India has to stay competitive in global business world: Kohler

Nandana James Mumbai | Updated on December 10, 2019 Published on December 10, 2019

David Kohler, President and CEO, Kohler Co

For the US-based premium sanitaryware brand Kohler Co, India remains one of its three most strategic markets, despite the prevailing economic slowdown. In an interview to BusinessLine, David Kohler, President and CEO, Kohler Co, explains why he thinks India is one of the most interesting and creative markets in the world. Excerpts:

Kohler started operations in India in 2006. What are some of the changes and trends you have been witnessing since then?

I think the brand’s journey has been excellent. Everything we believed about India, in terms of the opportunity, the fast growth and the dynamic economy, has been true. I think it has been exciting to see the design dynamic and the continued evolution of the luxury market, and the interest that people have in designing beautiful spaces in their home. To us, it is one of the most interesting and creative markets that we serve anywhere in the world... We think that it has been a great market and we have evolved over that period of time to be the leading international brand in the market.

How would you describe the importance of the Indian market to the company?

We think it’s hugely important. When we think of our top three most strategic markets, India comes right after the US, our original market, and China, where we are the number one brand. These are the three most strategic markets for us because of their long-term economic potential. In India, we have been growing at around 2x the market growth in the last five years.

Is there any India-specific strategy that you follow?

Our strategy is similar around the world, but we also have to tailor it to be appropriate for the market and that starts with building a strong organisation. Our team in India is one of the strongest teams we have anywhere in the world. From the beginning, we started designing and developing products for the Indian market. We also believe in building a network of strong business partners, distribution partners.

So, we have invested significantly in the country. We build manufacturing and supply chain capability across India. We have two modern manufacturing facilities in Gujarat. We also use those manufacturing locations for export to the US and Europe. We’re trying to build our brand in India in a very creative way.

Are there plans to expand the capacity at your manufacturing plants?

Yes, both of them continue to expand. One is for faucets or taps and the other is for ceramics. They are two of our larger and most capable plants in the world. It’s a very significant facility… They are significant investments.

Does the slowing consumption in India concern you?

We think there will be ups and downs in every major market. In a high growth market like this, you are going to have some volatility here and there and you will go through shorter term cycles, but that really doesn’t make a difference to us, because we are focused on the long term. And we invest through cycles and continue to do the right things to build the brand. We don’t really change our strategy dramatically based on short-term cycles. So, the short answer is: we are not concerned about the slowdown.

Has the slowdown had any impact on the company and the larger premium sanitaryware market?

No. On the project side, you may see some projects getting delayed, depending on what market they are in.

What do you have to say about the ease of doing business in India?

I think it’s like in any other country or culture. You have to learn how to do business in India and one of the keys to our business is building a strong local team that understands the market. We have not built this organisation with lots of expats. It’s a local team that understands the laws, understands how the economy runs, understands how to navigate the complexities of this market. Certainly, whether it is the tax structure in the country or the legal environment, there are a set of complexities to operating in India, but that’s the same for all companies.

Just because we are a foreign company, we are not at any major disadvantage. So it’s just the reality of how the economy and the country works. We have not felt disadvantaged, because we have built a strong team that understands how to do business in India. But, is there bureaucracy and complexity in India? Yes, and it’s there in most countries. It’s just that every country is a little different.

Is there any change that you would like to see?

I think it’s always about the infrastructure. The better the infrastructure and logistics network – the highways, mass transportation, airport etc – the easier it will be to do business across the country. But, since my arrival in India 16-17 years ago, the quality of the infrastructure – the airports and road systems etc – has improved dramatically.

I think India is making a lot of progress. But the reality is, India has to make a lot of progress because of the size of the country and how much opportunity there is. And other countries such as China are progressing rapidly. So, in this competitive landscape where businesses and companies can decide where to invest in, it is important for India to stay competitive in the global business world and continue to improve the attractiveness of its economy. So, I think it’s imperative that the government realises that and continue to drive that type of investment. That also impacts the quality of life for all.

Talking about investments, what do you have to say about India as a potential investment destination?

For us, it has been a great investment destination because of the long-term potential of the market for us, but then also as an export base for manufacturing.

So, we very much have bought into this Make in India idea, not just because of the philosophy of making in India, but also because we build manufacturing facilities that are high quality and very cost-competitive with any market in the world. So they are great export facilities. If we were just interested in short-term returns, we would not invest in building a brand like we have over the last 14 years.

I mean, to really build a brand in the country, you can’t be looking at just short-term results. You have to be looking at long-term results because, with the exception of a few categories, you can’t harvest a return that quickly and really build the brand.

Are there plans to have more manufacturing plants in India?

Absolutely. As we mature in some of these other categories that we have talked about, we definitely want to develop domestic manufacturing capabilities.

Ever since 2006, what are some of the positive and dampening factors that you noticed in the market when it comes to the premium decor space?

I think one of the biggest things that I've talked a little bit about is the appetite and interest in design in the country. And we've been really pleased to see the Indian consumer and the architects and designers really being interested in colours, materials, finishes... There’s almost more of a vibrant interest in colour and texture and finish in this country. I mean, there’s this whole kind of personality and emotion around design and the use of colour in a rich kind of way that we don’t necessarily see in other markets as strong as we see here. And that has played right into our strength as a company because we are a leader in colour and finish.

Despite all the numbers and figures saying otherwise, what makes you bullish about the Indian market?

Well, I would just keep coming back to, why not? Look at the numbers around population growth, look at the numbers around per capita GDP, per capita income, look at the numbers around education and how the country continues to invest in education.

You know, I think this market does have very strong, long-term potential and it’s demonstrating that year by year with one of the highest GDP growth rates in the world. And the country is making progress. So, to me, this is a very different market than other markets in the world.

Published on December 10, 2019
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