When in Japan, do as a Japanese: i-flex

"To do business in Japan, Indian companies need to be seen as a local player. For the short term, you might get some random contracts. But if you are there for the long haul then you will need to have a local presence and maybe employ local people as well. In fact, for longer time periods, there is no other choice," said N R K Raman, COO, iFlex Solutions.

He was speaking at 'Succeeding in Japan' Business Workshop' conducted here on Monday by the India Japan Initiative (IJI) from Kirloskar.

"Indian companies who are looking at Japan as a market would be well advised to invest in understanding the market dynamics of the country. For the first year you might not do any business at all. But if you want to be a serious player in Japan, that time will be well spent in understanding issues and other players in the field. Or else, you might as well be sitting there for years and feeling miserable about not getting deals," he added.

Speaking on the banking industry in Japan, Raman said, "Asset-wise Japan has the biggest banks in the world. Five city banks dominate the market and comprise 55 per cent of total bank technology spend of $11.8 billion. External investment in technology rose to $6.1 billion for year-ended March 2004 and 115 regional banks spend $2.9 billion on technology during the same time period. Also, $350 million of the IT spend in banks in Japan are outsourced. And that's one of the areas where Indians can bring in their expertise."

He also said that there was huge potential in the Japanese market for Indian technology firms but there was a long way to go in achieving it.

Explaining the challenges that Indian firms can face in the foreign country, he cautioned, "The element of being a foreign company can be a huge drawback. There is a high cost involved in sales and marketing activities. There is a relatively big language and cultural barrier "" in fact, make sure your offerings are double byte such that dual language capability can be enabled in the fastest time possible. Also, there is a huge 20 per cent tax on payments that is withdrawn because India and Japan do not have any existing agreements. If you are working out of Singapore or within Japan itself that is not applicable, but if you are working out of India, that is something you have to keep in mind."

He was preceded by Toshio Takata, MD, OKI TechnoCollage, who spoke about the importance of quality, cost and sticking to delivery times, "even when there is reasonable cause for delay", in dealing with Japanese clients.

"In Japan, the bottom up approach to decision making is more popular than top down. Therefore, Indian companies might profit by developing mid-level relationships. For, more often than not, decisions in Japan mean authorisations by the top personnel only," he said.

The IJI was formed nearly six months back as a non profit organisation to encourage industry links between Japan and India.

Members of the initiative so far include iFlex Solutions, Infosys Technologies, Sansui India, Tasty Bite, Kirloskar Foundation and Bharat Forge among others.

The IT industry generated 130 trillion yen in 1998, or 12.5 per cent of total domestic output of all industries and has recorded a growth of 2 per cent y-o-y.

The Japanese e-commerce industry or B2C industry is estimated at 3.2 trillion yen with the travel industry contributing most of it. It might be recalled that the Japanese government launched a 'e-Japan' strategy in 2001, aiming to make Japan the leading IT nation of the world.