Jap electronics firms plans big investments in India to counter Korean rivals
Giants such as Sony, Panasonic, Hitachi, Daikin and Sharp to invest Rs 8,000 cr in plants and product innovation
For years the Koreans, lead by Samsung and LG, have dominated the Indian consumer electronics market virtually pushing out the Japanese giants with a more than 50 per cent market share. But the Japanese are coming back with a vengeance, after concentrating their attention in China during the past few years.
In the last 18-24 months, Japanese consumer electronics giants such as Sony, Panasonic, Hitachi, Daikin and Sharp have announced investments of Rs 8,000 crore in the world’s second largest population over the next few years. This will be used not only in setting up manufacturing plants but also in marketing and product innovation for the local market. And they are catching up with the Korean giants who have till now invested about Rs 4,000 crore and have fresh investments of about Rs 2,000 crore over the next few years.
The Japanese push is being reinforced by the visit of Japan’s Emperor Akihito who is coming to India on a week-long official tour after 53 years. The importance of the visit is reflected in the fact that the Prime Minister of India Manmohan Singh would greet him personally, breaking the usual protocol.
Understanding the significance of this visit for business companies like Hitachi, Mitsubishi, Mitsui, Nippon, Sumitomo and Suzuki, associations like Japan Chamber of Commerce and Industries in India, and Assocham have come forward in publishing welcome greetings and several meetings have been organised.
The growing business interest is not limited only restricted to consumer electronics companies but for the first time fast moving consumer goods (FMCG) are also considering entry into the market. Even food and beverages companies like Nissin Foods (maker of Top Ramen Noodles) and brewers such as Suntory have been considering stepping up investments in India.
The investments in India should been seen in the context of the fact that Japanese companies are trying to hedge their bets in reducing their over dependence on China to invest in an alternative market with potential growth.
“Japanese companies are looking to balance out their investment in Asian countries. It’s the anti-Chinese sentiment that is driving Japanese investments towards India. Years after focusing on China, Japanese companies are now taking a more regionally balanced approach,” said a consultant with a global advisory firm.
For the Japanese consumer brands, consumer demand in India continues to be high; at a time when their businesses in developed markets are slowing.
Panasonic, which reported a net loss of $7.5 billion in the fiscal year ended March 2013, targets to return to profit in 2013-14 by trimming unprofitable businesses and focusing on emerging markets such as India, where the appetite for its products was growing. “India, without question, is a key market for us,” Panasonic President Kazuhiro Tsuha had said during his visit to India in April this year.
“The growing, young consumer base in India, a potentially huge growth economy, and the government of India's strong efforts to woo Japanese investment are key reasons behind the manifold increase in interest shown by Japanese companies in India. Recent investment announcements by Japanese companies are an indication of the fact that the Indian market is set to drive their growth,” said a top-level consultant at Protiviti Consulting.
Panasonic, for instance, has already announced investment of Rs 1,500 crore in India which will be used in setting up a second manufacturing facility in India for business-to-business products such as energy and high-definition video conferencing solutions. It has also lined up an investment of about $250 million towards marketing and advertising by March 2015. This follows the completion of its first manufacturing unit in Haryana, at an estimated investment of Rs 1,000 crore.
Panasonic is not alone. Hitachi has lined up investments of about Rs 4,700 crore by March 2016 to establish manufacturing plants in India, hoping to exceed Rs 20,000 crore in revenues by 2015-16, an announcement made by Hitachi President Hiroaki Nakanishi at the company’s recent board meeting in India.
Realising that Korean firms like Samsung and LG have swept the Indian market with aggressive pricing, local production and huge product offerings, most of the Japanese consumer electronics makers have reduced prices by 10-20 per cent in India during 2012-13 to counter aggressive pricing by their Korean rivals.
Akai, which tried entering the Indian market a third time in 2010, is playing on pricing to gain a foothold.
Sony India head of sales Sunil Nayyar, had in an earlier interview with Business Standard, said India would continue to remain a high-growth market for the company. Company executives said the Sony India unit had already jumped to the fourth position in 2012-13, behind its units in the US, China and Japan, owing to double-digit growth in categories such as laptops and flat-panel TVs. In 2012-13, Sony India's sales rose 30 per cent to Rs 8,206 crore. Sony targets to treble revenue in India to Rs 20,000 crore by 2015.
While Sony is yet to decide on setting up a plant in India, Sharp has announced plans to invest about Rs 700 crore to manufacture air-conditioners (ACs), refrigerators and microwave ovens in the country. AC maker Daikin is recording yearly growth of about 20 per cent, has also announced plans to double capacity at an investment of more than Rs 250 crore.
Industry experts say currently, India’s contribution to the revenues of Sony and Panasonic is three to five per cent; the companies plan to raise this to at least 10 per cent in the next few years, as developed markets such as North America, Europe and Japan slow.
Giants such as Sony, Panasonic, Hitachi, Daikin and Sharp to invest Rs 8,000 cr in plants and product innovation
For years the Koreans, lead by Samsung and LG, have dominated the Indian consumer electronics market virtually pushing out the Japanese giants with a more than 50 per cent market share. But the Japanese are coming back with a vengeance, after concentrating their attention in China during the past few years.
In the last 18-24 months, Japanese consumer electronics giants such as Sony, Panasonic, Hitachi, Daikin and Sharp have announced investments of Rs 8,000 crore in the world’s second largest population over the next few years. This will be used not only in setting up manufacturing plants but also in marketing and product innovation for the local market. And they are catching up with the Korean giants who have till now invested about Rs 4,000 crore and have fresh investments of about Rs 2,000 crore over the next few years.
The Japanese push is being reinforced by the visit of Japan’s Emperor Akihito who is coming to India on a week-long official tour after 53 years. The importance of the visit is reflected in the fact that the Prime Minister of India Manmohan Singh would greet him personally, breaking the usual protocol.
Understanding the significance of this visit for business companies like Hitachi, Mitsubishi, Mitsui, Nippon, Sumitomo and Suzuki, associations like Japan Chamber of Commerce and Industries in India, and Assocham have come forward in publishing welcome greetings and several meetings have been organised.
The growing business interest is not limited only restricted to consumer electronics companies but for the first time fast moving consumer goods (FMCG) are also considering entry into the market. Even food and beverages companies like Nissin Foods (maker of Top Ramen Noodles) and brewers such as Suntory have been considering stepping up investments in India.
The investments in India should been seen in the context of the fact that Japanese companies are trying to hedge their bets in reducing their over dependence on China to invest in an alternative market with potential growth.
“Japanese companies are looking to balance out their investment in Asian countries. It’s the anti-Chinese sentiment that is driving Japanese investments towards India. Years after focusing on China, Japanese companies are now taking a more regionally balanced approach,” said a consultant with a global advisory firm.
For the Japanese consumer brands, consumer demand in India continues to be high; at a time when their businesses in developed markets are slowing.
Panasonic, which reported a net loss of $7.5 billion in the fiscal year ended March 2013, targets to return to profit in 2013-14 by trimming unprofitable businesses and focusing on emerging markets such as India, where the appetite for its products was growing. “India, without question, is a key market for us,” Panasonic President Kazuhiro Tsuha had said during his visit to India in April this year.
“The growing, young consumer base in India, a potentially huge growth economy, and the government of India's strong efforts to woo Japanese investment are key reasons behind the manifold increase in interest shown by Japanese companies in India. Recent investment announcements by Japanese companies are an indication of the fact that the Indian market is set to drive their growth,” said a top-level consultant at Protiviti Consulting.
Panasonic, for instance, has already announced investment of Rs 1,500 crore in India which will be used in setting up a second manufacturing facility in India for business-to-business products such as energy and high-definition video conferencing solutions. It has also lined up an investment of about $250 million towards marketing and advertising by March 2015. This follows the completion of its first manufacturing unit in Haryana, at an estimated investment of Rs 1,000 crore.
Panasonic is not alone. Hitachi has lined up investments of about Rs 4,700 crore by March 2016 to establish manufacturing plants in India, hoping to exceed Rs 20,000 crore in revenues by 2015-16, an announcement made by Hitachi President Hiroaki Nakanishi at the company’s recent board meeting in India.
Realising that Korean firms like Samsung and LG have swept the Indian market with aggressive pricing, local production and huge product offerings, most of the Japanese consumer electronics makers have reduced prices by 10-20 per cent in India during 2012-13 to counter aggressive pricing by their Korean rivals.
Akai, which tried entering the Indian market a third time in 2010, is playing on pricing to gain a foothold.
Sony India head of sales Sunil Nayyar, had in an earlier interview with Business Standard, said India would continue to remain a high-growth market for the company. Company executives said the Sony India unit had already jumped to the fourth position in 2012-13, behind its units in the US, China and Japan, owing to double-digit growth in categories such as laptops and flat-panel TVs. In 2012-13, Sony India's sales rose 30 per cent to Rs 8,206 crore. Sony targets to treble revenue in India to Rs 20,000 crore by 2015.
While Sony is yet to decide on setting up a plant in India, Sharp has announced plans to invest about Rs 700 crore to manufacture air-conditioners (ACs), refrigerators and microwave ovens in the country. AC maker Daikin is recording yearly growth of about 20 per cent, has also announced plans to double capacity at an investment of more than Rs 250 crore.
Industry experts say currently, India’s contribution to the revenues of Sony and Panasonic is three to five per cent; the companies plan to raise this to at least 10 per cent in the next few years, as developed markets such as North America, Europe and Japan slow.
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The deluge has already begun .Three major industrial SEZs in and around Chennai and it's suburbs are in various stages of development . 
