Contemporary Issues Challenging the Growth of Indo Japanese Business relations

2000/1/24

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FICCI  Japanese Cell
Expert  Y. SEI

Present situations

It is said that the number of Japanese investment to China is more than 5,000. While, same to India is only about 200-250. Why does Japanese not come to India?

According to JETRO research which was done last year, about 75% of Japanese companies in India are black figures, while in China only 25% are getting profit. This fact show profitability is not necessary for Japanese to come in certain markets.

There is psychological distance between Japan and India. Japanese are not familiar with Indian way of thinking and hospitality and Indian are not qacustom to Japanese rhetoric and silence. It is said that role of chairperson of international conference is how to make Japanese to speak and how to stop India to speak. Food may be also not a small issue for Japanese. Chinese food are acceptable or welcome but Indian dishes are not so. Indian hospitality sometimes makes surprise Japanese.

It is a great regret to mention the fact that so far as financial corroboration is concerned, no new relation has established between Indian companies and Japanese companies except a few cases as on now. There are about 200 numbers of Japanese manufacturing units here in India who made financial joint ventures with Indian partners or 100% Japanese own capital. Those who established partnership are on line of extension of their traditional business. A trade partner becomes technical corroboration partner and financial corroboration partner. Technical corroboration became financial corroboration. Very few numbers of companies newly made partnership.

Float glass of India is corroboration between Tata(ACC Cement ) and Asahi Glass Japan, and this is one of rare new tie between two companies. Asahi looked for an Indian partner and decided to shake hands with Tata. Toyota case also new tie but we could not neglect relation between Toyota and Kilroskar with textile machinery. Daikin recently announced corroboration between SIEL, which can be, considered new one. Daikin has been looking for girl friends and found. Those three companies studied India well in advance.

Other cases of new joint ventures are made by certain pressure or guide line by bigger houses. Such as in case of Maruti, they introduced some Indian companies to their component suppliers in Japan and Japanese component makers will take decision to do joint venture even they has no experience with India. Some auto components makers in Japan asked India consultant to find out partner and they made agreement.

Other cases are on the extension of traditional relations. That means Japanese people are rather conservative so they always want to make tie who are expert on the business. So if any India want to make new venture on new items, it will be extremely difficult to satisfy Japanese. So when India opened door for foreigner in 1991, some of Indian approached Japanese trading firms to ask to find out any items which Japanese can show interest, for which we India side will prepare land, money and any necessary things. But no such cases are entertained at all.

It is said that by 2030 total numbers of automobile production in India will exceed ten millions. Presently numbers of production are little less than one million. If numbers of automobile will be ten times, how other items are - - mineral water bottle may be 1000 times, bear may be 100 times, ice cream 200times. Yes, Indian economy is sure to change. In such case Japanese wise and conservative businessmen will sure to change their attitude and come to India.

Japanese businessmen will come in the field of making profit. If you can proof your proposal is profitable any industries will willingly come.

My dream - Japanese companies in India in 21st century

I have a dream of Japanese companies of 21st century in India

There may be still wages differences between India and Japan, so rationalized Japanese companies will decrease Japanese staff as much as possible and make up organization by mostly Indian. One Japanese CEO or one Japanese adviser to Indian CEO will be common among Japanese companies. All internal exchanges of communication in the company will be in English and done through inter-net.

Trading companies will make up own world putting India in the center. They are not followers of Tokyo's instruction, but to make own policy towards world market and will work not only for Indian market abut also for world market. It may be rather important work to manage and control investment to the companies who are manufacturing exporting goods effectively.

Japanese banks will extend their services not only Japanese companies but also to Indian good companies. And they may pay attention on venture business also. Accordingly risk management will be important job.

Manufacturers are now following the pressure of the parent or concerned big companies, but they will decide their own policy on merit basis, considering specialties and profitability of India. Some will think India as their market, some as supply source of manpower, some the as middle point between Japan and Middle East, some as travel agent appearing Japanese sense to Indian tourism.

Largeness of India as land and population cannot be neglected. These two factors are most important thing.

My dream will continue. But I am a little bit cowardly and worried after looking around me. Not all of Japanese companies are going to the direction I dreamed.

Out of above three categories, trading companies will be most serious. They are still using Japanese as communication method and they are not communicating important matters to Indians. Japanese staff is always pageboys of headquarter in Japan and proposals and ideas from India will not be taken up seriously at all. Inter-net was introduced in the offices but Japanese language would not be abolished from offices. Japanese side would select goods, but India side suggestion should not be taken up. Project founding for possible business is must condition of trading companies, unless otherwise such pioneer point will be sinful.

Japanese banks in India are mainly handling Japan related companies, but in future to bring foreign money at cheaper cost to Indian companies by Japanese banks. Otherwise city bank will overwhelmingly win the market. To attain this object it is advisable to make use of India ability making software to manage risk management consulting. And Japanese banks would be good consultants for INDO-ZAIBATSU to draw money from international market.

As a page boy of Japanese big giants of automobile makers many components makers are now in India, but their way of thinking should be changed to consider their own profit rather than to follow the policy of giants. Let them consider 21st century is not simple continuation of the last century. They can be suppliers of auto components to any automobile manufactures beyond notorious KEIRETSU.


Unknown country India

When a Japanese company thinks of going out of Japan, there are many options. And India does not come the top of the list. There are countries that are welcome Japanese money and technologies. China, Korea, Hong Kong, Malaysia, Indonesia, Singapore, Myanmar, Vietnam, Bangladesh, Philippine and India are countries to be considered as destination. So first of all India must get win the competition among these ten countries. Then among Indian cities or states there is another competition. Gujrat, Andra, Karnataka, Tamil nadu, Punjab, Dehli, Goa UP, Kerala, Orissa these states will compete to draw attention of Japanese approach. So probability of Japanese company comes to Abdra will be one tenth by one tenth- mathematically one out of 100 may have chance to come Andra. India is known to Japanese as mysterious country or traditional cultural country, but not for its economic dynamism or energetic construction of most modern technology. Many attempts to make Japanese to understand India have been done but not enough. Much more efforts to make propagate India are required and same time each state must make PR to sell their own state in Japan. Many of Chinese states send their representative staff to Japan to make PR to local Japanese.

How to overcome this problem is really a head ache of both Indian lobby in Japan and Japanese lobby in India. It is very long way to go but to know each other may be usefull way at all. That is the reason for me to come here.

Thank you.


ASA BHANU JAPAN CENTRE
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