Chinese, Indian firms build new models

06 September 2012

NEW DELHI: Companies like Mahindra & Mahindra, Neusoft and Godrej are in the process of establishing a new blueprint for success in India and China, research by the Boston Consulting Group has argued.

According to the firm, consumer spending in China and India will hit a combined $10tr by 2020, roughly three times the current total, as demand rises for everything from cars and computers to food and healthcare.

"Speak to entrepreneurs in China and India, and you'll soon hear that they think about strategy in a strikingly different way," its study said. "They believe that when growth is this dynamic you need to be faster, more creative, and more willing to learn as you go."

Mahindra & Mahindra, the Indian group, is one such operator. It has acquired a Korean automaker, several IT firms and aerospace assets. It also trades in sectors from real estate to small tractors, where it has a lead role in China and a 20% share in parts of the US.

"If you had looked at us ten years ago, and if I had said that we would grow from $1bn to $14bn, no one would have believed it," Anand Mahindra, chairman and managing director of Mahindra & Mahindra, said.

"Yet that is what we have accomplished. In ten years' time, we want to be one of the 50 most admired brands in the world on the basis of metrics that are both quantitative and qualitative."

Another example is Neusoft, the biggest IT software, solutions and services firm in China, which has seen sales rise by almost a hundredfold since it went public in 1996, when it posted revenues of $7.5m.

Liu Jiren, its founder, has also developed three university campuses in China, the largest of which boasts 14,000 students, studying subjects from computer science to digital arts and foreign languages.

"We are not China's IBM or Microsoft. We have our own business model," said Liu. "It is my dream to have a legacy of students with the ability to innovate, create new businesses, and compete on a world scale."

Returning to India, BCG also name-checked Godrej, a conglomerate active in categories from consumer goods to chemicals, and which has logged sales growth from $25m to $3bn in the last four decades.

"We have had much success," said Adi Godrej, the organisation's chief executive. "But there is much to do – many, many more opportunities to conquer."

The company has recently announced its "ten-by-ten vision", a plan to become ten times bigger in the next decade. Godrej suggested that India is at a "tipping point", making this objective viable.

"I don't look at it as an unachievable goal," he said "But it's going to be tough, and it's going to need not only strong strategic thinking but also excellent execution."

Data sourced from Boston Consulting Group; additional content by Warc staff