Tata's Nano, launched in 2009 as world's cheapest car with price of 100,000 rupees (£1,400) is getting image makeover because buyers shunned low-budget image.

Nano was launched amid great fanfare as answer to India's aspirational middle classes and appeal to Indian families looking to enter car-buying market.  Problem was consumer aspirations to have car was not aligned with Nano's cheap image. Think Yugo deja vu.  Cheap does not equal quality in people's mind.  Poor quality product can never live up to consumer's aspirations.

Nano is being re-positioned as smart city car following disappointing sales.  "We are now focusing on making it smart city car and targeting young customers."

Future quality improvements for Nano include: power steering options, improved interior and exterior, be available in more colours, and better fuel efficiency.

Source: http://www.bbc.com/news/world-asia-23792196

CKB Solutions is all about real solutions for the real world.  To learn how we can help your business, contact Greg Kovacic in Hong Kong.

Summary:

• Indian's are increasingly hiring MNC food brands to cater and make their weddings stand out from the rest.
• This provides MNC food brands with fantastic opportunity to connect with their target customers - while being paid to do so.
• But MNCs need to be selective and make sure the weddings they cater match the brands' objectives.
• If you cannot maintain the quality of your product in a wedding setting, then the only winning move is not to play.
• The key India marriage seasons are November-February and April-May.
  

Imagine having MNC fast-food chains such as Domino's, Costa Coffee, Haagen-Dazs and Baskin Robbins entertaining guests at your wedding.  The Indians are doing it.  India definitely sets the standard for wedding ceremonies.  One way the rich marriage hosts now seek to make their wedding stand apart from the rest is to have MNC branded food and beverage stalls at the wedding ceremony.  Some even go so far as to replicate their outlets in malls, complete with similar seating arrangements.

A Fantastic Consumer Connect

MNCs are attracted to this trend because it provides them a direct channel to their target audience.  They are in effect being paid to promote themselves to the wedding audience, which just happens to be their target demographic.

A Haagen-Dazs parlour costs 5-8 lakh (INR 500,000 - 800,000) for one evening.  A Costa Coffee bar costs about 3 lakh (INR300,000).

New and Growing Business Channel

Caterers and wedding planners say the demand for branded food has gathered pace in the last 2 years.  15-20% of weddings these days demand branded stalls along with traditional snacks and cuisines. Demand for branded outlets is a growing trend all over the country, particularly in Chennai, Gujarat, Rajasthan, Mumbai, Punjab and Delhi. 

Dominos is taking advantage of this growing demand by forming a separate vertical for outdoor catering with dedicated staff, cold vans, pizza ovens and other paraphernalia in select markets such as Delhi-NCR, Mumbai, cities in Punjab and Uttar Pradesh. Domino's says wedding accounts for 50% of the outdoor catering vertical's revenues during the marriage seasons of November-February and April-May.

But Need to be Selective

A company must be selective about the kind of marriages they go to.  Revenue is not huge, so one must balance the consumer visibility, the wedding profile and the number of wedding guests.

And Not For Every Company - Must Be Able To Maintain Product Quality

McDonald's India does not do outdoor catering.  Creating and relocating a full store at weddings is logistically very difficult.  More importantly though, it is difficult to maintain the quality of its products outside its outlets.  In this situation, the only winning move is not to play.

Why India?

People are willing to spend to make theirs a grand Indian wedding.  Wedding hosts want the snob value and the bragging rights to have famous MNC brands at their weddings.  Indian weddings are becoming more and more about ostentatious showmanship with hosts wanting emphasize the specialness of the wedding event.

Source: "MNC food giants like Domino's, Costa Coffee, Haagen-Dazs eye a fast buck at Indian weddings", Economic Times of India, February 21, 2013
http://articles.economictimes.indiatimes.com/2013-02-21/news/37221580_1_weddings-future-brands-sushil-wadhwa

CKB Solutions is all about real solutions for the real world.  To learn how we can help your business, contact Greg Kovacic in Hong Kong.

The India government is taking an interesting approach to try and attract more much-needed foreign investment.  The India finance ministry, while trying to attract foreign direct investment,  is initiating some rather interesting tax collection actions against some very well known MNCs.  And of course this news is being read around the world outside India.  Some examples:

• India's Finance Ministry wants Vodafone, as the buyer, to pay the capital gains tax for Hutchinson Whampoa, the seller, after Vodafone bought out Essar via the Mauritius legal entity.
• Royal Dutch Shell used a unit in the Netherlands to invest into Shell India via a share purchase of Share India.  The India Finance Ministry is claiming Shell should have paid a higher price (18x) for those shares, and thus higher taxes on the share purchase.

India Taking Transfer Pricing Scrutiny to a New Level

India is right to scrutinize MNCs and their transfer pricing.  India audits companies with back offices in India to ensure the parent companies and other subsidiaries outside India are paying their Indian subsidiaries at arm's length, with a rate equivalent to what they would pay a third party for similar services.  Parent companies and their subsidiaries pay subsidiaries on a cost-plus basis to guarantee the subsidiary a certain profit over the cost of the labor and parts that go into the subsidiary's business.  India is trying to take transfer pricing to a new level:

• India wants to switch to a system where MNCs assign a portion of their total global profits to their Indian subsidiaries.   India obviously wants more tax revenue, but MNCs have options and will invest elsewhere.
• Indian tax authorities claim when a MNC run expensive marketing campaigns in India, they are transferring intangible value to the brand world-wide and the Indian subsidiaries should be taxed for that. LG Electronics has been fighting such a case for years. A Delhi tax tribunal upheld the tax authority's view last month.

Source: "India to Foreign Firms: Pay More Taxes", The Wall Street Journal, February 25, 2013.
http://online.wsj.com/article/SB10001424127887323864304578317821999568656.html?mod=WSJASIA_hps_LEFTTopWhatNews

CKB Solutions is all about real solutions for the real world.  To learn how we can help your business, contact Greg Kovacic in Hong Kong.

Ever hear the joke about what is the easiest way to become a millionaire?  Start off as a billionaire and buy and airline.

Is the airline industry in India going to follow a similar path as telecoms?

The India dream:  Indian aviation has enormous long-term growth potential and is expected to produce tremendous upside for first movers.  As India continues to modernize and grow over a 10- to 15- year time horizon, large number of Indians will be able to fly for the first time in their lives and an increasing number of people will be able to afford flying.  India is the only country which has this potential growth for airlines. They need to capture good Indian demand for their overseas services.

The India Reality: India is a challenging market.  India’s private airlines, once seen as a bright symbol India's modernization, soon found their hopes of boundless growth grounded in red ink losses. Intense competition for the loyalties of highly price-sensitive travelers, and high operating costs, led to years of losses and mounting debts.  Since 2007, Indian carriers, including state-owned Air India and now-grounded Kingfisher Airlines, have lost a combined total of about US$8.5bn after years of below-cost ticket pricing and overambitious expansion.  Indian carriers together have cumulative debts of >US$14bn to their lenders, plus debts of about $1.5bn to their various suppliers.  Government policy is often an obstacle instead of a solution.  Flying is taxed as a decadent luxury rather than an essential element of a modern economy. Indian Carriers pay up to 70% more for jet fuel than regional peers.  All of this limits potential demand. 
Telecom operators in India entered the market with similar rising tide lifts all boats mentality, only to find out the losses just kept coming as regulations and stiff competition created a market which had some of the cheapest call rates in the world.

In September 2012, the India government allowed foreign carriers to own up to 49% of domestic airlines.  No doubt to encourage others to invest in shoring up the finances of the India airlines so the government did not have to.

India's airline market growth story may have a different ending than the telecom market has had so far as foreign airlines, especially from the Gulf, are looking at tie-ups with existing Indian carriers, to help them capture more Indian passengers for their own international networks.  Analysts say tie-ups with Indian airlines will help Gulf carriers synchronise schedules and seamlessly connect travelers from smaller cities with their international routes.

But investors and operators would do well to look closely at the market realities and adjust their expectations and execution accordingly.

Source: "Foreign airlines see beyond clouds in India", Financial Times, February 21, 2013.http://www.ft.com/cms/s/0/38d491ee-7be5-11e2-99f0-00144feabdc0.html#ixzz2Lb7YAOQE

CKB Solutions is all about real solutions for the real world.  To learn how we can help your business, contact Greg Kovacic in Hong Kong.

Coca Cola faced a challenge in India:  How to sell chilled beverages in India's hinterlands during the hot summer when there are frequent power outages?  

Coca Cola India's pragmatic solution:  Provide solar-powered coolers to women retailers.  The “eKoCool” solar coolers help retailers chill their drinks using solar power but also empowers women.  

Beverages remain chilled for at least two-and-a-half hours after sunset.  Besides cooling drinks, the "eKoCool" solar cooler can also charge lanterns and cell phones which helps the women earn a little extra money. 

During the initial test using 20 solar coolers in Agra, sales jumped nearly 5x for these retailers.  Coca Cola has installed 110 coolers so far and has plans to roll out over 1,000.

Definitely a real solution for the real world.


Source: "Coca-Cola focuses on growing with communities", The Hindu Business Line, February 14, 2013.
http://www.thehindubusinessline.com/industry-and-economy/marketing/cocacola-focuses-on-growing-with-communities/article4415385.ece

CKB Solutions is all about real solutions for the real world.  To learn how we can help your business, contact Greg Kovacic in Hong Kong.