A&S talks to Anant Maheshwari, Managing Director of ADI Asia-Pacific, about the company's decision to move into Asia, with India as its springboard. Maheshwari shares how the company's strategies were formulated and executed.
ADI decided to grow in the Asia Pacific region in 2005, said Anant Maheshwari, Managing Director of ADI Asia Pacific. "ADI started to expand its operations globally in 2004/2005 after the North American base was well established," he said.
Within Asia, ADI looked at all areas of high growth and where there were reasonably sized markets. "We shortlisted India," said Maheshwari.
"Naturally, there were other countries," he said. "We, however, started with a clean slate, eventually choosing India because of several unique factors. First, it is a geography where there is very limited electronic security in place. I estimate that around 80 percent of the installers currently in business were not present five years ago; the same is true of the vendors."
Once the decision was made to go ahead with India, significant preliminary work was required. According to Maheshwari, it took about 12 months to draw up and execute the plan.
"We had meetings around the world, first in North America where our senior business leadership is located," Maheshwari said. "We pulled together people with expertise in strategy, finance and marketing — a lot of detailed thinkers to draft up these initiatives."
Aside from the meetings in North America, top ADI managers met with potential customers in India and simply listened to them. "We placed a great deal of emphasis on listening to the customer to learn what they need in terms of distribution," Maheshwari said.
ADI also talked to potential OEM partners, including those already operating in India and those with plans to set up operations in India. "We wanted to get a complete picture of both sides of the equation," explained Maheshwari. "We wanted to come in with a value proposition that would appeal to both vendors and customers."
Whole New Game
The third set of meetings was conducted to leverage all ADI practices in different parts of the world. "The project team visited ADI locations in various geographies t o understand what we could best put together and offer to the Indian launch," Maheshwari said.
ADI management learned quickly that what it was doing in highly developed markets around the world would not work in India. "We had to evaluate various markets," said Maheshwari. "We found that the ones that were closest in terms of market characteristics and scale were those in continental Europe as well as certain fast-changing regions in the United States."
Indian market conditions differ greatly from those China, Maheshwari said. In China, the past 20 years have seen major changes and the market for electronic security is one of Asia's largest.
"Growth and evolution in India today are akin to what was happening in China several years ago," Maheshwari said. "The Indian market, however, remains small-to medium-sized. We believed that we could bring in an entirely new business model and differentiate ourselves more easily and faster. Success, of course, depended on our ability to do the job right."
There were challenges, with a business plan had to keep up with constantly moving targets. "While there are great opportunities working in an undeveloped market, you find that you have to constantly change and adapt your business plan," Maheshwari said.
A second factor was the electronic security industry has existed in India for five to 10 years, so resources were often unavailable. This was exacerbated by India's rapid growth. "The competition for resources has been extremely fierce," Maheshwari said. "If you want to hire and train the right people to serve as your representatives, you need to invest a great deal of time and energy. That is absolutely key to making sure that they are relevant to the customer."
A third issue was that ADI did not have any local benchmarks to follow. "No one had done anything like this before," Maheshwari said. "We needed, therefore, to establish our own benchmark. Everything involved a learning curve. We had to accumulate our own experience. Now that we have gone through this, we are much better placed to do so again."
The company's operations in India are already profitable. "Our initial branches are not only on track for revenue and profitability, but also ahead of schedule," he said. "We were very conservative in our initial projections. Our branches are becoming profitable in a few quarters, not a few years as were initially expected."
Insight into India
According to Maheshwari, there are 10 to 15 homegrown distributors of a reasonable size in India.
"The problem is that their operations are usually confined to one city or state," Maheshwari said.
Bringing the ADI model to India, said Maheshwari, has been of great benefit to the Indian market. "It has been very good for the customer," Maheshwari said. "Many Indian companies used to believe that distribution was not important on the value chain, and that there was no need to invest in making improvements."
"Now, other players are evaluating and replicating some of what we have done," Maheshwari said. "Some are setting up sales offices in other states; others are creating the infrastructure for customers and vendors to be able to come in to see the products and to learn how to use them. They are working to create similar platforms as ours."
ADI also provides extensive training across the country. "This is the hallmark of what we have done and are doing," said Maheshwari. "It is our key selling point and our key value proposition."
As the majority of electronic security players in India did not exist five years ago, most companies do not have the quality people or the needed backup if those individuals leave to go to other employers. "The high attrition rate is due to the intense competition for talent and other resources," Maheshwari said. 'We need to have high-quality staff that provides high-quality, consistent technical and marketing service and support."
In terms of commercial practices, Maheshwari pointed out that there are many laws in India, and rules and regulations governing taxes and labor vary from state to state. In addition, there are many different kinds of taxes from city to locality to state to national. Doing business in India, therefore, is highly complex.
"Because our parent company has a large national presence, we have the resources and the experience to comply with all of these rules and regulations very quickly," Maheshwari said. "In addition, our parent company has been a source of strong support."
ADI sill has much to find out about India and its complex market. "India changes every 12 months, and the market will definitely be a different one compared with the market that we are operating in today," Maheshwari said. "We believe, however, that with our people and all that they have learned from this experience, we are ahead of the game and in a much better shape to take the next step, to face the next challenge."