GO EAST!!! - AvNetwork.com

GO EAST!!!

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By all accounts, 2007 should be a very good year for the Digital Communications Network ("DCN") industry. Many retailers are advancing projects, we are seeing banks expanding their networks, and advertisers are beginning to take the industry seriously. In addition, the likes of Google and Cisco Systems are poking about. For many firms, this may be the year that marks the shift into a profitable growth trajectory.

So our suggestion that firms consider investing in underdeveloped, immature markets may seem somewhat misguided. However, we believe that much of the technology and expertise that powers the DCN infrastructure will be both uniform and global. Thus, having a worldwide footprint presents an outstanding opportunity to achieve both size and scale. One such emerging market that must be so considered is India.

I just returned from giving a speech at POPAsia in Delhi. What struck me is the flurry of activity in the retail industry there. The Indian retail market is projected to grow from $300 billion in 2006 to over $637B by 2015. Over the next five years, it is estimated that more than $22 billion will be invested in the retail industry and the related supply chain. 600-700 million square feet of additional retail space is expected to be added to the market by 2011.

Recognizing this tremendous opportunity, global retailers such as Wal-Mart, Tesco, Carrefour, and Metro have announced plans to, or have already entered the market. In addition, Indian companies such as Reliance Industries have announced plans to spend up to $2.5 billion over the next several years to open some 1,500 stores. These retailers will adopt DCN's in their stores, as the second largest retailer in India, Shoppers' Stop, has already done. Yet the locally available base of DCN vendors is limited. Therefore, an outstanding opportunity presents itself to those willing to invest.

Sure, entering a new, far off market is risky. Just last week, the Indian government announced that foreign direct investment into India's retail industry will not occur until a study into the impact on India's rural communities is undertaken. Yet such studies are more political foreplay than a clear assessment of the economic reality. For retail liberalization will accelerate the process of modernization, which suits the desires of India's young and relatively affluent middle class.

When contemplating establishing a market position in such a young, robust, and foreign market, consider a joint venture, establishing a dealer network, or entering into a similar business relationship. For example, our Institute is negotiating a relationship with a major Indian business school, as we feel it essential to establish a presence now in India. A 2005 AT Kearney report said it best, to-wit: "Global retailers that missed out on capturing first mover advantage in China can make up for it in India." We think that this is equally true for their suppliers in the DCN industry.

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