China and India seem to offer the perfect antidote to lackluster growth in other parts of the world, but companies shouldn’t be seduced by the sheer size of these burgeoning consumer markets or assume they need to be there simply because everyone else is.
In an interview with BCG’s Michael Silverstein, a coauthor of Captivating the Newly Affluent in China and India, Sanjay Khosla describes how a headlong rush into these markets—seeking growth for growth’s sake—can be a recipe for failure. Winning in emerging markets requires careful planning and a clear competitive edge. Companies must focus on areas where they can offer something that bests the local competition, be it homegrown or multinational.
To build a viable presence in these markets, companies should start small. The first step is to take time to develop a sustainable business model—one that has a unique selling proposition and an appropriate cost structure, and is easy to scale up. One of the keys to making this work, Khosla says, is having on-the-ground talent who can connect with and delight local customers. Companies also need to listen to consumers in order to localize their products.