|
The big potential in India-Japan relations has already been talked about aplenty
for the last few years and is very evident now. The young and dynamic Indian
demography offers a huge market for a maturing and shrinking Japanese population
India, in its tast development and demands of 1.2 billion people, is in much
need of Japan’s technology, expertise and investment in such fields as
infrastructure, energy and healthcare. And in the true sense of a global
partnership, the vibrant global Indian community can be the trusted partner of
Japan in Tokyo’s need for globalisation.
There have been some good storms ot success in bilateral business development in
the recent years, but still these are quite few compared to the potential and
the need for both countries. While some of the good news has been encouraging,
many of the discussions that took a long time and effort but did not materialise
have also created a sense ot frustration on both sides.
The difficulties arise from differences in the business styles ot the two
countries, further aggravated by extremely low exchange of people and
information.
Japan is a highly organised country with profuse availability of precise
information and predictability. Accordingly, all the efforts for detailed
planning before taking any decisions in domestic businesses help in phenomenal
risk reduction and the execution becomes very smooth with all the prior due
diligence. In the highly organised Japanese corporate structure, roles and
responsibilities are also fine-grained and hence the culture of consensus-based
bottom-up decision-making has also been effective locally. Furthermore, being a
homogenous country, it is relatively easy to capture the market situation in
simple aggregates and averages in Japan.
On the other hand, India is a country of great dynamism, diversity and
volatility. It’s also difficult to gather information in India and the business
environment changes very fast. Hence, naturally, the Indian style of
decision-making is also very different from Japan. The decisions need to be made
based on a high level of macro evaluation of the situation and hence lop-down in
nature. This results in faster decision-making in India, but slower execution as
all the details and planning need to be done on the run, along with dynamic
balancing with changes in circumstances. Also, the averages and aggregates in
India have less relevance for most business purposes due lothe huge diversity
and market segmentation.
The prevalent saying in India’s business circles is “No time for talking,
immediate decision and action only,” while Japanese style requires a lot of
discussions in advance. While Japan has a very high degree of organisational
capacity, even to the extent of redundant employment, India has a very small
management and technical class compared to the huge population and scale of
required development and the growth opportunity in the country.
The differences of business styles get further aggravated as there is an
exceptionally low level of people and Information exchanges between Japan and
India. As a result, he Japanese side lends to seek too much information and the
impossible holistic understanding of India, ending up in disappointment, while
the Indian side becomes frustrated waiting too long for a decision from a
potential Japanese counterpart. In the process, many very worthwhile
opportunities get lost.
Indian Business Entry into Japan
Japan has high minimum standards for everything and accordingly has a higher
minimum cost of setting up business, and on top of that also a long initial
gestation period for relationship building is required in Japan. First of all
Indian companies are not aware of the potential with Japan, some who are aware
do not have enough information and contacts to start businesses in Japan, and
finally many of the few who take the leap of Japan entry have ended up with the
frustration of higher costs and lack of results for longer periods of time
compared to more familiar markets like in the United States. We also often hear
of the difficulties of the branches of Indian companies to adapt to the unique
Japanese practices while the head offices have grown with the Western style of
business culture and processes. In addition to the business difficulties, often
the single representative from India for initial exploration faces significant
lifestyle difficulties in Japan.
The global Indian community is very well spread out across the world but
northeast Asia (Japan, China and South Korea) and South America are the two
regions with exceptionally low presence and contact. Still, apparently that’s
not a determining factor for the special difficulties between India and Japan.
Recently, I started writing various articles and small reports on our activities
to promote bilateral relations and I share them with my Indian friends across
the world. In response to a recent article, a friend commended me as being brave
but wondered now I manage to do this. He mentioned their company’s previous
efforts to build a business In Japan. While they did not get any significant
results even after years of stay and significant investment here, I saw very
fast growth of their business in South Korea and South America. Before too long,
they decided to close their office in Japan and have no plans to try again for
the time being. We frequently come across such examples.
Japanese Business Entry into India
The case for Japanese companies’ entry into India is very strong. There is a
huge and diverse market for virtually any product in India. Given the dynamism
and the spirit of experimentation in India, mere is a potential for even
creating new markets for various products which may hardly be present in India
yet.
Japanese companies’ interest in India came up significantly since the beginning
of this century. While the interest got created, there was not enough
information about India and hence a lot of market research activity started
first. But with the dynamism and diversity of India, the research outcomes were
not easy to interpret from a Japanese per-spective. Furthermore, the results
would change with different instances of research. The middle management of
Japan also was not motivated to enter the Indian market for lifestyle reasons
among others. In the process, potential Indian partners also got frustrated and
this created a vicious cycle which has continued till recently.
The global financial crisis created a favourable twist. First, it shook both
Indian and Japanese companies to come out of their comfort zones and look at
each other more seriously. With the demonstrated strengths of the Indian economy
and stability of the Indian political scene, along with a better understanding
of the nature of India, the apparent reasons for delaying the entry into India
have started to diminish. We now come across Japanese companies telling us that
they have spent too much effort for research in India and would like to now
enter within a few months’ time. We even come across Japanese companies telling
us that there is no point in detailed market research and would instead like to
create a market of their own, which is a valid proposition in many cases.
With the high Japanese yen at present and future appreciation of the Indian
rupee anticipated, the timing for investing in India market entry is especially
ripe.
New Momentum
While a few years back friends in India used to just wonder what I’m doing in
Japan as they had no idea and had hardly heard of any other friend being here,
recently there is a definite rise in interest and awareness, though of a mixed
nature. Many friends have had some negative experiences of, what they felt, the
slow decision-making from Japan, but many other friends are now looking for
business opportunities with Japan. I get more and more requests from India for
potential tie-ups with specific Japanese companies. Instances of Indian
companies investing into Japan are on the rise. For me, the first Japanese
person I met was my first Japanese company’s president, but recently there is
also a fast growth in the number of Japanese people in India and hence it’s no
more such a rare thing to have a Japanese acquaintance in India and get some
firsthand information about Japan (though nothing compared to the much faster
growing exposure to South Korea and China). There is also a growing Japanese
professional community which knows well about India and even aspires to live
there.
As the immediate opportunity and interest are growing, we need to address all
the problems collectively to create a critical mass of suc-cessful examples of
cross-border businesses. For this, we need inte-grated platforms to provide
physical facilities, help with introductions and business relationships,
cultural and linguistic issues, professional services and lifestyle support.
The Marunouchi India Economic Zone in Tokyo is the first such platform in Japan
jointly created by Mitsubishi Estate Co, Deloitte Touche Tohmatsu LLP, and Sun
and Sands Advisors. By bringing together Indian companies in Japan and Japanese
companies working with or interested in India, many of the above issues can be
auto-matically resolved. In addition to advantages such as mutual interac-tion,
concentration of interest and economies of scale, the business network of Tokyo
21st Century Club, bilateral bridging expertise of Sun and Sands Advisors and
professional services of Deloitte Touche Tohmatsu are offered as a one-stop
window for various matters of concern for companies in the zone.
In the yet early stage of India-Japan relations, we need such struc-tured
efforts as the Marunouchi India Economic Zone, equivalent facilities in India,
projects like DMIC, etc. A natural open-ended momentum of business interaction
will follow once we have created a critical mass of people-to-people contacts
and enough successful business examples to encourage, convince and emulate.
Bigger Picture and Way Forward
While the huge economic opportunity in India draws attention from across the
world and India will continue to have a good growth despite any occasional
mistakes, there is also a need to take an occasional step back and look at the
overall direction and structural issues. How about the people’s safety and
protection of the environment? For example, India continues to have very high
incidence of road accidents; especially compared with Japan, there is a huge
order of magnitude difference. The reason for the difference also lies in the
styles of decision-making. In Japan, people would wait at a red light even if
there is no traffic in sight, in India, we would optimize the timing of crossing
with a spontaneous self-judgment. In the environmental context adoption of
eco-friendly technologies in India is of a matter of global concern as one-fifth
of the world’s population catches up with the industrialised world.
Japan’s management style and application of technology in the larger
socioeconomic context has a lot to offer not just to India but to the whole
world, but Japan is really short of self-promotion. That’s another area where
I’m sure the Indian partners will be of great help to Japan as India has a
remarkable capability to understand the virtues of other cultures and global
outreach. We already see some movement in these directions as the Japanese
management practices are reaching India along with technology and investment
and, on the other hand, Japanese managers are going to India to learn global
management. It’s a gradual but accelerated process, and as we see more and more
of bilateral interaction and mutual understanding, there will be no looking back
in realisation of the huge untapped potential of collaboration between India and
Japan.
|