). Activist groups protested outside the restaurant in Bangalore. [...]
KFC now has just one restaurant in India.

McDonald's has 58 restaurants in India[...] As Managing Director of McDonalds India, Vikram Bakshi says "When you go into any country, very clearly, you have to understand the culture; you have to understand how you intend to be relevant to the consumer in that country. I don't think any brand, no matter how big it is, can take the market lightly. And I think the biggest mistake is when you think you have a big brand and that everyone is overwhelmed by it."


I only know a bit about India, and not all of what I've learned is positive.
However, they are democratically organized, and there is at least a segment of Indian society that's forward looking, modern, and technologically-oriented. As Ms Kannan writes, Indians are rapidly becoming wealthy enough to have a consumer society, and Indian demand for gold jewelry was so great last year that it pushed the global price of gold above $ 500 an ounce.

If they can avoid having a nuclear war with Pakistan or China, a robust, creative, wealthy, technologically-advanced, friendly nation of a billion people will be a major driver for the benefit of humanity in general, and the U.S. in particular.

Think Japan times five.

The same might be true of China, if somehow China can peacefully transition to a modern nation - India's big advantage over China is that they're already a (mostly) modern nation, just a currently poor one, like the Czech Republic or Hungary.

China is more technologically advanced than is India, with the Chinese having better ICBMs, the ability to design and build their own computers and aircraft, and even a crewed space programme, the third-best on Earth. (Although their uncrewed space programme is rubbish).
However, their future potential is clearly much more stunted than India's.

9 Comments:

Blogger Brit said...

Bloody Indians, staying over there and stealing our jobs...

March 01, 2006 4:55 AM  
Blogger Peter Burnet said...

Brit:

"Oh, yes sir, we are mustard-keen to solve your problem."

They probably are.

March 01, 2006 5:13 AM  
Blogger Brit said...

I've had endless problems with my Broadband connection, and about a third of the time I call up the technical help, I get through to India.

Apart from the accent, whether it's an Indian or a Geordie on the other end of the line makes no difference at all to the customer service.

(...which is uniformly dreadful.)

March 01, 2006 5:48 AM  
Blogger Susan's Husband said...

This article explains why outsourcing to India by American corporation almost always yields dismal results -- smart, competent Indians are out hustling for themselves in the boom, not wasting time with multi-nationals. Those multi-nationals look at all those talented people without realizing that that type are far more likely to be competitors instead of employees.

March 01, 2006 9:51 AM  
Blogger Duck said...

I work with many Indians at my current workplace. The company uses offshore resources for it's software testing. They generally get young single people to work on their projects, bu there is a high turnover as the parents of the workers are arranging marriages for them, and once they get the call from their parents that they've found a wife (or husband) they leave the project with short notice.

The relationship manager for the offshore team that I work with is spending his first winter in St Paul. His wife just got a job with the company and will be moving to St Paul with their 7 month old son. One thing that they are not used to is cold & flu season. He caught his first cold this week. I told him to get used to it.

March 02, 2006 6:01 AM  
Blogger M Ali said...

Brit:

Switch to Telewest. Haven't had to call tech support once in the two years I've been with them.

March 02, 2006 7:55 AM  
Blogger Brit said...

M Ali:

Thanks for the tip. We're about to move house so I'll have a look around. Can't be worse than wanadoo.

March 02, 2006 8:15 AM  
Blogger Harry Eagar said...

For another view, check out an occasional column called Gandhi Porn at www.exile.ru.

I have M. Ali to thank for introducing me to this interesting site.

March 09, 2006 11:25 AM  
Blogger Jane Lory said...

Visit essay writing service.

April 25, 2014 5:14 AM  

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