Panasonic to make India regional hub

India may be reeling under growth pangs and severe structural issues but that hasn't stopped Japanese electronics giant Panasonic from putting India bang at the centre of its global strategy. The Osaka-based, $76-billion company has decided to make India its regional hub to service the subcontinent, Middle East and Africa. It is also moving one of its top honchos — Yoshihiko Yamada — to be headquartered in New Delhi to directly take care of these regions as also create synergies between India, Asean and China.

Besides, India will now be developed as the hub for product development, R&D, business solutions and would also serve as the global sourcing base for mobile phones, the production of which has been discontinued lately in Japan, as part of a global restructuring.

"India will be the second version of Panasonic Corporation as it has a huge potential and is the most promising country from future growth perspective because markets in the US, Europe and Japan have matured. We look at India from two perspectives, one from a capability creation and the other from a region perspective. India, Asean and China have been categorized as strategic regions and we see India on the top now from a business perspective," Kazuhiro Tsuga, global president of Panasonic Corporation, told TOI in an exclusive interview, unveiling what is being seen as the second chapter of both its India story and its global business. The company describes the first version as the process of its formation in 1918, when its founder encountered the same conditions in Japan that are prevalent in India today.

The new region headquartered in India would be only Panasonic's sixth such region globally. India was earlier housed under the Asia-Pacific, Middle East and Africa region.

Though present in India for about 40 years now, with a clutch of seven companies manufacturing an entire range of electric equipment from TVs to batteries, the interest has been rather sporadic. Tsuga, who is now restructuring the global operations after spiraling losses, said that India by 2015 will contribute 3.5% to the global turnover, up from 2% now.

As part of the global restructuring, which came on the back of $15 billion in losses over the last two financial years, Tsuga — who has been at the helm for a similar period about two years now — will transform the company globally from a consumer maker to a supplier for other businesses. In effect, this means that the focus globally will shift from B2C to B2B. "However, the focus in India would continue to be on consumer products," Tsuga said.

As part of this global restructuring, he pulled out of the smartphone business in Japan, trimmed circuit boards businesses and sold semi-conductors, and got out of plasma TVs too. The company has also decided to close down businesses which do not throw up operating margins above 5%. The restructuring appears to have yielded results already after Panasonic posted a third-quarter profit recently, which was 68% higher than analyst estimates. The company's stock also surged the most since 1974.

In India, too, the focus has been beneficial. Panasonic has increased its market share in the AC segment to 15% and in TVs to 9%, making it the third and fourth largest player in the industry, taking on entrenched and aggressive Korean competition.

Earlier this year, Panasonic set up the India business development centre to focus on the challenges in rural India like clean water, food issues, remote services like tele-education and telemedicine, and providing power to off-grid population. The centre would develop products and services which could be adopted globally.

The company now plans to be an aggressive player in India, focused on expanding existing portfolio and creating a strong lineup of entry products, including smartphones for which it would create robust products focused on local needs and insights. Besides, Panasonic also wants to target the lifestyle segment and B2B businesses, including security and surveillance solutions. It sees 4G services as a catalyst for offering security services to homeland security.

Japanese Envoy Optimistic about Trade Ties with Kerala

Japanese ambassador to India Takeshi Yagi said that his country is exploring the opportunities to cooperate with Kerala in IT and Tourism sectors. He was speaking at a press conference here on Thursday.
Takeshi added that the Japanese companies are looking to expand their operations in South India because there are more Japanese citizens working in the region compared to the rest of the country.
Later, the ambassador inaugurated the Indo-Japan Chamber of Commerce Kerala (INJACK), which is a non-profit organisation to connect the small and medium enterprises (SMEs) in Kerala with Japan.
“The bilateral trade between Japan and India is worth $20 billion, which is only 2 percent of the total trade of India. But the trade has increased by seven times in the past decade. The foreign direct investment from Japan has increased by 7-8 times during the last three years. At present, 1,072 Japanese companies are operating in India, half of them in its southern part,” he added. While commenting on the Japanese companies operating in Kerala, Takeshi said that though only 15 companies have presence in the ‘God’s own country’, the number of branches is increasing rapidly.
“The number of branches of Japanese companies in Kerala has increased from 53 to 105 in an year. With INJACK, we are positive about the future of trade between Kerala and Japan,” he said.
“Japanese companies are already participating in efforts to provide better connectivity within India. The major flagship projects in this regard are the Delhi-Mumbai and the Chennai-Bangalore industrial corridors. Japan is also interested in collaborating with the projects aimed at increasing water connectivity among ASEAN nations,” he said.
Yagi visited the Nippon Toyota showroom and the Nitta Gelatin company.  INJACK president T Balakrishnan, secretary Jacob Kovoor, Kerala State Higher Education Council Vice-chairman T P Sreenivasan, V P Nandakumar and Babu Moopan spoke.

‘Japan ready to consider proposals on Smart City’

Takeshi Yagi, Ambassador of Japan to India, said on Thursday that his country was ready to consider investment in Smart City if the Kerala government brought out suitable proposals.

He was addressing a press conference here. He said his country did not have immediate plans for launching any flagship programme in Kerala. Pointing out that South India was one of the priority areas for Japan, he said the number of Japanese citizens in Bangalore exceeded 1,000, the highest in any city in India. He also promised cooperation in energy networking and port operations. There was a seven-fold increase in trade volume between India and Japan during the last decade, but it was small in relation to the potential. FDI from Japan had gone up by 7-8 times in the past three years, he said. T. Balakrishnan, president of the chamber, and Jacob Kovoor, Secretary, were present at the press meet.

He later inaugurated the Indo-Japan Chamber of Commerce Kerala here. He said Japanese companies were establishing stronger foothold in Kerala, recognising its potential. He said his country would like to forge ties with India in general and Kerala in particular in a variety of fields.

The number of Japanese companies in India has reached 1072 in 2013. Though there are only 15 Japanese companies operating in Kerala, the number of branches has almost doubled from 53 to 105 in the past one year.

The Japanese Ministry of Economy, Trade and Industry and Indian Ministry of Communications and IT started a Joint Working Group on IT and Electronics last year A memorandum was signed between Japan tourism agency and the Ministry of Tourism of India in January.

TOYO wins LNG regasification project in India

Japan -- Toyo Engineering Corporation has been awarded a regasification plant project by Petronet LNG Ltd, India. The plant is to be constructed at Dahej, located in the state of Gujarat on the west coast of India, to expand the LNG receiving capacity from 10 to 15 mtpa. Toyo-India will lead EPC work on a turnkey basis, from engineering to construction and commissioning. The plant is scheduled to be completed at the beginning of 2017.
Construction of Dahej Terminal (original capacity: 5 mtpa), the first LNG receiving terminal in India, was awarded in 2000 to a consortium consisting of IHI Corporation, TOYO, ITOCHU Corporation, and Mitsui & Co., Ltd. In 2006, a consortium of IHI and TOYO received an order again to expand the receiving capacity.
To meet the growing demand for natural gas for electricity and fertilizer, more than 10 additional LNG import terminals are now planned to be built in India.

'High speed trains can boost India's growth'

Linking India's growth to high-speed trains, chief of a Japanese rail company said quicker movement will help the country in realising its ambition of pushing development and progress.

Yoshiyuki Kasai, Chairman of the Central Japan Railway Company which runs bullet trains in that country, said India has the potential of running high-speed trains, particularly between various cities in the range of 500 and 600 kms.

"High-speed railway makes travel time between cities shorter by several hours. Due to this, different cities are integrated into a single economic lifezone," he said while addressing a seminar.
To buttress his argument that India can achieve higher growth with the help of high-speed trains, he highlighted Japan's experience in this aspect.

"Japanese high-speed railway system is designed to minimise travel time for commuters, which has a great economic benefit," Kasai said.
The Central Japan Railway Company (JRC) operates the Tokaido Shinkansen bullet train system that links Japan’s principal metropolitan areas of Tokyo, Nagoya, and Osaka.
Reflecting on the potential for replication of Japan’s bullet train model in India, Kasai said, "India has a strong conventional railway network. However, there is an immense potential for high-speed trains in an industrialising India.

"There will be cost implications to setup a high-speed railway network between important Indian towns and cities lying within a 500 km to 600 km radius, but the long-term economic and social impact will be huge. This can be done through public-private partnership to minimise the financial burden." 

Suntory plans to purchase stake in Radico liquor unit for $100m

Japanese beverage firm Suntory is planning to purchase around 20% stake in India-based alcoholic drinks company Radico Khaitan's liquor unit for about $100m.

The move forms part of the company's strategy to increase its sales outside Japan, as the country's beer market is reporting slow growth due to declining population.

The proposed transaction will be the latest in a series of Suntory's investments.

Radico Khaitan manufactures and sells liquor primarily in India. Its principal products include rectified spirits, country liquor, and Indian made foreign liquor.

Earlier in January 2014, Suntory has agreed to purchase US-based whiskey producer Beam for $16bn.

Suntory manufactures and sells beverage and food products in China, Japan, Southeast Asia, Oceania, the Americas, and Europe. It operates through Beverages and Foods, and Beer and Spirits.

Why India should boldly push forward for an alliance with Japan

Japan has the capital and needs to pull out of China, which has been its major destination. India, on the other hand, desperately needs capital especially for infrastructure, argues Rajeev Srinivasan.
March has two big anniversaries for Japan: March 11, 2011 is when the giant Tohoku/Fukushima earthquake/tsunami killed some 19,000 people. March 10, 1945 is the day of an even bigger catastrophe: The American fire-bombing of Tokyo, which resulted in an estimated 100,000 deaths, and made 1 million homeless: Bigger than the initial toll of Hiroshima.
The fact that the country has recovered from these is a testament to their iron will and discipline, and this is something India should learn from them.
In fact, Japan is signaling that it wants friendship with India. The recent visits of both Emperor Akihito and Empress Michiko in December, and Prime Minister Shinzo Abe in January, were not celebrated by the chatterati with anywhere near the symbolic importance they deserved.
In my opinion, these were quite likely to be the most important visitors in the last decade or so; certainly more so than the much-ballyhooed visit by United States President Obama.
Critics may carp that there have been false dawns in Indo-Japanese relations before. I was personally disappointed that when an earlier prime minister, Junichiro Koizumi, made overtures, India was unwilling or unable to take them forward.

But hope springs eternal: Maybe this time there really is far greater urgency to cooperate.
The reason is that both India and Japan are changing in ways that dramatically emphasise their complementarity. Each has what the other lacks. Besides, there is a deep civilisational affinity between the two, and none of the well-cultivated rancor that some East Asians have for Japan. Thirdly, the two share a common goal: The containment of a rampaging China.
But the Indian government failed to take full advantage of the recent visits. If I am not mistaken, the Japanese Emperor hardly ever travels out of the country; and according to Brahma Chellaney, geostrategist and Japan expert, in the 2,600 years of the Japanese monarchy, this is the first time one of their Emperors visited India, even though Japanese are positive towards India as the Holy Land of the Buddhist faith.
Abe made his second trip in a few months, this time as the chief guest at the Republic Day parade. The reception, however, was distinctly low key. Instead of Manmohan Singh himself breaking with protocol and meeting Abe at the airport, it was a junior minister, Rajeev Shukla, who did it.
The Japanese, exquisitely sensitive to 'face', would have considered this a snub.
The rest of Abe's January visit also did not set the world on fire: there were no earth-shaking agreements inked. It seemed as though the two sides were just going through the motions: The Indians acknowledging grudgingly that Japan had just gone out if its way to offer its hand in friendship.
Perhaps, Abe was keenly aware that Singh is a lame duck; maybe he was saving his best for the new government, post May.
This is a shame, and is a lost opportunity for India. For this is perhaps the most opportune time to push forward boldly with an Indo-Japanese alliance. For one thing, the Japanese are throwing off 60 years of reticence, and considering how to re-position themselves in the Indo-Pacific region as a power to reckon with.
For another, they have soured on China, and wish to invest their money elsewhere, possibly in India.
There are many hurdles that make the Japanese reluctant business partners for Indians. The Nikkei Asian Review bemoaned the lack of punctuality, habit of making empty promises, the regulatory jungle, the lack of high-quality Japanese food, the amount of empty talking Indians do, and the class hierarchy in India as either baffling or difficult for the Japanese to deal with Indians.
An Indo-Japanese partnership, which may be incorporated into the Security Quadrilateral (Japan, India, the US, Australia) that Japan has proposed, may grow into a strong regional mechanism to keep the Chinese under control, just when they are attempting to turn the East China Sea and the South China Sea into Chinese lakes using their rapidly expanding naval power.
This is an era in which Japan no longer feels confident about the implicit American security umbrella under which it has prospered ever since World War II. The lacklustre American reaction to China’s bold move of creating an air defense zone conveniently covering the Japanese-administered Senkaku Islands has shown that the US has no stomach to take on China even in peacetime; the question of the US going to war with China to help Japan doesn't even arise.
One of the big issues in the US-Japan relationship is the post-war constitution that was written by the occupying American forces. It forced Japan to forswear the right even to defend itself, in Article 9, which Abe has vowed to overturn.
Chinese sabre-rattling in the East China Sea (as well as the South China Sea) has alarmed the pacifist Japanese. Article 9 says '... land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the State will not be recognised.'
This is all good, and it reminds me of the Panchasheel (the five moral precepts in Buddhism), but these good intentions are now running up against a bellicose China. As things stand, even the relatively innocuous discussion of India producing the amphibious search-and-rescue aircraft named the ShinMaywa US-2 (used by the Japan maritime self-defense forces) is debated as a possible violation of Article 9.
Maritime security, and the right to free passage in the high seas, especially in the Indian Ocean shipping lanes from the Straits of Hormuz to the Straits of Malacca (through which the vast majority of both India's and Japan's energy imports pass) is an area where the two countries see eye to eye.
The other major area of mutual interest is commercial. Japan has the capital and needs to pull out of China, which has been its major destination. India, on the other hand, desperately needs capital especially for infrastructure.
The $100 billion, 1,454 kilometre Delhi-Mumbai freight corridor, with four new ports and seven new cities, is the model: This should transform the western part of the country. There is a similar Chennai-Bangalore IT/auto corridor planned.
On a smaller scale, there is the drinking water project in Thiruvananthapuram, funded by Japan. Similarly, there are other major infrastructure projects where there could be synergy.
India is the fourth largest recipient of FDI from Japan, with $14.5 billion. Trade has tripled between 2005 and 2012, to $18.5 billion. However, there is a long way to go: each country only accounts for about 3 per cent of the other's total trade ('Why India and Japan are becoming closer', Nikkei Asian Review, January 2014).
Over a thousand Japanese companies have invested in India. One of the biggest investments was Daichi Sankyo buying Ranbaxy for $4.6 billion (although this may have gone sour with the latter's problems with the US authorities, and also allegations that the deal was priced too high).
On the other hand, Suzuki has seen its (now wholly-owned) venture with Maruti become the market leader. Mitsubishi Electric talks about its sales growing 40 to 50 per cent a year, while Hitachi held its global board meeting in India recently.
There is really only one complicating factor: Japan's extreme allergy to India's nuclear programme (perhaps understandable in a country that has faced Hiroshima and Nagasaki). This is acting as a serious deterrent to warming relations. However, Abe himself is generally pro-nuclear and is bringing back the nuclear power plants mothballed after Fukushima.
If he can persuade his parliament, the Diet, to ratchet down tensions, that would ease the way greatly.
Thus, on multiple fronts: Security, industry and culture, this is a perfect match with two partners that complement each other well. The Indian government would do well to not drop the ball.
On the other hand, if the Bharatiya Janata Party's prime ministerial candidate Narendra Modi were to come to power, he and Abe, both nationalists, would get on better.
At last, the vision of Nobusuke Kishi, Abe's grandfather and a former PM, and a friend of India, would be fulfilled.