Love in Tokyo

Many Indians first got a glimpse of the beauty of Japan from the 1966 Hindi

blockbuster, Love in Tokyo.

This column is not about the movie. It is about Japan, which celebrates its

National Foundation Day on Feb 11.Way back in 660 BC, the first Japanese

Emperor, Jinmu, reportedly brought an assortment of island tribes together to

found Nihon or Nippon or Japan. Feb 11 is celebrated as Kigen-setsu, or National

Foundation Day and was set by calculating the date in the solar calendar

corresponding to the date recorded in the Nihon Shoki (The Chronicles of Japan).

After World War II, the holiday was abolished, but was reinstated in 1966 by

popular demand.

In the 1960s, Japan was the original Asian behemoth. In the 1960s, Japans

real economic growth averaged 10% a year. It dropped to 5% average in the 1970s,

to 4% average in the 1980s, and to just 1.7% in the 1990s. Many economists

blamed this on the effects of over-investment and an asset price bubble during

the late 1980s. As of now, there are two major problems that Japan faces: one is

the countrys huge government debt (176% of GDP); and the other is its aging

population.

Japans land mass is over 300,000 sq km, about the size of Uttar Pradesh.

Japans population is about 127 mn; for comparison, UP has 139 mn people.

Japans GDP is about $4.88 tn; again for comparison, Indias GDP is about $900

billion. The much lower population gives Japan a GDP per capita of $33,100,

compared to Indias $3,800.

Raju Chellam

On the other hand, Japans economic growth in the next few years will be

under 2%, compared to Indias under 9%. What opportunities does India have in

Japan? Two key onesthe huge number of elderly, and the beginning of a boom in

SMBs, or small and medium businesses that employ up to 999 staff.

Japan has 27 mn people aged 65 and above, of which just under 40% are males.

Theres a huge market for infocomm services that cater to the elderly. That

includes wireless health monitoring systems, telemedicine, robotics that help

the elderly perform routine tasks, voice-activated systems and gadgets, and

specialized entertainment systems for the old.

All that requires nifty gadgets and specially-written software. Can Indian

companies partner with Japanese firms to bring specialized contraptions to the

Japanese market? Yes, if youre willing to take the time and trouble to do some

research. Remember, the typical Japanese elderly customer is quite well off, has

sufficient disposable funds, and is willing to pay top dollar for even simple

gadgets that take the boredom or trouble out of routine or specialized tasks.

What is needed is a little imagination and the willingness to listen.

As for SMBs, Japan has about 1.7 mn SMBs, with 97% of them being small

businesses that employ under 99 staff. According to AMI Partners, SMB spend on

IT is set to grow 7% a year till 2010. There are huge opportunities for Indian

companies if they make the effort to engage SMBs.

For one, the cost of labor and raw materials is quite high by Asian

standards. Japanese companies, including SMBs, are always looking for cheaper

alternatives to outsource if possible. The big problem is language and culture

and an inward-looking philosophy that doesnt trust foreigners as easily as in

the US. The solution: set up branches in key Japanese cities. The bulk of SMBsas

well as 100 mn peopleare in just these dozen cities.

Once your firm has a presence in one or more of these cities in Japan, and

you hire customer-fronting Japanese staff, you might be accepted as a local

company and start getting orders. It doesnt matter where you work on the

projects. As long as you have a Japanese presence and stick to the strong

ethical and cultural code of Japan, you may get a good yen for business.