India most important market for Xerox in Asia Pacific
June, 04th 2008
Till recently, technology MNCs used to follow a waterfall approach to international marketing whereby they would launch a product first in the west and then it would become available in India after three to six months. But the US slowdown seems to have reversed this trendIndia has now become launching pad for many products. Xeroxthe global leader in printer and copier business this month kicked off launch of eight multi-functional printers from India. ET talks to Xerox India MD Andrew Horne on the new trend and the challenges in the printer and MFD market.
Do you think there is now a reverse waterfall effect in international marketing?
Yes, I think we are moving towards a scenario where India will become the global location where products are launched first in the world or simultaneously (sprinkler approach) in other markets. But the source of the launch may become emerging markets of India and China.
This month, we launched eight mono printers and multi-function devices (MFDs) from India. Though it was a global launchour main kick off event happened from New Delhi. There was another small event in New Orleans (US). This is because India has become the most important market for Xerox in Asia Pacific. India holds the potential to be an engine of growth for the company. It is also amongst the fastest-growing SMB economies in the world. We are expanding our channel network and investing a great deal in India. China is also big but that is managed by a different companyFuji Xerox (a 75:25 JV between Fuji and Xerox) and they follow a different strategy. Many of our products are launched in India but not in other markets. Only one of our products is not launched in India but thats because the multi-functional product is very sophisticated for India in terms transportation and affordability factor.
Are the levies on imported MFDs and laser printers a deterrent to IT penetration in India?
The taxes and duties are definitely high. Import duty is about 4% due to a recent custom notification which regarded printers and MFDs as computer peripherals. But overall with VAT and other state taxes, the total tax incidence comes to more than 20%, which is very high. Add to this transportation and logistics cost, and it becomes really exorbitant. Removing taxes will definitely help in IT penetration and increase affordability by a lot of SMEs. But I understand the governments perspective tooto take taxes from corporations and deploy them in infrastructure building such as roads and schools which will help bring large masses of underprivileged children in to the mainstream. Expanding the infrastructure will also increase IT penetration and cut time to market. So, certain amount of taxation is necessary.
Why doesnt Xerox set up a manufacturing plant in India?
With the printers going digital, the required amount of components for making it have significantly decreased. This has made setting up an assembling plant in India less lucrative. We conducted a study which showed that it will not make economic sense as of now as the suppliers ecosystem does not exist in India. Our products are imported from our manufacturing plants in South Korea, Taiwan, China and the US (in Oregon and Rochester). But we are not ruling out that option.
Is the slowdown in US hurting your top line?
Not really. A bulk (about 70%) of our revenues comes from after-sales services such as maintenance, support and toner sales. Only 30% comes from sales of new equipment. Our revenues globally have grown 13% quarter on quarter. But there is a slowdown in the US for sure. We dont know as yet if its a recession. And it has impacted companies across board. In India, offshoring companies which are a big customer for us, are facing slowdown in IT budgets. But we believe that its a short-term recession and things will be back to normal in 18-20 months. After that the demand for IT products in India will suddenly peak as US companies will look to offshore aggressively to cut costs.