After having parted ways with a long-time German partner about a year ago, an Indian home-appliances maker that was considering pairing with a Japanese counterpart to manufacture what it claimed to be a cutting-edge product commissioned an image survey to fathom the perception of the various international brands in India.

The result of the survey was quite disappointing for the company. A majority of the respondents clearly described the brand personality of various global brands, but when it came to the Japanese brands, with the exception of the global electronic giant, Sony, few could correctly recall what Japanese brands were selling in India. To the Indian home-appliances maker, the survey’s revelation was almost shocking, for, even until a few years ago, Japanese brands were the dreams of Indian consumers.

The results of the survey went somewhat like this: the Korean brand LG was perceived as a tiger; the other Korean brand Samsung, as a kitten, aggressive but loveable; Whirlpool, as a reliable domestic help; and so on. But the study clearly indicated that many Japanese brands such as Panasonic, Toshiba, Sharp, Sanyo and Hitachi didn’t have any distinct association in Indian minds. And significantly, in terms of first preference, an upstart Korean car maker, Hyundai, had even managed to overshadow an 18-year old icon, the Maruti—the Indian car that is manufactured in collaboration with Suzuki. There was an exception, though: Sony somehow managed to hold its own, primarily due to the rub-off from its global image.

"Forget other global giants, they [Japanese brands] lag behind even Indian brands," said the now-dejected chief executive officer and owner of the Indian home-appliances company.

The CEO who commissioned the survey may be dejected, but equally surprised are the brand pundits in India. To them, the survey’s result seems strange, especially since most of these Japanese brands are Fortune 500 companies and many of them have been in India for years—Panasonic for nine years, while others such as Toshiba, Sanyo and Sharp that seem to be fading from Indian memory could once boast of a huge pre-residual brand equity even before they set up shop in India.

So what went wrong with the Japanese, who, some experts say, are fighting a losing battle against the seemingly invincible Koreans?

According to Smitha Banerjee, a professor in the University of Delhi and a follower of Japanese investments, India has been a low-priority market for them. "In contrast, the Koreans, who were little known a few years ago in India, have made an aggressive presence, catapulting severe competition with the Japanese," said Banerjee.

Banerjee added that the repeated failure of Japanese study missions to attract Japanese investments in India gave leeway to the Koreans to enter a new market in India. "India’s euphoria to grapple [with] the Japanese investors soon evaporated. The Koreans were perceived to be more congenial to make ventures into this huge market for consumer durable goods," said Banerjee. Foreign-investment statistics over the past five years reveal some interesting facts. Despite the Indian government’s fervent attempts to attract Japanese investments—in other words, the government paid less attention to the Koreans—large investment flowed in from South Korea. For instance, Korean investment leapfrogged close to $ 20 billion during 1996-2000, compared with a sluggish Japanese investment of
$ 16 billion during the same period. Prior to this, Korean investment was minuscule, at just over $ 96 million during 1991-95, compared with Japanese investment of close to $ 5 billion during the period.

Further, even at the initial entry, the Koreans plunged into bulk investment in major projects. The average Korean investment per project approved was $ 11 million during 1996-2000, compared with an average Japanese investment of $ 4 million per project. The reason for this, according to the Federation of Indian Chambers of Commerce and Industry (FICCI), is that Japanese firms, unlike U. S. and European Fortune 500 companies, are still apprehensive about doing business in India. For them, differences in business practices, environment and culture are major hindrances. In terms of foreign direct investment (FDI), Japan was behind the United States of America, Mauritius and the United Kingdom, FICCI said. Also, India received only 1.1 per cent of Japan’s total investment in Southeast Asia. According to Banerjee, the important factor that led the Koreans to overtake the Japanese was the growth in South Korea’s overseas investment. India emerged the fourth-biggest nation for South Korean overseas investment in 1998. Second, Korean investment in India was not narrowed down to only consumer goods, but also spread over other sectors, such as infrastructure.

A factor that tempted the Koreans to India was low project cost. Sources in the know say that the Koreans were reluctant to invest in developed nations, except the U. S. A., because they were deterred by high project costs and the prolonged recession in Western Europe. Of the total Korean investment overseas in 1999, nearly 40 per cent went to Asia and the U. S. A. each and only 10 per cent went to Europe.

But some also find good reason for the lesser interest that Japan had in India as a market. FICCI blamed the lack of Japanese interest squarely on the country’s policies. "Most Japanese investors in India complained that government policies here lacked clarity," said FICCI. Others felt that procedures concerning investment, import and taxation as well as the execution of laws and regulations were slow and inconsistent.