Dear GKD Colleagues, It is not surprising that international corporations are interested in India given that between 300 and 500 million Indians spent more than US$30billion in 2002 and a DSP-Merrill Lynch report says that household spending will be $500 billion by 2008, with spending going up even faster than the economy which, at 7% per year, is growing much faster than the West <http://www.atimes.com/atimes/South_Asia/EH22Df01.html> and <http://www.emergic.org/archives/indi/006260.php>. A market research company here in India ranks us fifth out of 30 emerging retail markets around the world. An example is the 2 million new mobile phone connections per month and mobile phones are catching on even in large villages that are near cities. The demographics work great too. In the next couple of years, we will have 250 million people in their twenties and thirties, all getting married, having kids and buying homes and all the stuff that goes with it. Imagine a market as big as the United States with the whole population in their twenties and thirties.
Electronics companies have discovered the India market. Nokia is one of the ones that figured out how to work in this market and they sold $2 billion worth of cell phones and equipment last year <http://www.brainbox.com.au/brainbox/home.nsf/0/members/brainbox/home.nsf/$ all/9E46656B37CEF26549256EC80038A480?opendocument>. But it is not easy for foreign companies to be successful here. International companies have to change the way they operate if they want to work here. One thing they have to learn is that everything is on a different scale. You sell a lot of units at low prices. Do not think you will sell 10 packs of CDs even if the cost per unit is lower. We buy tiny quantities compared to Americans or even Europeans. So you need to find ways to sell things cheaply, like prepaid cell phone cards that cost just a few dollars. But cheap does not always win either. Products have to be reliable and fashionable. Samsung is successful at selling expensive phones because they have made their phones a fashion statement here. And we Indians love new gadgets. Two things are going to help companies make products for the poor. One is that more and more IT companies are opening research branches here in India, like Cadence, Analog Devices, Intel and lots of others. The other thing is that more youngsters want to work for themselves. Not so long ago anyone who had a high school or college degree wanted to work for the government or some big company. Now many young people are going for setting up their own companies. They design high end wireless chips or new kinds of software. I think that this combination of research outfits and young entrepreneurs will make it easier for IT companies to understand and build for the poorer communities where the majority of the population still is. If companies set these young engineers to figuring out new products and services for the poor they could come up with some great products. I did hear that Hewlett-Packard opened an 'idea bazaar' in Bangalore that invites programmers and product developers to get together to talk about new ideas for mobile phones. I have not seen it myself but it is a great example to other companies. I read a blog from an American who says he outsources his own job; he hired someone in India to do his programming, pays about 1/5 of his salary, spends a couple of hours a day reviewing the code, and the rest goes in his pocket. His boss thinks he's telecommuting. I do not know if this is true but it would be possible and if it became a trend the boom here will grow even more. This all is good for India but perhaps it does not answer the question of the Moderator, how does this make things better for the poor right now. I believe most or all the market demand I described is from the middle class and that is a huge market. But companies here will grow, there will be more jobs and people's salaries will go up (people who work in call centers or data input centers make 15 times the average salary). I think that will help the poor and will have more impact than all the foundations or community nonprofits can have, even though it will take some time. If the nonprofits and government get new young entrepreneurs to work on products for the poor, then things will go even faster. The companies can make a profit and the poor will benefit. P. Gopinath ------------ This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: <[EMAIL PROTECTED]> To subscribe or unsubscribe, send a message to: <[EMAIL PROTECTED]>. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: <http://www.dot-com-alliance.org/archive.html>
