“Chinpressions” – Impressions from another of my China visit – Part 3!!!

It was about 3 years ago that I made my 1st visit to ChinaShanghai and wrote the 1st part of Chinpressions. Read here. In between that and my last visit this week, many more visits to China happened. Ergo, 3 years hence what are my impressions?

The visit this week coincided with Narendra Modi’s another foreign tour – this time to China. So obviously India was in the news. As is the wont these days in our PM’s abroad visits, he was in “Rock star” mode in China as well with local Chinese craving and crowding to take selfies with him. It’s obvious that in the last 1 year Modi has single handedly changed the perception of India for the better outside of India.

I had mentioned that in my last post that Shanghai was devoid of emerging market symptoms like touts at the airports,… I realized now that it’s not the case. There were the touts on arrival at the airport chasing you for taxi/hotels,… just that they were of the “suited and booted” types 😜 😜. Similarly I had the impression that Taxis were on meters always. Well, yes most of the times. But not always. This time much to our chagrin, we realized that beyond 10 p.m the cabbies were upto fleece passengers demanding 4 to 6 times the normal fare!!! While on cabbies, I couldn’t understand why the driver was always enclosed in a cubicle of sorts making it difficult to communicate with him/her even in sign language. (Trying to communicate in English is a horror left unsaid 😦 😦 )

For all the heavy duty infrastructure and the investment led growth strategy Chinese government has been adopting all these years with a fair degree of success, it is now clear that the growth is stuttering.  A 7% growth is being touted as the new normal. Print media is agog with articles questioning if the world’s 2nd largest economy is heading towards a protracted period of subdued growth.  China has now become the latest example to explain the Economics theory of the Middle Income Trap”

It’s clear that despite the pretensions of the Government taking China to being in the league of developed nations, it is still haunted by a few trappings of developing/underdeveloped countries. Which the people are yet to shrug off it appears.

  • Like the locals not caring about courtesy to others and smoking to glory in public washrooms.
  • Like the drivers continuing to smoke while driving in cars inspite of requesting them not to. (Blame the language)
  • Like invariably the noisy scenes you get to see in restaurants when Chinese get together to dine and drink. (Something like we Indians I must say).
  • Like the rounds of bargaining one has to do some times starting with 10% of the quoted price to purchase stuff mostly the imitations at the fake markets hawking branded stuff from I phones to watches to bags to clothes to everything. China’s tryst with IP regime may prove to be its Achilles heel sooner or later. Just couple of days ago while in China I read the news that top brands like Gucci were suing Alibaba the E-Com giant for sale of counterfeits through its marketplace.Like getting to see touts trying to sell I Phones at US$100 around to gullible passengers even inside the Shanghai’s Pudong airport terminal!!! I was surprised to see these guys inside the airports after the Check-in Area moving around looking for their customers!!! (This doesn’t happen in India even)
  • Like being amused to see empty chairs placed in sides of the road meant as parking lots. Something like placing the chair to reserve that lot. Reminded me of our Indian habit of placing towels/kerchiefs,.. in buses to block seats 🙂
  • Like for all the fascinating sights at “The Bund” at Shanghai (Clean, colourful, Hawker free,..,…) the urinals are still the old world style not seen even in towns in India these days.
  • Like finding grills in windows in residential apartments a la India type just that they were more uniform and still not spoiling the elevation of the building unlike in India where grills of all types and sizes spoil the frontage of most buildings.

Most of the above fall in line with the definition of “High Context Culture” as defined by Edward T. Hall in his seminal work – Beyond Culture, I feel. So not surprising.

But, these are just symptoms waiting to disappear soon I guess. Despite the current ills like ever rising labour costs, China continues to be the factory of the world. Global companies don’t have an option but to court the Chinese. Like Apple’s Tim Cook was attempting to do when he was in China last week logging on to “Weibo” – the Chinese microblogging site akin to Twitter. (Modi did the same on his run up to his China visit). The ever increasing aspiring class is a segment of the world’s largest population that just cannot be ignored.  But one thing which continues to amaze me in China even after being the world’s largest populous country is – Where are its people?? For example in Shanghai the world’s most populous city – you don’t get see crowds in the roads, in the malls, in super markets, in train stations,.. So where are they???

Let’s see if that mystery unravels in the next visits.

3 years hence, the impressions are still very good but may be the shine has worn a little bit.

 Postscript: Heard that the PM’s baggage on foreign tours will now have a “Selfie stick” 😜 😜

Sir, a Plus budget!!!

In India, come Feb, it’s time for the release of the mother of all blockbusters – “The Union Budget”. While even the blockbusters of the Khans are just in the vicinity of few 100 crores, this one flies in the space of thousands and hundreds of thousand crores. Isn’t it interesting, that the whole nation awaits with bated breath to find out how the Govt. of the day is going to spend “it’s collective” money in the next 1 year??? So too I was yesterday, when Arun Jaitley the Finance Minister rose oops sat down to present what I would think as one of the most significant budgets in recent years for our country.

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Since yesterday afternoon, we have been fed with hours and hours of programming in all current affairs channels with experts dissecting the budget. After having gone through these boiler plate stuff for so many years, I get a feeling that the reactions are mostly pre-determined irrespective of the content of the budget. As in, the verdict on the budget is along expected lines. Panelists from the ruling front sing panegyric paeans on the budget while those from the opposition usually sing the “disappointing” tune rather petulantly :(. Also for experts. For those with leanings towards the Govt. of the day, it is a transformational budget and for those in the other side of the divide it is “trashformational”!!! And for CII – any budget is a 9 on 10 budget!!! This satirical piece – Budget Criticism 101 from The Unrealtimes I feel is not a satire at all but the Annual reality 🙂 🙂 . So I thought why not analyse the budget through a normal aam admi prism devoid of any ideological/political tilt?

As a responsible tax paying citizen of the country, I look for the foll. In the budget:

  • Does the budget spell out initiatives which can fuel growth in the Indian economy? Overall Economic growth brings in investments, increases jobs for all, raises salaries,…,…
  • Is there any transformational/game changing idea (or is it Big Bang) which has longer term impact for the country? – Like De-licensing, Gram Sadak Yojana, Aadhaar, GST,…,…
  • India is notorious for its archaic regulations and laws. Is the Govt. doing anything to make life simpler for doing business – local or foreign?
  • What’s in it for the poorer sections of the people – which is still significantly big in our country?
  • Finally what are the signals being sent by the Govt. of the day?

Looking at the Modi-Jaitley budget from the above perspective, my sense is that they have presented a “Smart” budget. They know very well that the expectations of all sections of the people are very high and had to do the balancing act to appease everyone. At the same time, elbow space for tough decisions is only available in 2015 and 2016. Beyond that the Govt. gets into re-election mode.  It appears to me that, from whole lot of things they need to do (which they have promised) they clearly prioritized the ones which needed to be attended to in this budget. And put off a few for the future. And I feel that’s the way to go.

  • The budget indeed brings in focus back to economic growth without being apologetic about it. Focus on infrastructure, Corporate Tax cut, Job creation,.. signal that.
  • Though there are no new transformational ideas in this budget – to be fair to Modi – he didn’t wait for the budget to announce a few. Ideas like the Jan Dhan Yojana, Swachh Bharat Abhiyan and Make in India – all transformational ideas were kicked off last year itself. This is a welcome sign. Finally GST gets a final deadline.
  • Cleaning up gets a lot of attention. Whether it is Swachh Bharat, Clean Ganga or for that matter Black money cleansing!!!
  • The Universal Social security net for all Indians is an interesting initiative. That it is through the insurance route comes as a relief. Otherwise India could end up suffering like most of the European economies with very high long term liabilities.
  • The Govt. has clearly for this year atleast prioritized on domestic investors rather than foreign if one looks at the introduction of SETU fund …and no major FDI relaxations.
  • The pandering to salaried class interests with more income tax cuts or other gimmicks have been I guess postponed for years closer to 2019!!!
  • Again things like flowing money to Smart Cities, Digital India are on hold in this budget. Means could tap the private route for these initiatives or will be taken up in the coming years when tax collections are more buoyant with better economic growth.
  • I see a lot of critiques on the increase of Service tax rate from 12.6% to 14% which will overall shrink our wallets. But I think this is a clear attempt to prepare all of us for the introduction of GST which will be at a higher rate of may be 16%!

Any budget proposal will have its share of misses. And there were a few in this too. However overall, I think it is a Smart, Working, Balanced budget which sets the tone for the economy to grow in the coming years. Taking up a few important issues and implementing them is better than announcing a slew of initiatives and outlays and messing up the outcomes. So in that sense Sir, it is a Plus budget!!! And I guess the FM scored well if not a centum!!

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India has indeed reached a sweet spot. We must now be in a hurry to change its status from #WorkinProgress to #JustArrived!!!

Deciphering the cAAPital Verdict!!!

IMG_1357Modi loses capital” screamed the headline in The Economic Times the day after the historic victory of Aam Admi Party (AAP) in the Delhi state elections. Not only the ET, but across the board the post-mortem narrative in the media by and large has NOT been about AAP winning but Modi getting thrashed. It almost seemed like for a man who cannot do anything wrong since Sep 2013, suddenly it is rigor mortis. Since the ascent of Narendra Modi as PM, for the main stream media, even a local body election has been a referendum on Modi’s Central Govt.  Even after wading through the muddy waters in Haryana, Jharkhand, Maharashtra and even J&K fairly successfully, the “Blow to Modi” war cry finally returned when the AAP Tsunami hit BJP in Delhi.  There is no empirical evidence to show that Delhi voted for AAP as they didn’t like Modi’s performance so far at the centre. But then media’s narrative in India is seldom based on logic or ground realities. The only empirical evidence we have ( a post poll survey conducted by CSDS for India Today group) actually points to the fact that though Delhi voted overwhelmingly for AAP, more than 60% still gave a thumbs up to Modi as PM and his Govt..  For the media it is almost unfathomable that Delhi could vote smartly by opting for “Modi + Kejriwal Combo”!!!  In fact this sub text emerged during opinion polls in Delhi during Lok Sabha Elections as well, but that got drowned in the overall din. While all criticism of Modi and his Govt. of 9 months are not all misplaced, some of it are clearly over the top. Let us look at some of the uncharitable ones:

  • “This verdict is against “Hubris” of Modi and the Modi Govt.

In leadership, it’s only a thin line which separates arrogance and being decisive. In the last 10 years, we took our earlier PM, Dr.Singh to the cleaners for being an epitome of indecisiveness. If one reads Sanjay Baru’s ‘Accidental Prime Minister’ – a tell all tale of India under UPA-1, it’s clear why and how “policy paralysis” as a result of Dr. Singh’s tentativeness pulled the economy down to the rubble. In the last few months we have seen this Govt. taking a lot of firm decisions (like transfer of secretaries, calling off talks with Pakistan,…) and they if viewed through a cynical prism may seem arrogant. It’s still not clear on how many occasions Modi or the Govt. have taken decisions which were supercilious. If this conclusion is because of things like the ordinance route the Govt. took to pass some legislations, then there is another way of looking at it. This has also sent a strong message all concerned of the Govt.’s intent and urgency to get things moving on the mining sector and land acquisition,… which have been issues impending economic activity in the country. While on this, I would agree with critics that the Govt. could have been more benevolent and offered the Leader of Opposition post to Congress instead of being churlish and probably could have given the Hubris tag a miss!!!

  •  “Modi has been focusing too much on foreign affairs”

It is a well-known fact that since the slapping of the retrograde retrospective tax, India had fallen off the foreign investors’ radar.  Far from being a potential “Break out” nation, we suddenly became a “fallen BRIC”! So for any new Govt. seeking to put India back on a high growth path, it was imperative to turn around the sentiments and send a signal that “India Means Business”. And that can happen only if the top leadership is seen making the commitment. Critics also say that he should focus on getting the confidence of the Indian investors first rather than those outside. Once again, it will be worthwhile remembering that the flow of the Rupee follows the flow of the Dollars.  If foreign investors starts investing in India, the Indian ones start following the script.  For instance,when the Carrefours, Walmarts, Metros, Woolworths started pouring dollars in organized retail in 2007/08, all the Big Indian groups like Birlas, Ambanis, Tatas,.. followed suit.  So it made absolute sense for this Govt. to reach out to the bigger economies like Japan, China and the US with a sense of urgency to showcase the climate change. And to a large extent it has succeeded. At the World Economic Forum in Davos in Jan, the buzz around India was back after a hiatus.

  • “This Govt. is all about “Show-baazi”

If one is talking of the hype around programmes like Make In India, Swachh Bharat Abhiyan, Jan Dhan Yojana,.. then the critique is utterly misplaced.  Any programme has to be conceived well, communicated well and implemented well. Make no mistake. It’s just one word which separates “Hype” and “Hope”. From a positive hype, emerges a hope for results. And believe you me, the strong messaging around these programmes is what started giving hope of a Govt. which functions. It may well happen that some of the programmes may fail or may not yield all the desired results. But then you cannot blame the Govt. for not trying. At the end of the day, the Govt. has to function and more importantly it has to be seen as functioning.

It’s not my intention to turn this post to an unending paean on Modi and his Govt.. There indeed have been few false steps which could have been clearly avoided.

  • “Failure in controlling food inflation”

Though the head line inflation as per pink papers has come down, for the aam admi, price of vegetables and food items has never come down. And so far I have not seen any serious attempt by the Govt. to do anything about this. Supply side bottlenecks continue. In fact, the PM must have taken this as a mission and gone after this from day 1. In the coming days till the economy takes off, this will be a nagging issue in the minds of the public.  To give an analogy, in Tamil Nadu, inspite of the fact that the Govt. is being run through remote control, there is visibly less disgruntlement (atleast for now). One big reason being the opening of ‘Amma Canteens’ which disperse food at economic prices. I don’t think there is any other state in India today, where one can have a decent full day meal for under Rs.20. In TN, you can, if you choose to eat in Amma Canteens. So much so, the Saravana Bhavans and their ilk had to cut their prices in order to compete and maintain their market share. Some food for thought this.

  • “Ghar Wapsi of Kaala Dhan”

In the run up to the Lok Sabha elections, I tweeted – “We will ensure India wins the World cup in 2015 – The only promise Modi has not made so far”!!! Among the slew of promises Modi made in rally after rally, bringing back Black money stashed abroad was one significant and at the same time silly I reckoned.  This business of Black money stashed abroad in banks illegally,.. is mired in a complex vortex of Global Drug mafia, Arms trade, High level political Corruption, Tax evasion,…,… in which many countries and their Govts. are willingly complicit. So the SIT and Enquiry commissions will keep spending months together (as they have been doing in the past) without getting anywhere. On the contrary, the Govt. could have focused on the Black money racket within the country. I would be surprised if the people in the Govt. don’t know that the Real Estate business in India is a haven for black money! Why not a regulator for that sector in the lines of IRDA or TRAI or SEBI first instead of going after Ghar wapsi of Kaala Dhan in vain?

  • PM not reigning in the fringe elements of the Parivar

It was completely expected that when BJP came to power with a majority, it will see the emergence of the fringe elements sooner than later. What is surprising is that the PM who tactfully handled and silenced these in Gujarat didn’t anticipate and have a pro-active plan this time. Like for example, identify the louder elements and put them on some activity trap like “Spreading the values of Vivekananda”,.. in countries abroad using some NGO front organization. They will also feel important to roam around in exotic locales abroad and at the same time you are silencing them in the country. This will ensure that there are minimum distractions. Otherwise a distraction a day will keep the Govt. at bay! We saw this during the last parliament session.

Outside of the few blips I have outlined, there has been a lot going for the PM and his team. Like getting the right people in Key ministries unlike Dr. Singh who was constrained on this, being different and creative in his approach like getting the state CMs to attend the meeting of Mission heads recently pushing Mission heads to focus on getting Dandha for the country, setting up NITI AAYOG,…,…. So it is my opinion that it is utterly malicious for the commentariat to see the “cAAPital Verdict” as a manifestation of the dissatisfied voice of the Nation! This argument can’t get more specious!

When quizzed about this Govt. in Dec I think, Arun Shourie quoting Akbar Allahabadi said, ‘Plateon Ke aane ki Awaaz toh aa rahi hai, par khaana nahin aa raha!!!’ (The sound of the plates can be heard, but the food doesn’t seem to be coming!!!).  One hopes that in the Budget and the days after the Govt. puts the Delhi shock behind and stays the course on its Pro-Growth promises made so that people get to smell and eat the food as well.  That will keep the mouths of the critics busy in chewing the food rather than spitting venom on the Govt.!

Postscript: Same time last year, when Arvind Kejriwal resigned as CM, I wrote this piece – “The loud Wake AAP call”. Read here. Looks like both the aam admi and the AAP heard the wakeup call loudly that time and today are out of bed and on their way to office while the BJP, got up and hit the snooze button. Well, the Congress has not yet heard the wake up thud and has adjourned itself Sine Die!!!

Now running successfully worldwide – “India Sorry”

In the corporate board rooms of many multinational corporations the “India Story” which was weaving itself has now given way to “India Sorry” with accompanying pathos.  The overwhelming feeling is of a wholesale deprivation of the aspirations of the talented Indians by their political masters. “Incredible India” is desperately ‘in’ need of a ‘credible’ script, actors, technicians and the works. Flash back to the 2003-06 time frame, thanks to the easy money flowing in from the developed markets to emerging markets that included India, the markets were on fire. Pundits and others claimed that a GDP growth of 7-8 % is the base line rate of growth, come what may and if Govt. and administration did its bit (and If China gets to host events like Olympics 🙂 ), we could head towards 9 – 10 % growth.  The party was briefly interrupted by “the Lehman shock” the tremors of which shook the world – developed, developing and others. I say briefly because within a year or so markets like India and China not only recovered but were again breathing fire. This time the stimuli announced by developed countries like the US, Germany,… injected funds into the monetary system and once again easy money found its way here.  This was when the “India Story” was running full houses worldwide.

I recall seeing and hearing of many multinational companies having their Board meetings in India that time. Expansion plans for global companies seldom excluded India. Forex reserves were booming whether it was thro FDI or FII money. If you look at it now, that kind of over the top India focus and fuss became detrimental to India’s future. For, the rulers(UPA-I) started imagining and talking of India which is “decoupled” from the world without realizing that if structural reforms are not put in place, the “India Story” will turn apocryphal when the flow of easy money stops. And that’s exactly what happened. This is explained beautifully in Ruchir Sharma’s book –“Breakout Nations – In Pursuit of the Next Economic Miracles”. While he analyses many emerging markets and gives his verdict, as far as India is concerned his verdict is a 50:50 chance for India to breakout. I suspect that his own patriotic “Indian at heart” feeling came in the way of saying that the chances are pretty dim for India to become a breakout nation. Ruchir also says that we will have to get used to the “New Normal” of Pre 2003 GDP Growth which is 5.5-6%.

My own sense is that if India had focused on Governance, the situation would not have been as bad as it is now inspite of the global liquidity party getting over long while ago.  However in India the politics of economics is a deadly game. So instead of focusing on Governance, the Govt. headed by a Cambridge educated Economist was economic in Key decision-making and thereby introduced “policy paralysis” in the lexicon of the opposition/Industry and corporate reviews. Many observers are in unison when they point out that the Union budget presented by the present President of India in the year in the year 2012 as finance minister was the tipping point that led to world relegating India as a foot note in their strategy documents. Pranab Mukherjee amended the Income Tax Act, 1961, to impose a retrospective provision for tax on some types of global mergers, including Vodafone’s 2007 acquisition of Hutchinson’s assets in India. Even for a lay man it is difficult to fathom how somebody in the Govt. can think of passing an amendment with retrospective effect when companies have taken decisions to invest based on prevailing laws of the land.  That this controversial provision passed through the FM, the bureaucracy and even the PM is till today a shocker for me.  From then on it’s been a downward climb with downgrading of ratings, pulling out of money, slowdown in investments, falling off the Rupee,..,..  India got demoted while Pranabda got promoted 😦 😦 To compound to the situation, delay in environmental clearances for new projects, banning of mining, Telecom imbroglio, corruption charges all this made Indian investors to look for avenues outside of the country to invest.

As a rearguard action, Chidambaram was brought in as the Finance Minister to succeed Pranabda and frankly speaking he has been trying his best. The decision-making wheels in the Govt. have started moving. The “Rajan effect” has been just short of magic. From the time Raghuram Rajan was made the Governor of RBI, there has been some great things happening in the economy the most important being the strengthening of Rupee.  But the “Sir Newton effect” has been overpowering. Newton said “For every action there is an equal and opposite reaction”. So the reaction from the world now is of a wait and watch.  With the Government in the December of its term, it makes little sense to investors and others alike to jump into the fray. For them it makes more sense to wait and see if India presents a credible and durable “Change” come 2014.

And it is not just the world which is looking for a change in India but even within India the mood is the same. Though it is still not clear what the opposition’s clear economic agenda is, Narendra Modi the PM candidate for BJP is attracting attention all over.  This can only be due to an overwhelming yearning for change. If that change happens, it will be interesting to see how they tackle the economy differently. Yashwant Sinha an Ex and potential finance minister in his book calls himself a “Swadeshi Reformer”. As oxymoronic as it sounds, except for opposing what the Govt. is doing, even he has not yet spelt out clearly BJP’s stand on key economic reforms.

Shankkar Aiyar a reputed columnist in his book “Accidental India” says and I quote “It would seem that everything the country has achieved has arrived by accident, catalyzed by calamity”. Turning points in the country like the liberalization of 1991,.. as per him “were not the result of foresight or careful planning but were rather the accidental consequences of major crises that had to be resolved at any cost”. For quite some time now I was of the same opinion but dismissed it as a streak of a cynical Indian. But reading this fantastic book has confirmed my worst fears around policy making which is by nature reactive rather than proactive.  As the country is in the throes of another economic crisis if not collapse, we await another “accident” which will bring the “India story” back to the global theatres. Till then it looks like there is no escape (velocity) 🙂 🙂

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Also pls. read my earlier post on reforms “The Politics of Reforms” written in Sep 2012 –  http://wp.me/p1dZc2-bQ

The Economics of “Refill”

In all probability you must have seen this.  An Indian scientist is explaining to a group of Indian visitors what seems like a visitor’s gallery in NASA about the most ambitious project of NASA“JUNO” a spacecraft to discover Jupiter’s secrets.  At the end of his brief, he asks the group if there are any questions. Up goes a hand and the man asks nonchalantly “Kitna Deti Hai” (How much does it give – mileage?)  The scene cuts to the scientist who is flabbergasted by the question. The commercial closes with a voiceover which says “For a country obsessed with mileage Maruti Suzuki makes India’s most efficient cars”. This is one in the series of ads being aired by Maruti with the same theme to drive home the point concerning the obsession of Indians with mileage when they look to buy cars.  Here’s the link to that commercial.

The scientist who is shown as an Indian should not be so astounded after all. Because an average Indian consumer who apart from looking at the price of a product is programmed right from his childhood to also look at its running cost over a period of time while buying any product.   Hence this obsession with mileage as far as car is concerned and may be a space craft when he decides to buy one.   The importance of the “cost of using” a product (let’s call it ‘running cost’ to keep it simple) is not limited to cars alone.

Till I was in school, I was using a fountain pen in which the ink can be refilled and used for a long while.  I ‘graduated’ from using a fountain pen to a ball point pen ‘when I left college’. This can be used for eternity by just replacing the “Refill” once the ink is over.  Though the ball point pen as such costed few cents – we were told that it should NOT be ‘used and thrown” but refilled and re-used again and again.

Welcome to the “Economics of Refill”.  Welcome to India.

Between “Use & Throw” and “Refill & Use”, the vote of the Indian consumer is always for the 2nd one.   So you have refill solutions for almost all categories – In Fast moving consumer goods (FMCG) category  you get refill sachets for dishwashing liquids, mosquito repellants, room fresheners, cleaning liquids and the like.  In appliances – we are keen to know what the power consumption is because we are concerned that the electricity bill should not detonate in our face after we start using the product.  Moving from consumer to business category the story is not so different.

In my own long enough experience of selling printers in India, I’ve seen that the 1st question the trade asks when you talk of a printer is “Refill hota kya”? (Is this refillable?) And if your answer is negative, you can knock off one high potential emerging market from your pursuit list.  So you have the Dot Matrix printer ribbons being refilled with inked fabric, Inkjet cartridges of Inkjet printers being refilled with Inks and Toner cartridges of Laser products being refilled with Toner powder…  Akin to “Kitna Deti hai” in cars is the question – “Running cost kya hai” (What is the running cost?) in the printer industry.  . So much so, few years ago when we were planning to introduce a label printer which produces High quality labels which are long lasting – though the price of the printer itself was quite affordable we were continuously faced with the question of “Cost per label”!!!    Here we are talking of a label printer which can produce labels of such high quality that they are dust proof, impervious, chemical resistant, heat resilient so on and so forth and the 1st question which pops up is “All that is fine. What is the Cost per label”?  We had to change the narrative of the product from “Cost per label” to “labels for life” to be successful.  Succeeded we did, but it took a lot of sweat.  This question of “Cost per label” was not so commonly faced by the company in other markets it sold this product before.  Similarly in developed economies like US and Western Europe, I understand that the toner doesn’t get refilled by cheap refill vendors.  (There is an organized refurbished toner market though)

There is a common notion among foreign companies that consumers in India want cheap products (means products that cost as low as possible) and don’t care for anything else.  And this notion is continuously flagellated while arriving at product as well as pricing strategies. Well this view can be off the mark by the width of the Indian Ocean.  An Indian consumer while is certainly cost conscious also looks for lower running costs which includes recurring costs on usage like power consumption, consumables cost, maintenance costs, fuel costs, .. depending upon the type of product.

With this “refill psyche” in our DNA, look at the contribution we are making to a greener planet!!!  “Use & Throw” generates more plastic than “Refill and Use” isn’t it?

So companies looking to script a success story in India or an emerging market are well advised to introduce products which follow the “Economics of Refill” wherever applicable.

“While on this, don’t miss to read – “Characteristics of Emerging Markets and the Opportunities They Create” by Kamini Banga and Vijay Mahajan.

Post script : In villages, you can hear the phrase “Kitna Deti Hai?” actually in reference to “cows” when they are being sold in the market – meaning how much milk does it give in a day !!!  So the cow which gives a very high “milkeage” becomes a “Cash Cow”!!!