From being the world’s “back office” providing customer service and technical support for global brands, India is transforming into a lucrative domestic market and a major exporter. The rising yuan and the rise in raw material and operating costs in China, traditionally known as the “world’s factory”, is also encouraging international buyers to source more products from other low-cost manufacturing countries, such as India. This presents a great opportunity for Indian businesses to expand their business overseas.
Much of this activity is being driven by India’s eight million small and medium-size enterprises (SMEs), of which an estimated one million are in the export business. But how can an Indian SME forge into the global marketplace given its limited resources? Most small enterprises dismiss the export market as too expensive and only possible for big companies. However, the emergence of the Internet has brought new marketing channels that make it easy to bring potential trading partners together, whether they are based in Chennai and Mumbai or Gujarat and London. For just Rs65 a day, SMEs can now set up a premium online storefront on a virtual marketplace such as Alibaba.com and tap into an active global buyer community that is looking for everything—frozen vegetables to industrial machinery. The following real-life cases demonstrate how small suppliers have gone beyond their limits by moving online.
EverFast Rechargeables, a French company, posted a new battery charger on Alibaba.com’s international marketplace, and literally overnight the buzz and excitement about the product spread to blogs and technology websites worldwide. The company had to upgrade its server to cope with the huge number of visitors and shipped 200,000 chargers to eight countries in the first 30 days. Within just one year, it had concluded over $300,000 (around Rs1.28 crore) worth of deals through e-commerce. The speed and global reach offered by online marketplaces is unprecedented.
Lebo, S.L.U. is a small Spanish manufacturer of car cleaning products. Although it is based on France’s doorstep, the company had found it difficult to enter the French market using traditional marketing channels. In 2005, it set up an online storefront and was surprised to receive a growing number of enquiries from French buyers. It took the Internet to help it finally break into France. The company’s online presence has also won it new customers from countries beyond Western Europe, such as Latvia, Romania and Egypt.
I have also learnt of two remarkable success stories among our 400,000 Indian members. One of them is DVN Traders, a small jewellery trading firm that, thanks to e-commerce, grew from one workshop to an established jewellery brand with seven factories in just over one year. Niraj Choksi and his brother set up the company in 1975 to sell different kinds of jewellery, which range from genuine diamond-studded gold rings to 925 sterling silver necklaces. But it was only in 2006 that they ventured into the export business by marketing their products online, and that’s when their business really started to take off. DVN Traders’ jewellery can now be found in the US, Europe and Australia.
The other Indian company that has left a deep impression on me is Krish Exports, a manufacturer and exporter of different types of stainless steel utensils and kitchenware. In 2003, the company turned to the Internet in an effort to expand its global customer base. It established an online storefront on Alibaba.com and shortly afterwards the company was connected with several serious buyers and increased its turnover by $1 million. When they sold 10,000 cocktail shakers to a buyer in Brazil for $30,000, they understood the power of the Internet—new customers can be found anywhere, even in a far-off country like Brazil.
E-commerce has made it possible for companies in cities and villages alike to connect and trade with customers from around the world. Many companies in India are small. With less than 50 people, they cannot afford to have expensive marketing strategies, which include trade shows, magazines and sales offices. They need one reliable, simple and cost-effective solution that can help them find customers in India and worldwide. Many businesses are finding that solution online.
International trade is no longer just the realm of multinational companies. Millions of SMEs around the world have gained visibility in the global marketplace through e-commerce. I believe it is time for more Indian SME suppliers to make their move.
David Wei is chief executive officer of Alibaba.com.
This is the fourth in an exclusive five-part series he is writing for Mint.
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