The name of a small but confident company from Coimbatore in Tamil Nadu has inspired confidence among Latin American clients in Peru, Ecuador, the Dominican Republic and Argentina, who have given it orders worth $500,000 for textile machinery. And this, perhaps, is only the beginning.
Confidence is embedded in the name of the company itself -- Confident Engineering (www.confidentengineering.com. E-mail: firstname.lastname@example.org). More precisely it is the self-confidence of Rathnakumar, the managing director of the company who has managed to inspire the confidence of the textile companies of South America.
The engineer-entrepreneur spent the last month in Argentina, Peru and Ecuador, having come with a delegation of the Confederation of Indian Industry (CII) June 28. He leaves Buenos Aires July 31, having spent 10 days in each country. He plans to come back to the region in the next three months and target Brazil and Colombia.
Rathnakumar has appointed dynamic and proactive agents in these three countries, who took him to over 30 textile plants. He convinced the technical staff and management of some of these companies that he could help them reduce their cost of production with his dyeing and finishing and effluent treatment machinery, which costs just half as those they import from Europe.
He carried a small prototype of his effluent water treatment plant and gave demonstrations to clients using their plant wastewater. Confident Engineering has innovated a new technology to treat wastewater of dyeing plants through an electro-coagulation method without the use of chemicals. They are applying for a patent for this.
In Peru, he got an order for $70,000 for a machine that he has never made so far. He showed the client a French machine in a Peruvian plant and told him he could make a similar one. The client was convinced by the confident competence of Rathnakumar and gave him the order.
What difference did he find doing business with South American clients? He says here they don't want to open letters of credit. Most of them prefer to deal in cash. They pay an advance amount and the rest later. They retain a percentage of payment as guarantee for performance of his machine. Of course, Latin American importers open letters of credit for large orders.
Confident Engineering is a small-scale enterprise with a turnover of just $1.5 million and 40 employees. Their machines cost $20,000-$100,000. Rathnakumar, an electronics engineer who worked with Larsen and Toubro for six months, and his partner started it in 2003 with an investment of $20,000.
He got a breakthrough in Bangladesh for his dyeing and finishing machines. Now he has set up a full-fledged office in Dhaka to manage supply of machines and service them. Then he got some orders from Indonesia and Sri Lanka.
Now his focus is on Latin America. He expects to get orders worth $5 million in the next few years. He has already established his reputation in Peru, Ecuador and the Dominican Republic and now in Argentina.
How did the Latin Americans treat Rathnakumar in his business and personal interactions in the last one month, I asked him. He found Latin Americans pleasant and friendly. Of course, they needed to be convinced that they could risk their money with a small company in a remote corner of India. But they were willing to listen to him with open mind.
The Latin American textile industry had been importing from Europe and Japan. But now they want to try less expensive sources such as China and India. In these days of global financial crisis, local credit crunch, tough market conditions and global competition, the Latin Americans are focussing on cutting the cost of production.
They mentioned to him about their preference for India over China because of cultural reasons. They told him they could understand and communicate and trust the Indians better. They looked at him as a person from the well-known land of yoga, meditation, Sai Baba, Hare Krishna, Mahatma Gandhi.
What about language and food? I ask him.
This mild mannered sambar-idli eating South Indian smiles and says: "No problem. I have already picked up some basic Spanish in my two trips. I can understand the technical and price parts of the negotiations. Now I plan to take a crash course for a couple of weeks". I advised him to try the Instituto Hispania in Chennai.
Food! He eats whatever Latin America offers except beef. He does not miss idli-sambar in this one-month absence from India. He liked the ceviche of Peru and empanada (Latino samosa) of the region.
I have written about the success story of Tata Consultancy Services, a large company, in Latin America in the past. But in the case of Confident Engineering, it is a story of the success of a small Indian company. I hope this will inspire and motivate the small and medium exporters of India.
What our exporters need for business with Latin America is Confidence! Confidence in Latin America!
Indian exports to Latin America increased by 50 percent in 2008 to $7.5 billion from $5 billion in 2007. What else is needed to inspire confidence?