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A journey that began long ago is gathering
pace. From information technology and tea to automobiles
and steel, Tata companies are spreading their wings
to find a place in the global sun. Chairman Ratan Tata
shares his vision for the Tata Group
Going international
was never meant to be a mandate that every Tata enterprise
had to blindly follow. It should be up to each company
to evaluate according to its capability. It however
needs to be recognised that it is essential for each
company to become globally competitive, and advantageous
for it to expand its markets beyond the shores of India.
I
believe that, to grow, the Group must seek two distinctions:
one, it should produce world-class, quality products
that are globally competitive; two, on the back of that,
it should look at selected markets outside India where
it can grow.
But it is not globalisation,
as is commonly understood, which we seek to achieve.
Globalisation is typically equated with having a presence
in every continent. That is not our intention: we seek
to grow in select geographies. To that extent what we
are attempting is simply a greater internationalisation
of our businesses. Where this thrust is different from
the past is that it goes beyond exports: we will want
to be part of the community in which we operate.
One of the major drivers of going
international is to reduce our vulnerability to a single
economy. A broader base in multiple geographies equips
us better against a downturn. However, while we need
to look beyond the boundaries of our country to grow
our business, it should not be at the cost of our home
market. It is essential to first achieve leadership
in the domestic market; only then can we go international.
While the Group's increasing
internationalisation initiative has emanated from the
corporate centre, we would like to see this develop
into a company driven strategy. The Group role will,
over time, be one of ensuring the individual company's
international objectives are not in conflict with other
initiatives with the Group and that each move has been
adequately evaluated.
Each company should increase
its international footprint as part of its own growth
strategy. Companies will need to be very selective about
the geographies they are entering. They should go abroad
only when they believe they can establish a meaningful
presence in that territory. That presence can be in
export assembly or in the creation of capacity to offer
a locally produced service or product, but it should
be a presence that is meaningful and more than the level
of business activity carried out at present.
Going abroad meaningfully will
call for considerable resources in terms of funding
and as also a long-term commitment to create a presence
and achieve goals. When a company like Toyota or Honda
comes to India, for example, they don't come here to
sell only 1,000-2,000 vehicles in a year. They come
here to establish a sizeable market share over five
to six years. They do everything necessary in terms
of advertising expenditure, product selection, etc,
to make that happen. We will need to do the same.
We would like our companies to
establish themselves in different geographies as local
companies contributing to the local community and participating
in the development of those countries. We should be
a part of those nations, make a contribution with our
products and services — either from India or locally
produced — and be viewed as part of those countries,
enjoying the same degree of trust we do in India.
We do not want to be seen to
be transplanting India into those countries. The right
model is to adapt ourselves to the culture of the local
place. If we are going to China, we should have a Chinese
face, and not an Indian face in China. We should be
perceived as a Chinese company, but owned in India.
That, in my view, is the path we need to take.
We have tried hard and quite
successfully to allow some of the major acquisitions
we have made — be it Tetley in 2000, Daewoo Commercial
Vehicles last year, or the Spanish bus-maker Hispano
Carrocera more recently — to retain their corporate
identity, with the face, touch and feel of a local company,
only owned by an Indian business group. Tetley and Daewoo
still have the same management as they had when we invested
in them. At the same time, however, we have been able
to integrate product plans and strategies with the Tata
parent in India.
We believe that our presence
will be much more substantial in developing countries
in Asia, Africa and parts of Eastern Europe. Investments
may be more of an exception in the developed countries,
except in areas like IT services.
Do we have the sustained commitment
to grow outside India? Yes, I think we do. I have all
the confidence that our companies have the spirit to
achieve their objectives. In fact, over the next few
years, I would like to see more than 30-35 per cent
of our turnover coming from our overseas operations,
against a little over 20 per cent in 2003-04.
Some of this increase will come
from organic growth — as in TCS' international
operations, or our companies' exports, or Voltas International's
projects. Some of it will happen from greenfield projects
— as in Bangladesh and in South Africa, with Tata
Steel's proposed ferro-chrome project and the second
national operator's licence in telecom which VSNL has
won.
And some of this will come from
our overseas investments like Tetley by Tata Tea, in
Daewoo Commercial Vehicles and Hispano Carrocera by
Tata Motors, in NatSteel by Tata Steel, in Tyco's submarine
cable business by VSNL and most recently, a Moroccan
phosphoric acid manufacturer by Tata Chemicals.
Our products and services
and the manner in which we do business should both be
world class. We will need to deliver on all our promises
and we should be careful not to oversell ourselves.
Our presence will need to be supported by propagating
the brand before, during and while we are growing in
those new geographies. Going abroad with a sense of
responsibility, creating a presence and being a good
corporate citizen — these should be our priorities.
Uploaded on April 27, 2005
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