Why are the Japanese not getting a handle on Indian consumers?

Toshiba and Sharp of late are closing down part of their units in India and trying to find other vendors who can take over the assets.  Sony sold their PC business a while ago. Also they seem to have problems of their own in overstating their accounts globally. They seem to have lots of inventory lying around that they need to dispose.

      Be it TVs or mobile phones or other consumer appliances, the Japanese have found it hard to understand and play well in the Indian consumer appliances market which may be the second largest market for them in the world today.  It is going to be Numero #1 because of its youth that are rising up the ranks and would dictate the demography over the next two to three decades.  So, it is not the right time to pack up your bags and leave.

     Japanese products would always be revered for their quality but given these times where quality is a given or a not-much-of-a-care (if the shelf life of the item is small like cell phones), not much can they leverage this value in the Indian subcontinent.   Let along their Hondas or Toyotas, they are struggling everywhere in the Indian B2C space.  

     Here are a few reasons that they are not able to make any dent in India:

  • Lack of proper electronic presence – unlike a LG who has displayed all their specifications that includes prices on their website and have their own website over and above the normal distribution channel, I do not see many of the Japanese companies having their digital presence.  As an example, let me take the case of air conditioners- no pricing details are available, no proper and complete comparison data is available between their own models, and no completeness in their specification.  The MRP should be mentioned clearly and the websites must include both Made in India products and imported goods.   And to make matters worse, they do not seem to be pushing their products through the Flipkarts and Amazons in all cities and towns.  They should also be able to sell online directly to the consumers.
  • Lack of physical presence too – not too many chain outlets carry Japanese products.  Either the discounts and commissions do not work out for them or the products are not fast moving for the outlets to store them , both of which can be easily fixed by being on par with what other manufacturers do.  Actually since most of the Japanese firms want to get a foothold first, they need to do better in both these fronts to have the outlets be able to have a smaller shelf life for their products.  One would notice that the outlets would try to sell a LG or a Samsung even if you tell them you are looking for something else.  Their concept of Solutions Plazas do not seem to work – I happen to go to couple of air conditioner’s Solutions Plaza and they do not even seem to have proper display units on any of their products.
  • Lack of transparency –first, as I mentioned, is pricing – the prices of the consumer products are not advertised on their website.  Second, no mention of a point of direct contact for either sales or support which is important to ask a query or lodge a complaint.  Why are they trying to hide from the consumers?  Many sales queries must be directly handled by the manufacturers and they must assist the potential buyers with the right outlets to go buy their products.  Third, most of the dealers mentioned in their website, are not email friendly – even if any query is sent, no reply comes back.   Overwhelming the consumers with more information is better than not sharing most of the important details.  And in the management side, which I have personal experienced,  the Indian managers working for Japanese companies feel that they do not have any say in significant matters, and none of the top decisions are taken by accommodating them in the loop.   Being open and honest to both consumers and employees is essential.
  • Perception of higher quality can only get you so much – gone are those days Sony had a Trinitron that was regarded the best in class when it comes to Video.   Now if you look at Samsung LED TV, they are truly world class and best in the industry.   The challenge is for the Japanese to deliver superior products at the price points dictated by the market. Japanese cell phones in India do not seem to be renowned for their quality unfortunately.  If the quality is what gives them respect, having some superior proactive servicing capabilities DIRECTLY is what would make things better – if they are outsourcing this service, they must ensure that the parts are available at an affordable price and the quality of technicians are superior and well trained.
  • Not going with global standards – SONY’s biggest mistake was to use their own standards, either physical or electronic and trying to go at it alone without shepherding the global players with it.  Remember Memory sticks and Beta Max?  Once they understand the world is going in a different direction than theirs, it is important to deliver on those standards with reliable products.
  • Pricing it properly– one of the 4Ps of Marketing taught at any management school is PRICING.  For a consumer market like India, majority being middle class who are very price conscious, pricing their products ON PAR with other competitors is critical.  Quality is not going to get you a higher price, because most of the products today are use and throw and no repair or service work takes place.  There is a life time for every product after which most of them gets replaced and not repaired.  For example in cell phones, other than APPLE who have a price advantage because of the  eco systems they built and grew, others compete  on PRICE – I see no Japanese players  in the cell phone market other than Panasonic.  In any product, try not to price yourself out of the market.  Indians want to get what is available in Japan at the Indian price.
  • India is NOT a dumping ground – the strategy that I see Japanese using is to dump their older models into India and keep the fast moving newer models only in certain other markets.  This is totally unacceptable and unethical as one can be surprised as to how much wealth certain Indians have.  I take another example of a refrigerant R22 used in air conditioners which has been either banned or being phased off in other countries, due to its ozone depleting nature, but I see most of the air conditioners from Japan still trying to use the same.   If they are truly conscious of both the market and community, they must take an active role and lead from the front. 
  • Local Leadership and better management – Indian manager are more used to USA and European style of functioning where you feel empowered and decisions moves faster.  But in all Japanese companies in India, I do see only a Japanese expat at the top. Decisions are painfully slow due to the consultative group culture that they practice in Japan and it looks like most of the Indian inputs are not taken into consideration. Outside of Japan, they need to start operating their local subsidiaries differently.   Speak Latin while in Rome.   Being more visible among employees and end consumers would be helpful for a profitable journey.
  • Make in India with high quality – I see lots of assembly and integration work happening, but not everything needed for an appliance gets manufactured in India. They need to have a long term vision and will to make it big in India, and have processes that are identical to their worldwide factories and must be able to export Made in India products to other countries as well. This way we can be assured as well that the price of parts are cheaper and are available for the lifetime of a consumer product.

      It is easier to run away but it is tougher and more challenging to stay put and find your way through the market.  If your cost and hence your price comes down, if you have a good direct sales and service presence, if you are able to be more transparent to both consumers and employees, if you empower the Indian management and allow them to make some decisions, if you are able to change your direction on the drop of a coin, if you have a higher presence both physically and electronically, if you offer India the latest and the best technology, then there would be no fear of failure.   Do your homework properly before entering or expanding in India.   By walking away, do not leave the old Indian customers high and dry.

This article was written in 2014

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