Contents 1. Introduction 3

2. Social Characteristics 5

3. Cultural Characteristics 6

4. International Business Involvement Options 8

5. NZ Government Support 9

6. Conclusion 9

7. References 10

1. Introduction

India is one of the largest countries in the world. It is becoming a lucrative market for processed food imports, popular because of a growing population of 1.2billon. New Zealand exporters have found the biggest market potential is for processed foods such as milk and dairy, coffee and carbonated drinks, and seafood. Fonterra have invested in India and want to keep sustainable development.

India is also the one of the world's largest agricultural producers with a large farming industry. Its GDP was calculated to be US $2,010 billion in 2012 and to grow at 7 to 8percent per annum. There has been a specific increase in purchasing power among the cities. Indian packaged food trade was US$25.4 billion in 2011 and it was hoped to reach US$35 billion by 2016, with the highest value segments (dairy, bakery and oil) (India Online, 2013). India’s consumers have become more health conscious, more and more people are concerned with heart disease and diabetes. This influences their purchasing decisions. The New Zealand-India Free Trade Agreement currently being negotiated to reduce tariffs (India Online, 2013).

India’s importance is growing for New Zealand. New Zealand export for food and beverages to India was NZ$178 million in 2010, and had a 106 percent increase from 2009. The dominant export product was Dairy products, including butter, milk and cream (India Online, 2013). According to compound average growth rates, the fastest growing food exports from New Zealand were liquor, sweetened bottled water, seafood, babies’ formula, malt extract products and food preparations (NZTE, 2010).

Fonterra is a well known dairy company in New Zealand. It was formed by a merger of two largest dairy companies in NZ and the government run NZ Dairy Board. It is also the largest dairy exporter in the world, accounting for 1/3 of the global dairy trade market (Fonterra, 2013). Products are exported to more than 140 countries around the world, providing different kinds of dairy raw materials, covering the basic raw materials for dairy products. New Zealand exporters are considering surveying the potential markets for their product through Indian-based market research firms (Fonterra, 2013). To identify suitable business partners in India to help entry into India's market. This huge market demand needs to pander to the consumer market.

This report will gather information about India’s market and Fonterra’s resource situation from journal articles and website. The limit of this report was most information was collecting from the Internet and no opportunity to research the market in India.

2. Social Characteristics
India has dozens of ethnic groups and more than 300 tribal people. All ethnic groups are around 94-96% of the total number of the population. Main ethnic groups: Hindustan, accounts for 46.3% of the population, Telugu (with 8.6%), Bangladesh (with 7.7%), Marati tribe (with 7.6%). India's main religions: Hinduism (82.7%), Islam, Christianity (2.6%) (11.2%), Sikhism (2%) (India Online, 2013).

Indians are family-centred in their personal lives. The Indian middle-class cultural level has higher incomes and higher living standards generally (Rampur, 2012). In terms of administration, science, technology, culture and education, they directing control productivity and cultural facilities. Middle - class families have modern houses, servants and cars while poor families live in smaller and simple huts. Large joint families are living in big houses with many rooms (Rampur, 2012). However, people do not care much about the living standards. They are looking for peace and life satisfaction.

Traditionally, Indian social classes are divided into f our grades. They cannot marry between different castes and some even cannot have dinner together, also cannot drink from the same well of water. The highest caste Brahman is mainly engaged in cultural education and sacrifice (Manian, 2007). The lowest caste, Sudra, is engaged in simple labour. The second and third caste called Kshatriya and Vaisya respectively, they engaged in administrative management, war, and business activities (Manian, 2007). In addition, there is another part of Hinduism called "Panchamas ", also known as untouchables. It is called the fifth caste with the lowest position.

India's economic substantive reform aim is to realize the economic liberalization and globalization in India. The Government continually push forward economic reform and raising the agricultural reform (Rizvi, 2007). By improving infrastructure, promote the circulation of the domestic market and accelerates the reform of the fiscal taxation, financial system and the electric power departments. The expansion of state power of the Government reform, promotes the reform of the second generation of economics (Rizvi, 2007).

Impact for Fonterra Company

India is the eighth manufacturing country and the world's second most populous country. In the “tenth five-year plan" by the Government, the economic growth rate was at 8% from 2002-2007. However, based on India's heavy population burden, imbalance of industrial structure, the gap of huge fiscal deficits, the gap between rich and poor, backward infrastructure, high non-performing assets and domestic caste and religious contradictions, to deal with these issues is not easy(Rizvi, 2007). It restricts the trade of international business.

The market structure in India is different from developed countries. India is one of the largest food producers and agriculture countries in the world (NZTE, 2010). There is a large potential market in milk and dairy products. Indians prefer fresh foods. However, for Fonterra export fresh milk from New Zealand to India is unrealistic. Indian logistics are underdeveloped with a lack of cold storage facilities and it is expensive using air freighted transportation (NZTE, 2010).

Moreover, 65 percent of the market share is owned by small and independent family stores in the food and beverage retail market. However, large supermarkets have had an influence in family stores (NZTE, 2010). They will be more likely to import and export products.

Fonterra plans to overcome or limit the risks

To enter the market, develop the free trade agreement with New Zealand and reduce tariffs in export products. It is recommended that send representatives visiting India and its major trade shows before attempting to export there.

Establish a large-scale dairy farm. Fonterra should have build a test grazing land with 3000 to 5000 cows in India at first. India has a good English education, in line with the internationalization of management. This is good for setting up a farm and recruiting staff.

Fonterra should be aware that the Indian market is being flooded with international products and the only way to create awareness of their products is by large promotions. Fonterra need to cooperate with both supermarkets and family stores.

3. Cultural Characteristics
India is an ancient civilization, India's culture deeply affected the world, because of the sea and the mountains in the north block, Indian culture is self-enclosed, and independent. So in India, we need to know about Indian culture, especially all kinds of taboos, and understand Indian culture to facilitate communication with customers, officials and employees in India (Baylry, 1999).

First Fonterra need to understand is the caste system in India. India's caste system not only is reflected in the economics, but more importantly it influence of national culture in India. Caste system in India has been around for thousands of years, although the law stated the illegality of the caste system, but the concept is hard to change. For Fonterra to enter the Indian marketing also needs to face this difficult problem. The most prominent influence is the company's cohesion problems, because of India's caste system different castes of people can't work together. When Fonterra encounters this hiring of local employees who cannot work together it may be are embarrassing situation. So Fonterra in the face of this problem must strengthen their cultural education and try to avoid conflict as far as possible to minimize the effects of the caste system. In recent years, with the development of Indian economy and the improvement of income, the gap between the individual caste has a tendency to shrink, but discrimination and barriers still exist, Fonterra to its own development, needs to realize the seriousness of the caste system, and through education and income reduce the employee's caste consciousness and strengthen the consciousness of the company (Kathlen, 2011).

Fonterra also needs to face India's language problem. Indian language is variety, but there is no national language that occupies an absolute advantage. Even the largest Hindi, users are only 30% of India's population. Fortunately, British put English give to India, and until today is still the official language in India. English is one of the three tools of cohesion of Indian society, the North-South cultural differences in India are huge and English is the best means of communication between different ethnic groups. So Fonterra in India language must was English, only English can minimize the cost of management, and different cultural background staff communication. But India's English is not a native language. There are still many people who can't speak English. Fonterra needs to accord arrange relevant people to lead the work (Kathlen, 2011).

In India the religious overtones are strong, religious life is a part of life of most Indians. Religion also means that there are many taboos. So Fonterra in India, in the company's internal management and product development and marketing needs to consider the factor of religion. First of all Fonterra's internal staff management, need to respect employees' religious beliefs, Followed by Fonterra's product development and marketing, of the different religious groups， different styles can be developed based on religious preferences, the colour of the products, and they can participate in religious ceremonies, cultural exhibitions to promote products (Dalmie, 2012).
India's consumer mindset is also an important factor. Indians like simplicity of life. So in India, the most sale well product depends on the lowest price. The company's product development needs to consider the issue of cost, the cost must be reduced to a minimum, and they well experience price wars with local enterprises in India. In recent years, nationalism as an economic development had a tendency to strengthen, so highlighting India's colours in the product design, according to the Indian market conforms to Indian consumers’ aesthetic tastes and national characteristics of the product (Dalmie, 2012).

India is a commonwealth country. After independence, remained a British colonial legal system. India is a rule of law society, the status and role of the lawyer is important, and is similar to Anglo-American and other Western developed countries. In addition, educated Indians have a strong awareness of the law, but the national problem of corruption is a serious and traditional folk culture, and the outcome of the rule of law will be affected. There are three points for Fonterra in India: India's legal system is developed, the lawyer's role is very large, Fonterra needs to take full advantage of India's legal system to protect themselves; Followed by a strong sense of Indian law, in dealing with the problems of the employees they need to take into account the domestic laws of India for the protection of its own citizens; Finally, the rule of law in the enforcement process in India is influenced by other factors, making the law less effective, Fonterra need to take adequate measures to deal with this (Shankar, 2002).

4. International Business Involvement Options
New Zealand is a "dairy country", but the population of New Zealand is not high, the domestic market demand is not big, so the company's major dairy products are for export. The main export products are milk powder, butter and cheese。India's economy since 2003 has developed rapidly in recent years. India's GDP growth rate reached 8.2%, the per capita level of consumption has soared. India is a country with a large population, the market is quite large, but competitive pressure is less than in China.

Affected by the Western countries, Indians have an especially high demand for dairy products, such as milk in the diet of Indians, occupies a very important position. Per capita milk consumption is of 250 ml or 90kg per year. Currently, New Zealand is the only country that has not had outbreaks of avian influenza, foot-and-mouth disease, and mad cow disease. Farming in New Zealand is all based on herding mode, donot like the United States and other countries on the use of feed, so the New Zealand dairy industry in India has a good reputation. In recent years, India's imports of dairy products come mainly from New Zealand. So for products exported to India there is a good sales channel and government support (Dalmie, 2012).

Judging from the price of dairy products, because the local feed prices are rise in India, Local dairy prices to have maintained an upward trend since August 2009. Just will give the products of the company have a big of advantage in the local market price war. So we have chosen India as one of the main object for export (Rashmi, 2012).

5. NZ Government Support
The New Zealand Trade and Enterprise was set up in 2003 to assist industry and help exporters (Cook, 2012). The National Government worked to reduce regulation and continued to support exporters.

The Ministry is the key link to organisations such as the OECD (Organisation for Economic Cooperation and Development) and WTO (World Trade Organization) (Luthans & Doh, 2012). On August 14, 2012, the New Zealand ministry of Economic Development minister, Joyce and trade minister Glazer announced that New Zealand will join the WTO is the Government Procurement Agreement (GPA).

New Zealand signed the agreement for domestic enterprises to provide more chance to cooperate with foreign governments. New Zealand also should give foreign companies involved in the government procurement equal treatment. Accession to the WTO is not only benefits the domestic exporters, but also improves market access and reduces export costs.

New Zealand Trade and Enterprise (NZTE) make funds available to selected businesses up to $1 million over 5 years under its International Growth Fund. Now New Zealand needs to produce high value-added products (Luthans & Doh, 2012). It requires breaking through the limits of the market. The New Zealand Government is willing to invest a lot of money to pay for the domestic economic development each year. It also encourages enterprises to become involved in the international market. The Government paves the way for multinational companies. Fonterra can use this opportunity to invest in the Indian market to earn interest.

Growing economic prosperity in India. Growing urbanisation (the World Bank projects India's urban population to double over next 30 years). India consumer demand is growing rapidly, both imports and exports. Especially in the urban centres, brand awareness is outstanding. There is a large market in India. (NZTE, 2012).

Company's development direction and production goods must conform to the conditions in India. The dairy industry provides a platform for customers and markets as the auxiliary. Companies need to overcome many difficulties, including tariff and non-tariff barriers to trade with Indian complex government agencies and to regulatory environment (NZTE, 2012).

Taking dairy products to India while bringing new skills and technologies to New Zealand. Indian silk production gives priority to domestic or workshop production. Filature farmers generally buy fresh cocoon silk reels, and then sell silk to accelerate cash flow. The New Zealand Government will cooperate with Indian seminars of technical exchanges and industry will promote the development of the textile trade between the two countries to share production and sales experience. They can develop new technologies and promote economic development.

Further, with the offshore policy, Fonterra can establish an offshore company in India. The Government can make both parties get a win-win situation. On one hand, Fonterra can develop international business. Enterprises are used to enhance the power and expand business areas by transnational operation (Wang, 2011). These commercial activities can avoid tax legally and reduce the burden of finance and taxation. These companies can absorb experience from the other parts of the company. They can cooperate with domestic enterprises to develop their business (Wang, 2011). On the other hand, the Government can improve the reputation of the country. It can obtain an offshore company's registration fee and keep the commercial activity stable. Meanwhile, it is convenient for the government to manage the company and control the international trade market.

6. Conclusion

The New Zealand Government is implementing an interagency NZ Inc. India strategy. It is working well for India, being a core trade, and is economy for New Zealand. New Zealand and India has a common heritage reflected in important traits, like democracy, analogous legal systems and the use of the English language. Indian companies mostly give priority to family industries. Before entering the Indian market, Fonterra needs to find a cooperative partner that fit their company.

As India's standard of living is higher and higher, more and more India's customers are attention to food health. Based on India's heavy population burden, imbalance of industrial structure, Fonterra Farm Project can bring more jobs to India; reduce the gap between rich and poor. India, on the other hand, wants higher foreign investment to increase growth opportunities for its companies and jobs for millions of unemployed youth. New Zealand signed the agreement for domestic enterprises to provide more chance to cooperate with foreign governments. Fonterra investment projects can give India and New Zealand more chances to promote economic exchanges. Fonterra's investment is of great significance for the common development between the two countries in the future

7. References

Baylry, S (1999). Caste, Society and Politics in India from the Eighteenth Century to the Modern Age. London: Cambridge University Press.

Cook, M. (2012). Government and industrial development. Te Ara - the Encyclopedia of New Zealand. Retrieved from http://www.TeAra.govt.nz/en/government-and-industrial-development.

Fonterra. (2013). Dairy for life. Retrieved from http://www.fonterra.com

India Online. (2013). India's Population 2013. Retrieved from http://www.indiaonlinepages.com/population/india-current-population.html

Kathlen, K. (2011). The Culture of India. New York: Britannica Educational Publishing.

Luthans, F. & Doh, J.P. (2012) International Management-Culture, Strategy and Behaviour (8th Edition), New York: McGraw Hill Irwin Manian, R. (2007). Doing Business in India for Dummies. Indiana, America: Wiley.

NZTE. (2010). FOOD AND BEVERAGE MARKET IN INDIA. Retrieved from http://www.nzte.govt.nz/en/export/market-research/food-and-beverage/food-and-beverage-market-in-india/

NZTE. (2012). INDIA. Retrieved from http://www.nzte.govt.nz/en/export/export-markets/south-and-southeast-asia/india/

Rampur, S. (2012). Family Life in India. Retrieved from http://www.buzzle.com/articles/family-life-in-india.html

Rizvi, G. (2007). Emergent India: Globalization, democracy, and social justice. International Journal. 64(2), 753-768.

Shankar, Madhalika (2002). Becoming American, being Indian. New York: Cornell University Press.

Vaseudha, D & Sadanna, R. (2012). The Cambridge Companion to Modern Indian Culture. London: Cambridge University Press.

Wang, K. (2011). New Zealand banks still prone to offshore wholesale funding risks. AsiaRisk. P 1. Retrieved from: http://search.proquest.com/docview/913288466?accountid=15035