Investing In India: Not For The Fainthearted

Foreign companies see vast potential. But pitfalls, like finicky consumers, abound. Here are some lessons

It looked like a can't-lose proposition. In 1995, Mercedes-Benz opened a plant in India to manufacture its E-class sedan and win over India's new rich business class. Two years later, the plant is using only 10% of its 20,000-car capacity. Indians turned up their noses at the car--a model older than those sold in Europe. Now, Mercedes has to reassess its mistakes and start exporting extra cars to Africa.

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