Why this India craze?
There's a growing recognition that India is a very important centre for IT brains. Bothfrom an infrastructure basis and from a consumer standpoint, India is on the verge of anIT explosion. The population is well educated. So, foreign interest is natural.
But it isn't the cheapest place to do business in...
Depends on what you are trying to accomplish. The duties, of course, make it a little hardfor people to grow the market as fast as one would like to. It is no longer a source forcheap labour. Rather, it's one of the most expensive places to do business now. But it'sthe kind of facilities India has to offer, including human resources, that makes it such ahot spot.
What numbers are we looking at?
We see the market growing about 88 per cent in the PC arena. idc has projected the marketto grow at 50 per cent plus for the next three-four years and we will meet the challengeby growing four to five times that figure.
There's a huge grey market...
The market is split 75 per cent white box (grey market) and 25 per cent branded. This isbecause typically in a developing market price is the key. We have to figure out how tocompete with the white box. We are doing this through exclusive stores to cut down costsand give people a better product at a low price. The Centre has been extremely flexible ontaxation.
The PC is still an urban phenomenon here. What about rural penetration?
We are doing exactly that. We have started 200 exclusive stores in 145 places, themajority of which are non-urban. One of our key initiatives is to go upcountry and developthe market there and increase penetration because that is where the market lies. We have alot of plans there.
China, too, is another big name in Asia...
The major difference for Compaq is that we have been successful in India and not so inChina. The challenge there is the emergence of local heroes who have achieved a scale ofoperations that allows them cost efficiency. Also, there is transparency in India in termsof business rules and that's what one needs as a foreign company. The rules arestraightforward. But in China we are still figuring out things.
Is China a better market?
Probably not. India is not as mature as the US but definitely more mature than China. Justpopulation does not make a market. Also, don't discount the language barrier inChina.
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