Without its Indian joint venture partner, the Swiss global company Ammann would never have become the market leader

The Swiss family-owned company Ammann is the world leader in construction and road building machinery. "In almost all of the 100 countries in which we operate, we have started and become successful entirely on our own," explains Rolf Jenny, Ammann's managing director in India. "Except in India. There we quickly came to the conclusion that without local knowledge and support we would never make it."

Rolf Jenny and Apollo's managing director, Asit Patel, open the joint venture's first factory

"Ammann's first steps in Asia were made in China. At the end of the 1990s, the Chinese government was extremely interested in our technology because they wanted to improve their entire road network in a short space of time. We were therefore given a warm welcome with attractive tax rates and special support programmes," says Jenny. "We didn't have to make many changes to our product in China to be successful, just a small reduction in price. That was easily solved with a local production site and we had the market in no time."

With this smooth experience in his back pocket, Ammann then set off in good spirits for the other big market in Asia: India. "There we were suddenly at a loss for words. The Indians were not interested in our advanced products and certainly not at the price we were offering them," says the managing director. "What worked great in China did not work at all in India. In India, we couldn't get away with just minor adjustments to our products, so we said to each other: 'We're not going to manage this ourselves, we need a partner who understands the Indian way of thinking'."

Know well what you have to offer an Indian partner

Ammann starts a big market research in the hope of finding a company they want to buy, but instead comes across the Indian company Apollo. At the time, Apollo was the leading producer of road building materials in India. "And that was exactly why they were interested in our technologies, but immediately said no to the idea of a possible partnership," says Jenny. "They said that they had been operating at the top end of the Indian market for 50 years and so there was no advantage in entering into a joint venture with an inexperienced European company. With this harsh rejection, they wiped out our possibility of a successful start-up in India in one fell swoop."

But the Swiss company was lucky: two years later, Apollo sought contact again and this time the Indian manufacturer was open to a joint venture. "That was the start of tough negotiations, because we didn't immediately agree on the terms of our partnership," says Swiss top executive. "Ammann is normally always a 100 per cent shareholder in the companies we set up abroad, so for us it was unmentionable to own less than 70 per cent of the joint venture. Apollo, on the other hand, wanted the shareholding to be split 50-50. We also wanted the joint venture to focus only on India, while Apollo wanted to start exporting to neighbouring countries. Once again, we were facing quite a challenge in India."

Bridging differences

In order to bridge the differences during negotiations, Jenny initially focused on the similarities between the two parties. "We are both family businesses, which immediately created a bond. We decided to invite Apollo to Switzerland to get to know our company even better and gain more insight into how we could complement each other," explains the managing director. "We are the world leader in high-tech products, Apollo in low-tech, low-cost versions. So together we could deliver a good quality product at a mid-price. By building up trust and proving that we really saw them as an equal partner, we were able to convince them of the benefits that the joint venture with us would bring them. Without compromising on our own terms."

According to Jenny, a successful joint venture rests on a number of basic principles. "You have to be able to trust each other completely and treat each other as equal partners, even in our case where we owned 70 per cent of the company. All decisions within the joint venture were always made by mutual agreement. From the very beginning, we also had it agreed what would happen if one of us wanted to leave the joint venture. A joint venture should always be equally beneficial to both parties. That is why it is so important to think not only about what a happy marriage will look like, but also about a friendly divorce if one of the two wants to go on alone."

Ending the joint venture 

After eight years of running a successful joint venture together, Ammann and Apollo decided to call it a day last year. "We have learned a lot from each other over the years and have always worked well together without any disagreements. But Apollo was ready to stand on her own two feet again," says Jenny. "The 70-30 ratio meant they were more like investors than the entrepreneurs behind the business and something was starting to itch again - they wanted to get back to work." Apollo sold the remaining 30 per cent for almost 27 million to Ammann. "Not only did they get a very good deal with this sale, but they also benefited from the boom that the company has experienced in recent years. Together, we have not only increased the value of the company enormously, but also tripled its turnover. The joint venture has always been a success for both parties, despite the separation. We are therefore parting as friends and will continue to have a good relationship."

Jenny therefore recommends an Indian partner to every European company that wants to start up in India. "You can only be successful in India if you understand the wishes of the customer and if you adapt your product and price to these wishes. To do that, you have to manufacture in India, the product has to breathe India. If you are confident that you can do that on your own, then go for the adventure. In our case, we knew our products didn't fit the market, but we needed the local knowledge to understand how to improve that. If you go it alone, you have to be in it for the long haul and expect it to be a process of trial and error. We wanted a quick market entry without too many setbacks and we couldn't have done it without our great partner. So do your research and strategise accordingly, but be aware that local help makes a lot easier in India."

Opportunities in infrastructure and construction

Ammann is looking forward to the future in India. "Construction and infrastructure are two sectors that will grow significantly in India in the coming years. Indeed, more infrastructure is needed in the country if it is to maintain the same high economic growth rate in the long term," says the Ammann foreman. "But even though these sectors will offer interesting opportunities, it is important that foreign companies realise that India is not a quick fix. I have seen many international companies come and go, hoping to get a slice of the investment in the road network. But if your product doesn't fit India's needs and Indians don't trust you, you have a choice: either invest for the long term or pack up."

Brabants ENS Clean Air experiences difficult market entry in India despite high demand for unique technology

ENS Clean Air from Brabant and artist Daan Roosegaarde jointly developed a so-called smog tower, which removes fine dust from the air. After the success in China, requests from India flooded in, but market entry was difficult. "You need to be in it for the long haul in India," says Esmée van de Vorle, managing director of ENS Clean Air.

Managing Director Esmée van de Vorle pitch ENS Clean Air's air purification technology during the trade mission in India

First steps in India

The first contacts with India did not turn out as the Brabant family business ENS Clean Air had hoped. "We have an interesting technology for countries that struggle with poor air quality," says Esmée. "Not surprisingly, soon after we were founded in 2009 we were approached by a potential Indian partner. I flew back and forth with my mother, the founder of ENS, several times to see if we could actually set up a joint venture with this potential partner. It just didn't seem like we could keep full ownership of our technology and that closed the door on us right away. Our goal is clean air for everyone, but this way it didn't feel right." After this experience, India disappears from ENS's sights for a while. Until Esmée got talking to a local engineer at a trade fair in Germany. He wanted to link the company from Brabant to the European Business and Technology Centre in Delhi, because he thought that India could make good use of ENS's technology. "We seized the opportunity. Perhaps with the help of European experts on the ground we could find the right partner." 

The applications from India are rolling in

While the Brabant family business is working with the EBTC to find a suitable business partner in India, artist Daan Roosegaarde is simultaneously starting his world tour with the Smog Free Tower. "That's a design tower incorporating our air purification technology," Van de Vorle explains. "That exposure suddenly got the whole world interested in us. One of the interested parties was the Dutch Embassy in Delhi, which is keen to help ENS gain a foothold in India. "And then it all goes really fast," says Esmée. "Through the EBTC we met a suitable partner with whom it clicked well, and through our contact with the Dutch embassy we not only got an assignment from The American Embassy School to improve the air quality in their courtyard, but also a last minute spot in the trade mission in India led by Prime Minister Rutte."

Don't shy away from pitching at a children's party

- Esmée van der Vorle - Managing Director ENS CLEAN AIR

A trade mission is hard work

"Trade missions are mainly a very nice way to make contacts and to get exposure for your business," explains Esmée. "So don't expect to come home after your participation with all the hard deals under your arm. Especially not in a country like India where building a relationship of trust between trading partners is ten times as important." According to Esmée, making good contacts is therefore one of the most important lessons she learned about business from her mother and would also like to pass on to other entrepreneurs. "You are on a business trip to work, so you just have to show your face everywhere. Not just at business events and meetings, you have to be on 24/7." 

Pitching at a child's birthday

"If you get the chance to meet in private, make sure you take it," is Esmée's advice. "During the trade mission with Rutte I met our new business partner, whom EBTC had found for us, in person for the first time. That went very well and so they invited us to the birthday of the owner's niece. That birthday fell exactly on our last day in India, three hours before the flight back to the Netherlands. My colleague therefore doubted whether it was wise to go, but I knew we couldn't miss out. Once at the party, we were introduced to one senior official after another, all very interested in our company. So on the last day of the trip I was pitching at a children's birthday party to about twenty high-ranking officials."  

Firm agreements on quality

ENS and their Indian partner, Sudhir Power, have now successfully completed their first major job at The American Embassy School in New Delhi. "This job allowed us to test our newly formed partnership. We only had technical supervision on site and gave our partner Sudhir Power the freedom to do the installation work in their own way." Despite the fact that, according to Esmée, in such a partnership you have to dare to surrender a little to your new partner's way of doing things, she still advises companies to make clear agreements on manufacturing methods. "For example, we have agreed that we will produce the control cabinets in the Netherlands and the rest of the components, such as the housing, will be made in India. We do have strict requirements for this, so that we can be sure of guaranteeing the quality of our product. Fortunately, we have found a partner who has been working with European companies for a long time. They understand very well what quality the products have to be."

Benefits of corona crisis

With the outbreak of the coronavirus, the cooperation between ENS and Sudhir has temporarily slowed down. "Not because things are not going well between us", says Esmée, "but because we agreed from the start that we would build up the cooperation slowly. First we'd date, then we'd get engaged, and whether we'd actually get married or set up a joint venture is something we'll see in due course." But the big impact COVID-19 is having on India could create some interesting opportunities for ENS's products in the near future. "We are still a niche product, but as air purification is an important weapon in the fight against airborne viruses, more attention is being paid to our technology. That could well pay off for us in the future. 

Bureaucratic hurdles

For the time being, ENS is mainly suffering from the strict measures that the Indian government has taken to curb the spread of the coronavirus. After installing the purification systems in the courtyard of The American Embassy School, ENS also had special measuring equipment installed to show how effective the systems work. "And then suddenly the whole country went on lockdown and we were suddenly unable to remove that equipment, which we had introduced with a special visa, in time for the permit to expire," says the management director of ENS. "I thought I had done the right thing by asking the Indian Chamber of Commerce for advice. But now they have sent me from pillar to post and there is a claim on our equipment. We are now getting help from Maier+Vidorno, IndiaConnected's partner in India, and hope to convince the customs authorities to let us recover the equipment. If not, this will become a legal case. I am thus learning a hard lesson about bureaucracy in India."

Family business

Despite this setback, for Esmée India is above all a place where you are received with a warm smile and genuine interest. "Especially the fact that we are a family business opens doors for us. Our Indian partner, for example, is also a real family business and that not only evokes recognition, but also creates a better bond of trust. We are very happy with this cooperation. Esmée is looking forward to working with Sudhir Power in the coming years to gradually build a cleaner living environment in India. "For example by helping more schools to turn their squares into safe playgrounds or to improve the situation in the Indian streets a little by further implementing our Lungs of the City concept. Hopefully, in the longer term, we will also see the first smog towers rising in Indian cities."

Joint venture is the key to success for Flemish bio-energy plant builder Vyncke

For many years, India was a fly-over country for Peter Vyncke, who runs the Flemish family business Vyncke together with his brother Dieter. "Before my brother and I took the helm, I was in charge of Vyncke's Asian department in Kuala Lumpur, Malaysia. At the time, we were fully focused on South-East and North Asia, India was not in our sights. Until I suddenly lost an important order from an existing Malaysian customer to an Indian competitor. There was only one right strategy for that, fight them on their own turf."

CEO Peter Vyncke and his son Gilles during a traditional first-fire of a ForbesVyncke power plant

A biomass energy plant of the Belgian-Indian joint venture ForbesVyncke

Peters great grandfather, as the Flemish CEO likes to describe it, came up with the ingenious idea of converting coal-fired boilers into biomass boilers 100 years before the Kyoto treaty. "Those first Vyncke boilers were fired with waste from the flax industry, but now they can be used in almost any sector. We can convert all kinds of waste products into energy, from cocoa shells to wood chips." Vyncke's energy plants therefore sell well in countries around the equator, where large industries produce more organic residual waste, such as the coffee or palm industries.

Belgian company Vyncke has been active in Asia for more than 40 years, but only ventured into the Indian market ten years ago. "From 1996 to 2000, I managed the Asia branch of Vyncke from Kuala Lumpur," says the Vyncke top executive. "We were mainly focusing on China and the south-east of the continent and not at all on India. Then suddenly, one of my major Malaysian customers was snatched up by a competitor from India. That made me realise that I had to look into the country. Not only to see what opportunities there were for us, but also to start making life difficult for that competitor on its own territory."

Joint venture with Forbes Marshall

As the idea of starting up in India began to bubble up at Vynckeneers, Vyncke received a special visit in Belgium. "My father travelled all over the world for Vyncke and on one of those trips he ended up in Pune, at the Indian company Forbes Marshall. He had left a message in the guestbook there. To our surprise, 25 years later, a Forbes Marshall employee suddenly turned up on our doorstep with a copy of that guest book entry in his hand." The Indian company specialises in process efficiency and energy saving for industry and at the time was looking for a partner to conquer the biomass market in India with. "They just didn't have the technical knowledge and that's how they ended up with us, says the Vyncke director. "We immediately had a very good click. Forbes Marshall is run by two brothers, and we are also two brothers at the helm of Vyncke. We have the same attitude in how we do business, you can't do business without a bit of fun. In addition, we complement each other perfectly in terms of knowledge: we the technical knowledge, they the knowledge of the Indian market."

The companies therefore decided to formally establish the joint venture ForbesVyncke in 2010. "That was the best way for us to enter the Indian market. We could certainly have done it on our own with our experience, but it would have taken us much longer to get up and running," explains the Belgian CEO. "Forbes Marshall took charge of setting up the company and immediately put his best people forward. As a result, we got off to a flying start. Within two years we were already in every corner of the country, selling only to premium customers at about 20-30% higher prices than our competitors. We now have an annual turnover of around 20 million euros."

Give each other space in the cooperation

Peter advises any company considering starting up in India to find a good partner. "When companies say they want to start up on their own, I always ask, 'Are you really sure?' India is a country of 1.3 billion people and the bureaucracy is a maze". Working with a partner who knows the market and the way it works takes away a lot of start-up problems. "Our partner is responsible for the operations of the joint venture, so everything from sales and HR to legal is in their hands. This allows us to concentrate on our core business, the technology of the product. Because we both focus on our strengths within the joint venture, the company runs like clockwork, says Vyncke. "If you opt for such a construction, you must not micro-manage matters that are outside your remit. Give the other person the space and confidence to fill in the framework that you draw up together, as you see fit. Nobody in India is waiting for a Western company to come and tell them what to do, like some kind of colonialist."

Don't sell it as green, but for the money".

According to Peter, the advice not to be pedantic as a foreign company in India also applies to the product you market. "Take our product, for example, which is being used by companies in Europe for its higher morals. Namely because it replaces fossil fuels and is CO2 neutral. But in India, that is not the motive at all. There, it helps companies enormously in terms of costs, to be able to make energy from the residual products they have left over." Biomass is a lot cheaper than oil or gas in a country like India. India is therefore also one of the few countries in the world where more than 70% of the population depends on biomass for its energy needs. "So you shouldn't market such a product with a pedantic tone, because it is better for the environment. For India, it is a cheaper solution for the country's energy needs. Don't sell it as green, but for the money."

ForbesVyncke has had its biomass power plants heavily adapted to the needs of the local Indian market. "The standard in India is still different, even with the international companies we work with," Peter explains. "While in Europe the operation is fully automated, in India they are not prepared to pay extra for it. The labour costs are still lower than the costs they would have to invest for a fully automated installation. As a company, you have to take that into account and not look down on it." The CEO therefore advises any start-up company in India not to start with too big expectations and strategies. "Growing in the Indian market takes time. Stay close to yourself, your product and find a good partner! We really have the best partner in the world. Because of that partnership, we have now left that Indian company, which woke me up 20 years ago by hijacking my Malaysian client, far behind."