India Strategy for German Mittelstand (SMEs)

1.????Selection of the right partner

Be it the joint venture partner, Head of India Operations, or market-entry consultants. Matching objectives, vision, and a suitable Mittelstand mindset are more important than only domain expertise.

2.????Sales, product and pricing strategy

India is a highly competitive and price-sensitive market. India-strategy must include

·?????Localization of products, the possibility of dual branding, pricing strategy

·?????Appropriate technology,

·?????Value-for-money, value engineering,

·?????Leveraging the “Made in Germany” brand in Industrial (B2B) products

·?????Sales Network, Regional differences to be considered

·?????Leveraging India’s advantages of low costs, IT skills, Engineering and other services, Global sourcing possibilities should be utilised while identifying your place in this competitive market.

·?????Using India as a manufacturing base for regional mid-market segments (Africa, Middle-East, South Asia) can be considered.

3.????Financial Controls, Risk Management and Managing Working capital

·?????Inventory

·?????Receivables (tend to be delayed) – being selective on customers.

·?????Cash flow

·?????Proper Controlling Systems and Reporting

4.????Having a good CRM (Customer Relationship Management) system in place (depending upon the products)

·?????Customer Conversion rates are low – keep track of potential customers

·?????Employee turnover rates are high – tracking the ongoing negotiations

·?????After-sales Services (Spares, Servicing, AMCs etc) must be actively sold

5.????Skilled personnel availability

·?????VET (Vocational Education and Training) does not have the same social status as in Germany – over-academization of education

·?????No Dual VET system. Mostly theoretical / or sandwich courses. Government and private industry increasingly understand the importance of VET – ideally Dual VET. Joining Industry clusters that are opening VET institutes.

6.????Employee retention

·?????Young and highly mobile employees. Ambitious and career-oriented.

·?????Focus on German work culture – Fewer hierarchies, empowered employees, unbureaucratic processes, respect, etc – highly appreciated and helps retention.

·?????Intercultural aspects – Understand the multiplicity of titles without change in the span of control or work content. Non-monetary benefits, pat on the back. Team members’ progress should be real as well as visible.

·?????Branding of the companies, Digital presence

7.????Dealing with Moral Hazards

·?????Discretionary powers of Government officials are progressively reduced. However, corruption still exists. Not falling prey to quick-fix solutions. Establishing direct contact with senior government officials, Taking support of industry associations like CII, FICCI, ASSOCHAM or local chambers.

·?????Many companies undertake CSR activities jointly with Government departments.

8.????Develop Trust

Intercultural training for your India-support team in Germany, as well as your Indian team members, is a must. Understanding German concepts of deadlines, commitment, process orientation etc, and Indian traits of flexibility, creativity, agility, customer satisfaction, and risk-taking, can be better leveraged with the training.