Global companies tap into markets across rural India
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Global companies tap into markets across rural India

Friday, 30 May 2003, 07:00 Hrs
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NEW YORK: Global automakers and other electronic firms are honing in on India's huge rural population, seeing an increasing demand for their goods in places that were once behind the technology curve and too poor to afford televisions and cars.

The Wall Street Journal, in an article published in its May 30 edition, showcases companies like carmaker Hyundai and TV maker Philips Electronics doing demos in villages to men dressed in turbans and kurta pyjamas, enticing village headmen to lead the way towards selling their goods.

"A village headman is an opinion leader, whose advice is sought on everything from marriages to crops. In the past few years, villagers have started to ask what TV set or car to buy, too," the Journal notes.

"People are starting to buy more things," Kaler village headman Buta Singh tells the Journal. "If I tell them I like a particular brand, they'll go out and get it," says Singh, making people like him the nub of savvy multinational advertising campaigns.

The Journal credits the steady five percent GDP growth in India for years for building pockets of wealth in rural areas. "And a host of companies are pitching ever-more sophisticated goods to tap some of this rising consumer demand."

Sales are up from products like life insurance to home electronics, it notes. And "companies are betting the market will continue to expand," based on economic studies that show middle and high-income households in rural India will grow to 111 million in the next five years from 80 million last year.

The study quotes the National Council of Applied Economic Research, which estimates that an average rural Indian household will have five major consumer appliances by 2006, almost double what it had five years ago.

Indian companies are also benefiting from this rural expansion because the urban Indian is getting saturated, analysts are quoted as saying.

K. Ramachandran, CEO of Philips Electronics NV's Indian subsidiary, says: "In the cities, everyone who can afford a television has one. If you want to maintain high growth, you have to penetrate into rural India."

Despite lack of electricity and grinding poverty, these multinationals are willing to reach an untapped market.

"But as the world's biggest consumer goods companies confront limits on their growth, they are increasingly willing to target the most remote destinations on earth," and India's countryside provides a market second in size to rural China.

"Companies are applying the lessons they are learning in India to other emerging markets such as China," says the Journal based on interviews with officials at Hyundai, which is focusing on affluent farmers whose savings are high through a high-level of service and personal contact with consumers like Buta Singh.
Source: IANS
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