If you run, work in or source from an SME in India, this is something for you to read. For, who better to shed light on the ins and outs of the SME sector than Manoj Barve, the India Head of the BVMW (German Federal Association of SMEs)? With his extensive experience in the German and Indian SME sector, Mr. Barve talks about the differences and similarities between the two and shares his thoughts on the key focus areas for Indian SMEs to make it big internationally.
Could you tell us a little bit about your role and responsibilities as the India Head of the BVMW?
With my experience of living and working in Germany for 17 years, I have always wanted to work in the domain of Indo-German collaboration. So after I moved on from my corporate role a year and a half ago, I started my own consultancy called Kontakt India. And just a few months ago, I was in Germany and became the India Head of BVMW. The association has about 550,000 member companies that are predominantly German. My role is to help these companies as and when they come to India with the intention of sourcing material, forming joint ventures, etc. This would normally entail market entry advisory services, intercultural workshops, setting up sales organisations, providing transactional services, etc.
On the other hand, an increasing number of Indian companies want to have some kind of cooperation with Germany. This can either be in the form of technology transfer or they may wish to explore Germany as a potential market. I also have to help them in these collaboration projects.
We know that SMEs constitute an important part of the Indian economy. So what government initiatives would help SMEs?
The present government has already understood the importance of SMEs in employment generation because large companies either outsource or automate their activities. SMEs, however, exploit the demographic dividend properly. The government has already taken financial measures such as asking banks to support SMEs and startups. What SMEs lack currently is adequate hand holding. Therefore, additional efforts must be taken to train SMEs for skill development, standardization, etc.
What are the other key areas that Indian SMEs need to focus on?
One of the most important areas is skill development and focus. For this, a good example to follow is the Mittelstand, that is, the German SME sector. While even German SMEs are usually family owned companies like their counterparts in India, they are strikingly different because they are extremely focused on one kind of product. This has helped them carve out a niche and produce high quality products with precision and consistency. So even though these companies don’t necessarily have an international presence, they have become masters of export. Another important point is skill development. German SMEs employ 84% apprentices which helps young people get trained and find jobs locally. Once Indian SMEs gain better directed focus and invest in skill development, a lot of other things such as innovation, quality and export will fall into place.
How important is it for SMEs to take linguistic efforts while competing globally?
Linguistic efforts are very important. So much so that even the tag line of my own company, Kontakt India, is “We speak your language.” (laughs) I think English plays a very important role in the process of internationalization of SMEs. A lot of Indian SMEs are at par with international standards in terms of technology and quality. What they lack is the ability to present themselves perfectly, using proper language. Since marketing has gone from personal to digital, it is also very important to engage services from professionals for designing and writing the content for websites and other literature. Simple things like well-written emails can make a big difference while dealing with MNCs and big companies. Language service providers have therefore become key vendors. The new product launched by BITS is in fact a very good example of how English is crucial to the success of SMEs in India.
Secondly, as we can see from the example of e-Commerce and telecom companies, harnessing the power of regional languages can open newer markets. Regional languages gain further importance for empowering the shop floor in decision making. Shop floor operators should be able to read product specifications, machine maintenance manuals, etc. which will be made easier if they are in the local language.
Lastly, a lot of well established companies have started frequenting international trade fairs. Having multilingual brochures or inserts and localised websites will certainly help companies reap the most benefits from the money and time invested by them for participating in these trade fairs.
What other cultural gaps do Indian SMEs need to bridge to integrate better internationally?
India is known as a company of traders. More often than not, Indians start negotiating right away in a business meeting. Europeans have a very different approach. To begin with, they are seldom looking for vendors; they want long term partnerships. So, they will first want to discuss technical specification, compatibility, quality, etc. It is only after all of these aspects have been agreed on that they will move to the monetary aspect of the deal. Even here, it is important to know that price isn’t everything. They value quality and consistency more than getting the cheapest deal.
Lastly, we would like to know more about your plans for Indian SMEs during your tenure as India Head or BVMW.
I definitely want to get more visibility for Indian SMEs in Germany. I am also collaborating with BITS to conceive an SME Connect Programme that aims to professionalise SMEs, help them with their websites and in their preparations for visiting trade fairs. This would also include assistance in getting meetings and appointment during trade fairs. It is basically an initiative to empower SMEs.