The Belgian company Soudal found a suitable business partner in India.

Soudal is the European market leader in the area of sealants, adhesives and PU foams. For 12 years the company has had a joint venture with the Indian company McCoy, which was initially a customer of Soudal in India. "Meanwhile, we are growing by about 20% every year," says Emmanuel De Smedt, regional director of Soudal.

In 2007 De Smedt travelled to India for the first time, to participate in a small trade fair and to make his first contacts in the country. At that time Soudal was expanding in and outside of Europe. For instance, they were working hard in China. India was not really in Soudal's sights at that time, but De Smedt did manage to win a customer during this first visit. "There I met McCoy, one of the players in India in the field of sealants, adhesives and PU foam", says De Smedt. "They were interested in us and our products, and of course we were interested in them too, because in the long term we wanted to conquer the Indian market too."

Soon McCoy became a Soudal customer and the Belgians started a sales office in India. "In the meantime, we built up an increasingly good relationship with McCoy. On every trip I made to India I met with them and they also came to our headquarters in Belgium. The relationship grew very organically and Soudal is always looking for new opportunities, so we decided to sit down with McCoy and set up a partnership."

"Indians are very gifted negotiators. They don't give up until you give in a little - whether you have a friendly relationship with them or not."

- Emmanuel De Smedt - Regional Director Soudal

In six months, they got out and the two companies set up a 50:50 joint venture. "We both had a good understanding of what our strengths were and what we could therefore contribute to the JV. McCoy had been active in our segment for 10 years and therefore not only had a good local team, but also the local know-how and an existing customer base," De Smedt says. "But they were not yet a strong brand, acting mainly as a distributor for a number of European brands. Our knowledge of sales, marketing, production and R&D complemented that perfectly. A strong story with which we could conquer the Indian market together."

Despite the good relationship between the two companies and the clear role they would play in the joint venture, negotiations were occasionally tough. "Indians, whether you have a friendly relationship with them or not, are very gifted negotiators and don't give up until you give in a little. I was able to improve my own negotiating skills considerably in India," says De Smedt. "It is important to have a good lawyer at your side. The specialist and local knowledge that a lawyer brings is essential in any contract you conclude. Don't automatically choose the biggest or most expensive firm, but really be guided by specific knowledge and experience."

Cooperating successfully

In the joint venture, the roles are also split 50-50. The managing director, for example, is from McCoy and Soudal has the local management. "But it is not the case that there are two captains at the helm. We both know very well where our strengths lie," says De Smedt. "In addition, we have regular board meetings where all partners come together to discuss the ins and outs of the company. We work towards a common goal and the different perspectives of the various partners are an advantage rather than an obstacle."

A good example of this is the lightning-fast construction of a production site near New Delhi. Thanks to McCoy's knowledge and network, a piece of land was purchased within a year of setting up the JV and the right parties were found for the construction. "As Soudal, we were able to bring in our technical know-how and thus set up a factory in which we can produce products that are a good match for the local market in terms of price and quality level and that also meet our requirements," says the Belgian director. "We have had to adapt our products to suit the Indian market and climate. In Europe, for example, people want a kit that can be used for many different jobs, but in India they want a specific product for a specific problem. With our production location, we can respond very quickly to specific wishes of this kind and also scale up quickly if the market starts to grow."

A growth market

The Indian market for McCoy Soudal products is still relatively small. "We are growing more than 20 percent a year and our ambition is high," De Smedt says. "In the urban areas we see more and more that sealants and foams are used, in the rural areas the windows, doors and sanitary facilities are still often finished with cheap white cement. We have therefore started an academy to introduce contractors to our products and to teach them how they can be used. Of course this will not double our customer base in a year, but we are taking it step by step. The Soudal motto is 'Dream, think, dare, do and persevere' and that is exactly what we are doing in India. We dream of great results and persevere to make them a reality."

Entering the Indian market with the right partner

Entering the Indian market with a local partner is advantageous for many international companies, as you do not have to reinvent the wheel and can rely on your partner's contacts and knowledge. A joint venture can therefore be a good option for you, but it is certainly not the only way to get started in India without worries.

IndiaConnected offers you the possibility to quickly, easily and cost-efficiently set up your own office, with staff, in India without having to register your own entity. We call this the business incubator, in which we take a lot of time-consuming processes out of your hands:

• Export to India and sales processes through existing IndiaConnected structures in India.

• Existing administration structure and control mechanisms for your Indian employees.

• Use of our Office Management Services at four locations across India (optional).

• Transparency and monthly reports (tailored to customer requirements).

• Partner in India with over 20 years of experience.

Want to know more?

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."

More and more Dutch companies are achieving success in India. How do they do it in this large and diverse country?

India is not an easy market but it is a very big one. Too big to be ignored. Certainly for Dutch companies with ambition, guts and perseverance, there are many opportunities in this country. More and more Dutch companies are able to seize these opportunities. How do they do it and what can other companies learn from them? Lessons for success in India from seed potato grower HZPC Holland and machine builder Meyn Foodprocessing Technology.

IndiaConnected is regularly asked to share knowledge about India. For Globe, the magazine of the Dutch Export Association EvoFenedexpartner Maarten van der Schaaf wrote this article about the lessons from Dutch companies for success in India.

At the end of 2007 HZPC Holland, the largest Dutch exporter of seed potatoes, decided that the company from Joure in Friesland should seriously consider India. "Occasionally we came there", says ceo Gerard Backx, "but we had never given the country structural attention." That had to change, Backx thought. Coincidence or not, a few months later an employee of Indian conglomerate Mahindra calls him. He asked if he could drop by in Joure. Backx is curious. "What does such a huge concern, which is mainly strong in iron and engines, want with seed potatoes? I was curious where their interest came from."

That first appointment almost went wrong, Backx recalls. "Mahindra's representative arrived at Heerenveen station on Friday at 6.30pm instead of 11am. He had taken a wrong train and then got lost." But when the two got into a conversation that evening, it clicked. Mahindra appears to have decided to expand its agricultural branch and would like to introduce the potato varieties of world market leader HZPC in India. The meeting leads to a cooperation agreement in 2008, in which Mahindra will represent the Friesians in India.

Good balance

In 2014, the two companies set up a joint venture: Mahindra HZPC. This company started the cultivation and trade of common Indian potato varieties. HZPC has an interest of forty percent in the joint venture. Backx: "We have looked for a good balance. They do the finances and HR policy, we do the technology and the potato varieties. The joint venture pays our Dutch company a licence to use the varieties. As far as we are concerned, we are in balance. It does not matter that we have a minority interest. If the joint venture makes a profit, that is great, but for us it is mainly about the income from the licence stream. The more Indian farmers who grow our varieties, the better. We are not completely dependent on Mahindra and we are also talking to third parties to get more farmers in India to grow our varieties. By the way, we are having these discussions together with Mahindra. Our relationship is excellent."

Almost ten years

The potato varieties of HZPC are sold to the processing industry and supermarkets in India. "The processing industry, think of large french fries and crisps manufacturers such as Lays, is very pleased with our arrival. With our high-quality varieties they can make better products and achieve higher returns. The fresh market is by far the largest market for potatoes in India. Traditionally, growers take little account of the eating preferences of Indians: they focus mainly on technical cultivation issues such as disease resistance and the amount of water needed. Our varieties have different tastes, are smoother and look nicer than the classic potato varieties with deep pits. With this, we think we can primarily serve the middle class and elite through the supermarkets." It took almost a decade to get his high-quality potato varieties to market in India. Ceo Backx takes this long lead time for granted. "India is perhaps the most promising market of the future."

Tipping point

At Meyn Foodprocessing Technology, one of the world's largest machine builders for the production of chicken meat, they have a similar experience. It took the company from Oostzaan more than twenty years to get a firm foothold in India. "We had to sow a lot of seeds there before we could start harvesting, but it was worth it," says Karel de Waal, Meyn's senior sales manager for India. "Thanks to our patience, we now have over fifty percent of the market." That market is large and growing: India is the fifth largest producer of broilers in the world. As more chicken is sold through supermarkets, the demand for automation in the meat processing industry will further increase.

What is the key to Meyn's success? "A good partner," says De Waal. "Before we found our partner, we had a few less than smooth collaborations, which didn't yield much. But when we came into contact with Alok Raj, there was an immediate click. He opened up the market for us and worked for us in India for twenty years, more as an advisor than a salesman actually. In India, building a personal relationship is extremely important when doing business with each other. Alok understood this like no other and has seen about every meat processing company in India from the inside. He would work with the entrepreneur to see how the production process could be organised more efficiently and even help start-ups design entire factories," says De Waal with a smile. "Those factories actually materialised, because the entrepreneurs felt they could always count on us. That was the turning point when we were able to start charging for our service."

Much faster

Meanwhile, Alok Raj has retired and Meyn has a hundred per cent subsidiary in India. "Before we had the office, we arranged everything from the Netherlands. From sales to installation and after-sales. But as a company we want to be as close to our customers as possible. That is our global strategy. That is why we have a total of 16 after-sales offices, where we work in the local language and currency and sell spare parts. Especially in India, providing this kind of quick after-sales service is very important."

On the advice of Meyn's owner, the Berkshire Hathaway group, the Indian office was set up in partnership with a law firm that the Berkshire Hathaway group itself already had experience with. "In retrospect, this may not have been the best party. It was a very big firm that wouldn't do the metres for us. We were led to believe that setting up would be a matter of months, but it ended up taking two years." Smaller agencies can do it much faster, within three to six months, De Waal later learned. "As an international company, you shouldn't focus on size and international experience. It is more important that such a law firm has the right contacts in India and can focus its full attention on you."

All lessons from HZPC and Meyn in a row:

1. Give India structural attention;

2. A good partner is crucial in India;

3. Continuous professionalisation offers opportunities for high-quality products;

4. Selling in India takes time. Take that time, it is worth it;

5. Build relationships. Or work with Indians who have good relations in your sector;

6. Service and after-sales are very important to Indian customers;

7. Choose local knowledge, advice and support on the ground. You will need them.