B2B companies in emerging economies: SIEMENS in India

Like China, India is an emerging powerhouse that is expected to become the world’s third-largest economy within the next 20 years. The country’s rising consumption, huge and relatively young population, and problems in energy and healthcare present huge opportunities for foreign corporations.

Siemens India is a network of 22 companies, 18 manufacturing plants and over 500 channel partners across the country. The company also employs over 17,000 people throughout India. Siemens has been active in the Indian market for over 50 years, with its first connection dating back to 1867, when Mr. Siemens supervised the laying of the first telegraphic line between London and Calcutta. The company’s first Indian office was established in 1922 and became a corporation in 1957. As of September 2009, Indian revenues totaled €1.7 billion. Recent sales in India grew nearly 23 percent.

In the past year, Siemens has renewed its plan to focus on the Indian market over the next three years. With its commitment to India, Siemens will invest €1 billion into the market, specifically focusing on the green energy market and on developing a variety of products for India, including solar powered X-ray machines, fetal heart monitors, steam turbines and road traffic management systems.  The company hopes to increase sales tenfold over the next decade to make €1 billion in sales per year. It also plans to increase its Indian workforce by 50%.

To achieve this ambitious goal, Siemens plans to utilize a “low-cost, high-quality strategy,” or frugal engineering, focusing on simple, unsophisticated products. It aims to take advantage of the country’s infrastructure needs and develop products specifically for the Indian market.

Some examples of Siemens projects in India include:

-Investing in India’s renewable energies. Siemens plans to invest $346 million over the next three years, one-third of which will be used to help develop wind turbine technology and solar power.

-Setting up six manufacturing hubs in India. These facilities will “design, develop, produce and sell products such as signaling systems and steam turbines.”

As in China, Siemens is focusing on local R&D, design, and manufacturing in India. Although there is some debate regarding the level of skill and precision of local engineers and manufacturers, “Indovation” (innovations created by Indians) is certainly a key to the future. Some “Indovations” include a battery-powered, super-low-cost refrigerator that resists power cuts; an ATM for rural areas; and a flour mill powered by a scooter. If Siemens can harness this creativity and grasp the needs of this emerging economy, its optimistic projections will be realized.

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