When it comes to business opportunities in Asia, India definitely holds appeal for Singapore companies.
It's the world's fastest growing big economy and has the largest youth population on earth. Its retail market is expected to double to over US$1 trillion by the year 2020, middle class income is projected to balloon, and its government, led by Prime Minister Narendra Modi, has pledged a continued commitment to supporting foreign businesses.
This is the story of how one Singapore-based manufacturer has discovered and reaped the benefits of India's potential.
"I saw so much opportunity in India," said Mr Raymond Tan, CEO and co-founder of The Hub's Group, a Singapore-based manufacturer of retail fixture and other retail equipment. "I had to make the jump."
The Hub's Group, whose customers include household names such as Cold Storage, NTUC, Sheng Siong and Prime, has found success in many countries in the region. It has a large factory in Malaysia, a sister facility in China, and trading posts in Indonesia, Thailand, Vietnam and the Philippines.
Expanding to the region has been part of the company's strategy since its founding in the 1990s, and remains critical to its continued survival and success, said Mr Tan who sees 80 percent of the company's revenue being generated from overseas ventures.
But it's in India where the organisation has truly flourished.
The Hub's Group has been doing business there since 2005 when they began providing retail fixture solutions to Reliance Industries, India's largest private sector company.
Reliance was, and remains their number one customer across Asia, said Mr Tan.
The Hub's Group is now focused on establishing an even greater foothold in the country.
In 2015, it formed a joint partnership with Reliable Techno, a local manufacturer, and concurrently the company started acquiring a brand new 15,000 sq m industrial land near Mumbai.
Mr Tan estimates that when the factory is completed in 2018, its production capacity will help to meet the initial India market demand. And with another 5 years, it will surpass that of their facility in Malaysia.
India, he said, will likely also become the company's largest market. "In the next 5-8 years, we are expecting a lot of growth in both market size and customers," he said.
So why India?
Local manufacturers had started to become more competitive and import duties were a continuing concern. But mostly, Mr Tan said, it was the vast market potential that sucked him in. "There are more opportunities than challenges in India," he said.
Doing business, he found, had become more seamless in the country. Though he encountered difficulties over the years, they were not significantly more prohibitive than anywhere else in region.
In fact, he felt, particularly as a Singaporean company, that there was plenty of support available thanks to multiple bilateral agreements between the two countries, including the Comprehensive Economic Cooperation Agreement (CECA) which opened up market access in a variety of manufacturing, service and financial sectors.
"No matter which country you go to, (globalising your business) is a challenge," Mr Tan said.
"Even Singapore is a challenge. But for me, those countries with the most challenges and obstacles, I feel that I can find even more opportunities there.
"Usually, these challenges are quite basic. You just need to go deeper to understand them, and you realise it's actually not so difficult."
Mr Tan pinpointed three key factors that have helped his company take root in India.
Deeply understanding the business culture and finding the right local partner was critical, he said.
As with any overseas opportunity, it's also required having the courage and willingness to venture somewhere new.
Here are Hub's top three tips for establishing a business in India:
1) Don't be afraid to ask for help:
As a vast, multicultural country, setting up and running a business in India can seem complicated to an outsider. But once you understand the nuances, policies, regulations and requirements, the journey becomes smoother, said Mr Tan.
For The Hub's Group, this meant seeking help locally. From the very beginning, the company has relied heavily on local partners and employees.
It also leaned on IE Singapore and its Mumbai Overseas Centre for assistance in getting established and overcoming roadblocks.
For years, IE consultants have helped the company navigate local rules and regulations.
When the company first started selling to Indian customers, IE helped tackle questions about taxation and other payment issues.
Later, IE supported The Hub's Group as it was establishing its joint partnership and then more recently, in the construction of its Mumbai plant.
"The initial company set-up is quite complex and IE really helps with that," said Mr Tan. "They were able to link us up with many people, including consultants, local government and banks. They also connected us to all the relevant departments, helping us apply for licenses and other procedures."
When they encountered difficulties related to the construction of the factory, IE stepped in to assist.
It facilitated meetings between the company and the Maharashtra Industrial Development Corporation (MIDC), the local agency responsible for the management of industrial estates. In February 2016, MIDC and The Hub's Group signed a memorandum of understanding which committed the agency to facilitating the setting up of the Mumbai factory.
"IE can really help with relationship-building," said Mr Tan.
IE Singapore has three Overseas Centres in India — in Mumbai, New Delhi and Chennai. These local IE contacts are well-equipped to help your business thrive and navigate through unchartered waters. Find out more here.
2) Find the right partner
For The Hub's Group, finding the right local partner in India has been crucial.
"For any new global venture, I'd want to know more about the country first," said Mr Tan. "I'd look for reliable partners, someone I could trust. But if couldn't find the right partner, I would first set up a small trading post. I wouldn't rush into it."
Forming a local partnership can help diminish some of the challenges a company might face when entering the Indian market, including financial risks and cultural differences.
IE helps Singapore companies create synergistic partnerships in India with the right people.
3) Just 'chiong'
Ultimately, Mr Tan said, boldness is a prerequisite for any overseas venture.
"When we see the right opportunity, we just 'chiong,'" he said, using the Hokkien word for 'to rush in'. "We do it first, and then think later. Of course, the basic risk calculation must be done, but if you see that there's potential, just jump."
"You must be daring," he added. "In any new country, there are going to be surprises. You have to just be ready for them."
Want to bring your business to India, but don't know where to start? Talk to IE Singapore today.
- Produced in association with IE Singapore -