India – Not another China:overcoming the challenges of succeeding in India

Ferra AerospaceBHS Global

Aaron Thompson,Portfolio Director, Ferra Group

Chuck Ray, BHS Business Development Manager

International Business NewsAugust 2019

Also in this issue:Practical tips on India from Cerner / Country Profile - India

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Pg. 3: Letter

Pg. 4-5: Ferra - Feature story, First National Bank

Pg. 6: Ferra, continued

Pg. 7 : BHS Global

Pg. 8: EXPRESS NEWS

Pg. 9: Cerner Tips, Kansas Global

Pg. 10: India Profile

Pg. 11: India cont’d, Transimpex

Pg. 12-14: India continued

Ferra AerospaceBHS Global

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Is India a better export market than China?In our opinion India is the cultural elephant in the room and a better bet for US traders. China has shown good growth until recently, but India has much deeper and stronger roots.

India’s market appears to have proven itself by its ability to remain largely unaffected by global downturns whereas China has seemed more susceptible.

The greater number of billionaires and millionaires in India is indicative of the fact that there are no restrictions imposed (directly or indirectly) on the growth of a business. This is directly related to India’s open economic structure. Indian consumers spend a greater part of their income on non-essential commodities, fashion accessories, and luxury items. Unlike China, media, journalism and, most importantly, judiciary, are independent and uncontrolled by the government.

Sure, there are both tariff and non-tariff barriers in India.• Infrastructure improvements• High tariffs and protectionist policies• Local content requirements• Power of the 29 states plus the federal regulations• Intellectual property (IP) protection, but they are outweighed by factors, such as freedom of speech and movement, and substantially less government control over everyday life.

It is an inviting market with many Exporting Opportunities, among others

• Aerospace & defense• Agricultural commodities• Education• Energy• Environmental technology• Travel & tourism• Healthcare• Financial services• Franchising

page 3August 2019

Ferra Engineering is an Australia-based manufacturer serving the aerospace industry from a manufacturing facility in Brisbane, Grove City, Oklahoma and other cities around the world.

In addition to its Brisbane headquarters, it has a much-needed manufacturing facility in Bangalore, India, which it opened in 2011 to provide access to lower cost manufacturing and technical services, as well as provide opportunities for the group to enter into the domestic Indian market.

Now, both the Bangalore and Brisbane facilities work in concert with the Oklahoma manufacturing plant to offer sophisticated high-end manufacturing for some of its largest customers, including Boeing, Lockheed, Northrop Grumman, Thales and others.

Ferra Group, Portfolio Director, Aaron Thompson, has full P&L responsibility for the company’s port-folio which is spread across the Australian, United States and Indian sites. He was involved in the de-velopment of the Bangalore facility in 2011, and re-cently spent 12 months living in India, and although

back in Australia now continues to supervise the outcomes and progression of that facility.

“Initially, it was a real challenge to get the Banga-lore facility up and running,” said Mr. Thompson. “There were so many statutory and compliance re-quirements in India, of which were initially foreign to us. We hired some high-level local people, but it was not until we engaged an independent con-sultant on the ground that we were able to work through these regulations and really gain a better understanding of how things actually work there.”

He pointed out that many of these regulatory restrictions have since been removed thereby making it easier to develop high-end manufacturing in India. He also explained that Ferra continues to train its Bangalore employees both on site and in Brisbane to improve their performance.

After much investigation and understanding of the restrictions, Ferra’s 40-plus employee India facility not only manufactures for some of its worldwide customers, but also began developing business with Indian aerospace customers.

Australian aerospace company manufactures amidst the challenges of India

Ferra Oklahoma facility

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August 2019page 4

It took several years for Ferra to grow its low-cost manufacturing plant in Bangalore to a viable level. Mr. Thompson’s ongoing attention and communica-tion with his management team there was required to improve the company’s much-needed supply services.

“I spent time working with all three of our facilities as we’ve grown our capabilities,” Mr. Thompson explained. “Because of the American skill set in aerospace with its large carriers, we’ve been able to incorporate those high-level skills and utilize our Bangalore, Oklahoma and Brisbane operations to meet these global needs.”

“We see a great deal more opportunity in the US and expect to expand our Oklahoma facility. The State of Oklahoma provided excellent incentives and our site there is close to many of our aero-space customers,” he continued. “We also opened a smaller office in Anaheim which provides after sales and supply chain management capability, and are establishing a presence in Washington, DC, to better interact with compliance regulators and to increase governmental affairs resources within the group.”

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Ferra has been appointed as the sole source supplier of Alternate Mission Equipment (AME) Weapon adapters in support of the JSF F-35 program

Ferra, continued on page 6

page 5August 2019

When asked for tips on how to do business in India, Mr. Thompson offered some interesting observations.

“First of all, India is not an easy country to establish a manufacturing business. There are many challenges, both social and governmen-tal. My advice is:1. Do your homework first. Be sure your upfront planning is adequate to meet the diverse and often unusual challenges you will face.2. Be sure you have boots on the ground to guide you through the complexities of doing business.3. Look for other companies that have been suc- cessful there and get their advice.4. Travel there to get a first-hand view of the busi- ness – and social – landscape.5. Keep your people engaged there to ensure that Made in India meets your standards through continued communication and interaction.

For more information about Ferra, visit www.ferra.com/au IBN

CNC machine in the Ferra India facility.

Ferra, continued from page 5

South Korean KSSII Class with Phoenice Radar system in operation, designed by Ferra Engineering

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August 2019page 6

BHS Global - Battery Handling Systems

BHS Global LTD. (BHS), based in St Louis, manufac-tures electric forklift battery handling and material handling solutions for worldwide customers. The company employs some 90 people and just cel-ebrated its 40th anniversary.

The application of battery-changing is not neces-sarily high-tech, but BHS does offer equipment that offers compliance with strict US safety regulations, which many other countries seek from its equip-ment manufacturers.

India is one of those countries, and BHS saw the opportunities available there.

“Because customs and policies are so unique in India [as they are in many countries], we were cautious about entering this market,” said Chuck Ray, BHS Business Development Manager. The way we did it was to identify a distributor relationship which already had the connections and capabilities we needed.”

This Mumbai-based distributor and manufacturer, Godrej Material Handling, already served many of the same or similar industries as BHS and was aware of the legalities and directives involved in doing business in India. Through many conversa-tions with Godrej’s people at international trade shows, it was the company’s first choice to partner in the India market.

Mr. Ray made five visits over a 30-month period to ensure that the distributor understood BHS equip-ment and process. “It has been a challenge,” he said, “even considering their market expertise.” As with many large organizations, there are turnover and promotions to contend with, and we’ve had our share.”

Since BHS has been doing business in Europe for some 20 years, they already had the CE mark, which many Indian customers require and which added to the company’s acceptability.

“Not to mislead other companies considering India, we’ve spent considerable resources in developing the market,” Mr. Ray conceded. It may be on the verge of success there.

When asked about advice for other companies considering India, Mr., Ray offered the follow-ing tips:

1. Do your due diligence in evaluating the market.2. Drill down on anticipated expenses needed to penetrate the market.3. Partner with a company based there that already works with customers you identify.4. Cover the basics of your product repeatedly to be sure they truly understand its capabili- ties and advantages.

For more information about BHS, visit its website at www.bhs1.com

BHS forklift battery room

page 7August 2019

Asahi Shimbun Japan Airlines (JAL) resumed regular air cargo service after a 9-year hiatus via a code-share flights with Kalitta Air (US) three times a week. Flights will be to and from Narita and Chicago. Previously, after filing bankruptcy in 2009, JAL only utilized the cargo holds in their airliners and chartering freight-ers when demand rose.

Nissan plans to slash 12,500 jobs to cut costs and achieve a turnaround. 6400 jobs would be eliminat-ed in 8 unspecified locations by end of fiscal year. Another reduction of 6100 jobs will come by fiscal year 2022.

Korea TimesIncreasing labor costs and union problems, trade feuds between Japan and South Korea, and the US and China trade wars are reasons that large South Korean companies are expanding their investments in the US.

Samsung Electronics - expansion of semiconductor plant in Austin, Texas (US$1.5B).

Samsung Electronics - feasibility studies for expan-sion of foundry.

Samsung Electronics - considering more invest-ments such as home appliance factories.

Hyundai Motors- plans for investment in existing plant in Alabama LG Chemical- considering building additional battery plants.

SK Innovation- plan on building new battery plant by 2025.

SK Group- eyeing multiple opportunities in US energy business.

Buenos Aires TimesSince China stopped purchasing US soybeans, the assumption was that Brazil could meet their demand. After shipping record volumes and a growing season that saw weather problems, Bra-zilian inventories are now dwindling, and the next harvest is still months away. There are few other alternatives. Argentina may be one option but

farmers there are currently hoarding beans amid upcoming election.

Amazon is studying whether to construct its largest data center in Latin America in Argentina.

According to the IMF, Venezuelan economy to con-tract by a further 35% this year.

UPM (Finland) plans to construct a US$3billion paper pulp plant in Uruguay. The company already operates one such plant there. Estimate is that it will create around 10,000 permanent jobs.

Gulf NewsOil, gas and petrochemical projects, valued at more than more US$859 billion are either underway or planned in the Middle East and North Africa of which US$283 billion are already underway.

Straits TimesBecause of a cash shortage due to the economic slowdown, some businesses in China are accepting the equivalent of IOU`s instead of cash.

Bangkok PostThe Thai government is considering a rule that requires 90% local content for “state megaproj-ects and procurement” to encourage investors and builders to use locally made materials in projects.

For example, The Eastern Economic Corridor plans has many megaprojects planned such as airports, seaports, roads and railways. Those plans are being accelerated.

ReutersAccording to the UK government, the US overtook Germany as the biggest supplier of imports for the first time since the early 2000`s in the last financial year.

According to Prime Minister Boris Johnson, a no deal Brexit preparation is his top priority.

On 8/8, US Secretary of Commerce, Wilbur Ross met with his UK counterpart, Trade Secretary Liz Truss to discuss a US-UK trade deal as well as other matters.

Express News from Around the World

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August 2019page 8

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Brent Greubel has managed Cerner software development in India and the UK for over 13 years.

IBNewsmag: Based on your experi-ence of running a major operation in India, what advice would you give to other, smaller companies wishing to do business in India?

1. Identify a strong leader for the location, someone who under stands your business and your businesses’ culture. That person will be on the ground every day and your connection point.

2. Try to have this person work in your home office for a span of time first.

3. Build trust from the remote location early and often. You will depend on it and sharing accurate/transparent updates is the key.

4. Try to do joint projects as much as possible. It works better to feel like one team and deliver together, than separating out the work and functioning as two separate groups.

5. Everyone should still feel the same level of joint accountabili- ty and responsibility.

6. Encourage travel both ways. You must have personal rela- tionships and there is nothing

better than meeting in person as regularly as possible.

7. Over communicate. Communi- cation can be difficult, and things can easily be interpreted differently over the phone. Use video whenever possible.

Tips on running a successful operation In IndiaBy Brent Greubel Cerner, Vice PresidentClinical Product Development

page 9August 2019

GeneralFor men, a lightweight suit is appropriate and ties are not compulsory except in more formal occupa-tions such as law or banking. Women should wear a pants suit instead of a dress. In India everything takes time. Handshakes are expected. Always greet the most senior person first. Use formal titles. Men do not touch women in public and vice versa. To be polite, instead of using the word “no”, Indians will use terms like “we`ll see” or “yes but it may be difficult”.

• Never lose your temper.• Never use your left hand for eating, serving, handing over or accepting things. • Never eat everything on your plate. • If you eat it all, it is a sign that you want more. • Vast cultural differences between north and south India. • Indians place a great value on relationships.

Business• English is the official business language. • Always be polite but firm.• Decisions are generally made at the highest level of the company. • Roles are very defined. • Meetings will generally begin late and end late.

PROFILE:India

A Few Practical Tips for Doing Businessin India

• Very formal and hierarchical relationship between manager and staff. • Try to schedule meetings way in advance. • Always confirm meetings beforehand. • Negotiations are generally slow. • Business cards in English are fine. • You don`t need to have cards for every local language.• Small talk before a meeting is common e.g. each other`s family.

OverviewThe climate varies from tropical monsoon climate in the south to a more temperate climate in the north. 61% percent of the land is used for agri-culture and 23.1% is forest land. India`s coastline is 4671 miles. (The US coastline is 12,383 miles.) Major religions are Hindu (79.8%), Muslim (14.2%), Christianity (2.3%) and Sikh (2%). New Delhi time is 10 hours and 30 minutes ahead of Washington D.C.

LocationIndia is located in southern Asia bordering the Arabian Sea and the Bay of Bengal in the Indian

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Ocean between Burma and Pakistan.Bordering countries are Bangladesh, Bhutan, Burma, China, Nepal and Pakistan.

Brief HistoryIndia has a very old civilization flourishing begin-ning in the third and second millennia BC. In the 19th century, India became a British colony. In 1947, India became independent through the lead-ership of Mahatma Gandhi and Jawaharial Nehru. Mr. Nehru became their first prime minister.

Size: Slightly more than 1/3 the size of the United States Population Distribution: With the exception of deserts in the northwest and edge of a moun-tain range in the far north, a very high population density exists. The core is in the north along the Ganges River and other river valleys as well as the southern coastal areas.

• Population: 1.48B (2019 est.)• Population Growth: 1.14% (2018 est.)• Literacy Rate: 71.2%• Government: Federal parliamentary republic

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EconomyIndia has a diverse economy from traditional village farming, modern agriculture, handicrafts to a wide range of high-tech industries and companies, nu-merous medium and heavy industries like iron and steel, mining, aluminum production, transportation equipment, defense manufacturing etc., and a large number of service providers as well.

• GDP: $2.726T (2018 est.)• GDP Growth Rate: 6.7% (2018 est.)• Unemployment Rate: 8.5% (2017 est)• Exchange Rate: 1 US Dollar = 71.15 INR (Indian Rupees) - 8/16/19 Labor Force: 521.9M (2017 est.) Labor Force Makeup: Agriculture - 47.0%, Industry - 22.0%, Services - 31.0% (2014) • Major Industries: Agriculture (rice, wheat, tea, sugarcane, vegetables, oilseed, cotton, jute, fish, poultry, goats, sheep etc.,) textiles, chemi- cals, food processing, steel, transportation equipment, cement, mining, petroleum, ma- chinery, software, pharmaceutical

India, continued on page 12

page 11August 2019

New Delhi market

International TradeTotal Exports: $323.1B (2018 est.)Total Imports: $507.6B (2018 est.)

• Major Exports: Mineral fuels, including oil, gems, machinery including computers, vehicles, organic chemicals, pharmaceuticals, electrical machinery, iron and steel, cotton, clothing and accessories (2018)• Major Imports: mineral fuels including oil, gems, precious metals, electrical machinery/ equipment, machinery including computers, organic chemicals, plastics/plastic articles, iron and steel, animal/vegetable fats, oils, waxes, optical, technical, medical apparatus, inorganic chemicals, (2018)• Major Export Partners: India - US, UAE, Hong Kong, China, Singapore, UK, Germany, Bangla- desh, Netherlands, Nepal (2018)• Major Import Partners: China, US, UAE, Saudi Arabia, Switzerland, Iraq, Hong Kong, South Korea, Singapore (2018)

Sampling of English Language News Sites• Times of India - general news - www.timesofindia.indiatimes.com • India Today - general news - www.indiatoday.in • The Indian Express - general news - www.indianexpress.com • Business Standard - business news - www.businessstandard.com • The Hindu Business Line - business news - www.hindubusinessline.com • Financial Express - business news - www.financialexpress.com• The Economic Times - business news - www.economictimes.indiatimes.com • Outlook Business - business news - www.outlookbusiness.com • BW Businessworld - business news - www.businessworld.in • Business Today - business news - www.businesstoday.in

India, continued from page 11

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Taj Mahal, Agraa, India

Sampling of Indian Companies• Indian Oil Corporation - www.iocl.com - large conglomerate - petroleum, natural gas and pet- rochemicals - New Delhi• Reliance Industries - www.ril.com - large conglomerate - energy, petrochemicals, textiles, natural resources, retail, telecommunications, defense - Mumbai• Tata Motors - www.tatamotors.com - autos, commercial vehicles, buses, construction equip- ment, military vehicles etc. - Mumbai• Rajesh Exports - www.rajeshindia.com - mining, refining, retail - Bangalore• Zoho Corporation - www.zohocorp.com - business management software - Chennai • ABG Shipyard - www.abgindia.com - ship design, building and repair - Mumbai• ApolloTyres Ltd. - www.apollotyres.com - tire production - Gurgaon• Exide Industries Ltd. - www.exideindustries.com - battery production, insurance services - Kolkata• Ashok Leyland - www.ashokleyland.com - large manufacturer of buses, trucks, spare parts, engines etc. - Chennai

• Mahindra & Mahindra - www.mahindra.com - tractors, automobiles, commercial vehicles, two-wheel vehicles etc. - Mumbai• Pidilite Industries Ltd. - www.pidilite.com - adhesives, construction chemicals - Mumbai• Persistent Systems Ltd. - www.persistent.com - IT services- Pune• Rashtriya Chemicals & Fertilizers - www.refitd.com - chemicals & fertilizers - Mumbai• Tessolve - www.tessolve.com - semiconductor engineering solution provider - Bangalore• Thermax - www.thermaxglobal.com - engineer- ing company involved in energy & environment - Pune• Ultratech Cement - www.ultratechcement.com - cement and concrete production - Mumbai• Unitech Group - www.unitechgroup.com - real estate investment and construction - New Delhi• Vicco Group - www.viccolabs.com - pharmaceuticals - Mumbai• Air India - www.airindia.com - government owned airline - New Delhi• Amrutanjan Healthcare - www.amrutanjan.com - healthcare & beauty products, software, fruit juices - Chennai

India, continued on page 14

International Business News

page 13August 2019

• Arise India Ltd. - www.ariseindialtd.com - consumer electronics - Delhi• Ordnance Factories Board - www.ofb.gov.in - government owned defense contractor - Kolkata• Onida Electronics - www.onida.com - consumer electronics- Mumbai• Microland - www.microland.com - IT services- Bangalore• Micromax Informatics - www.micromaxinfo.com - web browsers, smart phones, tablets etc. - Gurugram Haryana• MobME - www.mobme.in - IT, analytics, tele- communications etc. - Kochi• National Aluminum Company (NALCO) - www.nalcoindia.com - mining, aluminum pro- duction- Bhubaneswar, Odisha Note: 52% govt. owned• National Mineral Development Corporation - www.nmck.co.in - mining company- Hyderabad Note: 72% government owned• Hindalco Industries - www.hindalco.com - aluminum and copper production - Mumbai• Cyient - www.cyient.com - large conglomerate - aerospace, energy, transportation etc. - Hyderabad

• Coal India Ltd. - www.coalindia.in - largest coal producing co. in world - Kolkata• Ambuja Cements - www.ambujacement.com - Mumbai Note: owned by Lafarge Holcim• Larsen & Toubro - www.larsentoubro.com - large technology, engineering, construction and financial services company - Mumbai• State Bank of India - www.sbi.co.in - large government owned bank - Mumbai Note: operations in 36 countries• Jaypee Group - www.jalindia.com - engineering, construction, power, cement, real estate etc. - Noida

Public National Holidays-2019• January 26 - Republic Day• August 15 - Independence Day

There are many regional and religious holidays as well

By Paul MastilakInterMark3, Inc

Lotus Temple, India

India, continued from page 13

July 2017page 14 August 2019page 14