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Issue IV, November 2003
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Foreword |
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Dear Readers,
As the new editor of Cluster e-News, I am proud to present you the first international training course on SME Cluster Development “Helping SME clusters in developing countries meet their potential in the globalised economy”, organised by UNIDO together with ILO. For the first time, two UN specialised agencies with vast experience in supporting the growth of small and medium enterprises (SMEs) team up to offer a course on SME cluster development, aimed at government officials and SME practitioners from developing countries, which will also take stock of the 7 years long experience of UNIDO in India.
One of the regular features of the newsletter, the case study, is this time extracted from the “Guide to Export Consortia”, recently published by UNIDO and Italian Federexport. It recounts the experience of the export consortia in the machine tool cluster of Bangalore. Export consortia are a natural element of a cluster and network development strategy because they tend to develop interfirm cooperation also in areas seemingly unrelated to export such as quality improvements and upgrading of production methods.
In addition, the newsletter includes news on potential financing for small entrepreneurs from the Italian credit line and the EU Asia Invest programme along with a list of Swiss institutions related to India. It provides updates on the government of Kerala agenda on cluster development and gives snapshots of the latest development in clusters such as Chanderi where an innovative community based initiative is addressing the health issues of local weavers.
You suggestions are invited,
Elisabeth Beer
Editor
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Coming up... |
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UNIDO - ILO International training course on "SME cluster development: principles and practice." Turin, Italy 19 - 30 April 2004
This training course is intended for designers and managers of SME development and local economic development programmes, including organisations providing financial services and business development services to SMEs. The overall objective of the course is to enable participants to better devise, implement, monitor and assess the impact of a cluster development programme. Applications to attend the course should arrive no later than 15 March 2004.
Brochure available at www.unido.org/en/doc/4815
For further information, please contact :
Mr Fabio Russo - UNIDO
Tel: 00 43 1 260263611
Fax: 00 43 1 21346 3611
f.russo@unido.org
Mr Peter Tomlinson - ILO
Tel: 00 39 011 6936776
Fax: 00 39 011 6936 589
SME@itcilo.it
Last deadline for Asia-Invest II call for proposals postponed to 8th of January 2004
The Asia-Invest Programme commenced in 1997, has entered a second phase of implementation for five-years from 2003 to 2007, with a renewed European Commission commitment of €41 million (Rs 20.5 crores). The Programme's Instruments are aimed at supporting business co-operation between the EU and Asia across three areas of activity: business match-making, the development of the Asian private sector and the capacity and networking between EU and Asian intermediaries. The Programme’s first Call for Proposals 2003 + Corrigendum is open with one remaining deadline: 8 January 2004.
For more: http://europa.eu.int/comm/europeaid/projects/asia-invest/
Bellary Institute of Fashion Technology to open up in December 2003
UNIDO began its assistance to the jeans cluster of Bellary (Karnataka) in 2002. The cluster is suffering from poor quality and product image in the market. This is due to the prevalent use of out-dated machines, scarcity of human resources able to handle modern equipment, absence of facilities and technological support for servicing modern machines. In order to address some of these issues, the Bellary Garment Manufactures Association, an association supported by the UNIDO project, decided to start a training institute. The overall cost of the project is Rs 18 lakhs (approx USD 40 000) contributed in equal shares by BGMA, Zillah Panchayat, State government of Karnataka and SIDBI. The Institute shall start operating this December and hold three-months courses for 60 people at a time besides organising short term courses.
For more information, contact Mr S.S. Sankaramoorthi, UNIDO at sangam156@sify.com
11th international Technology fair Techmart 2003 14-27 November 2003
National Small Industries Corporation Ltd. (NSIC) is organising Techmart 2003, at Pragati Maidan, New Delhi. The fair will provide a centre stage for those associated with the small sector and interested in keeping abreast with the latest technology in the Indian small sector. It will assist small enterprises to market their products and services and help large companies and buyers to identify SMEs to become their ancillaries, partners in joint ventures and subcontracting.
For participation, contact at exhb@nsicindia.com
Cambodia OECD Workshop in December
UNIDO Focal Point has been asked to share its experience on Cluster Development during an OECD regional workshop on “Trade capacity building and private sector development in South and South-East Asia”. The workshop will take place in Cambodia in the first week of December. It will focus on identifying supply side bottlenecks to exploiting expanding trade and investment opportunities in specific sectors and on the services and institutions necessary for a strengthened integration in the global economy. Particular attention will be paid to the role of small, micro and medium size enterprises.
For further information, www.oecd.org/doc/trade
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News in Brief |
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Italian credit line
The Italian Government has made available to the Indian Government a soft loan of approx. USD 5 million (10 billion Italian Liras); NSIC has been appointed by the Govt. of India for operating the ‘Programme for development of small and medium enterprises’. The line of credit can be utilised for the acquisition of Italian Machinery and Services correlated to the identified sector. Entrepreneurs are required to apply only on prescribed application forms available with NSIC’s Regional and Branch Offices. The application form can also be downloaded from the web site www.nsicindia.com.
UNIDO Investment Technical Promotion Office - India Desk is responsible for the evaluation of projects and provides also free technical assistance. For further information, contact Mr Andrea Topo at at.unidoreg@vsnl.net
The State Government of Kerala moves ahead on its cluster development agenda
On the 18th October, the first Cluster Development Agents (CDA) Training Programme has been launched for 30 officers of the District Industries Centres. This was preceded by a State level conference on the 12th of October on SME Cluster Development in Kerala with wide participation from industry leaders, UNIDO Focal Point, SIDBI, SBI - Uptech project, State level industry associations and leaders of consortia. In Kerala, several consortia have already been registered in plywood manufacturing, food processing and ready made garments. Consortia leaders made effective presentations on the relative advantage they see in forming consortia and networks.
For more information, contact Mrs A. Das, UNIDO at anitadas@yahoo.com
State Bank of Travancore funds the first bulk purchase consortium in India
The Natural Rubber and Fibre Products Manufacturers Consortium Plt., Changanacherry (Kottayam) launched its Raw Material Purchase Bank fully funded to the extent of Rs 60 lakhs (USD 130 000). The bank is likely to lead to substantial savings for its members. This is the first example of its kind in India and is an outcome of the collaboration between UNIDO, Govt. of India and Govt. of Kerala under the project "Support to the Country Effort to Promote SME cluster Development".
For more information, contact Mr N Sathyaraj, CDA rubber cluster at cfscchry@sancharnet.in
Health initiative of the Silk Club for the weavers of Chanderi
In the handloom cluster of Chanderi where UNIDO started its cluster development initiative in 2002, the issue of weavers’ health was ignored by master weavers and traders. Through meetings and joint discussions, the Chanderi Silk Club, a representative organisation of traders, started realising its responsibility towards the weaving community and agreed to participate in a community based approach to address the problem. As a result, the Mission Hospital at Lalitpur was mobilised to provide weekly OPD services in the cluster. So far, more than 400 weavers have visited of which 60% are women. This has brought not only an improvement in weavers health and therefore in their productivity but also has introduced the concept of social corporate responsibility among the traders and has improved trust among weavers, master weavers and traders.
For more information, contact Mr Rajveer Singh, UNIDO at rajveers@hotmail.com
Improving quality in Jalhandar
For most of the entrepreneurs of the sports goods of Jalandhar, the concept of quality was equated with 'large' investment in machines and manpower and thus loss of competitiveness. Since the beginning of its intervention UNIDO focused on creating quality awareness by holding one-to-one meetings and organising a workshop on ISO 9001:2000 quality certification. At present four firms have registered for aquiring the certification. Due to joint negotiation they have obtained a discount of 30% on certification costs. One of them has already been certified and has made savings around Rs 100 000 (USD 22 000 ) through lesser rejection and better inventory, It is also expecting a remarkable increase in export orders in the current year.
For more information, contact Mr D Bandyopadhyay, UNIDO at debashis11@yahoo.com
WIPO-WASME Special Program on Practical Intellectual Property Rights
The documents from the first WIPO-WASME Special Programme on Practical Intellectual Property Rights Issues for Entrepreneurs, Economists, Bankers, Lawyers and Accountants, which was held in Geneva from October 6 to 9, 2003, are now available on-line at:
www.wipo.int/documents/en/meetings/2003/wipo_wasme/index.htm
Based on the experience, WIPO and WASME are planning to organise a second event in March 2004.
Trade Marks Act Enters Into Force in India
On September 15, 2003, the new Indian Trade Marks Act entered into force. Some of the salient features of the Act that may be of interest to small and medium-sized enterprises, include: registration for service marks, introduction of collective marks, definition of trademarks expanded to include three-dimensional marks and the possibility for applicants to apply for registration of a trademark in several classes using a single application. More information is available from the website of the Trade Marks Registry at: www.tmrindia.com .
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A Case Study |
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Consortia in the Machine Tool Cluster of Bangalore
The machine tool cluster of Bangalore encompasses about 125 firms, including 45 machine tool manufacturers (MTMs) and 70 to 80 small-scale producers of machine components. The cluster has a turnover of Rs 2,500 million (USD 50 million), approximately 40 per cent of India's total production of machine tools. However most of this arises from the domestic sale of large MTMs.
In 1999, when UNIDO began its assistance to the Bangalore cluster, the Indian Machine Tools Manufacturers Association (IMTMA) was the main organization for MTMs. Its membership consisted predominantly of large-scale manufacturers and the association mostly dealt with macro issues. On average, small-scale units were disorganised and lacked the capacity of collectively addressing their problems, the greatest of which was their inability to market their products.
A recession in the domestic market and the mounting competition from foreign producers intensified the need for improved sales techniques. Traditionally, the small-scale manufacturers firms had been selling their machines through personal connections. However, this strategy was not applicable in export markets. The small firms needed to take up aggressive marketing and to obtain national and international market linkages as well as support services to upgrade their products' quality in order to remain competitive in a global market. All this was, however, beyond their individual reach.
To address these needs, the UNIDO cluster development programme had to take an active lead to promote the creation of several consortia. The programme concentrated on the more dynamic firms, relying on their leadership to rope in more members. To limit the scope for internal conflict, it was decided that firms should not be competitors in the market but should produce complementary goods. Furthermore, it was agreed that members of a consortium should be of similar size in terms of production capacity and ability to invest.
Overall, 56 firms were organised into 9 marketing consortia. The programme further helped these groups to form an umbrella association called "Association for Bangalore Machine Tool Consortia" (ABMTC), to provide platform to exchange information. The newly created consortia were assisted in hiring a coordinator (called a "Network Development Agent" or NDA in short) to run the day-to-day activities of the consortium. However, it soon became clear that the NDAs that could be recruited locally were not very competent. Moreover, the leadership of some consortia proved unable to effectively guide the NDAs. Most notably, essential skills pertaining to conflict resolution were abundantly missing among the NDAs available locally. To overcome these problems, UNIDO provided capacity training to NDAs, including on-the-job training and two formal sessions for NDAs.
Each individual consortium has pooled its members' resources to undertake various common marketing initiatives which individuals firms could not undertake due to the high costs involved. Although activities were initially aimed at the domestic market, they were quickly adapted to foreign markets. Achievements of consortia, within the six months following their creation, include the elaboration of common brochures, establishment of joint marketing offices across the country, appointment common marketing dealers and consultants, creation of common websites, joint advertising campaigns, a common warehouse and collective participation in several international exhibitions, both in India and abroad. Overall, these new marketing channels have generated business worth Rs 23 million (USD 500 000) and enquiries worth Rs 161 million (USD 3.5 million).
One of the main achievements in terms of export-related activities so far has been the entry of one consortium into the Chinese market. Throughout the cluster, China was traditionally perceived as a competitor for Indian goods and none of the consortia members was willing to venture into the Chinese market. However, Chinese machine tools are typically standardised and a shortage of customised machine tools exist. The UNIDO programme therefore called in a Business Development Services (BDS) provider to point out this market niche to the firms, who began to see China as an opportunity instead of a threat. The members of the Bangalore Machine Tool Manufacturers Network (BMTMN) became interested in organising a study tour to China and charged their NDA with preparing the mission. Two months later, a delegation of BMTMN embarked on their study tour to gain more information on the Chinese market and on potential prospects for Indian firms. The study tour, which included visits to MTMs in China, buyers, fairs and support institutions, was perceived as a success and shortly afterwards, the consortium sent two members back to China to assess the need for establishing a sales office. It was found that the creation of a common office was premature and alternative distribution channels were identified. In addition to these missions, three members of the consortium participated in an international fair in China where they distributed BMTMN’s common brochure on behalf of the other members.
As a result of BMTMN's positive experience, other consortia, with the support of ABMTC, have prepared study tours to countries besides China and have organised their participation to important international fairs abroad.
Cooperation between member firms has improved due to their membership in the consortia. Consortia can share inquiries: often, an order is received by a firm that is not in a position to take the work. In such cases, the members can share the enquiry within the consortium and if nobody is in a position to take up the work, the enquiry is passed to other consortia. Firms are thus becoming confident that they can take up large-volume orders and share them among each other. Additionally, members have referred their customers to other consortium members and have developed a database of buyers thereby increasing the customer base for all firms.
In order to get the full "Guide to export consortia", please write to Mr Fabio Russo, at f.russo@unido.org
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Interesting Web Sites |
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In this issue of Cluster e-News we are providing you with an overview of Swiss Institutions that may be of business interest.
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