Given the trade tensions between the United States and China, there is a good window for India to explore the possibility of replacing Chinese exports to US in some sectors. The US is looking to replace Chinese exports with Indian products in at least seven product lines, including toys, stationery, cables, electronics parts, vulcanised rubber, footwear and kitchen accessories.
With the US trying to reduce its trade deficit with China by increasing duties on Chinese products, this has opened up opportunities for Indian firms to increase exports to the USA.
BestMediaInfo.com talked to industry leaders and brands to understand how prepared are Indian brands to enter the US market and what could be the possible challenges, especially in advertising/marketing, given the whole different consumer set.
"After China, India has the ability to match the scale and quality to fulfil the demand in the US markets. Currently, domestic consumption in India is muted, and if companies are able to tap this opportunity to help boost the export sector, while not directly, it will help improve consumer optimism and benefit advertising spends in these sectors â especially digital advertising, including search and performance marketing," said Anand Bhadkamkar, COO, South Asia, Dentsu Aegis Network.
âTill now most of the Indian brands have been focussing on domestic consumption and do not have the wherewithal to look at international markets. However, with domestic consumption on a slowdown, they would be left with no alternative but to seek growth from outside India. Hence they should look at this as a golden opportunity and build their systems/processes to capitalise on this,â said Sandeep Verma, President, Bajaj Consumer Care.
However, according to reports, the demand has to be met within five to six months. Given the short time, isnât this equally a challenging task for the brands that are eyeing the opportunity?
When sudden demand gets created, capacity is a big constraint. If any SME player had unutilised capacity, they can quickly produce to meet the increased demand, said Pranesh Mishra, Chairman and Managing Director, Brandscapes.
Jagdeep Kapoor, Director of Samsika Marketing Consultants, suggested Indian brands should make a mark in the US market and not be driven by whom they are replacing, but be driven how they are placing their brand. âIndian brands should be able to make a mark in proper brand marketing in the US like we would do in any other part of the world, including India, and be able to woo the US consumer through their brand, quality and service. We must treat the market with respect, understanding the needs of that consumer. Irrespective of whether it's a short-term opportunity, or a longer one, it should not be seen as an export but international market.â Kapoor said brands should have world-class quality, service, branding, positioning and communication when entering a global market.
But given how well Chinese goods are often praised for quality products, do Indian brands have to compromise on the quality part?
âI think Indian manufacturers would have the capability to meet the quality standards. But China does have a big advantage on the cost of manufacturing, which is really low compared to India. So, one has to see if after the higher import taxes for Chinese goods, we can offer similar goods at a lower price or not. If we can, then the opportunity could be exploited,â Mishra said.
He said Indian manufacturers will not have that big a challenge in meeting quality requirements. He said, âMaybe a bit in the beginning, but ultimately we will be able to deliver. The key challenge will be the high cost of manufacturing in India due to higher raw material cost, higher energy and transportation costs and taxes within India.â
Chinese products have the widest variety of value across categories on offer. Indian brands, to compete, will have to match the Chinese productsâ value in whichever category they want to get into. More than the quality, the value that a brand offers will be more important, said Verma. Nobody is going to accept any drop in quality because India is not the only country looking at filling this void. Countries such as Indonesia, Malaysia, Taiwan etc., are getting aggressive now.Â
Given the strength of the US Dollar, the price that goods attract in the US is higher than in developing and emerging economies. Also, as the prices of Chinese goods with export duties have been increased, how brands in India are planning to price their products is also a question.Â
Dileep Baid, Chairman of Dileep Industries, said it will actually level the playing field and bring parity in pricing and standardisation across geographies. Baid represents Ellementry Kitchenware, which has been fulfilling demands from US, UK, and other countries for three decades now, catching up with international trends.
Talking about kitchen accessories as a category, Baid said, âChinese products have been only considered due to their pricing, but their designs are very industrial in nature. At the same time, Indian designs are praised for authenticity and quality.â
But how this consumer set would be targeted? Marketing and advertising always follows the consumer. If the brands start targeting American consumers, marketing and advertising would change accordingly. So, how would that change for the Indian brands?Â
Digital is going to get a lionâs share of the advertising budget for all of these brands. Conventional media will play a minimal role (if any) here, said Verma.
Mishra had a different view on this. He said, âI really canât see any impact on advertising and marketing. Indian goods in fabrics and garments are already available in the US supermarkets. These are not advertised as Indian goods but sold under the brand name of the importing companies. So, that part is unlikely to change materially.â
Kalyan Kumar, Co-founder, CEO, Social Catalyzers, echoing the same view as Mishraâs, said there wonât be any significant impact on advertising or marketing in the short term. Although, he said investing in brand building may be an enormous challenge given the high levels of competition.