Indo Japanese Business relations

2001/3/26

Indo-Japanese relations: The Emerging Trends
Jawaharlal Nehru University  School of International Studies

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 accustom 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. (please refer comparative list of how India and Japan is differ prepared by Mr. T. Yamanouchi)

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 relations. 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 agreed 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 guideline by bigger houses. Such as in case of Maruti, they introduced some Indian companies to their component suppliers in Japan and Japanese component makers took decision to do joint venture even they have no experience with India. Some auto components makers in Japan, however, asked Indian consultant to find out partner and according to the result of consultant survey they made agreement with recommended party. Those were very rare cases and its numbers were few.

Other cases are on the extension of traditional relations as I mentioned above. That means Japanese people are rather conservative and they always want to make tie the party who are expert in a certain business field. 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.

How to promote Japanese investment

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, beer may be 100 times, ice cream 200 times. Yes, Indian economy is sure to change. In such case even Japanese wise and conservative businessmen will be sure to change their attitude and will come to India.

Japanese businessmen as well as other foreign businessmen will come in the field of making profit. If you can proof your proposal is profitable any Japanese industries will willingly come. So time has come to invite foreigners saying please make profit in India. Each states as well as central government should say to foreign companies to come to India to make profit. In order to promote Japanese investment it is a time to show success stories than to explain theory or procedure how to resister their companies. For that purpose state government must take up problems and requests from existing joint venture or Japanese companies in order to get them near to success as soon as possible.

India is very big country and general information about India will not help for Japanese companies to study where to invest money in India. Particular information on each state must be propagating in Japan. Otherwise Japanese companies cannot decide where to go in India.

Now time has come each state would appeal their specialties to foreign countries. Such as I made proposal to Karnataka to focus onto their interest on sericulture, to Assam to make International Mushroom Institute to invite world interest of mushroom, which is considered one of the positive foodstuff and medical stuff for 21st century. Once Karnataka becomes Mecca of sericulture, all dealers or parties who have interest on silk would gather and money also gather looking opportunity invest. According to the information Karnataka is good for sericulture and some of Japanese are already there to help formers there together with national sericulture. Karnataka could show their specialties are not only IT but also sericulture. Assam state is popular by its tea and crude oil, but its tropical rainy climate does not known to Japanese people. According to the scholar its climate may be very fit to mushroom cultivation. So if Assam state promotes to set up mushroom research institute in global scale, many scholars on mushroom will pay visit to Assam and cultivator in Japan will show interest. Assam can have possibility of being Mecca of mushroom.

In this way each state should propagate its specialties, otherwise India will be treated only general but not come to the point. Each state also does efforts to distinguish deference from other state. It looks funny for me all states saying IT or Techno Park, which does not make sense.

Chinese provinces or cities have made up sister-relation with Japanese prefecture or cities. More than 20 were reported while India is only one; that is Munbai and Yokohama. I do propose to make such relations, by which you can make business relations newly. Chinese cases are rather good. Each year both sides send a delegation of business and based on such exchange some of investment started newly. Without such efforts how people can meet together. To drop a name card at the exhibition will not lead to make corroboration. Some closer exchange of friendship or mutual understanding is sure to be required.

To know each other is the most effective remedies and any kind of efforts for that purpose should not be neglected. In that sense Prime Ministerfs visit was very meaningful and his commitment must be carried out effectively. And your Prime Minsterfs visit must be realized.

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