Hettich is literally changing the rules of business… If Covid taught the world the need for a China plus one supply chain , this German lifestyle brand is at the forefront of ‘make in India, sell in China’ strategy and championing the cause of ‘Make in India for the World.’ While unveiling the new flagship store in Mumbai, the leadership team made it clear that they are keen to make hay while the growth sun is clearly shining on India even as many parts of the world are in the midst of slowdown.
Why India makes sense as manufacturing destination
The Indian modular kitchen market size is expected to grow a rate of 25% CAGR between now and 2029 and may near $14 billion in terms of revenue estimates and Hettich is keen about garnering a significant pie of that market. Andre Eckholt, Managing Director of Hettich India, Middle East, Africa & SAARC highlighted that, “One of the biggest advantage of doing business in India is the economies of scale and the growing middle class. Therefore, it’s very important to focus on the classic business case, which made us big and also define the right go to market strategy for the OEM business model to ensure it is future-proof.”
But India is not an easy market and the cost is a key factor. Dr. Andreas Hettich, Chairman of the Hettich Group Advisory Board explained that the company has a wide range of product offerings across price slabs and that’s the reason they have investing in manufacturing faciities in the country, “we have the high volume products and the more affordable range to use here in India with the same quality and that’s very important . Be it Germany or India, we follow the same standards. So they fulfil different load capacities for example, different cycles and solutions. We are the only multinational player who are invested in India exactly to have this point of affordability.”
Make in India, sell in China
Hettich is not just manufacturing in India to cater to the demands of the Indian market . “We are probably the only company in our industry, which produces in India and export to China,” added Dr Hettich. Not just China, Hettich has its plans in place for making India a global production hub. “We are also producing in India for global OEMs in the appliance industry, which have really the highest standards of quality and we are offering world class quality made in India,” reiterated Dr Hettich.
The head of India operations, Eckholt also underlined why it makes a lot of business sense for the Germany based manufacturer. “India has free trade agreements with so many countries, which we cannot access easily from Germany. Also there are certain logistical advantages in terms of time-to-market from an Asian perspective. We are investing into a new product which we are supposed to launch at the end of 2025. And this will be the first product which from the beginning is ‘made in India and made for the world’ with a clear focus on the Asia Pacific region,” added Eckholt.
Red Sea Crisis
One of the reasons that would have possibly propelled Hettich to make India a hub to service the APAC region is also perhaps the current conflict and crisis in the Red Sea region. With ships taking the longer route via Cape of Good Hope, it is not just adding travel time but also cost factor and Hettich is not completely untouched by it. Eckholt pointed out that “it’s impacting a little bit, especially on the working capital side because at the end of the day when we need to undertake demand and supply planning, we are heading down to three weeks on top of what’s allocated for lead time and we are filling in stocks, in order to ensure that we are able to supply to the market in India.”
Future-Perfect business strategy
That brings us to the point about Hettich’s roadmap for the future. Dr Hettich outlined that while Europe and US are still in the midst of differnt phases of economic slowdown, India and China are important markets for them – “China does have some challenges, especially with real estate sector construction companies struggling but also there we see a stabilisation. And for the mid-term future, we see a brighter image because our macro potential is quite simple.”
In terms of the India outlook they are significantly more confident. Eckholt highlighted the growth momentum across India and even with talks of demand curve normalising in FY25, he is confident that the growing middle class will keep the revenue stream ticking for them, “there is a growing economy and definitely our industry is growing. So if the entire world is struggling at the moment, the sun is shining right in India and we are happy to be part of this.”