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Indian Retail Market Offers Promise for Hong Kong Companies
HKTDC Research Report Sees Opportunities in Working with Indian Companies

18 November 2008 - The retail market in India is expected to jump from US$333 billion in 2007 to US$453 billion by 2010. This retail boom is led by the fast-expanding middle class and the country's young consumers, a new research report from the Hong Kong Travel Development Council (HKTDC) reveals. "India: A Challenging Market with Promise in South Asia" notes increasing consumer demand in India for a greater variety of products and says that Indian retailers are sourcing internationally, making the country a potentially strong market for Hong Kong products.

This is particularly true in the current global economic climate, according to HKTDC Assistant Chief Economist Dickson Ho. "With exports to developed markets in the United States and Europe slowing, it makes good sense for Hong Kong companies to explore the promise of new markets such as India," said Mr Ho.

With a population of 1.1 billion, 60 per cent of whom are under the age of 30, India's purchasing power is rising and the demand for products, including international brands, growing markedly. Indian retailers are eager to tap into the consumer market through expansion and diversification, turning to multiple retail outlets with new formats, as well as sourcing globally.

Indian retailers are familiar with the product offerings from Hong Kong and the Chinese mainland. They prefer dealing with Hong Kong companies because of their quality products and competitive pricing, their connections and experience in mainland sourcing and their strong communication skills and responsiveness.

Along with supplying products and components to India, Hong Kong companies can introduce brands into the Indian market through local distributors or retailers under licensing and franchise agreements. Another option, according to the HKTDC research report, is to form joint ventures with Indian companies, taking advantage of their knowledge of local culture, markets, trends and related laws and regulations. Hong Kong companies can seek Indian partners through Indian chambers and associations. Teaming up with Indian companies for ODM and OBM arrangements in India is also worth considering.

Consumers in bigger cities have developed a brand culture and taste for quality products. With that in mind, Hong Kong companies should target major cities such as Mumbai, Delhi, Bangalore, Chennai and Kolkata. As for products, apparel, gems and jewellery, toys, watches, furniture and electronics products and components offer considerable potential.

Regarding services, Indian developers often engage international architectural and design firms for construction projects. Hong Kong companies could consider forming consortiums to bid for projects in India that would otherwise be too big for an individual firm to handle.

As with any new market, there are challenges as well as opportunities in India, and companies considering the market must be aware of them. Seek reliable legal advice to help minimise problems in forming partnerships with Indian companies. Cultivating strong working relationships with local authorities is particularly important in India. Hong Kong companies should also be aware that infrastructure development, including electrical power, traffic and telecommunications networks, remains a challenge in doing business.

Along with research reports, the HKTDC also brings Hong Kong suppliers to India to visit trade fairs there. A Hong Kong toy industry trade delegation will travel to Mumbai, 18 November, to explore business opportunities.

Hong Kong Exports to India

US$ million 2002 2007 Compound Annual Growth Rate (%)
Total Exports 1,441 4,463 +25
Apparel 3 3 +60
Gems and Jewellery 661 2,411 +30
Watches and Clocks 37 47 +5
Toys and Games 8 10 +4
Furniture 0.3 11 +53
Electronics and Electrical
  • Consumer electronics

  • Household electrical

  • Telecommunications

  • 448
    96
    3
    120
    1,285
    216
    5
    405
    +24
    +18
    +9
    +28
    Source: Census & Statistics Department, Hong Kong

    Website
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    About the HKTDC
    Established in 1966, the Hong Kong Trade Development Council (HKTDC) is the international marketing arm for Hong Kong-based traders, manufacturers and service providers. With more than 40 offices worldwide, including 11 in the Chinese mainland, the HKTDC promotes Hong Kong as a platform for doing business with China and Asia. The HKTDC also organises trade fairs and business missions to connect companies with opportunities in Hong Kong and the mainland, while providing information via trade publications, research reports and online. For more information, visit www.hktdc.com

     

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