May 2013: Goldman Sachs remains quite bullish on India for years now started getting a reality check and finding it difficult to do business in the world’s second-fastest-growing economy.
BRIC the acronym was coined by Goldman Sachs economist Jim O’Neill in a 2001 paper entitled “Building Better Global Economic BRICs”. Goldman Sachs argues that the economic potential of
Brazil, Russia, India, and China is such that they could become among the four most dominant economies by the year 2050.
The thesis was proposed by Jim O’Neill, the global economist at Goldman Sachs.
While India’s economy is growing, Goldman Sachs which was betting big on India is perhaps still confused with the level of its earnings and finding profit from deals in India is almost elusive.
Most of the western companies just don’t realize that the Indian market is just different. The concept which applies elsewhere just doesn’t work in India.
Western companies just jump into the Indian market without understanding Indian consumer psychology. The results are obvious
“Vodafone managing 140 million Indian customers with zero profits”, Apple India iPhone 4s launch failure, Check Point launch failure, etc.
Unlike in the west, companies in India are reluctant to pay for advice on mergers. Banks are ready to accept tiny fees as compared to
that in the west from state enterprises.
Goldman Sachs has climbed to No. 2 in mergers and acquisitions. It now offers investment banking, broking, offshore asset management,
fixed income securities, private equity, and non-banking finance business.
Total investment banking fees in India were about $1 billion last year which is around 20% if compared to $4.9 billion for China.
Goldman Sachs’s annual revenue in India from all of its businesses is around $100 million, which is only around a quarter of a percent of
the firm’s $39.2 billion in revenue worldwide last year.
In brief, I would say that Mr. Neill’s report about India has some serious flaws and other eminent consultants and companies would be
doing the same mistake unless they understand Indian culture and psychology, the country’s infrastructure at the first place.
Issued in investors’ interest by Indian Business and culture Trainer and consultant Subodh Gupta based in London.
Subodh is the author of the book “Doing Business in India and Understanding Pitfalls”, and also “Understanding Indian culture and bridging
the communication gap”, available at Amazon, Barnes and Noble,Apple Ipod, etc.