With GST, India will be an important market for us
August, 28th 2014
Where does India fit in your `Strategy 2020'?
India is a very important market for us. It is not because it is so huge, but because certain reforms will happen in India sooner or later. Then it becomes a fantastic market. There is such a huge population, which wants to become middle class. If infrastructure gets better and if Goods and Services Tax (GST) reform comes, we see India as a very important market. When will it hit is the question. But we will invest anyway because in 10-20 years. India will be an important market for the world.
What kind of reforms are you looking at from the Indian government?
One is definitely this GST element. Then, there is still too much bureaucracy and administration around the borders. These are these two things, where I see an opportunity. I think the new government has looked at it and will definitely do something about it.
Deutsche Post was privatised in early 1990s. People have been talking about something similar for India Post. From your experience what are the things India Post should be doing?
What Germany did was make a private company out of a state-owned enterprise, which would still be owned by the state. However, you give the company the freedom to pay salaries, which is necessary to find talent and manage such a large oper ation. You need certain skills that come with a price ticket.
Deutsche Post made more money under my predecessor after privatisation than it did under the chancellor when it was a state-run enterprise. Freedom was given to sell real estate that was owned by us, to change the business model by having our own retail outlets for postal services to franchise systems. All that was possible after the reforms Germany did. They said the state-owned enterprise should be run like a private company.
If you do that you can be quite successful.There is a significant trust in the (Deutsche) Post than some unknown company. We had a lot of trust from the population but we were not efficient.
The government installed a system which gave us the opportunity to do that right business reforms. That is the reason why we turn around the German business and created a base for us to become the largest logistics company in the world through acquisitions.
What would have happened if Germany had not taken the tough decision to privatise Deutsche Post?
The company would have still been a stateowned enterprise and not a global operation. Instead of waiting for it to be profitable, the first step is to give freedom to manoeuvre like any private company and then protect it. We had protection for first 15 years for mail monopoly. You have to give them headroom to manoeuvre and also protection until it is competitive. The aviation authorities will not allow drones flying all over the place. We might implement relatively soon some niche applications for customers. We will tell the market more when we have a solution. I don't want to make competitors aware of what we are thinking.
Are you looking at any acquisitions in India? Have you put aside any money for acquisitions from the $100 million that you plan to invest in India in two years?
It is all organic capital expenditure and investment. It can be easily more, our business is growing rapidly. We are following customers. If we are more successful, we invest more. We are not doing major investments in car plants or hi-tech plants. We create jobs. We already have 20,000 employees in India. Our work is labour intensive.
Therefore, we create less capex and more jobs. We will possibly do some acquisitions in the future but we never talk about countries. I would not comment on that.