For over 20 years, CMIE has computed `market shares' of the companies who compete in a certain product. They have also computed the Herfindahl index of concentration. This data is valuable in obtaining a snapshot of what is happening in an industry. But more interesting, this data goes back to 1990-91, and thus constitutes a valuable historical series using which we can obtain insights into individual industries and the economy.
I often get asked how this information base can be accessed, other than by going through print documents over the years. Here are the steps through which you can get data on markets shares, and the time-series of the Herfindahl index of concentration from 1990-91 onwards, for all industries:
- Use the CMIE website http://www.business-beacon.com. This is a pay-per-use site. You can create an account to use this over the net.
- Start at the tree-structured industry classification.
- Pick an industry of interest: e.g. Tea.
- Click on Market shares.
- To go further, you need to have a prefunded account.
- Click on Market share of companies. At this point, you are charged Rs.100. This shows the market share of each company in the paper business. The last row (at the bottom) shows the Herfindahl index. This has been around 0.06 in recent years -- suggesting very little market power.
- At the right hand top, there is access to a spreadsheet where there is a full time-series for the market share of all Tea companies, going back to 1990-91. At this point, you are charged Rs.250. This spreadsheet has the bottom row with the time-series of the Herfindahl index.
Sometimes, an industry (e.g. Two/Three Wheelers) contains market shares data for several sub-components. In this case, the sub-components are accessible from the bottom of the market shares page. Here is an example, for the Two/Three Wheelers industry, where the market shares information defaults to motorcycles (the most important sub-component), but the other sub-components are available by looking below the list of reports.
Dear Prof,
ReplyDeleteMy two-pence worth take on CMIE Business Beacon offering Herfindahl index of concentration...
I think CMIE is relied upon by most respectable economists, statisticians and financial analysts worldwide for India data but marketers and strategists have multiple sources which have had H index with deeper modelling and factor/cluster analysis et al with media rates, corporate ad-spends, time-of-year rollout, gradual/sudden burst entry factors bundled in.... to achieve desired H index.
More or less, anybody who matters, uses them while entering India amongst major firms if not all top-notch domestic corporates who have it in house using syndicated market research data.
The scope of usage wanders over to areas of focussed expertise of likes of Nielsen India, TNS, Technopak or big daddy BIRD under IMRB They have their own sectoral focus with purer figures of H index. Our regulator or Competition Commission mayn't use it yet but US Dept of Justice, Anti-Trust Division uses the changes in the Herfindahl Index to decide if a merger is anti-competitive or not. They take the increase in Index value by 100 or any increase in the overall value to over 1,000 seriously to issue notices on erring companies.
Market research dynamics might be a great lateral enhancement for CMIE's strengths but it is a phenomenally big strategic area in itself; beyond CMIE's IAS.
Best,
Manu Bhat
US DoJ Anti Trust Division Citings of aforestated index
Mr Ajay,
ReplyDeleteI've visited CMIE website. & its really interesting to browse through.
A number of business & Educational research bodies are in need of such research reports on economic advancements & pitfalls.
Thanks & Regars,
Sohan DHande
sohandhande.wordpress. com