The Hindu Business Line : How to take the first few steps

Prakash Menon, President of NIIT China, is one of the first and longest serving technocrats from India in China today. He came to scout out opportunities for NIIT in late 2007 and stayed back ever since to see it gain the confidence and trust of many of China’s provinces and universities.

His wife and two school-going children have made Shanghai their home for nearly a decade.

Menon himself is an active member of the Indian Association (and a former President), networking the 2,800-strong Indian community in Shanghai (their proactive patron is the Indian Consul General, Vishnu Prakash) with 4,000 in Guangzhou and some 800 in Beijing.

Training under way at NIIT’s Nanjing Road centre, Shanghai.

eWorld asked him what the challenges and rewards for Indian IT players coming to China might be.

Why should Indian IT players look to setting up an operation in China?

Indian Technology vendors can look at the China market for the following business areas:

The Chinese domestic market (difficult to break the ice, takes time, but TCS and Satyam have shown the way).

The regional market of Japan and Korea. Given the cultural proximity between China and Japan, and given Japanese skills are higher in this region when compared to India, this is a good place to address the Japanese market.

Most MNCs in the US and Europe want to establish a risk mitigation strategy and therefore would want operations in multiple countries. China is an obvious choice. If one has a large ambition then there is no choice today but to be in China as well.

What is the best route?

Avoid making a joint venture to begin with, be here as a Wholly Owned Foreign Enterprise (WOFE) , learn the way business is done here and then look at a JV with a local company for addressing the domestic market… the model of TCS is very good. Look at areas such as embedded software and gaming/animation as the Chinese minds are better suited to these sort of applications when compared to business applications of the West. Also, hardware is cheaper and therefore lends itself to animation, etc, where larger processing capability is required.

What is a good starting point?

China is not just the big four cities of Shanghai, Beijing, Guangzhou and Shenzhen: There are a number of second-tier cities that offer excellent facilities , incentives and much cheaper manpower, places such as Wuxi and Suzhou. Choose the city based on the incentives the government offers you.

How soon can one expect to see results?

Do not expect to start seeing results immediately, be patient and remember China is a commitment.

Top management time must be spent on China strategy and operations. Be prepared to open a large cheque book when you enter China. You must have financial muscle to establish yourself.

What are the challenges? Is it language, cultural issues?

Yes, language is a barrier, but the cultural gap, though much stronger, can be overcome. It takes about three months to speak the basic Chinese. You have to learn minimum 3,000 or so characters to read newspaper headlines.

Convenient shopping, great restaurants, great infrastructure, very safe, excellent international schools, household help comparatively easy to get — we call them Aayi (aunt in Chinese).. it’s fun all the way. Can’t ask for more!

The legal system is yet another area that might be a concern. One needs to understand how that works, especially keeping IPR, etc, in mind.

In addition, one needs to know what motivates the Chinese, this helps in day-to-day management and in bringing in the right HR policies.

A very big challenge is to get your own Indian headquarters to think ‘Chinese’. This probably is the most difficult. The pace at which China works is amazing and when we don’t get back on anything at the speed they are used to — which means within 24 hours — they interpret it as a lack of interest from our side.

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