Consolidating Kansai Nerolac: the pivot to emerging markets (1986)

What the take-over-the-incumbent model left behind

What stands out about the 1986 decision is that, unlike the Thai method of raising a local subsidiary from a blank sheet, it absorbed whole a company already listed on the Bombay Stock Exchange. Paint is heavily constrained by transport costs — a business of local production and local sales — so making a subsidiary of an existing firm that owned a brand and a sales network was, in all likelihood, the faster route into the market. The practice of leaving the management in place and entrusting the running of the business to them appears to have been held to consistently from this point on.

Even so, it took nearly forty years for this decision to become the pillar of the overseas business. Among the chain of capital tie-ups with local companies stacked up at five-year intervals from 1985 to 2007, India turned out to be the one that grew the most. That the Helios acquisition in Europe is now the object of restructuring while India is named, alongside Africa, as a growth market shows that this form of expansion — taking over a local incumbent in an emerging market — was a long bet whose verdict only settles decades after the purchase.