Osaka – Sunday, October 3, 2010
Nikkei, Japanese leading newspaper specialized in business and economy, reported on September 2 that Japanese retailers trading clothes and sundries are expanding their made in Japan product line-up. Such retailers are promoting this with the objective of appealing ”obsessiveness to manufacturing” to grow business in high price range products with value added to consumers, instead of focusing their business on low price range products. Background of such of their change in strategy includes cost increase of China, one of major production site country, which means it is now easier for them to utilize production sites in Japan.
1. How have Japanese retailers training clothes and sundries expanding made in Japan product line up?
Major Japan domestic production expansion of clothes
(Source: Nikkei, translated and edited by the author)
Company Name / Products / Production Expansion Plan
Itoyokado / Shirts, bags, etc. / Develop products with leading production sites. Expand SKUs to 50 by next spring.
AOKI / Suits, shirts, shoes etc. / New made in Japan brand launch. Leverage high tech such as 3D sewing.
Sanyo Shokai / Coats / Obsessiveness to details by its own factory located in Aomori Prefecture.
UNIQLO / Jeans / High end product at 9,990 yen with obsessiveness in processing.
Right-on / Jeans / First made in Japan product launch with its unique brand this autumn.
Sanrio / Towels with character illustrations / Launch as souvenirs targeting travelers from abroad.
SRI Sports / Golf clubs / New product launch in November this year leveraging made in Japan shafts.
1) AOKI
AOKI, a leading retailer in Japan specialized in men’s suit, launched a new original brand of made in Japan products of suit, shirt and shoes and started selling them in their 85 stores (equivalent to approximately 20% of total stores) from October. Fabrics are not made in Japan but sewing is done in Japan leveraging Japan’s high technologies such as 3D sewing to enhance wear comfort. The price range of such suit is between 108,000 yen and 128,000 yen, which is high-end range of their product line up. They target sales of 5,000 suits as a start.
2) Aoyama Shouji
Aoyama Shouji, another leading retailer in Japan specialized in men’s suit, is also increasing stores trading made in Japan suits. It started pilot sales in 6 stores this spring and will increase to 10 to 15 stores from the end of October to November this year, to target selling 1,000 suits. Made in Japan suit is sell accepted to travelers from abroad so if their sales turns out to be strong they will study to further expand their business of made in Japan suit.
3) Sanyo Shokai
Sanyo Shokai,a leading retailer in Japan specialized in men’s coat, plans to launch this month a new brand for their main product of men’s coat planned and designed by a well known designer and sewn in its own factory located in Aomori Prefecture. The fact that such coats are made in Japan with much care from cutting of fabrics to sewing will be introduced by showing video at sales floor in order to appeal obsessiveness to details to consumers.
4) Itoyokado
Itoyokado, a leading retailer (super market) in Japan, is also strengthening their line up of clothes and sundries by joint-development with leading production sites in Japan, and appeal “made in Japan”. It launched 36 SKUs of polo shirts and bags etc. made in 10 prefectures in Japan in 160 stores. It targets to achieve sales of 10 billion yen in the first year and 15 billion yen in the second year.
2. Why are Japanese retailers expanding made in Japan product line up?
1) Meeting needs of Japanese consumers
Japanese consumers are not necessarily after low price products or rather some of them are getting tired of low price products so Japanese retailers need to take measures to meet such needs. Expanding and strengthening made in Japan high quality, line-up of high end products and appealing such line up with effective marketing is one effective strategy/option for Japanese retailers.
2) Counter measure to increase in production cost in China
According to the Ministry of Economy, Trade and Industry (METI), approximately 95% of clothes in Japan are imported from China due to low production cost in China; however, with increase in production costing China, it is quite natural for Japanese retailers to review their business strategy. One option for them is pursue possibilities of production in other countries which they already have started. And strengthening made in Japan products line up to grow high-end products is another option they started to pursue and implement, and this was the topic of this article.
In addition, some retailers started to establish their new factory in Japan. Maker’s Shirt, a Japanese retailer with main products of shirts made in Japan, plans to jointly establish a new factory in Japan with a company that they outsource their production.
3. What are possible upcoming challenges?
In order to leverage Japanese production sites, supports such as re-investment by companies with sufficient capital would be vital. This is because most factories in Japan that produces clothes are have not been invested for a long time because currently most clothes retailed in Japan are imported from countries with low production cost.
2010年10月3日日曜日
Risk Management and Interdependence in Today’s Global Economy
Osaka – Sunday, October 3, 2010
Various Japanese media such as The Japan Times have been reporting since September 29 that Japanese companies started to rethink their risk management strategy and take measure for dispersion of risk of importing rare earth elements, since the China government reportedly banned exporting them to Japan as part of its diplomatic spat with Japan over the disputed Senkaku Islands. (The U.S. recently insisted clearly that the islands were returned to Japan from the U.S. in 1972 together with Okinawa mainland, and that Japan’s recent actions have been appropriate and sufficient). Report also includes the fact that the U.S. started to take measures in its own ways with similar concept.
1. How Japan has been rethinking rare earth sourcing and its risk management strategy?
1) Companies (sourcing)
Japanese companies, who had already been concerned about rare earth shortages as early as July, when China cut its export quotas to bolster prices and ensure domestic supplies, immediately started to take concrete actions such as sourcing rare earth metals from other countries such as Kazakhstan to disperse risk. China produces and supplies over 90% of the world’s rare earth metals but their reserves is only around 30% of the world total. This means remaining 70% are available in other countries.
As reported by The Japan Times and other media, Sumitomo Corp. signed a deal with Kazakhstan's national nuclear power company Kazatomprom to establish a joint venture and produce rare earth metals in the country, including neodymium and dysprosium, which are crucial to building motors for electric vehicles. And, Toshiba Corp. said it signed up with the same Kazakhstan firm in June to establish a joint venture to produce rare earth metals coming out of uranium mines in which Toshiba has a financial interest. The electronics maker said it hopes to set up the venture by the end of the year and start producing rare earth elements used in motor magnets.
2) Companies (R&D and others)
Research of technologies to reduce use of rare earth elements has been in progress as reported in a recent Japanese TV news programme. Honda Motor Co. has been conducting research and development to find alternatives for the rare earths. Toyota Motor Corp., the world's largest maker of hybrid cars, has set up a task force on rare earths metals earlier this year to explore new sources for rare earth elements and ways to recycle used parts, the Nikkan Kogyo newspaper reported Wednesday, according to The Japan Times..
3) Government
It was reported in a recent Japanese TV news programme that the Japanese government signed a memorandum with Kazakhstan of supporting Kazakhstan extraction of rare earth metals.
2. How about the U.S.?
With sense of crisis, the U.S. also started to take measures for risk diversification such as restarting mining of rare earth metals in California. The U.S. used to mine and supply approximately 50% of worldwide rare earth metals but with emergence of cheap products from China, the U.S. lost their global competitiveness and its worldwide market share dropped dramatically. As a result, the U.S. rely their rare earth sourcing from China. Rare earth metals are used in their nation’s “critical” equipments and systems such as military communication systems. For this reason, the U.S. also started to rethink their rare earth sourcing strategy and take measures in earnest.
3. What is the final thought of the author?
Being a marketing versatilist with management literacy and not an expert in politics and diplomacy, the author has nothing to say about politics. To the author, it seems that what China has executed (i.e. banning rare earth metal export to Japan as a part of diplomatic spat) triggered Japan and the U.S. (at least) to rethink rare earth sourcing and risk management strategy and take concrete measures, to be less dependent on China, although risk diversification does take time. This means decrease in China’s rare earth business in the long run.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that in an APEC meeting held on October 2 in Gifu Prefecture in Japan, Japan’s Minister of the Ministry of Economy, Trade and Industry (METI) requested to his China counterpart to proceed smoothly to re-start rare earth export to Japan, to which China answered “would like to make effort to solve the problem. Economic interaction with Japan is important also for China”. This is a step forward because China simply has been insisting that “the Chinese government have never banned exporting rare earth metal to Japan”.
It seems that this incident delivers a strong message that an economic sanction by a country as a part of diplomatic spat is never effective in a global economic world in which countries are interdependent. It would lead to negative effect to the country executing the sanction in the long run. After all, countries need to diversify their risk while be cooperative for sustainability and co-prosperity.
References:-
Hiroko, Nakata (2010), Firms Rethink Rare Earth Sourcing
http://search.japantimes.co.jp/cgi-bin/nb20101002a1.html
Various Japanese media such as The Japan Times have been reporting since September 29 that Japanese companies started to rethink their risk management strategy and take measure for dispersion of risk of importing rare earth elements, since the China government reportedly banned exporting them to Japan as part of its diplomatic spat with Japan over the disputed Senkaku Islands. (The U.S. recently insisted clearly that the islands were returned to Japan from the U.S. in 1972 together with Okinawa mainland, and that Japan’s recent actions have been appropriate and sufficient). Report also includes the fact that the U.S. started to take measures in its own ways with similar concept.
1. How Japan has been rethinking rare earth sourcing and its risk management strategy?
1) Companies (sourcing)
Japanese companies, who had already been concerned about rare earth shortages as early as July, when China cut its export quotas to bolster prices and ensure domestic supplies, immediately started to take concrete actions such as sourcing rare earth metals from other countries such as Kazakhstan to disperse risk. China produces and supplies over 90% of the world’s rare earth metals but their reserves is only around 30% of the world total. This means remaining 70% are available in other countries.
As reported by The Japan Times and other media, Sumitomo Corp. signed a deal with Kazakhstan's national nuclear power company Kazatomprom to establish a joint venture and produce rare earth metals in the country, including neodymium and dysprosium, which are crucial to building motors for electric vehicles. And, Toshiba Corp. said it signed up with the same Kazakhstan firm in June to establish a joint venture to produce rare earth metals coming out of uranium mines in which Toshiba has a financial interest. The electronics maker said it hopes to set up the venture by the end of the year and start producing rare earth elements used in motor magnets.
2) Companies (R&D and others)
Research of technologies to reduce use of rare earth elements has been in progress as reported in a recent Japanese TV news programme. Honda Motor Co. has been conducting research and development to find alternatives for the rare earths. Toyota Motor Corp., the world's largest maker of hybrid cars, has set up a task force on rare earths metals earlier this year to explore new sources for rare earth elements and ways to recycle used parts, the Nikkan Kogyo newspaper reported Wednesday, according to The Japan Times..
3) Government
It was reported in a recent Japanese TV news programme that the Japanese government signed a memorandum with Kazakhstan of supporting Kazakhstan extraction of rare earth metals.
2. How about the U.S.?
With sense of crisis, the U.S. also started to take measures for risk diversification such as restarting mining of rare earth metals in California. The U.S. used to mine and supply approximately 50% of worldwide rare earth metals but with emergence of cheap products from China, the U.S. lost their global competitiveness and its worldwide market share dropped dramatically. As a result, the U.S. rely their rare earth sourcing from China. Rare earth metals are used in their nation’s “critical” equipments and systems such as military communication systems. For this reason, the U.S. also started to rethink their rare earth sourcing strategy and take measures in earnest.
3. What is the final thought of the author?
Being a marketing versatilist with management literacy and not an expert in politics and diplomacy, the author has nothing to say about politics. To the author, it seems that what China has executed (i.e. banning rare earth metal export to Japan as a part of diplomatic spat) triggered Japan and the U.S. (at least) to rethink rare earth sourcing and risk management strategy and take concrete measures, to be less dependent on China, although risk diversification does take time. This means decrease in China’s rare earth business in the long run.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that in an APEC meeting held on October 2 in Gifu Prefecture in Japan, Japan’s Minister of the Ministry of Economy, Trade and Industry (METI) requested to his China counterpart to proceed smoothly to re-start rare earth export to Japan, to which China answered “would like to make effort to solve the problem. Economic interaction with Japan is important also for China”. This is a step forward because China simply has been insisting that “the Chinese government have never banned exporting rare earth metal to Japan”.
It seems that this incident delivers a strong message that an economic sanction by a country as a part of diplomatic spat is never effective in a global economic world in which countries are interdependent. It would lead to negative effect to the country executing the sanction in the long run. After all, countries need to diversify their risk while be cooperative for sustainability and co-prosperity.
References:-
Hiroko, Nakata (2010), Firms Rethink Rare Earth Sourcing
http://search.japantimes.co.jp/cgi-bin/nb20101002a1.html
2010年9月12日日曜日
What Does EPA Between Japan and India Mean?
Osaka – Sunday, September 12, 2010
Nikkei, Japanese newspaper specialized in business and economy, reported on September 10 that the governments of Japan and India reached a broad agreement to conclude EPA (economic partnership agreement), as mentioned in the article Japan and India Reach a Broad EPA. This has much significance to the both countries while at the same time challenges lie ahead.
Top 5 international trade items in 2009
(Source: Nikkei that acquired the information from JETRO (Japan External Trade Organization), translated and edited by the author)
From Japan to India
Item / % of total trade
Iron and steel / 13.0
Components of automobiles / 6.4
Metal working machinery / 4.3
Power engines / 4.1
Organic processed products / 4.0
From India to Japan
Item / % of total trade
Petroleum products / 24.4
Iron ore / 12.1
Non-metal mineral manufacture / 7.5
Sea foods / 7.5
Organic processed products 5.8
1. What does the EPA mean to Japan?
The EPA means that that Japan is closing the gap between Korean in terms of condition of international trade. Korea has already concluded FTA (Free Trade Agreement) with India in January this year; therefore, opinion leaders of Japan such as Mr. Suzuki, CEO/Chairman and President of Suzuki Motors, were extremely worried that Japan has handicap in global competition. With the EPA between Japan and India, they assume that competitive condition for Japanese automobile and consumer electronics compared with their Korean counterparts will improve.
Lowering/minimizing of tariff means so much and should be beneficial to Japanese automobile and consumer electronics. This is because they rely control component and high-precision processing components on import from Japan although they has been making efforts in increasing use of local components to reduce cost because such components are extremely difficult to source locally. Local sourcing to reduce cost is vital to grow business in India where the price range of volume zone is below 1 million yen and price competition is extremely severe.
2. What does the EPA mean to India?
The EPA means that India has made a progress in expanding their business in pharmaceutical (generic drugs). This is because Japan seems to have compromised to study to accelerate approval procedure of generic drugs in Japan. Currently it is difficult for Indian pharmaceutical companies to expand their business in Japan because of the slow speed of approval, which partially attributes to the fact that Japanese doctors and patients request high standard of quality. Some experts expect that cases in which Indian pharmaceutical companies acquire Japanese counterparts will increase in the future.
3. What are the challenges for Japan?
Japan needs to further negotiate with larger countries for EPA agreement such as China, Korea and Australia and catch up with Korea in developing and executing EPA strategy. Japan has only concluded EPA with countries and regions covering 16.5% of the total trade, and it is only 36.5% even if countries and regions in negotiation are included. On the other hand, Korea has already signed FTA with the U.S. and EU, and if countries and regions in negotiation are included it would be as much as over 60%.
The country that Japan seems to be able to agree to conclude EPA in the near future is Peru, whose negotiation is in progress. Mr. Okada, Minister of Foreign Affairs, said that Japan would like to start negotiation with EU and Korea and conclude EPA following agreement with India; however, there is no concrete EPA strategy.
4. Why Japan is behind in FTA / EPA?
It is because Japan has not been able to take bold step for market liberalization in agriculture. This is why in the EPA agreed with India main agriculture products such as rice have been excluded from items whose tariff will be abolished. However, lowering tariff of agriculture products would be inevitable if the Japanese government is to set a target of concluding EPA with the agriculture giants such as the U.S., China and Australia in the basic EPA policy to be drafted by November this year.
Scope of discussion topic of liberalization may expand beyond agriculture. Recently there have been some cases in which liberalization in items of non-tariff barriers such as standardization of safety criteria of products. What is required to initiate EPA is strong leadership of the government (ruling party) to convince stakeholders.
Nikkei, Japanese newspaper specialized in business and economy, reported on September 10 that the governments of Japan and India reached a broad agreement to conclude EPA (economic partnership agreement), as mentioned in the article Japan and India Reach a Broad EPA. This has much significance to the both countries while at the same time challenges lie ahead.
Top 5 international trade items in 2009
(Source: Nikkei that acquired the information from JETRO (Japan External Trade Organization), translated and edited by the author)
From Japan to India
Item / % of total trade
Iron and steel / 13.0
Components of automobiles / 6.4
Metal working machinery / 4.3
Power engines / 4.1
Organic processed products / 4.0
From India to Japan
Item / % of total trade
Petroleum products / 24.4
Iron ore / 12.1
Non-metal mineral manufacture / 7.5
Sea foods / 7.5
Organic processed products 5.8
1. What does the EPA mean to Japan?
The EPA means that that Japan is closing the gap between Korean in terms of condition of international trade. Korea has already concluded FTA (Free Trade Agreement) with India in January this year; therefore, opinion leaders of Japan such as Mr. Suzuki, CEO/Chairman and President of Suzuki Motors, were extremely worried that Japan has handicap in global competition. With the EPA between Japan and India, they assume that competitive condition for Japanese automobile and consumer electronics compared with their Korean counterparts will improve.
Lowering/minimizing of tariff means so much and should be beneficial to Japanese automobile and consumer electronics. This is because they rely control component and high-precision processing components on import from Japan although they has been making efforts in increasing use of local components to reduce cost because such components are extremely difficult to source locally. Local sourcing to reduce cost is vital to grow business in India where the price range of volume zone is below 1 million yen and price competition is extremely severe.
2. What does the EPA mean to India?
The EPA means that India has made a progress in expanding their business in pharmaceutical (generic drugs). This is because Japan seems to have compromised to study to accelerate approval procedure of generic drugs in Japan. Currently it is difficult for Indian pharmaceutical companies to expand their business in Japan because of the slow speed of approval, which partially attributes to the fact that Japanese doctors and patients request high standard of quality. Some experts expect that cases in which Indian pharmaceutical companies acquire Japanese counterparts will increase in the future.
3. What are the challenges for Japan?
Japan needs to further negotiate with larger countries for EPA agreement such as China, Korea and Australia and catch up with Korea in developing and executing EPA strategy. Japan has only concluded EPA with countries and regions covering 16.5% of the total trade, and it is only 36.5% even if countries and regions in negotiation are included. On the other hand, Korea has already signed FTA with the U.S. and EU, and if countries and regions in negotiation are included it would be as much as over 60%.
The country that Japan seems to be able to agree to conclude EPA in the near future is Peru, whose negotiation is in progress. Mr. Okada, Minister of Foreign Affairs, said that Japan would like to start negotiation with EU and Korea and conclude EPA following agreement with India; however, there is no concrete EPA strategy.
4. Why Japan is behind in FTA / EPA?
It is because Japan has not been able to take bold step for market liberalization in agriculture. This is why in the EPA agreed with India main agriculture products such as rice have been excluded from items whose tariff will be abolished. However, lowering tariff of agriculture products would be inevitable if the Japanese government is to set a target of concluding EPA with the agriculture giants such as the U.S., China and Australia in the basic EPA policy to be drafted by November this year.
Scope of discussion topic of liberalization may expand beyond agriculture. Recently there have been some cases in which liberalization in items of non-tariff barriers such as standardization of safety criteria of products. What is required to initiate EPA is strong leadership of the government (ruling party) to convince stakeholders.
Japan and India Reach a Broad EPA
Osaka – Sunday, September 12, 2010
Nikkei, Japanese newspaper specialized in business and economy, reported on September 10 that the governments of Japan and India reached a broad agreement to conclude EPA (economic partnership agreement). Japan’s EPA has already come into effect with 11 countries and regions, and India is the first country to conclude EPA with the major emerging countries of Brazil, Russia, China and India.
Tariffs of items that equals to 94% of the total trade amount between the two countries will be abolished in 10 years from the point of the agreement coming into effect. This could well drive more Japanese companies entering India market because most items that are exported from Japan such as iron and steel and components of automobiles will be free from tariff. Japan is to accept the request from India and study to speed-up approval of Generic drugs.
The main points of EPA that have been agreed with Japan and India are as below.
1. EPA is targeted to be officially agreed and concluded in October when Prime Minister of India Mr. Singh visits Japan.
Mr. Singh, the Prime Minister of India, is to visit Japan in October. The EPA is to be officially concluded then, and is expected to come into effect in 2011.
2. When the agreement comes into effect, tariffs of items covering 94% of total trade between the two countries will be abolished in 10 years.
According to 2009 statistics of JETRO (Japan External Trade Organization), approximately USD 6.3 billion was exported from Japan to India and approximately USD 3.7 billion was imported from India to Japan. Tariffs of items equivalent to 90% of the USD 6.3 billion from Japan to India and 97% of the USD 3.7 billion from India to Japan will be abolished in 10 years after the agreement comes into effect.
3. Tariffs of most items of iron and steel and automobile components will be abolished.
The two countries agreed to abolish tariffs in most items of the major industries of Japan including components of automobile, iron and steel and electronics. In many cases, 7.5% or 10% tariff is set in exporting these items from Japan to India, which sill be abolished in 10 years. It seems that tariffs of finished products will remain as today.
4. Tariffs of some agricultural items will be abolished but some others remain as today.
As for agricultural items, MAFF (Ministry of Agriculture, Forestry and Fisheries of Japan) announced that curry, tea and logs imported from India to Japan will become free from tariff but other items such as rice, wheat, beef, pork and sugar will remain as today. As for items exported from Japan to India, bonsai, strawberries and peaches will be free from tariff, and rice, milk powder and chicken will remain as today.
5. Items that India has requested will be discussed for crystallization.
Accelerating approval of generic drugs and expansion of working opportunities of India people in Japan will be agreed to further discussed to crystallize collaboration.
Japan also accepted India companies to establish in India call centre(s) targeting Japan market even if the companies do not have a branch in Japan.
Nikkei, Japanese newspaper specialized in business and economy, reported on September 10 that the governments of Japan and India reached a broad agreement to conclude EPA (economic partnership agreement). Japan’s EPA has already come into effect with 11 countries and regions, and India is the first country to conclude EPA with the major emerging countries of Brazil, Russia, China and India.
Tariffs of items that equals to 94% of the total trade amount between the two countries will be abolished in 10 years from the point of the agreement coming into effect. This could well drive more Japanese companies entering India market because most items that are exported from Japan such as iron and steel and components of automobiles will be free from tariff. Japan is to accept the request from India and study to speed-up approval of Generic drugs.
The main points of EPA that have been agreed with Japan and India are as below.
1. EPA is targeted to be officially agreed and concluded in October when Prime Minister of India Mr. Singh visits Japan.
Mr. Singh, the Prime Minister of India, is to visit Japan in October. The EPA is to be officially concluded then, and is expected to come into effect in 2011.
2. When the agreement comes into effect, tariffs of items covering 94% of total trade between the two countries will be abolished in 10 years.
According to 2009 statistics of JETRO (Japan External Trade Organization), approximately USD 6.3 billion was exported from Japan to India and approximately USD 3.7 billion was imported from India to Japan. Tariffs of items equivalent to 90% of the USD 6.3 billion from Japan to India and 97% of the USD 3.7 billion from India to Japan will be abolished in 10 years after the agreement comes into effect.
3. Tariffs of most items of iron and steel and automobile components will be abolished.
The two countries agreed to abolish tariffs in most items of the major industries of Japan including components of automobile, iron and steel and electronics. In many cases, 7.5% or 10% tariff is set in exporting these items from Japan to India, which sill be abolished in 10 years. It seems that tariffs of finished products will remain as today.
4. Tariffs of some agricultural items will be abolished but some others remain as today.
As for agricultural items, MAFF (Ministry of Agriculture, Forestry and Fisheries of Japan) announced that curry, tea and logs imported from India to Japan will become free from tariff but other items such as rice, wheat, beef, pork and sugar will remain as today. As for items exported from Japan to India, bonsai, strawberries and peaches will be free from tariff, and rice, milk powder and chicken will remain as today.
5. Items that India has requested will be discussed for crystallization.
Accelerating approval of generic drugs and expansion of working opportunities of India people in Japan will be agreed to further discussed to crystallize collaboration.
Japan also accepted India companies to establish in India call centre(s) targeting Japan market even if the companies do not have a branch in Japan.
2010年9月5日日曜日
Automobile Companies Compete to Win Promising India Market
Osaka – Sunday, September 5, 2010
Nikkei, Japanese newspaper specialized in business and economy, reported today that Suzuki Motor, a Japanese automobile company strong in small cars, has made a policy of investing approximately 30 billion yen in India to construct new car plant, with the annual production capacity of 250,000 cars. The plant may start its operation as early as 2013, and the annual production capacity is expected to expand to 1.7 million cars at the maximum, which is far greater than that of Japan.
Suzuki is the leader in India with market share of nearly 50%. Other automobile giants such as Toyota and Nissan are also aggressive in entering India market. Therefore, Suzuki aims to make the most of “first mover advantage” strategy and to establish a system for stable supply in the rapidly growing promising market before the competition gets tough.
1. What is Suzuki’s strategy to remain leading India Market?
Suzuki was the first foreign affiliate company in India to start production in 1983. The company plans to expand its annual production capacity to 1.45 million cars in 2012. With the construction of the new plant, the annual production capacity in India will be the largest in the world, which is much more than the total annual production capacity of 3 plants in Japan combined (1.4 million cars).
The new plant is to be constructed in Manesar in Haryana, the suburb of New Deli. In this area, Suzuki has already constructed the first plant with the annual production capacity of 300,000 cars (to be increased to 350,000 cars by the end of this year) that started its operation in 2007. Suzuki also is constructing the second plant with annual production capacity of 250,000 cars, to start its operation in 2012. Suzuki is to start construction of the third plant simultaneously and to install equipments depending on the demand trend. The types of cars to be produced are assumed to be primarily the best selling line products in the local market.
One main reason for consecutive construction of the plants in Manesar in Haryana is that the plant in Gurgaon in Haryana is getting old, although its annual production capacity is to be increased to 850,000 cars by the end of this year. Mr. Suzuki, the Chairman and President of Suzuki group, says that the company would like to preserve available production capacity in Manesar to establish a network that is capable of stable production and supply even when the Gurgaon plant needs to be renovated.
Suzuki, the pioneer of passenger car market in India, still enjoys market share of almost 50%. Two thirds of Suzuki’s consolidated operating profit is regarded as from business in India. Suzuki would like to make haste in establishing its leading position and improve its profitability in India business when the competition is expected to get tough, and leverage the know how from India business in strengthening businesses in other markets in Asia and Europe.
2. How are other automobile companies doing business in India?
Other global and local automobile companies have recently been entering India market, with their own respective strategy.
1) Toyota (Japan)
Toyota is to start local production and sales of small, strategic cars from the end of 2010.
2) Honda (Japan)
Honda is to start business of small cars with the price range below 500,000 rupee (approximately 900,000 yen) in 2011.
3) Nissan (Japan)
Nissan has started business of small cars with the price range below 400,000 rupee in July this year.
4) Volkswagen (Germany)
Volkswagen started its operation of its new plant with annual production capacity of 110,000 cars in March 2009, and started its business of small cars.
5) General Motors (the U.S.)
GM started its business of small cars with the price of approximately 300,000 rupee in January this year.
6) Tata Motors (India)
Tata Motors started operation of its plant that exclusively produces Tata Nano, its low price range car, in June this year.
3. Why worldwide automobile companies are aggressive in starting and expanding business in India?
The reasons are the fact that India is a promising market and that success in India business will a requisite for global companies to expand their business in other emerging markets.
1) India is a promising market
With its economy growing, India’s automobile market is expected to grow. From statistics, it is generally said that popularization of automobiles start when GDP surpasses 1,000 USD and India is currently at that stage. It is estimated that 4 million cars will be used in India in 2015, when 40% of China’s automobile production capacity is to be excess in 2015, according to the estimation of China government. The pace of automobile market expansion in India is expected to accelerate when middle-income group gets big.
2) Success in India business determines success in other emerging market
In India, approximately 80% of new cars are passenger cars, and over 60% of passenger cars are small cars with engine size below 1200cc. Volume price range in India is 300,000 – 450,000 rupee (approximately 550,000 – 800,000 yen), and is regarded as the most competitive market in the world for cars with low price range.
With this background, India business is the core of their global strategy of small cars, and success of India business is likely to determine their business success in worldwide emerging markets. This is because automobile companies are to accumulate know how of development, production and marketing of low price range cars through their business in India then expand their business in other emerging markets.
Nikkei, Japanese newspaper specialized in business and economy, reported today that Suzuki Motor, a Japanese automobile company strong in small cars, has made a policy of investing approximately 30 billion yen in India to construct new car plant, with the annual production capacity of 250,000 cars. The plant may start its operation as early as 2013, and the annual production capacity is expected to expand to 1.7 million cars at the maximum, which is far greater than that of Japan.
Suzuki is the leader in India with market share of nearly 50%. Other automobile giants such as Toyota and Nissan are also aggressive in entering India market. Therefore, Suzuki aims to make the most of “first mover advantage” strategy and to establish a system for stable supply in the rapidly growing promising market before the competition gets tough.
1. What is Suzuki’s strategy to remain leading India Market?
Suzuki was the first foreign affiliate company in India to start production in 1983. The company plans to expand its annual production capacity to 1.45 million cars in 2012. With the construction of the new plant, the annual production capacity in India will be the largest in the world, which is much more than the total annual production capacity of 3 plants in Japan combined (1.4 million cars).
The new plant is to be constructed in Manesar in Haryana, the suburb of New Deli. In this area, Suzuki has already constructed the first plant with the annual production capacity of 300,000 cars (to be increased to 350,000 cars by the end of this year) that started its operation in 2007. Suzuki also is constructing the second plant with annual production capacity of 250,000 cars, to start its operation in 2012. Suzuki is to start construction of the third plant simultaneously and to install equipments depending on the demand trend. The types of cars to be produced are assumed to be primarily the best selling line products in the local market.
One main reason for consecutive construction of the plants in Manesar in Haryana is that the plant in Gurgaon in Haryana is getting old, although its annual production capacity is to be increased to 850,000 cars by the end of this year. Mr. Suzuki, the Chairman and President of Suzuki group, says that the company would like to preserve available production capacity in Manesar to establish a network that is capable of stable production and supply even when the Gurgaon plant needs to be renovated.
Suzuki, the pioneer of passenger car market in India, still enjoys market share of almost 50%. Two thirds of Suzuki’s consolidated operating profit is regarded as from business in India. Suzuki would like to make haste in establishing its leading position and improve its profitability in India business when the competition is expected to get tough, and leverage the know how from India business in strengthening businesses in other markets in Asia and Europe.
2. How are other automobile companies doing business in India?
Other global and local automobile companies have recently been entering India market, with their own respective strategy.
1) Toyota (Japan)
Toyota is to start local production and sales of small, strategic cars from the end of 2010.
2) Honda (Japan)
Honda is to start business of small cars with the price range below 500,000 rupee (approximately 900,000 yen) in 2011.
3) Nissan (Japan)
Nissan has started business of small cars with the price range below 400,000 rupee in July this year.
4) Volkswagen (Germany)
Volkswagen started its operation of its new plant with annual production capacity of 110,000 cars in March 2009, and started its business of small cars.
5) General Motors (the U.S.)
GM started its business of small cars with the price of approximately 300,000 rupee in January this year.
6) Tata Motors (India)
Tata Motors started operation of its plant that exclusively produces Tata Nano, its low price range car, in June this year.
3. Why worldwide automobile companies are aggressive in starting and expanding business in India?
The reasons are the fact that India is a promising market and that success in India business will a requisite for global companies to expand their business in other emerging markets.
1) India is a promising market
With its economy growing, India’s automobile market is expected to grow. From statistics, it is generally said that popularization of automobiles start when GDP surpasses 1,000 USD and India is currently at that stage. It is estimated that 4 million cars will be used in India in 2015, when 40% of China’s automobile production capacity is to be excess in 2015, according to the estimation of China government. The pace of automobile market expansion in India is expected to accelerate when middle-income group gets big.
2) Success in India business determines success in other emerging market
In India, approximately 80% of new cars are passenger cars, and over 60% of passenger cars are small cars with engine size below 1200cc. Volume price range in India is 300,000 – 450,000 rupee (approximately 550,000 – 800,000 yen), and is regarded as the most competitive market in the world for cars with low price range.
With this background, India business is the core of their global strategy of small cars, and success of India business is likely to determine their business success in worldwide emerging markets. This is because automobile companies are to accumulate know how of development, production and marketing of low price range cars through their business in India then expand their business in other emerging markets.
2010年8月29日日曜日
Japanese Companies Enter the U.S. Healthcare IT Market
Osaka – Sunday, August 29, 2010
Nikkei, Japanese newspaper specialized in business and economy, reported today that Japanese IT related companies started to enter the U.S. healthcare IT market, when the U.S. counterparts have been accelerating their investment in this market. NEC is to enter the U.S. healthcare inspection business in the summer 2011. The company invests in the U.S. healthcare venture business and develops a system that determines risk of having disease by inspecting proteins in the blood. Fuji film integrated their U.S. healthcare information system affiliates to establish and strengthen their business of diagnostic imaging systems.
The U.S. preventive healthcare market is expected to grow with president Obama’s healthcare reform, and the U.S. companies have been entering and/strengthen their businesses in this market. Competition in the new promising healthcare IT market has started and is expected to get fierce.
1. Why is the U.S. preventive healthcare marketing promising and is expected to grow?
The healthcare IT demand is expected to grow dramatically with the increase in the healthcare insurance consumers. This is because of the healthcare insurance reform law was enacted in March. This law aims all of the U.S. citizens to benefit from the healthcare insurance.
Demand of preventive healthcare is also expected to grow because all the preventive healthcare cost is to be paid by insurance.
2. How are Japanese companies to enter and/or strengthen their healthcare IT business in the U.S.?
1) NEC
NEC is to enter the U.S. healthcare inspection business in the summer 2011 and to make healthcare IT business as a new business pillar. The company is to develop a new system that determine risk of having diseases by inspecting proteins in the blood, whose market size is expected to grow as big as more than 200 billion yen worldwide, the U.S. being the biggest market.
NEC invested 5 million USD (approximately 400 million yen) in a U.S. venture company and made alliance with the venture company. The venture company has a technology of inspecting in details proteins in blood. Based on the data from this inspection, NEC is to system that immediately determines risk of having diseases. The system will be located in a data centre in the U.S. The inspection result will be delivered to the customers by the Internet, precisely speaking, “cloud computing”.
NEC will be entrusted with the inspection from pharmaceutical companies that initiates “order made healthcare”, treatment tailoring to meet constitution of each patients, from summer 2011. From 2012 the company is to be entrusted with the inspection also from hospitals. The company is also to study health check service for individuals; collecting bloods in places such as at super market and send the inspection result to mobile terminal.
2) Fuji Film
Fuji Film integrated an affiliate strong in diagnostic imaging management (located in Indiana) and another affiliate engaged in system supporting diagnostic tasks earlier this month.
Fuji Film had acquired the two affiliates after 2006 and has been supplying systems to approximately 700 U.S. and worldwide healthcare organizations. By integrating the two affiliates, the experts believe that the company is to broaden the range of services to expand their business, so that they can achieve the target of supplying their systems to 1000 organizations very soon.
3. How have the U.S. companies been developing their healthcare IT business?
The U.S. companies of IT and healthcare have been accelerating investment in healthcare IT business. This is because with President Obama’s healthcare reform aims to reduce 32 million citizens without healthcare insurance in the next 10 years, meaning growth of healthcare IT demand such as electronic clinical record.
GE and Intel agreed to integrate their in-home healthcare system business earlier year. They plan to invest more than 250 million USD by 2014 and develop in-home healthcare system for senior citizens and demented patients.
Oracle acquired a software company specialized in healthcare software with 68.5 million USD.
Dell acquired an IT company with 3.9 billion USD to enter electronic clinical record business.
Nikkei, Japanese newspaper specialized in business and economy, reported today that Japanese IT related companies started to enter the U.S. healthcare IT market, when the U.S. counterparts have been accelerating their investment in this market. NEC is to enter the U.S. healthcare inspection business in the summer 2011. The company invests in the U.S. healthcare venture business and develops a system that determines risk of having disease by inspecting proteins in the blood. Fuji film integrated their U.S. healthcare information system affiliates to establish and strengthen their business of diagnostic imaging systems.
The U.S. preventive healthcare market is expected to grow with president Obama’s healthcare reform, and the U.S. companies have been entering and/strengthen their businesses in this market. Competition in the new promising healthcare IT market has started and is expected to get fierce.
1. Why is the U.S. preventive healthcare marketing promising and is expected to grow?
The healthcare IT demand is expected to grow dramatically with the increase in the healthcare insurance consumers. This is because of the healthcare insurance reform law was enacted in March. This law aims all of the U.S. citizens to benefit from the healthcare insurance.
Demand of preventive healthcare is also expected to grow because all the preventive healthcare cost is to be paid by insurance.
2. How are Japanese companies to enter and/or strengthen their healthcare IT business in the U.S.?
1) NEC
NEC is to enter the U.S. healthcare inspection business in the summer 2011 and to make healthcare IT business as a new business pillar. The company is to develop a new system that determine risk of having diseases by inspecting proteins in the blood, whose market size is expected to grow as big as more than 200 billion yen worldwide, the U.S. being the biggest market.
NEC invested 5 million USD (approximately 400 million yen) in a U.S. venture company and made alliance with the venture company. The venture company has a technology of inspecting in details proteins in blood. Based on the data from this inspection, NEC is to system that immediately determines risk of having diseases. The system will be located in a data centre in the U.S. The inspection result will be delivered to the customers by the Internet, precisely speaking, “cloud computing”.
NEC will be entrusted with the inspection from pharmaceutical companies that initiates “order made healthcare”, treatment tailoring to meet constitution of each patients, from summer 2011. From 2012 the company is to be entrusted with the inspection also from hospitals. The company is also to study health check service for individuals; collecting bloods in places such as at super market and send the inspection result to mobile terminal.
2) Fuji Film
Fuji Film integrated an affiliate strong in diagnostic imaging management (located in Indiana) and another affiliate engaged in system supporting diagnostic tasks earlier this month.
Fuji Film had acquired the two affiliates after 2006 and has been supplying systems to approximately 700 U.S. and worldwide healthcare organizations. By integrating the two affiliates, the experts believe that the company is to broaden the range of services to expand their business, so that they can achieve the target of supplying their systems to 1000 organizations very soon.
3. How have the U.S. companies been developing their healthcare IT business?
The U.S. companies of IT and healthcare have been accelerating investment in healthcare IT business. This is because with President Obama’s healthcare reform aims to reduce 32 million citizens without healthcare insurance in the next 10 years, meaning growth of healthcare IT demand such as electronic clinical record.
GE and Intel agreed to integrate their in-home healthcare system business earlier year. They plan to invest more than 250 million USD by 2014 and develop in-home healthcare system for senior citizens and demented patients.
Oracle acquired a software company specialized in healthcare software with 68.5 million USD.
Dell acquired an IT company with 3.9 billion USD to enter electronic clinical record business.
2010年8月22日日曜日
Japan Ventures Filing IPO in Asia Emerging Equity Markets
Osaka – Sunday, August 22, 2010
Nikkei, Japanese newspaper specialized in business and economy, reported today that Japanese Venture companies are filing IPO in Asia emerging equity markets instead of in Japan stock exchange market. It is estimated that by the end of next year more than 10 companies are to file IPO not in Japan where IPO filing has been sluggish but in Korea and Taiwan where IPO has recovered and stock trading is active.
In addition to effectively raising capital, such companies aim to enhance company awareness and leverage in expanding business in Asia emerging countries.
If more leading and promising companies should list in stock market outside Japan instead of in Japan market, it is possible that hollowing of Japan’s emerging equity market accelerates.
1. Which companies are filing in Asia emerging equity market?
Major Japanese Venture Companies Filing IPO Abroad
(Source: Nikkei, translated by the author)
Company Name / Business / Year of Foundation / Sales (million yen/year)
DLE Inc / Production of animation and videos / 2001 / 800
Zero / Internet payment / 1989 / 3,000
Food Discovery / Lecture on vegetable sommelier, green vegetable sales / 2001 / 1,300
Office 24 / OA equipment sales, office convenience / 1993 / 7,500
Salvatore Cuomo Japan / Pizza franchise chain / 2005 / 5,600
DLE Inc http://www.dle.jp/en/, an animation production company based in Tokyo, is to file IPO in Taiwan equity market by June, 2011. They had been planning to file in Japan but changed their policy because Japanese animation is highly evaluated abroad. The company has already made alliance with a Taiwan production company, and aims to expand their business, taking the opportunity of IPO.
Zero http://www.zeroweb.co.jp/, an Internet payment company based in Tokyo, is to file IPO in an emerging equity market called “Catalyst” of Singapore. The company aims to raise capital necessary for future growth and enter Asia market.
Quite a number of companies are planning to file in an emerging equity market called “KOSDAQ” of Korea. Food Discovery http://fooddiscovery.jp/, a company based in Tokyo that is engaged in businesses including lecture on vegetable sommelier and green vegetable sales, is to file IPO in KOSDAQ in October this year. Office 24 http://www.webjapan.co.jp/, a company based in Tokyo engaged in business of OA equipment sales and office convenience, also has established its policy of filing IPO in KOSDAQ around November this year. Salvatore Cuomo Japan http://www.salvatore.jp/, a Tokyo based pizza chain company, also is studying to file in KOSDAQ. The companies aim to raise capital in Korea and utilize it in building and establishing local branch network.
Internet (online) business companies and semiconductor related companies are also planning to file IPO in emerging Asia instead of Japan.
2. Have Japanese venture companies been filing IPO in Asia emerging equity market until today?
No, only 1 Japanese venture company (excluding local joint venture companies) had filed IPO in KOSDAQ. One after the other Japanese venture companies filed IPO in NASDAQ in the U.S. around 2000. Then Japan local emerging stock exchange markets (e.g. Mothers = Market of the High-Growth and Emerging Stocks, JASDAQ = Japan Association of Securities Dealers Automated Quotations) were drastically improved and Japanese venture companies has been filing IPO to such markets instead of those of abroad.
3. Have Japanese companies been active in filing IPO lately?
No. Japanese companies filing for IPO has been decreasing in the last 4 years, with the negative effects of the worldwide depression. In 2009, only 19 companies filed for IPO, which is 1/10 of the peak in 2006. Experts estimates that only 20-30 companies will file for IPO in 2010.
The amount of capital raised by IPO and after being listed has also been sluggish. The average capital raised in 2009 was 3 billion yen, which is less than that of 2006.
4. Why Japanese venture companies are aggressive in filing IPO in Asia emerging stock exchange market?
1) Asia emerging stock exchange market is active
Asia emerging stock exchange markets are now attracting investment capital, and many companies are filing IPO in such stock exchange markets. According to WFE, 56 companies filed IPO in KOSDAQ in 2009, which is 47% increase from 2008, and 14 companies filed IPO in Catalyst in 2009, which is double of 2008.
In addition, Asia emerging stock exchange markets are making upmost efforts in attracting companies abroad filing IPO in their market. Taiwan Equity Market has abolished regulation for foreign companies being listed in their market. KOSDAQ also are focusing on attracting foreign companies to list in their market.
2) Hurdle for filing IPO in Asia emerging equity market is low
Time required to be listed after filing is far shorter for Asia emerging equity market compared to those for Japan. It takes more than 2 years in Japan, when it takes only approximately 1 year for KOSDAQ and 1-1/2 years for Taiwan.
Profit criteria, a critical requirement for filing IPO, is less for Asia emerging equity market compared to that of Japan. The criterion is 500 million yen for JASDAQ, when it is approximately 150 million yen of net profit for KOSDAQ. For Catalyst, there is no regulation on this issue.
5. What are the disadvantages of filing IPO in Asia emerging equity market?
1) Additional cost is necessary
Additional cost would be necessary. Such cost includes cost of local IR to be performed in local language, and cost to be paid to lawyers accompanied by information disclosure.
2) Alliance with sponsor company is required (in some cases)
In filing IPO in Catalyst, companies are requested to make an alliance with a sponsor company that is responsible as guarantee of listing. Finding an appropriate sponsor company and making an alliance for this purpose means much additional work.
Nikkei, Japanese newspaper specialized in business and economy, reported today that Japanese Venture companies are filing IPO in Asia emerging equity markets instead of in Japan stock exchange market. It is estimated that by the end of next year more than 10 companies are to file IPO not in Japan where IPO filing has been sluggish but in Korea and Taiwan where IPO has recovered and stock trading is active.
In addition to effectively raising capital, such companies aim to enhance company awareness and leverage in expanding business in Asia emerging countries.
If more leading and promising companies should list in stock market outside Japan instead of in Japan market, it is possible that hollowing of Japan’s emerging equity market accelerates.
1. Which companies are filing in Asia emerging equity market?
Major Japanese Venture Companies Filing IPO Abroad
(Source: Nikkei, translated by the author)
Company Name / Business / Year of Foundation / Sales (million yen/year)
DLE Inc / Production of animation and videos / 2001 / 800
Zero / Internet payment / 1989 / 3,000
Food Discovery / Lecture on vegetable sommelier, green vegetable sales / 2001 / 1,300
Office 24 / OA equipment sales, office convenience / 1993 / 7,500
Salvatore Cuomo Japan / Pizza franchise chain / 2005 / 5,600
DLE Inc http://www.dle.jp/en/, an animation production company based in Tokyo, is to file IPO in Taiwan equity market by June, 2011. They had been planning to file in Japan but changed their policy because Japanese animation is highly evaluated abroad. The company has already made alliance with a Taiwan production company, and aims to expand their business, taking the opportunity of IPO.
Zero http://www.zeroweb.co.jp/, an Internet payment company based in Tokyo, is to file IPO in an emerging equity market called “Catalyst” of Singapore. The company aims to raise capital necessary for future growth and enter Asia market.
Quite a number of companies are planning to file in an emerging equity market called “KOSDAQ” of Korea. Food Discovery http://fooddiscovery.jp/, a company based in Tokyo that is engaged in businesses including lecture on vegetable sommelier and green vegetable sales, is to file IPO in KOSDAQ in October this year. Office 24 http://www.webjapan.co.jp/, a company based in Tokyo engaged in business of OA equipment sales and office convenience, also has established its policy of filing IPO in KOSDAQ around November this year. Salvatore Cuomo Japan http://www.salvatore.jp/, a Tokyo based pizza chain company, also is studying to file in KOSDAQ. The companies aim to raise capital in Korea and utilize it in building and establishing local branch network.
Internet (online) business companies and semiconductor related companies are also planning to file IPO in emerging Asia instead of Japan.
2. Have Japanese venture companies been filing IPO in Asia emerging equity market until today?
No, only 1 Japanese venture company (excluding local joint venture companies) had filed IPO in KOSDAQ. One after the other Japanese venture companies filed IPO in NASDAQ in the U.S. around 2000. Then Japan local emerging stock exchange markets (e.g. Mothers = Market of the High-Growth and Emerging Stocks, JASDAQ = Japan Association of Securities Dealers Automated Quotations) were drastically improved and Japanese venture companies has been filing IPO to such markets instead of those of abroad.
3. Have Japanese companies been active in filing IPO lately?
No. Japanese companies filing for IPO has been decreasing in the last 4 years, with the negative effects of the worldwide depression. In 2009, only 19 companies filed for IPO, which is 1/10 of the peak in 2006. Experts estimates that only 20-30 companies will file for IPO in 2010.
The amount of capital raised by IPO and after being listed has also been sluggish. The average capital raised in 2009 was 3 billion yen, which is less than that of 2006.
4. Why Japanese venture companies are aggressive in filing IPO in Asia emerging stock exchange market?
1) Asia emerging stock exchange market is active
Asia emerging stock exchange markets are now attracting investment capital, and many companies are filing IPO in such stock exchange markets. According to WFE, 56 companies filed IPO in KOSDAQ in 2009, which is 47% increase from 2008, and 14 companies filed IPO in Catalyst in 2009, which is double of 2008.
In addition, Asia emerging stock exchange markets are making upmost efforts in attracting companies abroad filing IPO in their market. Taiwan Equity Market has abolished regulation for foreign companies being listed in their market. KOSDAQ also are focusing on attracting foreign companies to list in their market.
2) Hurdle for filing IPO in Asia emerging equity market is low
Time required to be listed after filing is far shorter for Asia emerging equity market compared to those for Japan. It takes more than 2 years in Japan, when it takes only approximately 1 year for KOSDAQ and 1-1/2 years for Taiwan.
Profit criteria, a critical requirement for filing IPO, is less for Asia emerging equity market compared to that of Japan. The criterion is 500 million yen for JASDAQ, when it is approximately 150 million yen of net profit for KOSDAQ. For Catalyst, there is no regulation on this issue.
5. What are the disadvantages of filing IPO in Asia emerging equity market?
1) Additional cost is necessary
Additional cost would be necessary. Such cost includes cost of local IR to be performed in local language, and cost to be paid to lawyers accompanied by information disclosure.
2) Alliance with sponsor company is required (in some cases)
In filing IPO in Catalyst, companies are requested to make an alliance with a sponsor company that is responsible as guarantee of listing. Finding an appropriate sponsor company and making an alliance for this purpose means much additional work.
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