Category — Export Markets

Major brand owners like General Electric, DuPont and Nestlé are all turning to India as an innovation hub. Some interesting examples :

General Electric has opened, some ten years ago its John F Welch Technology Centre, Bangalore, investing around $175m since then. It has outlined an intention to boost the headcount at this unit by 3,000 scientists, supplementing the 5,500 existing staff, alongside constructing a plant in the country. “India is a very critical market right now. As the outlook for the US and Europe slows … the interest levels here continue to go up,” said John L Flannery, President/CEO, GE India. “We have reorganised the business, created a separate P&L so that we could be more responsive to the market and make decisions quickly.” “If we were to pick a word of what we have to do in India, it is localisation.”

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According to the Indian National Council of Applied Economic Research (NCAER), a very high praised think tank, at least 45% of the  nation’s population are likely to live in towns and cities by 2050. This compares with a total of 30% at present, and should result in 379m people migrating from rural areas during the next four decades.

The increasing size of the middle class and accelerating urbanisation in India will provide substantial opportunities for brand producers.

Currently, the 20 biggest cities in India contain 10% of its residents but generate 31% of earnings, 60% of surplus income and 21% of consumer spending. Rural areas – currently home to 70% of Indians - are also undergoing a transition.

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According to a recent report by McKinsey, luxury sales are set to remain resilient in South Korea in the future, as high-end goods are rapidly becoming “part of the fabric of life.”

The country currently accounts for 4% of the luxury sector’s returns worldwide, or approximately 3 billion Euros a year.

The revenues generated by domestic department store chains, the primary channel when it comes to acquiring offerings from firms like LVMH and Hermes, rose by 16.7% in 2008–09, despite the recession

During that period only 5% of wealthy individuals felt guilty about the amount they spent on expensive purchases, measured against 10% to 15% in other developed economies.

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Companies seeking to enhance their position in Asia could gain significant benefits from looking beyond India and China, and investing in nations like Indonesia and Thailand.

Singapore’s economy is expected to enjoy growth of 15% in 2010, a total that stands at 7% for Malaysia, 6.6% for Indonesia, and at least 6% for both South Korea and the Philippines.

Indonesia is another attractive possibility, as 55% of its citizens are under 30 years of age, and its GDP is expected to increase by 8% in 2011. LG Electronics and Caterpillar have recently taken aim at the country, where Unilever has already established a major presence.

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