NRI Papers
No.123 November 1 , 2007
  Opportunities and Issues on Business in India for Japanese and Korean Companies  
Tetsuji UEMURA, HaJin BAE, Naoki IKEZAWA, Makoto OKUDA, Koji ADACHI
    Since the release of the BRICs Report in 2003, increases in foreign direct investment (FDI) into India by European, US and Korean companies, who had steadily prepared for entry into the Indian market, have led to a rise in real estate prices and wages by 2006. In some regions where a number of foreign companies have enthusiastically established their offices, the purchasing power of the middle class has grown to be quite strong.
    Until 2005, Japanese and Korean companies have conducted business activities from the long-term perspective with the aim of tapping India's domestic market. In 2006, some pioneering Japanese and Korean companies such as LG, Samsung and Suzuki have shifted their focus to new business development such as exports to retain their advantage in the Indian market. Latecomers have tried to establish sales bases to enter and spread their business in sales in the Indian market.
    Among the issues that Japanese and Korean companies face in the process of developing business in India, the lack of infrastructure and connection to labor unions, which have been pointed out for a long time, are being recognized as matters that can be addressed. The largest remaining issues are related to employee management such as a high job change rate, high rate of wage increases and developing employees' loyalty to the company.
    With the remarkable growth of the Indian middle class, the focus of players in the Indian markets should shift to brand strategies and segment strategies in India from long term positioning strategies in the world. For the leading companies, it will be significant to establish middle term branding for securing their advantage in the market. Conversely, latecomer companies should consider differentiating strategies such as segment specialization and dominant strategies for securing or tapping their position in the market.
Contents
I Changes of Doing Business in India
II Structural Changes in 2006
III Positioning of Business in India by Japanese and Korean Companies
IV Issues for Japanese and Korean Companies in Doing Business in India
V Outlook on Business in India
VI Stronger Approaches Are Needed for Doing Business in India

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