Israeli Purchasing and Logistics Managers Association

1. Purchasing in India – Tips for the Negotiation Process & Using Indian Suppliers to Improve Competitiveness Israeli Purchasing and Logistics Managers Association Telecom Forum Meeting 4

2. Agenda • BDO-I2I at a Glance • India - Culture • India - Business Culture • India - Intercultural Communication Aspects • India - Telecom Industry

3. BDO-I2I Background • BDO-I2I is Israel’s leading India focused business consulting firm • Joint venture between BDO Consulting Group and I2I Ventures • Combining forces of Israel's leading consulting group and the leading Indo-Israeli business group • Leveraging on BDO international expansion and leadership • Provides Israeli and Indian companies with Business Development and professional “One Stop Shop” solutions • Providing our customers end to end coverage of the services required for operating cross border • Business and Market Research • Strategic and Business Planning • M&A and JV Leadership • Access Strategic Customers and Partners • Setting Sales and Distribution Channels • Complementary Services

4. BDO-I2I Executive Management Team David Keynan – Founder and CEO David is heading BDO-I2I. David was a member of the Intel Capital India team since 2003, managing Intel’s investments there. David has relocated to India after spending three years in Intel Capital Israel, leading Intel investments in the telecom space. David was Vice-Chairman of the Israel-India chamber of commerce. He previously joined TiE as a chartered member in the Bangalore chapter. David earned his B.Sc. in Mathematics and Philosophy from the Hebrew University in Jerusalem. P. Sriganesh – Mumbai Partner A Fellow member of the Institute of Chartered Accountants of India and Institute of Company Secretaries of India. Sriganesh has over 30 years of experience in the IT and ITES industry and NBFC sector having set up several Companies in India. Between 1986 and 2000 he worked in senior financial positions in Citigroup India. He was a Promoter-Director of Citicorp Information Technology (now known as I-Flex) and co-founder and Honorary Treasurer of NASSCOM. As Treasurer of NASSCOM in the initial years was involved with the Government to set up regulations for the then nascent industry.

5. BDO Ziv Haft Consulting Group - Business Activities M&A and Investment Banking - US Corporate Finance & M&A in Georgia

6. Agenda • BDO-I2I at a Glance • India - Culture • India - Business Culture • India - Intercultural Communication Aspects • India - Telecom Industry

7. Flag & Emblem • The saffron stands for courage, sacrifice and the spirit of renunciation • The white is for purity and truth • The green is for faith and fertility • The navy blue wheel denotes the continuity of the nation's progress which is deemed to be as boundless as the blue sky and as fathomless as the deep blue sea. “Truth Alone Triumphs”

8. Geography • Area: 3,287,590 sq km • World 7th largest • Natural hazards: • Droughts • Flash Floods • Widespread and Destructive Flooding from Monsoonal Rains • Severe Thunderstorms • Earthquakes

9. Fact Sheet FY08 unless indicated otherwise Sources: IBEF, EIU, RBI, CIA fact book

10. Geographic Division Delhi North East Center Kolkata Mumbai South

11. Population • Ethnic Groups: • Indo-Aryan 72% • Dravidian 25% • Mongoloid and other 3% (2000) • Religions: • Hindu 81.3% • Muslim 12% • Christian 2.3% • Sikh 1.9% • Buddhist, Jain, Parsi 2.5% (2000) • Languages: • English • Hindi (the national language ) • 14 other official languages: Bengali, Telugu, Marathi, Tamil, Urdu, Gujarati, Malayalam, Kannada, Oriya, Punjabi, Assamese, Kashmiri, Sindhi and Sanskrit • Hindustani

12. Indus Valley Civilization- one of the world’s first great urban civilizations. World’s first university in Takshila –700 B.C Ayurveda- earliest school of medicine known to humans OM - The first sound of the Almighty, oneness with the supreme. The Trinity: Generates-Brahma Observes-Vishnu Destroys-Shiva Yoga – Made in India – 5000 BC Kalarippayat - Origin of Martial Arts – 200 BC History & Religion

13. Culture Fundamentals • Non-Violent Religion • Never invaded any country in her history • The British influence inspired western education and thoughts: • Created a new educated class. • Created a common language – English • Inspired freedom and exchange of ideas • Religious tolerance and freedom of worship: • Hindus and Muslims live side by side but inter-religious marriages are rare • Gandhi’s Non-Violence Movement for freedom appealed to the civilized world • Caste System • Brahmins: Highest caste, most privileged - lawyers, doctors, businessmen • Ksatriyas: Warriors and rulers had to give their lives to protect the Brahmins and sacred animals (cows). • Vaisyas: Farmers and traders. Encouraged to give money to Brahmins & build temples • Sudras: Serve the other three classes. Weavers and carpenters • The Untouchables/Dalit Caste

14. Meals, Drink & Snack • Varies from region to region • Hindus do not eat beef • Muslims do not eat pork or drink alcohol • Vegetarian Cuisine • Meat for the non-vegetarians • (mainly lamb, chicken, and fish) • Ingredients: mainly use herbs and spices • Curry – “Pan -Asian” Dish • In favor of tea (most famous: Chai)

15. Local Culture Essentials • Respect elderly and touch their feet for blessing • Right Hand • Eat with fingers and always use right hand to eat • Wash their hands immediately after and before eating a meal • Believed that food tastes better when eating with one’s hands • Can't Say No • Take your footwear off when you enter a private house or temple • Indian names vary based upon religion, social class, and region of the country • Frangipani and white flowers cannot be the gifts • Yellow, green and red are lucky colors • Strong bonds with family members as well as relatives (Respect the elders) • Sons are always more preferred than daughters • Most marriages are still arranged by parents • Extremely low divorce - rate with only 1.1% • Woman Status

16. Agenda • BDO-I2I at a Glance • India - Culture • India - Business Culture • India - Intercultural Communication Aspects • India - Telecom Industry

17. Business Dress Code • Normal Business Dress Code for Man – Suit and Tie • Due to a warm climate, often full-sleeved shirt and tie are also acceptable • Business Dress Code for Woman – Pantsuits and skirts which cover the knees; neckline of the blouse and top should be high and sleeves should cover the shoulders • Select neutral colors that are subdued and not very bright

18. Greeting… • Greeting • When doing business in India, business etiquette requires a handshake • Indians among themselves use Namaste – the palms are brought together ant chest level with slight bow of the head • Using Namaste is a sign of Indian Etiquette understanding • Business Cards • Business cards should be exchanged at the first meeting • Be sure to receive and give with the right hand • Make sure the card is put away respectfully and not simply pushed into your shirt/trousers pocket

19. Meeting • Meetings • Meetings should be arranged well in advance in writing and confirmed later on by phone • Avoid meetings near national holidays – Independence Day, Diwali, etc. • Punctuality is expected however being late usually will not have disastrous consequences • Flexibility is paramount • Last minute cancellations are possible and not a sign for anything • Meetings Flow • When entering a room always greet the most senior figure first • Start from commencing a a conversation – latest business news, stock exchange and sports (mostly, cricket) • Avoid talking about: • Personal matters • Poverty/beggars • Politics, caste system & religion issues • Woman rights

20. Agenda • BDO-I2I at a Glance • India - Culture • India - Business Culture • India - Intercultural Communication Aspects • India - Telecom Industry

21. Most Important In India, Relationship Comes Before Business

22. India – Top 10 Business Principals • Time is measured by years, not weeks • Long term approach will create significant impact • Partnering and win-win is were it all starts • India and its people are very diverse • Need to adjust to the right people/team • Listening is much more appreciated than talking • “The land of good enough” • “No” is never said • Government/official relations are important • Business India is corruption free • If you are asked, you are in the wrong place • Regulations are simple, but very strictly enforced

23. India Geographic Business Corridors 80% of India GDP

24. “The Land of Good Enough” • India has very interesting view on brand and technology • Brand represents “hard” values: • Reliability, complexity, cost, suitability for multi-user • With very few exceptions, “luxury” and “”Name” are less important • Example – Nokia cell phones: • Reliable and hard working • Though much more expensive than Chinese brands • >60% market share in India • Another example - fashion brands: • Very low penetration of global brands • Very strong local brands • Opposite to China • Reason – no value in “Global” tags

25. Negotiations - How to Start? • Send a detailed product overview in advance • Prepare your initial offer to allow bargaining later on • Respect Indian Business Hierarchy • Hospitality is part of the business culture – accept any hospitality offers (tea/coffee/snacks) • Presentations are generally accepted to start a discussions • Declare long term, and mean it • Learn first, talk later • Tough issues: • Learn first… • Raise when discussed, resolve last • The time between raising and resolving is reserved to relationship, internal contemplations and product/technology international presence • Indians tend to take larger risks with person they trust -> Credibility and Trustworthiness are Critical

26. Decision Criteria • It is all personal • The business reason is key • Technology is being looked at from business perspective • Innovation per se is a mixed bag • Risk aversion - major issue • In Indian organizations, size matters • As many employees, as good • Automation is Necessary to deal with scale • Product/Technology WW Spread • Trust relationship • Relationship/Emotions

27. CEO Role In India: • CEO, Managing Director, Promoter • All alternate names to same function • CEO - Potential Decision Maker • The most superior company executive -> Respect • Must be addressed with appropriate title -> Mr. • Exhibit positive traits -> Honor, Trustworthiness • Being most senior -> Must be greeted first • Concentrate efforts on building relationship with the CEO • You should leave space for escalations • Chairman, Large share holder etc.

28. On the Discussion Table • Silence is blessed • Let the VP talk, CEO to close • Listen to the music • Don’t push… • Don’t insist on any commitment at the first meetings • Do not use strict expressions • “No” is not being said, “Yes” is hardly used • Indians value flexibility during negotiations • Express disagreement openly considered rude -> “We will discuss this issue later on” • Disturbances during the meetings doesn’t show lack of interest or respect • Be prepared for questions/enquiries that seem not related

29. Business Hierarchy • One of the most significant influences on Indian Business Culture • Mostly – One decision maker in the company • Managers and executives – still will wait for approval by CEO/owner • Sometimes decisions are maid by people who are not present during negotiations

30. Agenda • BDO-I2I at a Glance • India - Culture • India - Business Culture • India - Intercultural Communication Aspects • India - Telecom Industry

31. India Technology Boost – Present CAGR: 27 per cent US$ bn Revenues–Indian IT industry Israeli Technology Export

32. India Technological M&A Trend - Telecom

33. India Electronics Manufacturing Services • Electronic Manufacturing Services are among the most rapidly growing industries in India, with the capacity for fulfillment of large series of orders • Indian manufacturers started to operate in quantities and qualities which can easily compete with the Chinese manufacturers. • Two major players: • Vinyas Innovative Technologies Pvt. Ltd • Centum Electronics • India is one of the biggest target market for telecom equipment. Close to 15% of all productions are sold to India. • Using an Indian EMS company lower your costs and bring you closer to your final customer

34. Thank You ! David Keynan CEO BDO-I2I India Business Consulting Menachem Begin Road 46-48 Tel – Aviv, Israel Israel (O)+972-3-6382508 Israel (F)+972-3-6374801 India (O)+91-80-4330-1999 einat@bdo-i2i.com