Professor of Marketing at the Goizueta Business School, Emory University, Jagdish N Sheth, was in India last week to explore the possibility of starting a training company in Delhi. He, however, maintained that it was too early to talk about the project.
But the marketing wizard, who taught at the University of Southern California, University of Illinois as well as the Massachusetts Institute of Technology, discussed his assignments on building countries as brands.
Talking to Shuchi Bansal, Sheth explained why Indian companies could not build global brands.
What kind of work have you done in the context of countries as brands?
I have been working with the Singapore government since 1988. Recently, the governments of Turkey and Egypt also invited me. But advising countries is not a private practice. It is done free of cost.
The Singapore assignment was less about branding and more about positioning. Initially, Singapore was a manufacturing hub and it did a great job. Later, we realised that it cannot sustain manufacturing as labour was not cheap any longer. It had neither any raw material nor a large domestic population to consume the products.
So I suggested that Singapore should become a distribution centre and focused on the "four flows": flow of products, money, people and information. The sea port was built for improving the flow of products while the Changi airport brought in loads of traffic. Now the focus is on the flow of culture and education.
Turkey has its own problems. The country has to integrate into the European Union. Its dilemma is whether it can bridge the gap between Europe and the Islamic world. It does not want to project itself as an Islamic nation.
What about India as a brand?
The India brand will evolve on its own rather than any government proactively managing it. The advantage in Singapore is that the country is run by very highly paid bureaucrats: they are the decision-makers. In India, you deal with the ministers.
But the India brand will evolve through what we do outside the country. India's biggest ambassadors are Indians who have gone abroad. Nearly 50 large corporations in America have CEOs of Indian origin. The India brand will happen through people rather than through products.
Why have Indian companies not produced global brands?
The primary reason has been government policies. During the licence raj the capacity was limited. For exports, you had to set up a separate unit. The domestic and the global markets were not allowed to mix. In the old business model, you remained domestic and diversified into as many industries as possible. That model has now collapsed.
India also had a shortage of capital and to expand globally you needed a significant amount of money. Besides, we did not have scale. The economy was organised a lot more around the unorganised sector. Even today, the unorgnised sector is big.
For instance, the top three brands in India's luggage industry, namely, VIP, Safari and Aristocrat produce only 35 per cent of the total moulded luggage. The remaining 65 per cent is in the unbranded sector. But all this is changing now.
Which Indian brands are likely to become global?
Amul is my favourite. It must aspire to become a global brand. The quality is as good as anywhere in the world. But advertising in the US is expensive.
To introduce an FMCG brand in America today, you need, at least, $75 million to $100 million. Then there is the slotting fees in the retail stores. So the strategy is to get into the distribution system.
Wal-mart is pretty much open to sourcing from India. For a brand to become truly global, it should be consumed by the Americans, British, Germans and Japanese and not just the Indian diaspora.
Tata Tea is another potential global brand. So far, Tata Tea is for India, and Tetley for the British. Why not have both the brands all over the world? We can do exceptionally well in soaps and ayurvedic products and herbal medicines. So a brand like Dabur could become big.