Friday, October 07, 2005

Tapping the Rich Markets of India

Vasu Reddy from Chicago
4th October 2005

Many of the NRI families come from rural areas and smaller towns of India. For example everyone doesn’t come from Hyderabad, although we may have a family member or a relative who live there. With almost 10 million some people in Hyderabad, it is likely that in over 70 some million people who live in Andhra Pradesh, at least we have someone who we know or somehow related to in Hyderabad. In that context the market power of the capital city is obvious. Political center, industrial center, hitech center and cultural center along with the huge population is attractive for businesses to hoard their wares in Hyderabad. Big homes, big fancy cars, multiplexes, cinema and other entertainment centers along with advertisers who constantly spend zillions of rupees in the big city is natural.

But think of the NRI families that are from smaller centers such as Vijayawada, Guntur, Nellore, Tirupathi, Proddutur, Amalapuram, Badrachalam and many other towns, and in cases villages where our families live, and have all the affluence necessary to afford the luxuries of wealth.

In reality the ratio of people who are affluent may be higher in the smaller markets rater than in the big city. From the Internet cafes to Mercedes showrooms of Hyderabad cater to the affluent folks of the city, and the rich of the rural Pradesh have to go all the way to the big city to get some of these high-ticket items. I am sure the gold and sari shops of the smaller cities are as posh as the big city. How about the big-ticket items, cars, appliances, specialist markets that are very affordable to the very rich who live in the villages, but are not advertised in the smaller communities or available easily.

I really don’t have a business model that can take every luxury affordable and available in Hyderabad and take them to the village, but there has to be a way to make things easy to acquire if you can afford them. The transportation facilities seem to be much improved since a generation ago and there is better communications with wireless networks.

May be it is time for many of our dynamic NRI to think of modeling the business strategies to develop access to their communities, where by the folks form the rural areas don’t have to go to Hyderabad or next big city to buy stuff. For example this year I have been to small communities, which are fairly affluent but have neither Internet nor mobile coverage. This is one of the small things that can help better communication. For example if my mom can see me on the Internet (for which there is a need for Internet connectivity) and can speak to me on the telephone (for which the wireless or wire line networks must work if they are there or they need to be built) then I won’t miss her as much as if I am unable to find her. By simple development the communications can be deployed. I am not sure why the private enterprise has not made inroads into small community infrastructure development?

There is a lot of development with educational facilities over the last generation, with many technical colleges springing everywhere. There is plenty of human resources all around the state, to provide for opportunity for enterprise to grow in every area of the state (for that matter the country). And thanks to the NRI wealth there is every village with a decent population that is rich and can afford all the high-ticket items. There is plenty of opportunity in all parts for business of transportation, communications, agriculture, commerce and other areas that can be upgraded to the levels of the big city.

The congestion of the big city and the extraordinary difference in cost of living is a good reason to make all parts of the state accessible. With the affordability of the rural population (it perhaps is a greater than the big city) serious efforts to bring all things that are available in the big city to all parts of the state, except the congestion and high prices. While the market is there with the rich farmers and traders along with the NRI families, only planning is necessary to capitalize on this.

I have been seriously thinking of various models that extend the infrastructure of the big city along with its big-ticket items to all parts of the state. Much has been said about development in the state with various governments including this one, but bringing the entire state with similar market system as the big city will need enterprise doing the planning and work, not just the state government. Companies, individuals and enterprise should seriously start planning for catering to the whole state and bring products and services to every community that can afford them. Think of the impulse buying people go through everyday when they go shopping. Whatever is on your list plus whatever else you see available become your targets for buying. The rural markets become the same. If it is available people will but it. Be it cars, apartments, gas stove or beans, if they are easily available they become your targets for impulse buying.

People can afford things, and are willing to pay for them and need them. I invite all NRI and the folks with people in the smaller towns to work on solutions. Every market need met, is simply better business for all people involved. Every additional service available in your town is a value addition to the family, government and the development of the state in general. It will be incredible to not rely on just going to the city to buy stuff but simply be at home in the village and have the pleasure of the product or service delivered to you. Indians are great spenders and acquirers and no question they will welcome all the luxuries money can buy into their communities, and all the services they need to be in touch with the rest of the world without traveling to the big city. I would believe that the small markets are really not that small. It is the entire state that is rich with farmers, merchants and NRI. They can make Andhra Pradesh a big market by acquiring for all things that are accessible to them. They can afford them.

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