There are over a billion Indians, but very few of them have managed to build a business in China.
Chander Oberoi was one of those rare exceptions: an Indian entrepreneur who spent over 10 years in China, and spotted an opportunity to grow his company via an innovative new business model. He built strong relationships with local Chinese firms and capped his success story by selling his company to a multinational.
In late July, Oberoi died, aged 49, as a result of a stroke – only weeks after he’d sold Yamei Electronics to America’s Trimble.
His untimely death is tragic. All the more so for Mumbai’s business elite and New Delhi policymakers. Oberoi offered a much-needed symbol – the enterprising Indian who could profit in China.
That matters. As WiC has recounted (dating back as far as issue 35, and as recently as last week), India has a fractious relationship with its bigger neighbour. Quite aside from the military tension, there is also a sense that economic ties with China are far from equal.
Yes, bilateral trade between the two countries is growing rapidly (estimated at $70 billion for 2011 and expected to grow to $100 billion by 2015). But Indian businessmen fret about Chinese competition – at home and in international markets – and for many in India’s commercial class, China appears more of a threat than an opportunity. Oberoi’s success offered a more hopeful narrative. Indeed, it stood out as a concrete example of what Deloitte and the Confederation of Indian Industries have argued in a new study: that if Chinese manufacturing and India’s research and design capabilities could be brought together, the business potential could be formidable.
Chander Oberoi managed to do just that. The son of an Indian diplomat he grew up with a very international outlook. He spent time at school in Hong Kong, lived in Iran, and studied in France. He also studied in the US – earning a Master’s in International Business from Pepperdine University in California in 1991. While doing that degree he made his first trip to China – an experience that would leave an indelible mark on his future business.
Oberoi’s first job was with Power-One, a company that specialised in energy-efficient power solutions. But after six years he was keen to branch out on his own. During a conversation with a friend at Texas Instruments he was introduced to RFID (radio frequency identification) technology. He quickly saw one potential application: smart car keys. Using RFID allows drivers to open their car doors without having to do so manually (and to start their engines, so long as they have the key in their pocket).
Oberoi may not have been formally trained as an engineer, but he had a gift for developing electronic technology. He set up a business in the US to work on ‘smart keys’, and 100,000 cars were using his technology within the first year.
Then in 2001 he went to China.
“I saw China developing rapidly and believed the car industry was bound to follow,” Oberoi told CBN Weekly (in an interview conducted only a few weeks before he died).
He arrived in Changchun – a bitterly cold city in the northeastern province of Jilin – speaking no Chinese and with no business connections. Regardless, he founded Yamei Electronics to focus on developing and producing smart key technologies.
His initial sales pitch concentrated on theft. Thanks to the unique code of RFID smart keys, it is harder to steal cars relying on them. Oberoi decided that was the selling point that he’d focus on.
It was a tough slog, with his initial idea to sell through electronics retailers. While this proved not to be the optimal sales channel, he soon began to adapt to local conditions. One thing he did was tweak the key designs (for example, encouraging more ostentatious use of gold colouring to make the keys look more ‘luxurious’).
But his real breakthrough was to forge relationships with one of China’s major insurers. Oberoi partnered with PICC (see WiC121) – a move designed to signal his confidence in his keys’ security. Under the insurance plan, anyone who paid to have Yamei’s smart key technology fitted got their car replaced if the vehicle was stolen within three years of installation.
This insurance proved crucial in persuading car dealers (known in China as ‘4S stores’) to start marketing Oberoi’s product to customers. The upshot: whenever a new car was bought, the salesman was incentivised to package Yamei’s key with the vehicle. At the time of the sale, the buyer was already spending a large amount. It was classic psychology that consumers were more likely to spend a little more for piece of mind at such a time.
As it became clear that the key was helping to reduce theft, dealer numbers grew. Currently Yamei’s products are sold through 2,000 dealerships in more than 150 Chinese cities. And according to CBN Weekly, more than 500,000 vehicles in China are now installed with Oberoi’s smart key.
In 2006, Yamei also began partnering with auto manufacturers in China, such as Geely. These firms fitted the smart keys as standard
“The company now has two basic business models; products are either installed at the time of purchase by the auto dealers, or are sold directly to the manufacturers and installed at the factory,” says David George, the new general manager of Yamei Electronics. Currently, car firms account for 25% of Yamei’s business.
Then Yamei moved into telematics, linking the key with dealership databases. Here Yamei has partnered with China Unicom to offer a service in which the dealer can track a vehicle’s status (via GPRS), to schedule repairs and maintenance.
In an Apple-esque combination of hardware and software, Yamei’s end-to-end solution has helped dealers improve their after-sales service, which has in turn boosted their customer retention.
Research firm Strategy Analytics notes: “The Yamei service allows the dealer to know the status of all the cars sold. This means the dealer can plan advertising and promotion campaigns based around scheduled maintenance and communicate special offers to customers via text messages or emails.”
Much of this programme is fully automated. And Strategy Analytics adds that it can also be used to generate new car sales, via targeted campaigns: “The dealer can target test drives, new financing, and new car offers to customers who own older cars.”
It was this proposition that interested the multinational Trimble, which purchased Yamei in June. Founded in 1978 by Charlie Trimble, the eponymous firm was built on a specialisation in GPS technology, but has rapidly diversified via M&A.
It was envisaged that Oberoi would still lead the firm post-takeover. Trimble’s management (having worked with Oberoi for three years prior to acquiring his company) says it will build on his legacy, and look to sell Yamei’s technology solution in markets outside China.
“With Trimble, Yamei’s culture of innovation will now be taken to the next level of development and expansion both within China and internationally,” says the firm’s new general manager David George.
India will be hoping more of its businesspeople can follow in Chander Oberoi’s footsteps and achieve success in China.
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