Over the years, small family businesses have built strong business ties internationally. A new book explores how some Indians have achieved success abroad
Indian companies going global is not a phenomenon. In fact, there have been three different waves in this direction over the years. In the 1970s and 1980s, a few business groups such as Aditya Birla, the Lohias and LN Mittal (father of Lakshmi Mittal of Arcelor Mittal) established a foothold, especially in Southeast Asia. The second wave occurred in the second half of the 1990s, following India's economic liberalization, when the country's foreign exchange reserves improved and the government liberalized foreign investment rules. During this phase, the Tatas, Mahindras and the Godrej family over-aggressively acquired overseas companies. Finally, technology-driven companies like Infosys, Wipro and NIIT expanded into both the Western and Eastern markets in the 2000s.
Furthermore, there has been a significant shift in overseas investment destinations (OIDs) over the past decade. In the first half, overseas investments were focused on resource-rich countries such as Australia, the UAE and Sudan. In the second half, foreign investment was focused on countries that offered greater tax benefits, such as Mauritius, Singapore, the British Virgin Islands and the Netherlands.
The above successes occurred despite the slowdown in the global economy due to Covid-19. Government policies and reforms helped boost foreign direct investment (ODI). For example, the government has eased restrictions on Indian companies investing abroad by lifting the limit on raising financing through pledging of shares, local assets and foreign assets. Finally, India has been instrumental in signing several Memoranda of Understanding (MOUs) and Free Trade Agreements (FTAs).
While the above largely applies to large companies, the presence of medium-sized family businesses was virtually non-existent until the early 2000s. But since then, a small group of lesser-known family businesses have built strong business ties on foreign shores. We profile the strategies of some companies:
House of Anita Dongre: building a global brand
With an existing global brand equity thanks to high-profile clients such as Kate Middleton, Hillary Clinton and Priyanka Chopra, setting up an Anita Dongre flagship store in chic Manhattan was a logical extension. In 2018, when the 4,000-square-foot store opened, it was perhaps one of the first Indian fashion stores in the US. Some lesser-known Indian fashion brands had set up stores in areas like New Jersey, which have a large concentration of middle-class Indian consumers. By setting up a store on New York's main street, the Anita Dongre group wanted to target the wealthy Indian and South Asian clientele in addition to American customers. Traditionally, wealthy Indian Americans flew to Mumbai or Delhi when they needed to buy occasion wear for weddings and other family functions. Now it was available in the US itself. In the US, Anita Dongre tasted early success with her occasion and bridal wear, because the Indian diaspora is large and powerful. Yash (Dongre, business head of House of Anita Dongre) says their per capita income and other disposable incomes are on the higher side compared to many other expat communities. But even as the House of Anita Dongre makes modern international clothing, it is true to Indianness in terms of design and aesthetics. Even for the American market, it only works with Indian professionals.
Yash says, “When we set up shop in New York, customers started coming in from day one. Many of them felt emotional and some got teary as they said they were so proud that an Indian brand would make it big globally.”
The next destination after New York was Dubai, where it opened another flagship store in the luxurious Dubai Mall in 2023. Counterintuitive: Even though the UAE has a large Indian population, the business model here is different. About 75 percent of the customers are Arab and international, the rest are Indians. Moreover, Dubai Mall is very selective when it comes to the types of brands they work with. Normally, a brand would be given preference in the mall after having around two to three stores in Dubai. But because the Anita Dongre brand had a high global brand value, it was selected at the first store itself. This strategy speaks volumes about the changing nature of Dubai in recent years. In the future, the company plans to expand within the region in Dubai and other parts of the UAE and the Middle East. The group is also planning more stores in the US, North America and the UK.
Yash says a number of factors have contributed to the company's success in going global. To start with, the first mover advantage of an Indian fashion retailer in that market. Second, it has adapted and adapted its positioning and branding strategy from market to market. Third: listen to what the consumer wants. Over the past three years it has done a lot of market research in the UAE region and held a number of exhibitions, which has given the company a lot of knowledge that has been used to create products for that market. For example, the company is considering introducing an existing brand called Global Desi, which falls in the Indo-fusion category. It has also created local websites where the US and Dubai also have their own websites in addition to the main company website. Finally, close monitoring and being close to the market is important. For example, when Yash initially set up the US presence, it was based there. Now focusing on the Dubai market, Yash has shifted its base to Dubai.
The cover of 'Beyond Three Generations: The Definitive Guide to Building Sustainable Family Businesses'
Bhima Jewellers: Creating a Startup Abroad
Have you heard of a family business group that split itself decades ago only to come together again recently, when an opportunity for growth arose by going global? Think Bhima jewelers.
In 2014, the ambitious yet daunting task of taking Bhima Jewelers global with its first store outside India in Dubai fell to twenty-five-year-old Abhishek, the dynamic grandson of founder Bhima Bhattar and son of B. Bindumadhav. It wasn't easy because it meant bringing along his uncles and cousins, who were often not on the same page.
The reason for Dubai was an easy decision. With around five million non-resident Indians (NRIs) in the Middle East, accounting for around 30 percent of the world's total NRIs, this is a natural first stop for any company looking to target this consumer group. Of this number, about 3.8 million are from Kerala. Furthermore, Dubai is often considered the alternative gold capital of the world after Kerala.
Abhishek says, “It was just like any other new venture and we had the brand recognition from the Indian diaspora there, especially the South Indian communities. This was a business that my father and my uncles told me to set up and manage. So for me it was a real entrepreneurial experience. It took me out of my comfort zone and today I am what I am because of those Dubai experiences.”
The new geography brought with it the challenges of new clients, relocating the original team from Kerala, setting up banking facilities and getting the funds for operations from Kerala, which had its regulatory challenges, setting up the right security infrastructure, bringing in the jewelry. Kerala and imports it into UAE. Along the way, Bhima also relearned the important fact that location is a priority in a fast-paced market like the Middle East. In fact, it had to abandon one location and set up a new one when it realized the first one wasn't exactly suitable.
As the saying goes, sales are vanity, profits are common sense, and cash flow is reality. Bhima in the Middle East failed to generate profits for years. The partners in the business—the extended family members who had come together for this venture—began to grow tense.
Abhishek recalls, “I didn't see the initial failure as one failure. By nature I am very optimistic and hopeful. Initially we were burning money and I promised again and again that the company would turn around. I think that was the biggest challenge. The partners only had half of that confidence, but the biggest motivation for me was to make them believe in the future of the project. About three years ago, one of the partners went so far as to say we should just end the global operation. I said, wait a minute. If you want to leave, you can, but I'll stick around here. The conviction, hard work, patience and passion have paid off. Since 2020, we have started generating operating profit. Now there's no turning back.'
Despite these hurdles, there were a few crucial elements that helped Bhima conquer the Dubai market: (i) it retained some of the traditional aspects that its products are famous for, such as antiques and temple designs; (ii) Unlike India, where standalone stores are in vogue, Bhima in Dubai followed the local trend of having stores in large malls; (iii) Since Dubai is a global megapolis, Bhima even targeted the contemporary ultra-modern woman within the NRI community.
The Covid years of 2020 and 2021 hit the company hard, especially in a new market where there was already uncertainty. Competition existed, but the group focused on three dimensions: location, products, team and consistency. They believed that if they kept their vision and execution simple, worked hard, and remained consistent, it would one day pay off.
Now that they know what works and what doesn't, they are going to expand and open new stores. Having overcome the initial challenges, they now believe they have the right learnings and business model for further global expansion and growth. The company focuses on Great Britain, the US, Singapore, Malaysia and Australia. These are also regions with a concentration of the Indian community, although unlike the Gulf, the majority are not Keralites.
There are a number of lessons to be learned from Bhima's global foray for other family SMEs looking to go global as a means to scale. First, Bhima did not opt for a comprehensive, high-investment strategy. It used the Middle East – a region with a high NRI population – as a test case and took relatively limited risks. In this way, the company was able to build on the brand equity it had into a focused, traditional brand. Bhima sent a member of the younger generation, Abhishek, to lead this project, who perhaps had much more passion and energy to get through the grueling, difficult early years.
Reprinted with permission from Beyond Three Generations: The Definitive Guide to Building Sustainable Family Businessesby Navas Meeran, Firoz Meeran, MSA Kumar and George Skaria, Harper Business