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Carrefour, France and India

Lessons of carrefour India exit-marketexpress-inThe failure of the French retailer Carrefour announced in June 2014 raises questions about the advantages of France in India. Failure of a company or failure of French companies in general?.Misperception of India by French companies or poor perception of France by the Indians?

The fact is that a large portion of the Indian elite admire the “French genius” in the strict sense of engineering as in the figurative sense of scientific genius.

This is particularly the strength of the Rafae aircraft after that of the Mirage 2000 in the 1980s, but also of the TGV or in urban infrastructure (Degremont, Veolia, GDF Suez …), not to mention the unexpected success of Renault (Duster) after the first difficulties encountered in its JV with Mahindra.

Finally, the success of the visit of Foreign Minister Laurent Fabius – the first Western personality to meet the new Prime Minister of India- made ​​lie those who feared that the attitude of France vis-à-vis the dramatic events of 2002 in Gujarat will result in retaliation from the new Indian government. In fact, since his election last May, Narendra Modi has demonstrated a great sense of statehood and a strong spirit of consensus and of national interest. And here, the French engineers and multipolar diplomacy appears essential for his government.

Symmetrically, a whole set of indices reflect a real French interest on India. The 2014 elections were covered in detail by the mainstream media and the incredible success of the film “Lunch Box”, launched in France by a small production company, Dharma Production, is also a good illustration of the popularity of India. As for French companies, all now have the Indian market on their radar for the coming months.

So, India is interested by France, whether its creators, engineers or its diplomats, and France is interested by India whether its managers, its IT engineers or its cultural landmarks; we have all the ingredients of the combination of a love story  and of an arranged marriage.

The Time factor

But do not dream, India is a difficult country as everyone knows and often bitter experience, and Indians are complex people. But it is finally also a very French feature, like elsewhere we share the same spirit of arrogance and caste according to all well-placed observers. We just need good toolbox and one can take three symbolic keys for any success in India, those Carrefour clearly missed in its approach to India.

A sentence of the Mahatma Gandhi can illuminate the first two. Because India is still the land of Gandhi and not just Modi as the latter recalled himself the day of his election by paying his tribute to Gandhi, another icon of Gujarat. “Live as if you will die tomorrow, learn as if you were to live forever.”

This is a perception of the time factor in the Indian tradition that often escapes the French:

– Holistic rather than linear, where the very short time is as important as the long time, while the French have inherited from the enlightenment a tradition of linear time focusing mostly on the medium-term. This leads them to focus on planning and quasi-military organization of the implementation of projects while India has the reputation of being an “organized chaos” in the words of Nobel Laureate economist, former U.S. ambassador India: John Kenneth Galbraith.

– It is also a relationship to knowledge, to a thousand years culture, that of the Indo-European civilization, which explains the popularity of the candidate Modi versus the secularist Congress party closer to the French enlightenment tradition.

Relation to space

It is also a relationship to space and you can take here the image of the dancing Shiva, the so-called Nataraja, one ubiquitous symbol in India, whether in families, in business, or in administrations like this imposing bronze statue that sits at the bottom of the grand staircase that leads to the cabinet of the most powerful minister in India after the Prime Minister, especially when his name is Arun Jaitley and that he holds the defense portfolio.

The dancing Shiva is the relationship to the world, the cosmos, with a huge gap compared to the French cartesianism (Descartes) where the same causes produce the same effects. In India, the holistic and systemic vision prevails with all that entails defects in the implementation of projects, but also strengths or qualities in operating the smallest factor of success for a project. This is called the Indian ingenuity, the Jugaad, the sense of opportunity. Like the multiple arms of Shiva and his dance, Indians usually do not favor a single goal and a well classic sequence in connecting means and ends in a very mechanistic or systematic way like the French.

A bit like the visit of Minister Laurent Fabius sometimes attached exclusively to the sale of Rafales by many French commentators. Significantly in reality, Laurent Fabius and his team seem to have been finally sufficiently flexible and “Indian” to follow this Nataraja vision with multiple arms and therefore multiple objectives. They talked diplomacy of course, including regional and Middle East, but also infrastructure, energy, urban development, not just fighters.

It was then realized that France is competitive on all priority projects of the new Indian government, not just defense. That industrial France and its reputation correspond to major challenges facing India in the coming years, especially the implementation of the Narendra Modi key infrastructure project, partly launched in reality during the tenure of the BJP government in 1999 : the “Golden Quadrilateral”.

The new economic map of India

There is here another symbol of one space factor that determines any business success in India: the space of Power. The French have a strong centralizing tradition – everything goes in and from Paris- as India must be addressed in all its complex federal space: 29 states today, maybe 50 tomorrow; 23 official languages, a hundred actually if you count the major dialects. Narendra Modi has understood it again. Some of his extreme partisans tried to impose Hindi as one compulsory language for all regional administrations.

They immediately took a drubbing, and not only in the southern Dravidian states, but also in West Bengal or in Maharashtra where people speak Bengali or Marathi. In fact less than a quarter of Indians speak and read Hindi, and nothing can succeed if not adapted to the geographic realities of India. A country that is not only huge in size (3, 3 million km2), but also by its population : 1.5 billion people in 2030, with states like Uttar Pradesh which will be as populated as the European Union by 2050.

Watching the new map of India which appears in the golden quadrilateral project, one can realize that it is essential to know the cultural, social, historical but also geological contours of modern India. Any company needs a geographic strategy, to meet with local governments but also family business groups, 90% of which having a regional berth. It is according to the French Tycoon Jean-Louis Beffa itself, the reasons behind the success of Saint-Gobain in India which has in the south its most profitable plant in the world with a team of top-notch managers consisting of south Brahmins. These people are gifted in mathematics and also in engineering, finance, logistics and marketing.

Ganesh attitude

We can conclude with a final key to success in India with two legendary proverbs and a fetish god who articulate the qualities that Indians expect from their French partners : “Despite its fragility, the vine can withstand the weight of the gourd.” This is a nod to the fascination of many Westerners for China, but also to the extremely negative judgments about the Indian economy which has been read in recent years in the press, particularly French. In fact, despite it slowdown, India is already the third world GDP in purchasing power parity (about $ 5000 billion).

So that even a growth of only 5% per year, represent a market addition of  $250 billions, to be compared to $20-25 billion France and even to the $250 billion of the whole  Europe.

Second proverb: “In India, every European learns patience if he does not, and loses it if he has.” This is a nod to the French temperament always in a hurry or stressed. As for the fetish god who expresses this flexibility and patience, it is “Ganesh”, the elephant-headed god, the belly greedy and mischievous smile that throne again in all Indian families and most shelves of Indian managers. It is a symbol of perseverance, empathy, success in any business, but also pragmatic (his father cut his head angrily). Narendra Modi is probably closer to Chanakya,  the Chandragupta Maurya Emperor advisor, to whom we owe the greatest treatise on political economy: Arthashastra, but his first months in office reflect the roundness of Ganesh as  much as the rigor of Chanakya.

In light of this analysis grid of the keys to success in India, the Carrefour group has accumulated all handicaps: impatience, lack of culture, in particular about the importance of the small trader castes (kirana) who largely supported the BJP and Narendra Modi.

Carrefour refused to leave its exclusive model of very large urban supermarket unlike its competitor Metro for example. Finally, Carrefour lack flexibility in its retail approach of India. In short, too reckless French and not enough Indian. Unlike Lafarge, Renault, Saint-Gobain, Schneider, Capgemini etc, many success stories in India which confirms that French groups can stay and succeed in India provided they mixed the two business cultures.

  • Lokesh Madan

    Good article on Carrefour actually i am really surprised when they announce exit as i meet their TOP management peoples at France they are positive on India.. suddenly change.. Most IT people working Carrefour are friend of my & now the problem comes as Carrefour offer them good packages now its really difficult to find new one.. Public enjoy as most of Carrefour store offer 50% on their all products..

    • Jean-Joseph Boillot

      yes Lokesh, you are right, surprising decision and need to explain that they were the right company at the right place but not flexible enough may be

  • Ritu Bhanot

    It is difficult for such malls in India because even though we love going to these places we buy most of our stuff from local markets and vendors who come to your home. They had started a reliance store near my home in India, it failed because they couldn’t match the quality and prices of local vendors. When a vegetable vendor comes to your doorstep and sells the product at a lower cost why would anyone go to a supermarket and buy stale vegetables that don’t even look good. Who can beat the grocery shop that is ready to home-deliver half a bread and that too free of cost? These supermarkets make you wait for hours for stuff worth several hundred rupees. It’s easier to call your friendly neighbourhood grocery shop and get everything home delivered within a couple of minutes. Buying your own fabric and getting it stitched according to your own imagination will always win over these readymade garments… one of the reasons why I dislike shopping in France… the overpriced low-quality fabric may be acceptable to people here but I have grown up with excellent fabric and clothes made according to my own imagination. Need I go further?