BANGALORE, India Despite a slumping Asian electronics market, design services companies here continue to target Japan.
Indian designers have long had a hard time cracking the Japanese electronics market. Now, Japanese companies are more open to partnerships with overseas companies, especially Indian designers.
Indian companies that have had success working with U.S. partners are again trying to figure out why it has been so difficult to partner with Japanese companies. Mindtree Ltd., a technology products and services firm, generates about 4 percent of its annual revenues from the Japanese market.
"Japan tends to source design services at the project and IP levels [rather] than just people," said S. Janakiraman, Mindtree's CEO of R&D Services. "Project management and IP leadership are essential to service in the Japan market.
"Japanese companies have comfort with a local face to deal with, so a local presence with a Japanese- speaking sales force becomes critical," Janakiraman said. "We must go beyond specifications to understand the needs of the customer and do enough planning to execute perfectly. It takes time to build business with Japan, and resilience is a critical need for Indian companies that deal with Japan. Nothing happens overnight."
Ganesh Ramamoorthy, principal research analyst at Gartner Inc., said the lure of the market is "that Japanese companies have deep pockets and long-term plans." Language and culturural barriers remain, Ramamoorthy added, noting that "investment of time is very important in relationships with Japanese vendors [and] a few Indian design service companies are now reaping the rewards of patience."
Citing years of experience working with Japanese companies, N. Ramakrishnan, president and CEO of Mandate Chips and Circuits Pvt. Ltd., based here, said the design approach and work methodology of Japanese companies make it a harder market to enter. It is one that offers growth potential, long-term business relationships and decent wage rates, Ramakrishnan added.
Indian companies themselves may be their own worst enemy," Ramakrishnan continued. "Indian design service companies are not approaching the Japan market in the right manner. They are used to a body- shopping approach, or doing a design in a modular manner. Integration of the modules is done at the end. This is so because companies in the U.S. and other Western countries are alright with this. In this approach, issues will come up at the integration stage. Japanese companies prefer a holistic and integrated approach to design which results in cleaner designs."
The Japanese External Trade Organization has extended its Regional Industry Tie-Up Program Project List to expand partnerships among Japanese companies in the Kyushu area (Fukuoka) with the Indian cities of Bangalore, Chennai and Hyderabad.