Thread: 3 Ways to Kill a Business Deal in India

Very enlightening, thanks NewYorkDude! Is there usually a written contract in place when these late payments occur?

Written contracts is a Western notion. Traditional business in most of the non-Western world is not done by written contracts, but handshakes. Most of the world does not have many lawyers, so in most of the traditional world does not bring late payments to courts. Business in traditional economies is done on the basis of honor. If you have a bad name for nonpayment no one wants to do new business with you.

Yes, I've read that in India they don't like documentation. NewYorkDude, thanks for all this information.

Thanks NewYorkDude - very interesting!

I don't agree with you completely..but most of the things you said were very true..

Know the personality and attitude of people you are dealing with. Sensitivity of the persons feeling should also be applied because they have different culture.

I just came across this video, which offers advice about the do's and don'ts of doing business in India. You can listen to some interesting insights. Here are some examples:

• India on the outside looks chaotic but once you get through the layers, you'll find internally it's very organized and calm.

• The Western aggressive approach of doing business (and looking for it to be done fast) is considered disrespectful in India. It's better to have a gentle approach.

• Take the time to understand and learn about their family. Family life and community is the same in the workforce as well as in the home.

The idea that you make a deal today and expect to be paid ASAP is very Western. It is not a rule followed all over the world. Many Indians are used to paying quite a while after the deal is done. The modern Indian young person probably was taught all about the Western idea of prompt payment and has thoroughly absorbed the lesson. But that young Indian's parents might live on a different time schedule. For example, they might be used to paying their pharmacy bill several months after they picked up the pills.

In China, for example, it is not unusual to be paid a half a year after the deal is done or after delivery. Regular people also pay slowly. In India (and many other countries) workers sometimes get paid several weeks or even months after their work is done. These workers live with it. A Westernized worker might demonstrate or strike or do other nasty things to a boss who pays late. Not many Asians.

I wouldnt speak of china but my family was once considered the cement king of india and from what I know, workers need to be paid daily.. something even in advance. You cannot delay your workers payments because they live off on the money they make everyday. They have no savings and they want no savings. They live in slums and they live their life of whatever money they make... ofcourse its subjective on what you define "a worker" as.

A deal breaker for me would be if a westerner tries to rub his royalness in my face. The reality is asians save money and invest in property. Just with that virtue we are way too rich than you can imagine.. our apparments are worth 200k - 300k $ just to give you an example... if an american tries to rub his money in my face.. I dont even pick up his call the next day no matter how important his business may be.

Originally Posted by domainerin

once considered the cement king of india and from what I know, workers need to be paid daily.. something even in advance. You cannot delay your workers payments because they live off on the money they make everyday. They have no savings and they want no savings. They live in slums and they live their life of whatever money they make... ofcourse its subjective on what you define "a worker" as.

The "workers" you mention are the type who do unskilled manual labor like picking up headloads of raw material and dumping them onto trucks that will take it to the cement factory. Since you don't know if you are going to see that worker again, you have to pay him on the spot. But workers who do laundry, who deliver things at the home, domestic help etc are not paid daily and neither do all workers live in slums.

The payment models in India are broadly of these types:

(A) Organized sector (usually the Government and Public Limited Companies)
(1) regular employed skilled workers - paid monthly
(2) regular employed unskilled workers - paid monthly or weekly in some industries
(3) skilled or unskilled contract worker - after work finishes, there is a vicious cycle of purchase committees/officers who drill the worker and dissect the bill very thoroughly and most times it takes much more time to get the payment than it took to do the work. For example, if a worker was contracted to do some electrical repair works in a big cement factory, and which he finished in 2 days, his payment may take months to be released (unless he offered a massive discount or perhaps greased some official in cash or kind)

(B) Un-organized sector (private companies, small businesses, homes, even local government)
(1) regular employed skilled workers - paid monthly
(2) regular employed unskilled workers - paid monthly or weekly for some like construction workers, farm labor etc.
(3) skilled or unskilled contract worker - there's lot of haggling involved here - but usually payment is done at the finish of the work which may be a day, week or even a month.

Depending on personal relations that the contract workers maintain with employers, they might be able to get occasional milestone payments and rarely even some advance.

The "workers" you mention are the type who do unskilled manual labor like picking up headloads of raw material and dumping them onto trucks that will take it to the cement factory. Since you don't know if you are going to see that worker again, you have to pay him on the spot. But workers who do laundry, who deliver things at the home, domestic help etc are not paid daily and neither do all workers live in slums.

Thats where I said

ofcourse its subjective on what you define "a worker" as.

(2) regular employed unskilled workers

These prefer daily payments, sometimes even advance.

Anyway, lets stick to the topic of business deals ..