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Book extract: Taking a family business global

Over the years, small family businesses have established strong business ties internationally. A new book examines how some Indian ones have succeeded abroad

Some critical elements have helped Indian businesses crack markets abroad. (Representative image)
Some critical elements have helped Indian businesses crack markets abroad. (Representative image) (iStockphoto)

Indian companies going global is not a phenomenon. In fact, over the years, there have been three distinct waves in this direction. In the 1970s and 1980s, a few business groups like Aditya Birla, the Lohias and L.N. Mittal (father of Lakshmi Mittal of Arcelor Mittal) set foot overseas, particularly in Southeast Asia. The second wave was in the latter half of 1990s after India’s economic liberalization, when the country’s foreign exchange reserves became better and the government liberalized rules for overseas investment. During this phase, the Tatas, Mahindras and the Godrej family too aggressively acquired overseas companies. Finally, in the 2000s, technology-driven companies like Infosys, Wipro and NIIT expanded both into the western and eastern markets.

Additionally, in the past decade, there has been a significant shift in overseas investment destinations (OIDs). In the first half, overseas investments were focused on resource-rich nations like Australia, the UAE, and Sudan. In the latter half, overseas investments were directed toward nations offering greater tax advantages, such as Mauritius, Singapore, the British Virgin Islands, and the Netherlands.

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The above successes happened despite the slowdown of the global economy due to Covid-19. Government policies and reforms helped in boosting overseas direct investment (ODI). For example, the government reduced restrictions on Indian companies investing overseas by removing the cap on raising funding through the pledge of shares, local assets and foreign assets. Finally, India has been instrumental in signing various memoranda of understanding (MOUs) and free trade agreements (FTAs).

While the above is largely applicable to large business houses, the presence of medium-scale family businesses was virtually nil till the early 2000s. But since then, a small group of lesser-known family businesses have established strong business ties with foreign shores. We profile strategies of some firms:

House of Anita Dongre: Building a Global Brand

With an existing global brand equity on the back of high-profile clients like Kate Middleton, Hillary Clinton and Priyanka Chopra, setting up an Anita Dongre flagship store in upmarket Manhattan was a natural extension. In 2018, when the 4,000 square feet store was opened, it was perhaps one of the first Indian retail fashion stores in the US. Some lesser-known Indian fashion brands had set up stores in areas like New Jersey where there is a heavy concentration of middle-class Indian consumers.

Yash and Anita Dongre
Yash and Anita Dongre

By setting up a store in high street New York, the Anita Dongre group wanted to target the rich Indian and South Asian clientele apart from American clients. Traditionally, high-net-worth Indian-Americans used to fly down to Mumbai or Delhi when they had to buy occasion wear for weddings and other family functions. Now, it was available in the US itself. In the US, Anita Dongre tasted early success with its occasion and bridal wear because the Indian diaspora is huge and powerful. Yash (Dongre, business head of House of Anita Dongre) says their per capita and other disposable incomes are on the higher side compared to a lot of other expat communities. But even though the House of Anita Dongre does modern international clothing, it is true to Indianness in terms of design and aesthetics. Even for the American market, it works only with Indian craftsmen.

Says Yash, ‘When we set up our store in New York we had customers landing up from day one. Many of them felt emotional and some would tear up saying that there were so proud to see an Indian brand making it big globally.’

The next destination after New York was Dubai, where it opened another flagship store in the high-end Dubai Mall in 2023. Counterintuitively, even though the UAE has a large Indian population, here the business model is different. About 75 per cent of the customers are Arab and international ones and the rest are Indians. Additionally, Dubai Mall is very selective about the kind of brands they partner with. Normally, a brand would get preference at the mall after the presence of about two to three stores in Dubai. But because the Anita Dongre brand had high global brand equity, it got selected with the first store itself. This strategy speaks volumes about the changing nature of Dubai in recent years. Moving forward, within the region, the company plans to expand within Dubai and in other parts of UAE and the Middle East. Further, the group is planning more stores in the US, North America and the UK.

Yash says that a few factors have contributed to its success in going global. To start with, the first-mover advantage of an Indian fashion retail in that market. Second, it has customized and adapted its positioning and brand strategy from market to market. Third, listening to what the consumer wants. In the last three years, it has done a lot of market research in the UAE region and did a couple of exhibitions, which gave the company a lot of learnings that were used to create products to that market. For example, the company is mulling over introducing an existing brand called Global Desi, which is in the Indo-fusion category. It has also created local websites where the US and Dubai have own websites apart from the main corporate website. Finally, close monitoring and being close to the market is important. For example, initially when it was setting up the US presence, Yash was based there. Now, that it is focusing on the Dubai market, Yash has shifted his base to Dubai.

The cover of 'Beyond Three Generations: The Definitive Guide to Building Enduring Family Businesses'
The cover of 'Beyond Three Generations: The Definitive Guide to Building Enduring Family Businesses'

Bhima Jewellers: Creating a Startup Overseas

Have you heard of a family business group that partitioned itself several decades ago only to come together again more recently, when an opportunity for growth presented itself through going global? Think Bhima Jewellers.

In 2014, the ambitious yet onerous task of taking Bhima Jewellers global with its first store outside India in Dubai fell on twenty-five-year-old Abhishek, the dynamic grandson of founder Bhima Bhattar and son of B. Bindumadhav. It was not easy because it meant taking along his uncles and cousins who often were not on the same page.

The rationale for Dubai was an easy decision. With around five million non-resident Indians (NRIs) in the Middle East, which accounts for about 30 per cent of the total NRIs in the world, it is a natural first-stop for any company wanting to target this consumer group. Of this number, around 3.8 million are from Kerala. Furthermore, Dubai is often considered the alternative gold capital of the world after Kerala.

Says Abhishek, ‘It was like any other new venture and we did have the brand recognition by the Indian diaspora there, especially the South Indian communities. This was a business that my father and my uncles asked me to set up and manage. So, it was like a real entrepreneurial experience for me. It took me out of my comfort zone and today I am what I am because of those Dubai experiences.’

The new geography came with its attendant challenges: new customers, shifting the initial team from Kerala, setting up banking facilities and getting the funds for operations from Kerala, which had its regulatory issues, setting up the right security infrastructure, getting the jewellery made in Kerala and importing it into UAE. Along the way, Bhima also re-learnt the important fact that location is a priority in a market like Middle East, which has a fast life. In fact, it had to move out of one location and set up a new one when it was realized that the first one was not at the most appropriate.

As the saying goes, sales are vanity, profit is sanity and cash flow is reality. Bhima in the Middle East was not able to generate profits for many years. The partners in the business—the extended family members who had come together for this venture—started to get edgy.

Abhishek recalls, ‘I did not see the initial failure as one. By nature, I am very optimistic and hopeful. We were burning cash initially and I did give a commitment over and over again that the business would turn around. I think that was the biggest challenge. The partners only had half that confidence but the biggest motivation for me was to make them believe in the future of the project. In fact, just about three years back, one of the partners even went to the extent of saying that we should just wind up the global operation. I said, hold on. If you want to exit you can, but I am sticking around here. The conviction, hard work, patience and the passion paid off. We have started generating operating profits since 2020. Now there is no going back.’

Despite these hurdles, there were a few critical elements that helped Bhima in cracking the Dubai market: (i) it retained some of the traditional aspects its products are famous for, like antique and temple designs; (ii) unlike in India, where stand-alone stores are in vogue, in Dubai, Bhima went in with the local trend of having stores in the large format malls; (iii) with Dubai being a global megapolis, Bhima targeted the contemporary, ultra-modern woman even within the NRI community.

The Covid years of 2020 and 2021 hit the company hard, especially in a new market when there was already ambiguity. Competition existed, but the group focused on three dimensions: location, products, team and consistency. They believed that if they kept their vision and execution simple, worked hard and stayed consistent, it would pay off one day.

Now that they know what works and what does not, they are expanding and opening new stores. Having overcome the initial challenges, they now believe that they have got the right learnings and business model for further global expansion and growth. The company is looking towards the UK, US, Singapore, Malaysia and Australia. These are also regions with concentration of the Indian community, though unlike the Gulf, the majority are not Keralites.

There are a number of lessons from Bhima’s global foray for other family MSMEs who want to go global as a means of scaling-up. First, Bhima did not go for an all-out high-investment strategy. It used the Middle East—a region with a high NRI population—as a test case, taking relatively limited risks. In this way, the company was able to build upon the brand equity that it had into a focused, legacy brand. Bhima sent a member of the younger generation, Abhishek, as the leader of this project, who perhaps had a lot more passion and energy to last out the gruelling early difficult years.

Excerpted with permission from Beyond Three Generations: The Definitive Guide to Building Enduring Family Businesses, by Navas Meeran, Firoz Meeran, M.S.A. Kumar and George Skaria, Harper Business

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