India must think big to enter China
Yapp is a 14-year old company with six manufacturing plants, employs 600 people and has a turnover of over US$ 100 million. It counts General Motors and Volkswagen as its major customers, giving it a market share of 60 percent in China’s plastic fuel tank business. Our successful collaboration with Yapp has now led us to discuss a possible joint venture for India. We invited them to India and they have met Tata Motors, Maruti and Ford India. Incidentally Ford after extensive discussions has developed its entire tooling for the Fiesta through Yapp. This will be the first time Yapp is coming out of China. Our talks with them are now at a concluding stage.
Indian companies looking to enter China must be very strong with their product line in India. It is important to have a large volume of production capacity in order to feed the Chinese market because it is the volumes that matter in China. In-house efficiencies must be at the highest level to reduce costs because cost again is very vital in China. Similarly, speed of delivery is critical since they absolutely operate on time schedule.
The Chinese are very conscious about quality when it comes to the automotive sector. They understand that they are dealing with multinational OEMs and these MNCs have committed to the Chinese people to provide cars at value for money.
The biggest challenge in China is its people. China is so vast that people’s habits and consumer psychology changes from one region to another. You cannot have the world’s best standard or system and simply place it in China. It does not work that way. You have to mix it with the local mindset and requirement. It is extremely important to understand consumer psychology and then adapt your system and strategy to merge with the business.
Communication is another challenge. However the young generation is going all out to become IT savvy, understand English, and get familiar with most products worldwide that are available. If only communication was not an issue, they would be somewhere else!
At the same time, understanding each other’s cultures can also be an issue for any company going to China or anyone coming from that country to set up shop here. In our case, we have been lucky because of our extensive interaction with Yapp for the last one and a half years. Even so, we have decided the initial team over here will go for a Chinese learning program that we will start very shortly.
We are also quite comfortable because the set of people we are dealing with at Yapp are very highly qualified and traveled out of China to complete their education. So their level of understanding and grasping power is much better. Since they would be coming to India, it is important for us to ensure that the practices we adopt in the company, where both Chinese and Indian workers will be there, will be such that it suits both the cultures.
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