Experts: Good, Bad & Indifferent

Written by Subhash Agrawal | Updated: Sep 26 2002, 05:30am hrs
The list of marketing fiascoes by multinationals (MNCs) in India is now legion, firms which underperformed miserably against their own targets or any respectable numbers in the trade. The MNC honeymoon with India, a major part of our political debate in the early years, is over, and in numerous surveys the causes frequently cited for this range from political stability to corruption to bureaucracy.

But there is little admission about stupid self-goals, an honest admission about some dishonest numbers. In fact, it is rather amazing how so many people, consultants and organisations in India have so successfully been able to dish out misleading data or self-serving advice for so long, thereby raising the expectations and disappointment of MNCs. Or why these firms were seduced by glossy market projections instead of relying on instinct and common sense.

Evaluating business opportunity is far from easy in India, a country where the corporate environment is opaque and the media is careless or even in league about tall claims. Plus, we have over 20 different nationalities, not to mention a complex and dynamic urban-rural divide, with a large number of cities falling somewhere in between. Most foreign investors, even those who have heard of this confusing social mosaic, are deceived by the relative homogenous nature of Delhi, Mumbai, Kolkata and Bangalore, typically the only cities they visit initially. The shock comes later. It is in small cities and towns, the bulk of the market, where this apparent convergence comes apart, and where North is so different from South.

Popular estimates of the Indian market have always been misleading. The fact is that 80 per cent of India consists of low-income earners and two-thirds of all products bought cost less than $30. Few people bothered to carefully read the original 1992 study by the National Council of Applied Economic Research, else they would have known that the 250 million strong middle class included those with buying power for matchboxes, candles and soaps. Or, just about anyone who is not totally destitute.

Other, more current, examples abound. In 2000, a leading computer industry association reported that there are five million personal in India but failed to mention that almost 60 per cent are old PCs which are not internet-capable. A consumer market-related study by one of Indias leading business chambers doing the rounds these days forecasts a boom in the organised retail sector, with sales of $300 billion by 2010. But it talks in a vacuum, painting an ideal scenario in an ideal world. To build these shopping malls and superstores would require a drastic rehaul of antiquated land laws, and an enormous expansion of roads, flyovers, parking space and electricity. Do you see that happening

Experts are often wrong, whether in business or otherwise, here or abroad. In an op-ed piece The Declining Terrorist Threat published a few months before 9/11 in the New York Times, Larry C Johnson, a former State Department counter-terrorism specialist, argued that terrorism is not the biggest security challenge confronting the US and extremist Islamic groups are not the main cause of terrorism. In the US, a stream of la-la land predictions about the internet flooded the public domain during 1995-99, including from well-known market-research outfits. During the same period, the Clinton administration poured billions of dollars on computers in primary schools. It now turns out, as plenty of research studies show and as many suspected all along, that premature computer interaction robs kids of a civilising influence as well as innate creativity, and that what kids really need is group activity, outdoor experiences and hands-on learning. And the Harvard Institute for International Development did play a major role in transforming Russia, but not in wealth creation but in wealth confiscation by a few.

So, instead of engaging expensive consultants, foreign firms in India should perhaps hire backpackers, the kind who live on a shoe string budget in Goa for a month or travel to Benares to experience inner peace. They may not possess the sophistication so consciously cultivated by marketing experts, but they may do better in reporting what India needs, what people miss and what might sell.

The author is an analyst of Indian political and business trends and editor of India Focus, a political risk report for international investors