M&M wants to be more aggressive in Southeast Asia, which it says has huge potential
It's not just the Indian IT firms that are facing the global protectionism heat. Automakers with global aspirations too are running into similar obstacles.
Mahindra & Mahindra (M&M), which is aiming to increase its global footprint by setting up bases outside the country, said that it is seeing a lot of "protectionism" globally.
Arvind Mathew, head of international operations at M&M, said, "Every country now wants to control its economy by raising import duties and enforcing localisation. So we are working on these plans and get local assemblies in many of these countries."
As per the company officials, the extent of localisation varies as the individual governments decide the level of localisation that is required for waiver on custom duties. For example, it can be 15% in Sri Lanka to as high as 60% in Algeria for the automotive sector.
M&M already has presence in many countries, including the US, China, Japan and Australia, Africa, South Asia. For Africa expansion, M&M has set up four major zones in South Africa, Nairobi, Lagos and Cairo, which will overlook the markets in respective sub-zones.
Pawan Goenka, MD at M&M, had last year said that as part of its globalisation plan the company is focusing on merger and acquisition in companies which can be beneficial in reaching their desired goals. It is also focusing on increasing manufacturing footprint, research & development (R&D), enhancing branding and sales infrastructure.
According to Mathew, the company's plans have been affected in Africa and several other countries due to a number of reasons. For example, when the commodity prices fell, they affected some very big economies in which the company operates. Restrictions on foreign exchange further tightened the situation in these countries and, in turn, for the company.
A company official said that as a result of this, when dealing with these countries they make sure that they get their money before the goods are shipped.
Talking about farm equipment business, Mathew said that farming in most part of Africa still happens manually with scant use of equipment, the way it happened in India about 10-15 years back. The farm sizes are also small (2-3 hectare). Hence, there is a great scope for growth in future, he said.
Further, the company wants to be more aggressive in Southeast Asia, which it says has huge potential. In the Middle East, M&M already sells gasoline cars and other products, and is poised to enter Iran, looking to break the stronghold of French and other European players.
For electric vehicles, Mathew said it again depended upon the kind of subsidies and support each countries provides. However, the company is betting big on electric three-wheeler vehicles as the more and more countries are moving towards it considering the increasing pollution and traffic.
BIGGER FOOTPRINT
- M&M wants to be more aggressive in Southeast Asia, which it says has huge potential
- It already sells gasoline cars and other products, and is poised to enter Iran
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