Beating China at its own game

Ever wondered where clothing and accessories for babies are made? They are made by people such as Neeraj Dhir. Not only does he make some of the finest baby clothing in India, but he is also breaking the mental barrier that a lot of Indian entrepreneurs carry, that it is next to impossible to compete with Chinese manufacturers.

Neeraj Dhir is a first-generation Entrepreneur who runs AStar Clothing in Ludhiana and grew his business by 100% over the last year. His brands ‘Baby Loon’ and ‘Meow Meow’ are supplied to some of the biggest brands in the country.

Entrepreneur Story #3 -?Neeraj Dhir?-?AStar Clothing

On top of giving Chinese manufacturers a run for their money, Neeraj Dhir is also working to build a culture at his firm that’s rare in his community in Ludhiana. Where most MSME owners face a consistent challenge of attrition, Neeraj Dhir’s employees rarely leave. To understand how Neeraj Dhir does these phenomenal things, let’s divide this article into 3 parts.

1. How Neeraj Dhir is beating China at its own game

2. His HR policies and team engagement strategy

3. How he dealt with the complex market during COVID lockdowns and grew by almost 100%!

How Neeraj Dhir is beating China at its own game

Out of the 600+ local entrepreneurs I interacted with during my time in Ludhiana, only a handful were consistently innovating in the conventional manufacturing space. Neeraj Dhir is one of them.

In 2021 through the incubator that I was running, Neeraj Dhir found the purpose of his business. He was in the business to provide quality wear to all children and hence came up with the tagline ‘Every Child Matters’. This propelled him to think of more ways in which he could create value for little children and their parents. This quest led him to discover that Sleeping Bags for babies were not being manufactured in India, and were only imported from China. He decided to tour across the country, and finally devised a mechanism through which he could manufacture the sleeping bags in India, as per the Indian size requirements, and at a cost lower than what was being offered by China!

Our entrepreneurs learned in the Accelerator program repeatedly that price wars were never beneficial for anyone. So, to ensure that price was not the only thing that Neeraj was competing on, he came up with other value propositions he could offer. He proposed that because his product would be manufactured in India, his packaging could reach the buyers in a much neater and pristine packaging, as opposed to the wrinkled packages coming in from China. (You can find Neeraj with a Baby sleeping bag in the picture above)

In present times when people are trying to diversify their sourcing, Neeraj Dhir’s effort to innovate and create a product in India was received very well by big corporates. They encouraged him to explore the possibility of creating other imported baby clothing/care products in India as well, granting him the first-mover advantage in several categories

His HR policies and how he engages his team?

If you have ever spoken to an MSME owner, one of their biggest issues is attrition and HR Management. Employees leave as soon as they get a fair bit of increase in salary elsewhere.

The first time I spoke to Neeraj Dhir in his interview for the accelerator program, he mentioned that his employees rarely leave. He went on to explain the different schemes and incentives he had in place to combat the challenge of attrition.

He mentioned his scheme under which the best-performing employee gets a mobile phone, and this, in turn, incentivizes other employees to work hard as well. With a smile on his face, Neeraj narrated a story where an employee asked if he could get a bicycle instead of a mobile phone in case he wins, and knowing he could, left feeling excited and motivated!

All these incentives got supercharged when Neeraj understood how he could further motivate his employees through our incubator program. He started creating and enabling leaders among his employees. He took time to carefully understand the needs of his staff and motivated them to take up more responsibility to be able to fulfill their personal goals, such as purchasing their own house and vehicle in the city. As per Neeraj, he can focus a lot more on business growth as his employees now manage most of the operations, and through their hard work, a couple of his migrant laborers have already been able to purchase land for their homes in the city.??

He shared an example of how he drove performance through incentives. He used to have a high level of pilferage in his processes. He decided to implement a small incentive for every completed lot (0 pilferages), and quite effectively, his pilferages went down by 80% in a single month! His employees would endeavor to ensure that every last piece was present when the final lots were prepared. One challenge that accompanied this reduction in pilferages later was quality control, which he later fixed by hiring a quality control manager.

In Neeraj’s words, earlier he needed to oversee every process himself or things wouldn’t move. Now he can just sit on his chair and have a bird’s eye view while his employees manage everything, only coming to him when needed - all while achieving a higher net output.

How he dealt with a complex market

When COVID hit, a lot of entrepreneurs felt stuck as the buyers had either canceled or delayed orders, and there wasn’t much movement in the market. At that point, Neeraj Dhir started to innovate. He tried to figure out what are the opportunities that exist in the given scenario. From the newfound clarity around his purpose - Every Child Matters, he derived that in addition to making clothes for children, he can also make a basket of products for newborns and sell them to hospitals. He started small, and the hospitals and parents loved it. Within 2 months he was catering to a huge set of orders for this product as well.

Another challenge that many entrepreneurs faced was delayed payments, especially in textiles where the business is seasonal - a lot of working capital gets stuck in the stock that’s created, and when the buyers were delaying final purchases, it was creating a big issue for the entrepreneurs. Neeraj learned that if he asks for advance payment with a slight cut at the beginning, he might be quite well off towards the end as he would not need to take a working capital loan, and would also have free bandwidth to focus on growing his business instead.

Out of all the entrepreneurs I worked with in Ludhiana, Neeraj is someone I admire for his HR practices and constant innovation. To this date, he maintains his humility and continues to build immense value for his people and his customers. Most recently, when I met him in Ludhiana, he shared with me how he is now planning for the future, to make sure that his dream of making sure that Every Child Matters lives on with or without him. For me, that’s an Entrepreneurial hero!