Business Today
"China's growth is good but India is the jewel"

She was credited with turning around the North American operations of cosmetics major Avon in the '90s. Today, as President & CEO of Colorado-headquartered $5.3-billion Western Union, Christina A. Gold, 62, has her task cut out:

She was credited with turning around the North American operations of cosmetics major Avon in the '90s. Today, as President & CEO of Colorado-headquartered $5.3-billion Western Union, Christina A. Gold, 62, has her task cut out: To grow the core customer to customer (C2C) business hit by the slowdown, and to scale up new promising businesses—electronic channels and business to business (B2B). In an interaction with BT's Anand Adhikari, she talks about all these and much more, including the company's prospects, especially in India and China. Excerpts:

India and China are the two biggest recipients of remittances. How well are you doing here?
India is the largest recipient market in the world. If you go back 7-8 years, we had about 3,000 locations in India. Today, we have 56,000 locations. We have a strong brand awareness here and we are seeing tremendous growth in business, market share and customer loyalty. We did a million transactions in 2004 and now are close to hitting the 10-million mark.

Today, our Indian business is larger than China's, which has about 25,000 locations. China has seen good growth, but India is the jewel in terms of performance.

How big are India and China in terms of revenue?
Together, they contribute about 6-7 per cent to our business. But there is a large potential to grow if you look at India as the largest remittances market in the world. Asia contributes about 20 per cent to the remittances market and about 8 per cent of our business. I've no fear in asking the Indian team to triple our business— there are lots of opportunities to grow. In 2009, we grew by 22 per cent in terms of transactions and revenues were up by 11 per cent.

The global remittances market shrank by 5-6 per cent in 2009 and unemployment is still high in the US and other developed countries. How are you navigating this challenging business environment?
I wouldn't say shrinking, but it has slowed down a bit compared to the earlier growth periods. Over the last five years, remittances were growing at about 8 per cent globally. If you look at our business, we continue to grow. We grew our revenues by about 2 per cent last year. We also have a very strong cash flow of $1.2 billion. This year, we are expecting a modest to relatively flat growth. That's also the projections of the World Bank, which has pegged remittances growth at 1 per cent. However, we could see a marked improvement in 2011.

How are the big 'send' countries behaving in these tough times?
One of the most challenging markets is the Gulf countries. It's still growing, but not in the double digits of the last five years. The remittances market has a direct relationship with the housing crisis and the construction industry. We are, however, seeing encouraging signs in the domestic money transfer business in the US, the biggest "send"country. Russia is also holding up strongly.

Does political rhetoric like jobs for the locals in the US or the backlash against foreign workers, especially Indians in Australia and the UK, threaten your business model?
We always analyse these (political) developments by looking at what types of jobs are impacted. Clearly, there have been discussions about immigration reforms in the US. The world's biggest economy continues to attract talent. We see some retractions in Mexico and South America because of the debacle in the housing and construction industry. There is also some push back on immigration reforms because of the high rate of unemployment. I think these things are temporary and migration will return as economies resume normal growth.

What kind of transactions are you doing through the mobile network?
If you look at the 5 billion mobile phones, there are very few—just 30-50 million—with M-wallet capability. Over time, in many of the emerging markets, the brick and mortar infrastructure won't be there. But mobile will be there. We could be a meaningful player in the mobile space over a five-year period. But a lot depends on customer acceptance. Today, the transaction size is very small. There are also regulatory issues involved.

Will electronic channels transform the remittances industry?
I don't see it that way. I think it just changes the delivery mechanism. Mobile transfer offers cost efficiencies.

Will it translate into lower fees for customers?
Not necessary. If you look at the principal amount, money transfers are very small in size because of regulatory issues. People are also not sending much through this medium.

Which are the countries where mobile transfer holds promise?
In the UK we have activated about 10, 000 locations, which are able to do mobile transactions. By the end of the year, we will have 75,000 locations under mobile coverage. Kenya is one of the few places in the world to hold promise for mobile transfers as it has a very robust intra-country money transfer business. South Africa and the Philippines are other countries.

What are you doing to encourage domestic money transfer in India?
It may be difficult for us to be able to do that because of rules in terms of the number of transactions a customer can do. This is something I discuss with policy makers every time I come to India. Every country has different rules and we work with the regulators to see how we can help our customers.

There are a lot of expatriates working in India today. Do you see a reverse flow of remittances?
You see that happening in different countries. Look at Russia 10 years ago when it was a "receive" market . But during the high growth period of the last five years, Russia turned into a "send" market. Workers were migrating to Russia to work. Today, it is a mixed market.

How do you plan to scale up the B2B side of the business?
We had acquired a company Custom House two years ago to facilitate money transfers from company to company and conduct business to business transactions. It operates in about seven countries and we are expanding to other countries. We want to scale it up step by step as we are very clear about maintaining customer service and margins.

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