Abheek Singhi
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| Abheek Singhi |
He has co-authored the bestselling book The $10 Trillion Prize and also authored several seminal reports on the Indian consumer and retail sectors – including The Tiger Roars , Building a New India and Agribusiness: Cultivating New Opportunities.
A member of the National FMCG Committee and the National Retail Committees of the Confederation of Indian Industry for several years, Singhi was selected by the Aspen Institute to be an India Leadership Initiative Fellow.
The Message of the book
A must-read for those wanting to tap the markets of India and China, The $10 Trillion Prize: Captivating the Newly Affluent in China and India is
a portrait of the world’s biggest buyers of cars, mobile phones,
appliances and other products and services. Who these consumers are,
what they buy, their aspirations, how to fulfil those needs, with all
that backed up with facts, figures, strategies and research, the book
makes for a comprehensive study on the two markets.
In the initial chapters,
authors Michael J. Silverstein and co-authors Abheek Singhi, Carol Liao
and David Michael give an account of the various kinds of consumers,
including the middle-class, millionaires and the poor. With stories of
real people and families from the two countries, the authors then go on
to profile preferences, appetites and aspirations of these people. In
the concluding chapters, the book suggests ideas for business leaders
who are entering these markets and trying to position their companies
there.
While Silverstein is one
of the founders of the Boston Consulting Group (BCG), an international
strategy and general management consulting firm; Singhi heads the India
practice of BCG; Liao heads the China consumer practice; and Michael
leads the global advantage practice. In an email interview, Singhi gives
us a glimpse into the life of the Indian and Chinese consumer as well
as a perspective of what the next decade will be like for these
countries and those doing business here. Edited excerpts:
What made you write a book that clubs China and India as a market?
Market matters: Abheek Singhi.
We felt that no book had
truly focused on the vital force that will transform these countries and
their economies in the decade ahead—namely, the new consumers. Or shown
how companies can capitalize on these new opportunities.
No one has written
clearly about these consumers’ hopes, dreams, and ambitions. No one has
closed the loop on income growth, education, jobs, and the net expansion
of markets for food, apparel, housing, transportation, healthcare,
education and financial services. This book aimed to fill such gaps.
Highlight
some similarities and differences that you came across while
discovering this portrait of the Indian and the Chinese consumer.
First, consumers in both
countries have a sense of energy, ambition and optimism that is
infectious. More than 80% of Chinese and Indian consumers feel that
their lives will be better off in the next 10 years. They believe that
their children will have a better life than theirs. The number in the US
is 25%. Second, people in both countries believe in education as an
investment for the future. The importance that parents, across all
income classes, provide to education is very similar. Third, while we
are familiar with the diversity in India—the diversity in China is also
high—with many regional variations in tastes and preferences.
At the same time, there
are differences. First, from a consumer income and spends perspective,
China is about seven years ahead of India on an average. The difference
is more at the premium end (10 years or so) and lesser at mass levels
(four to five years). Second, the difference in family structure results
in different behaviours. In China, given the high proportion of working
women, the family has typically 1.8 working adults earning and spending
for a family of slightly more than three. There are four grandparents
spending on an only grandchild. In India, it is usually 1.3 working
adults earning and the spends are spread over a family size of more than
five. Put simply, the Chinese family has more discretionary spends
available.
The luxury market in China is significantly bigger than in India. What is keeping Indians from wanting the “fabulous life”?
The luxury market is
larger in China, first, because the number of upper income households in
China is more than 2.5 times that of India. Second, even for the same
household, the discretionary spends are higher in China due to lesser
children. We came across several consumers in our research where
youngsters who were at their first job would spend three months of their
salary to buy a bag or watch since all the other expenses were borne by
the parents. Third, the number of working women is high in China.
That being said, there is
also the supply side dynamic that has driven the Chinese market. Many
Indians who can afford luxury prefer to buy overseas due to lack of
options in India today. Our book profiles an affluent Indian consumer
who actually goes to Dubai to purchase luxury goods. If the supply side
obstacles get addressed, the Indian luxury market could become
significant in the next decade. As an example, the sales of BMW in China
in 2001 is similar to their sales in India in 2011-12, and LVMH (LVMH
Moët Hennessy Louis Vuitton SA) today has the same number of stores in
India as they had in China 10 years back.
Apart
from the millionaires and the middle class, you talk about the
“left-behinds”. Are they potential consumers in the coming years?
Today the numbers of
left-behinds or below the poverty line are nearly 450 million in India
and 210 million in China. Over the next 10 years, 280 million Indians
and 200 million Chinese will move out of poverty and emerge as part of
the consuming class. But even those who are left behind over the next 10
years should not be discounted as consumers. We are careful to
distinguish between two types of lower classes: the truly poor, who are
often penniless and without hope, and the aspirant poor with real
prospects for income improvement—the next billion. They have jobs and
varying levels of education, but below-average incomes.
A few companies are
beginning to engage these consumers by actively developing customized
products and services. These companies aim at entry-level price points
and acceptable quality.
Power of the purse controlled by women around the world
According to a BCG study,
in the US, women control 73% of the spends, in China 52%, while the
Indian women control 44% of the spend. Compared to most other markets,
the female consumer in India is still at an early stage. However, this
is changing. Women are already the major buyer and influencer in
categories like food, clothing, housing, haircare but still low in
categories like durables, car, and other financial products. In summary,
the rise of the female consumer in India will happen but would take
some more time.
The Book
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