Sport is just one of the key areas opening up for Australian exports in India. Tim Harcourt examines export opportunities in a fast-growing economy with a huge consumer market on the rise.
It is often said that Australian-Indian relations are based on the ‘3 Cs’: cricket, curry and Commonwealth. Indeed, on my visits to India I can barely get through the airport as I am regularly accosted by walking, talking Indian cricket encyclopaedias among the airline staff, who want to engage me in all aspects of the game, whether it be Test, one-day, or even domestic cricket. (They say things like: "You are from South Australia? Yes, I know Ian Chappell, Bradley Hogg, Darren Lehman, Jason Gillespie, all very good players sir….").
But a recent development has actually expanded Australian-Indian sports connections beyond the great game of cricket. In the game of basketball, Australia’s greatest boomer (and an Olympic flag-bearer) Andrew Gaze recently announced a strategic partnership between his company, Australian Basketball Resources (ABR), and the new Indian sports company, Jus Sportz. The deal will see Australian basketball brands—mainly sportswear, footwear, and memorabilia—sold throughout India. Jus Sportz will launch four stores in southern India by March 2007, and plans to expand to a total of 20 stores across the subcontinent within five years.
According to Jus Sports director, C. Sivakumar, India’s growing love of sports and all things Australian makes it a very natural fit for his company. "Most of our favourite sports icons are Australian, and Australian brands enjoy a strong reputation in India. With phenomenal growth in sporting retail sales in India, it makes sense for us to take the best of Australian sporting brands directly to the customer."
In fact, Andrew Gaze himself sees his role as pioneer in terms of giving Australian sports brands a ‘beach-head’ into the growing Indian sports retail market. "The new deal will create opportunities for more Australian companies to expand their operations into one of the world’s fastest-growing developing country economies with a relatively low risk and great exposure," the sports star says.
Gaze is not alone as an Australian sports exporter in India. In fact, when I travelled to India on a recent trade delegation, I noticed a number of Australian sports exporters on my flight from Sydney to Mumbai, including Albion, a manufacturer of the cricket helmets and the baggy green cap. According Albion’s general manager, Ross Barrat, "We see India as a major source of expansion for our product. We were founded in 1947—the same year as India’s independence—and see our future wrapped up with India’s just as we have a shared history."
Barrat says Albion’s ability to innovate has been a key part of its success as a company and as an Australian exporter. "I feel the invention of the Albion cricket helmet during World Series Cricket in the 1970s, is similar to the invention of the Hills Hoist, the Black Box flight recorder, the Cochlear ear implant and the baby seat capsule for cars, an example of Australians being innovative and looking to make the world better but also safer," he says.
According to Mike Moignard, Australia’s senior trade commissioner in New Delhi, there should be many more opportunities to put Australian sporting brands in the hands and on the feet, backs, and heads of India’s consumers. He estimates the Indian retail sports market "to be worth close to $310 million".
So why India? One reason is the growing middle class of some 300 million people, and a growing purchasing power of an estimated A$85 billion. Furthermore, the economic reforms started by the finance minister (now Prime Minister) Dr Manmohan Singh in 1991, have really opened up the Indian retail market to western tastes in food, fashion and entertainment while strengthening and expanding India’s strong culture to the rest of the world (look at Bollywood’s influence). This means that western retail brands—including Australian companies like Gloria Jeans and Cookie Man—are doing well in Indian retail markets through franchising arrangements.
Australian-India trade ties are certainly growing. Over the past five years, Australian exports have grown faster to India than in any other of our top 30 markets. However, there’s still plenty to do in terms of expanding and diversifying our export base as only around 1500 Australian companies export to India (which is half the number that go to China and about the same number that export to the United Arab Emirates). Sport is one way to get into the burgeoning Indian retail market, whether it be basketball, cricket, hockey, or football. Of course, there will be great opportunities ahead with the Commonwealth Games being held in New Delhi in 2010. And with so much Indian business interest at the Commonwealth Games in Melbourne in 2006—with one in five business visitors being from India, according to Business Club Australia—let’s hope there’s similar Australian interest in India when New Delhi gets its turn.
Forging Export Relationships
During his recent visit to India, the Minister for Trade, Warren Truss, identified Australia’s role in the growth of India’s economy. "India is growing faster than any of our other top 30 export markets. Merchandise exports to India exceeded $8.8 billion in 2006," he said.
And Australia’s commercial links to India’s economy seem set for another boost, with Truss announcing Utsav Australia, Celebrate Australia, a three-year promotional program intended to increase Australian business in India.
India’s sustained economic growth of 9 percent has led to trade in sectors other than commodities, says Austrade’s CEO, Peter O’Byrne. "Austrade has identified six key industry sectors for targeted development in India, including advanced manufacturing and aviation, consumer retail, food and beverages, ICT, infrastructure, in particular 2010 Commonwealth Games projects, mining and resources, and services."
Utsav Australia is part of the $6.5 million Budget package announced last May, and aims to help businesses by increasing recognition of "business brand Australia", says Truss. Australian products and services already have a strong reputation in Chennai and Bangalore.
Australian services to southern India will continue to improve through the opening of a new office for the Australian Consulate-General in Chennai, and Prime Minister John Howard’s signing of a Trade and Economic Framework with the Indian Government.
For further information on Ustav Australia, or to participate, call Austrade on 132 878.
Doing Business in India
• Australian goods exports to India: A$7.387 billion (key sectors: non-monetary gold, coal, copper, wool), 2005-06
• Australian services exports to India: $1.415 billion (key sectors: education, tourism)
• Australian-India two-way trade: A$8.627 billion, 2005-06
• Key growth sectors: non-monetary gold, coal, education, tourism, franchises in consumer/lifestyle products
• Number of Australian businesses exporting goods to India: 1463
Source: DFAT, ABS, Austrade.
Tips for new exporters:
• Do your homework. The subcontinent is a rich and enthralling place but it is not a monolith. For example, the Delhi market is very different from say, Chennai in the south or Mumbai in the west. So target your market carefully looking at consumer trends and tastes by region, and the strength of the competition from locals or other international players.
• Take advantage of the local knowledge provided by Austrade. Mike Moignard and his team in India have a network that covers Chennai, Hyderabad, Mumbai, New Delhi, and Kolkata, as well as Pune and Chandigarh. Austrade can also help you deal with India's regulations—re
member that India has a federal system with many government agencies to deal with at federal, state, and regional level.
• Once you have done your research and have some contacts lined up via Austrade India, you have to take your own 'passage to India' as the subcontinent's economic miracle is worth seeing for yourself.
• And if you like cricket, try and catch a local match, especially a Test or one- day international. I have been to cricket matches all over the world and India is the penultimate in cricket tragicology (perhaps along with the Caribbean)! And if you are lucky enough to be there when Australia is playing India, make sure you travel through India with a dignitary who doesn't like cricket, that way you might snap up some spare tickets. Or if he or she does, make sure they look after you!
* Tim Harcourt is chief economist for Austrade, Sydney (http://www.austrade.gov.au/economistscorner).
Case Study: Network to succeed
Director of Peddle Thorp India, Colin Rofe, believes the key to success in the Indian market is building networks. "I take the view that I come to India to visit friends and coincidentally do business with them too."
Rofe heads a consortium of six Australian design firms, which was recently awarded a multi-million dollar design consultancy contract for two sports venues for the 2010 Commonwealth Games in New Delhi.
The newly formed Peddle Thorp India was selected by the Delhi Development Authority (DDA) over French, British and Indian companies competing for the contract to design two games venues—a badminton and squash stadium at Siri Fort and a table tennis venue at the Yamuna Sports Complex.
Led by the Melbourne-based firm, the consortium includes Connell Wagner, SMEC (India), Marshall Day Acoustics (MDA), Sustainable Built Environment (SBE) and Simply Great Leisure (SGL).
Rofe attributes the success to the team’s significant experience in sports planning and architecture, with Peddle Thorp designing some of the venues from the Melbourne Commonwealth Games last year, including the Melbourne Sport and Aquatic Centre and the Rod Laver and Vodafone Arenas.
"Another critical factor (to success) was our persistence during the phase when DDA was making its decision to award the contract," Rofe says. "It took DDA some time to get accustomed to the fee scales of international architects, particularly in comparison to local architects." The winners of the contract were to be announced in May last year, but announcements were not made until February this year.
Rofe says the bid’s success would’ve been challenging without input from ICN Victoria and Austrade’s New Delhi-based market specialist, Amarbir Anand. "No doubt, we’ll continue to rely on Amar’s knowledge of the nuances of doing business in India for the rest of the contract."
According to Anand, doing business in India is not without difficulties, but it pays to be patient. "Businesses must really commit to making it in the Indian market," he says. "It may be a difficult market to break into, but once you’re in the opportunities are tremendous."
Boasting a growth rate of nine percent in 2006, India is now Australia’s eleventh largest merchandise trading partner, growing faster than any of our top 30 export markets. Two-way trade in goods and services has increased to more than $12 billion in the last financial year.
According to Rofe, India’s tremendous capacity for growth makes it a crucial market for his company. "India’s growth in a similar, but different manner to China, provides plenty of opportunities to those prepared to put in the hard yards," he says.