Japanese companies like Sony, Panasonic to ramp up India presence to end Samsung ‘rule’ | by:Writankar Mukherjee | The Economic Times

Kazuhiro Tsuga, president of Panasonic Corp, landed in Mumbai this weekend, becoming the third board-level official of the Japanese electronics major to visit India in the past four months. Sony Corp too has had three business heads in India since its CEO Kazuo Hirai’s visit in September last. 

It is not any coincidence that India has become one of the most visited countries for the senior leaders of the two Japanese electronics majors; both Sony and Panasonic are intensifying their focus on India betting this market will drive their future growth. And they have the same goal: to end the dominance of South Korean firms Samsung and LG, and take leadership in the `50,000-crore Indian electronics market. 

So much dominance of just one company, Samsung, is not good. We would give them a healthy competition by venturing into several new categories,” Panasonic India president Daizo Ito says. Kazuhiro Tsuga, who took over as the principal executive of Panasonic in June last, is in India for the first time. 

Japanese companies like Sony, Panasonic to ramp up India presence to end Samsung ‘rule’

The Panasonic chief is expected to review the Indian operations as per the company’s recent midterm review plans, forge partnerships for the B2B segment with top Indian corporates and also review opportunities to enter new product segments.

Panasonic, which is betting on India & Brazil to drive growth, wants to become India’s largest electronics company by 2018 by toppling Samsung

For Sony, India was its fourth largest revenue contributor in the year ended March, up from sixth position in the previous year. Sony India’s sales increased 30% to Rs 8,206 crore last fiscal. 

Sony India MD Kenichiro Hibi says the management believes the country can further increase its contribution to global sales, and that is why there are so many top-level visits to the country. ” We want to further strengthen our brand image and drive growth through technological advancement, channel expansion and marketing,” he says, adding that Sony India has decided to grow its marketing investment by more than 50% this year from Rs 550 crore last year. 

Panasonic, too, is marketing its products aggressively and has just completed more than Rs 1,000 crore investments on a manufacturing plant in Haryana.

It now plans another plant to manufacture ” B2B ” products such as Energy-Solutions and HD video conferencing solutions. Both the firms are getting aggressive in India at a time when in most global markets they are selling assets, exiting unprofitable businesses and cutting thousands of jobs to stem losses. 

Other Japanese companies such as electronics maker Sharp and air-conditioner makers Daikin and Hitachi, too, are betting on India to drive their growth in the future. Even though Indian consumers are currently holding back their discretionary spend and brands are selling products either through discounts and EMI schemes, senior executives at these companies concur the country is still performing better than their main markets such as Japan, Europe and the US. As per the latest estimates by the Bank of Japan, Japan has clocked a growth rate of 2.9% in 2012-13, while the US economy rebounded last quarter with 2.5% growth rate. 

“India’s growth may have slowed down, but still it is one of the few countries to grow at more than 5% making it a focus country for us,” says Panasonic’s Ito. “India’s working-age population is set to increase by 240 million over the next 20 years, which is too big a consumer base for anyone to miss,” he says. 

Japanese companies like Sony, Panasonic, Sharp, Daikin and Hitachi, have cut prices by 10-20% in India to make their product pricing at par with Samsung and LG.

They have localised promotions and hired Indian brand ambassadors, and are setting up local manufacturing base to grow and compete in the country. This is a significant shift from Japanese brands’ earlier strategy of pricing their products at a premium and import products. While Sony is yet to take a decision in setting up a plant in India, Sharp is investing more than Rs 700 crore to make AC, refrigerators and microwave ovens in the country. 

“Local manufacturing will help us to react to market needs quickly such as new models with customised colours or features which is not possible when one has to import,” Sharp India CEO Sunil Sinha says, adding that the company has just started trial production of air-conditioners and expects to turn India operations profitable by June. Daikin too is growing upwards of 15% in the present season for air-conditioners when the market is flat. The company has also launched India-specific models that are driving growth. 

“Japanese companies like Panasonic, Daikin and Sharp are following the same strategy which helped LG-Samsung to gain leadership in India, such as localisation and building product brands like Viera for televisions or Econavi for air-conditioners,” CEO of a rival white goods maker says. 

” While Sony sells due to its huge brand pull in India, there are industry speculations that it too may follow a similar strategy,” the person adds. 


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