Wednesday, August 2, 2017

Factroing Japan in investment strategy - 3

"Moral codes adjust themselves to environmental conditions."
—Will Durant (American, 1885-1981)
Word for the day
Ergate (n)
A worker ant.
Malice towards none
NiKu's mantra of success - "If you can't beat NaMo, join him."
First random thought this morning
30 members, including some senior ministers, of Rajya Sabha belonging to the ruling NDA were found absent from the house when an important legislation relating to backward classes was being discussed and put to vote. Consequently, the opposition Congress was able to push through some amendments. This absenteeism happened despite specific directions from the prime minister.
The moot point is that should these MPs be punished the same way, as any other public servant would be, in case he knowingly and willfully remains absent from office when an important agenda is being discussed. Or if a senior police officer enjoys dinner at home when riots break out! Or 'we the people' should also not take PM seriously.


Factroing Japan in investment strategy - 3

·         India's rapid economic growth is attracting worldwide attention. Many countries are keen to strengthen their ties with India, with a population of 1.1bn the world's largest democracy and. like China, one of Asia's most important countries. From a geopolitical point of view s well, India has great strategic importance, located in the middle of what the Japanese government calls the "Arc of Freedom and Prosperity".
·         Japan and India have deep ties, with roots extending far into the past, and today e two countries share many strategic interests. Now that India's global presence is growing, the two countries need to deepen their ties to spur prosperity in an Asia that is moving towards regional integration.
·         Strengthening Japan-India ties depends on private sector business activities. The Japan-India relationship can be suitably enhanced only if trade and investment are increased far above their present levels.
·         Japan and India share many strategic interests and a number of common diplomatic objectives.
·         One prerequisite for enhancing Japan-India business ties is diversification of trade and investment. Most direct investments made in India by Japanese corporations are in the area of transportation equipment manufacturing., indicating a remarkable lack of diversification. Furthermore, the majority of those investments are to promote sales within the Indian market, and this inhibits diversification in India's foreign trade structure.
·         In addition, Japanese investments should be made in various parts of India. Most Japanese investment in India has been concentrated in the Delhi capital region, because that is where many companies affiliated with Suzuki and Honda established operations in 1980s abd achieved considerable success.
·         Promising areas for Japanese investment in India include general and industrial machinery, processed foods, everyday items such as sanitary goods and cosmetics, chemical products, pharmaceutical, retail markets, distribution, real estate, infrastructure, finance and software development.
·         Another area worth considering is investment by Japanese financial institutions in the infrastructure funds of Indian financial institutions.
·         Prime Minister Singh's visit to Japan near the end of 2006 formed the backdrop to an announcement that bilateral leadership-level consultations would be held annually, and that annual summit level meetings would be held in the respective capitals.
·         Japanese corporations should adapt their business strategies to realities in India
·         Japan's financial sector would benefit most from India's IT expertise. Instead of coddling their affiliated IT companies and client hardware companies, Japanese financial institutions should develop open IT systems and outsource some of their business to Indian software related companies. Japanese manufacturing sector should too make use of India's IT expertise.
·         One of the most effective ways to promote human interaction is to greatly increase the number of Indian students studying in Japan. Bilateral government arrangements encouraging the employment of Indian exchange students in Japan should be augmented. Other possible approaches include Japanese universities promoting themselves in India to attract more students, and Japanese companies conducting hiring campaigns in Indian universities.
The events post these recommendations in 2007 indicate that these recommendations have been accepted and being acted upon.
The Indo-Japan relations have grown. The area of Japanese investments has moved much beyond Delhi NCR region.
Japanese companies have invested in building India's infrastructure. Metro Rail Projects, Dedicated Freight Corridors are some signature projects.
Japanese transportation equipment companies like Suzuki and Honda have greatly enhanced their commitment to Indian markets by larger investments in their local manufacturing units. Furthermore, they have increased the scope of these units beyond India's local markets to other parts of Asia and Africa.
Besides we have material rise in commitment and investments of other equipment makers like Hitachi, Toshiba, FCC etc.
Besides, investments have been made in logistic (Gati Ltd); Pharma (Deep Care), Consulting (New Era India, Alp Consulting), IT Services (Accel Frontline, Micro Clinic) Stationary (Camlin) and Telecommunication (Inmobi tech)
The most notable growth has occurred in financial and retail sectors. The corporations like Nippon, Softbank, Nomura, etc. have made significant investments in financial services, Financial technology services and ecommerce retail ventures.
Between 2008 and 2014, Japanese corporations made about 180 M&A deals in India (including minority stakes, joint ventures, acquisitions and increase in shareholding).
The point I am trying to make is that Japanese commitment to Indian economy is a mutual necessity and part of a long term strategic plan. It transcends political parties and political leaders.
The action so far is miniscule, if we consider the potential. There are enough indications that this engagement is going to rise exponentially. It is therefore important investment strategies and technical market studies include this factor as a critical one, in my view.....to conclude on Friday

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