Important Success Factors for Doing Business with and in India

/Important Success Factors for Doing Business with and in India
  • Dr. Jana Helbig: Business India

Author: Dr. Jana Helbig | Managing Director | German Centre Delhi.Gurgaon

First published in M+V’s India Insight in December 2016

When it comes to dealing with Indian business partners or investing in India, most companies see the plain numbers first. These numbers may either appear to be very impressive in terms of potential customers or may sound very attractive in terms of the rather lower costs of production in India. Of course, companies also evaluate potential bottlenecks and business risks such as an inefficient infrastructure, the Indian bureaucracy or the degree of corruption that companies may face depending on their industry. However, in daily business, it is often the soft factors that determine how successful a company in India is. No business is decided by its plain numbers alone. It is the people and the relationships in a firm that define the success or the failure of a company. In general, there are a number of cultural differences to consider when dealing with Indians and the Indian mindset.

First, there is the importance of proper hierarchies and hierarchical structures within an Indian firm and with stakeholders in India. These hierarchies need to be first established, they need to be properly communicated within the firm and externally on business cards and, most importantly, these hierarchical structures need to be followed in daily business. For many, it is puzzling how the hierarchical thinking in India affects many parts of a company’s business; for instance, the chain of command within a company, the importance of organizational charts, people’s preferences for brands or on how to deal with employees, business partners, colleagues and public administration.

Second, there is the importance of close guidance, monitoring, and even direct control of Indian employees and business partners. In German companies, less control by the manager is preferred by employees. Indian employees rather feel appreciated when working very closely with their manager. This includes detailed instructions to employees and even business partners, constant repetition and reminders, and role conformity of employees. Often, it may also include a certain lack of self-initiative or, in connection with hierarchies, the avoidance of asking for clarifications if something is not understood. Control is also highly connected to the importance of clarifying and monitoring the expected workquality of employees and business partners in India. German quality standards cannot be expected in an emerging market- in products or work outcome. Expected quality standards  need to be taught by German headquarters and constantly monitored.

‘Jugaad’ is another interesting and often frustrating concept for foreigners in India. Jugaad refers to the strategy or actions on how to cope with the often erratic daily life in India and how people resultantly organize themselves. Jugaad is the concept of flexibly working around upcoming tasks or difficulties and finding new and creative solutions. This can be very positive because it is real ‘outside the box thinking’ and results in new solutions and innovations. But, often the solution is rather a short-term working around and not a long-term concept. Furthermore, the personalized relationships and close networks with all external and internal Indian stakeholders of a firm can be rather difficult for German business people. In India relationships and knowing someone are taken to a wholly different level. The simple reasons are the sheer size of the country and the lack of institutions that establish trust in unknown business partners.

In Germany, for instance, there is a trust in a sufficient legal system to solve late payments within an appropriate amount of time. Or, business partners can be checked beforehand with a number of business agencies. As full information about potential business partners is less available in India, trust is established via personal contacts and longterm relationships and recommendations from contacts. A myth about India is that all communication is indirect and that Indians avoid to communicate clearly. Communication always depends on the context, i.e., communication can be very formal and indirect but in other contexts communication is very direct. Regardless, foreign companies and expats in India should keep in mind the often emotional tone used, conflict avoidance, and the need for harmony of Indian employees and stakeholders. Indian employees are differently motivated to employees in Germany.

Whereas many employees in Germany value work-life-balance, Indian employees value harmony in the workplace, and salary is a big motivator due to the overall economic development of an emerging country like India. Overall, important success factors for doing business in India are the stamina and the commitment of the decision makers as well as the personal characteristics of the involved key personnel in both countries. In-house trainings of the local employees and the establishment or assignment of an expatriate in India are very important. Apart from these, understanding and adapting to local business and management practices, as well as building and maintaining personal contacts and networks, are highly advised.