When Baljit Sierra founded NOVO Plastics in 2006 he knew he’d have to do two things if he was going to have the global success he wanted. The first thing was to innovate. Check.
Fast forward eight years, and today the Canadian-based plastic manufacturer for both the automotive and commercial industry is creating products for emerging markets that are innovative and in high demand – such as their first-to-market plastic muffler that produces low CO2 emissions, increases fuel economy and reduces noise emission.
“This is a tough industry and Canadian companies face stiff competition on the global playing field,” says Baljit Sierra, NOVO Plastics president and CEO. “If you want to compete, innovation is key.”
The second thing NOVO needed to do for global success was, well, go global. That’s when Sierra set his sights on India.
“We’re very focused on India. It’s one of the world’s largest markets and it’s hungry for technology,” says Sierra. “You often go there to present one product and leave with the task of looking into other products and solutions for the customer.”
In 2013, Canadian companies exported nearly $3 billion to India. India’s burgeoning middle class, projected to grow from its current population of 50 million to 475 million by 2030, has created huge opportunities in the energy, agriculture, infrastructure and education sectors.
But understanding the process of investing or prospecting business opportunities in India is easier said than done.
According to Richard Schuster, Senior Economist at EDC, “One of the biggest challenges of doing business in India is that it is segmented. There are 28 states, each has its own unique regulatory structure, culture, income rates, infrastructure, urbanization rates and levels of industrialization. Anyone that wants to conduct business with this country should really be thinking about the different markets, each with their own unique potential, that just happen to share a common currency.”
Foreign companies also face complex bureaucratic regulations and lengthy procedures – which can be difficult to navigate without local key contacts who understand each state’s unique business culture.
Helping NOVO confront these challenges is where EDC came in. By making some important introductions for NOVO in India, EDC helped them gain access to the market on a local level. “I met the EDC contact on the ground in Delhi and he immediately connected me with a key local player,” says Sierra. “The matchmaking process alone shortened our timeline for entering the market significantly.”
And when one of NOVO’s Canadian suppliers needed support, EDC partnered with their bank to provide a loan to finance their working capital costs. EDC then supported the supplier with an Accounts Receivable Insurance policy. This helped free up the financing the supplier needed to provide extended payment terms to NOVO, creating more working capital flexibility for the plastics manufacturer– a win-win for both NOVO and the supplier.
Despite the challenges Canadian companies face when penetrating emerging markets, Sierra believes Canada has a reputation on the global stage that can set them apart.
“Canadians are known for their innovation, are viewed as fair and enterprising, and have a great reputation for education.” Sierra adds that having a Government that facilitates R&D, and some of the best universities in the world to partner with, provides NOVO with the opportunity to be a leader in innovation in the plastics industry. (Case in point: NOVO’s plastic – and patented – car muffler.)
With the experience he has gained bringing NOVO products into emerging markets like India, Sierra encourages Canadian exporters looking to do the same to use the resources that EDC offers. “Every country has a different way of doing things,” says Sierra. “You need to work with someone who has local knowledge and the connections to execute.”