Japanese companies have been steadily losing ground to more aggressive Asian rivals , particularly Korean firms such as Samsung and LG globally, but their Indian arms have held their own against the Korean onslaught.
Panasonic Corp and Sony, two leading consumer product majors, recently reported bad financial years on the back of a surging yen, global recession and last year's earthquake in Japan and floods in Thailand, which hit supply of key components. Sony even announced it would shed 10,000 jobs globally, even as it is adding to its headcount in India.
Healthy growth
Mr Masaru Tamagawa, Managing Director, Sony India, said, “Our India business is showing healthy growth. We plan to increase our employee count from the current 3,300 to 3,800 by March 2013.”
The Indian operations are its sixth largest for Sony globally and the company plans to elevate it to fifth largest by fiscal year 2012-13. Unlike its global operations, where Sony has lost money on its television business for eight straight years, the growth for Sony India has come primarily from the Flat Panel TV segment.
“Bravia is the top selling brand in bigger screen sizes, that is, 40 inch onwards. Sony had the highest market share of 40 per cent in the LED market space in 2010-11, selling 9.5 lakh units,” Mr Tamagawa had recently said.
Sony India's growth is primarily fuelled by three categories — Bravia range of televisions, Vaio branded notebooks and compact cameras such as the Cyber-shot range, which contributed 35 per cent, 20 per cent and 15 per cent respectively to the total sales in 2011-12.
The company plans to increase its sales channel to 12,200 outlets by the end of this financial year 2012-13, from the current 10,400. Sony India plans to pump in an investment of Rs 450 crore in 2012-13 for brand promotion.
Different story
Panasonic India, too, has a different story to tell from its parent. The Indian arm, growing from a small base, clocked 72 per cent growth in the fiscal year ending March 2012.
“The growth has primarily come from air conditioners (ACs) and flat panel televisions,” says Mr Manish Sharma, Managing Director, Consumer Product Division, Panasonic India.
The company has a 12 per cent market share in the AC segment and 8.3 per cent in flat panel televisions. t aims to attain leadership in the AC segment with 25 per cent market share and 15 per cent market share in the flat panel television segment by the end of the current fiscal.
The increasing importance of India can be gauged by the fact that in 2010, the company had nine branches which has grown to 26 now.
The company had earlier set aside $300 million for India operations (2010-2015), out of which $200 million is for augmenting manufacturing capacity. In the current fiscal year, the company has a marketing budget of Rs 350-400 crore.
Panasonic is setting up a manufacturing unit in Jhajjar (Haryana). Construction of the plant is likely to be complete by November this year.
Trust Factor
The high recall and trust enjoyed by Japanese brands is a major factor. Mr Ashwani Arora, Research Head, Market Xcel, says, “Lot of studies undertaken by MarketXcel in different domains suggest that top of mind association with any Japanese brand in India happens to be trust. Sony and Panasonic are losing in Japan and other markets as these markets are already entrenched, while the developed economies are fundamentally seeking more advanced products.”