stratedic alliance - suzuki

7/31/2019 Stratedic Alliance - Suzuki

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Yuriko Koike

Posted: Mon, Feb 15 2010. 8:44 PM IST

Suzuki and strategic

allianceFor India and Japan, there is life beyond love forcars. They have convergent geopolitical interests

too

Illustration: Jayachandran / MKint

Print

The name Suzuki is the most popular surname in Japan and the brand name of

the most popular car in India. Suzuki has a market share of 55.6% in the compact

and midsize car market in India, whose middle class, car purchasing public,

accounts for 200-300 million of the countrys 1.15 billion people.

For a long time, Indians

have used bicycle

rickshaws or

autorickshaws for daily

transportation. The

word rickshaw

originates from the

Japanese word

j inrik isha, which

literally means human-

powered vehicle. Thefact that Suzuki is now

practically synonymous

with automobile in

India suggests how close the relationship between the two countries can be.

Indeed, India and Japan are natural allies. Their strategic interests are almost

perfectly aligned, and each shares a desire to stabilize and preserve Asias balance

of power. So it is no surprise that Japan is pushing to develop closer economic

and strategic ties with India.

Suzuki Motor Corp. first entered the Indian market in 1982, when it started a joint

venture with Maruti Udyog Ltd, an Indian state-owned firm. Despite many ups anddownsand fierce competition from other major automobile manufacturers,

including the Indian giant Tata Motors LtdSuzuki succeeded in establishing its

brand as Indias peoples car.

Currently, Maruti Suzuki India Ltd has at least 4,000 employees and a nationwide

sales network of 337 dealers with 8,600 salespersons. The company is planning to

build a new factory in 2011, with a production capacity of 300,000 cars per year

for a market expected to reach two million in sales this year.

The reason why Suzuki entered the Indian market is clear. Suzuki chose an

untapped market while Japans bigger auto makersToyota, Nissan, and Honda

engaged in fierce competition within Japan. Osamu Suzuki, CEO and COO of thecompany (and a grandson-in-law of its founder), is a creative decision-maker, a

maverick who considers himself an old man in a mom-and-pop company that

concentrated most of its resources on producing motorcycles and light motor

vehicles. Yet when he decided to diversify and focus on India, many criticized him

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as being reckless, because India was so unfamiliar to Japanese companies.

Indeed, while there are currently at least 19,000 Japanese companies in the

Chinese market, there are only about 260 in India.

Suzukis decision to enter the Indian market turned out to be a resoundingly wise

choice. Japans population peaked in 2004 and is now falling, while its younger

generations show diminishing interest in automobiles. In the past, young Japanese

were proud of their knowledge about cars, and every teenage boy knew which

model would attract the most girls. Today, however, Japanese driving schoolssuffer from a fall-off in students, which cannot be explained solely by declining

population.

India s population, on the other hand, is increasing dramatically in the absence of

a one-child policy, such as exists in China. It makes sense, then, that Japanese

companies should head to the expanding Indian market.

Doing so, moreover, makes geo-strategic sense as well, with successive Japanese

governments increasingly regarding India as a vital diplomatic and political

partner. For example, in August 2007, then prime minister Shinzo Abe headed a

big delegation to India, followed by an official visit in December by current Prime

Minister Yukio Hatoyama.

The Strategic and Global Partnership between Japan and India, established in

2006, rests on the recognition that Japan and India share common values and

interests, as they are the two major entrenched democratic countries in Asia.

These shared values distinguish the Japan-India relationship from Japans

relationship with China. The growing congruence of strategic interests led to the

2008 Japan-India security agreement, a significant milestone in building a stable

geopolitical order in Asia.

A constellation of Asian democracies l inked by strategic cooperation and common

interests is becoming critical to ensuring equilibrium at a time when Asias security

challenges are mounting due to the shift in global economic and political powerfrom west to east. The emerging Japan-India partnership looks l ike a necessary

foundation for pan-Asian security in the 21st century.

The key point today is that the governments in both India and Japan are keen on

developing their strategic consensus about Asias future, a fact underscored by the

many bilateral discussions between defence and military officials of both countries

that are taking place. These discussions include joint initiatives on maritime

security, counterterrorism, weapons proliferation, disaster prevention and

management, and energy security.

More is needed. India and Japan should, for example, jointly develop new defence

capacities. Today, India and Japan cooperate on missile defence in partnershipwith Israel and the US. Bilateral efforts should also be launched to develop other

defence technologies. Suzukis joint venture in India suggests that cooperation in

high-tech manufacturing is eminently possible.

Suzukis success is a powerful precedent not only for other Japanese companies

that are looking at the Indian market, but also for further deepening cooperation

between the two countries. Osamu Suzuki may not be will ing to share all of the

secrets of his success with his competitors, but they and Japanese diplomats

should be studying the Suzuki method. Japans economy and Asian security

depend on its replication.

2 0 1 0 / PROJECT SYNDI CATE

Yuriko Koike is a former minister of defence and minister of the environment of

Japan, and was her countrys first ever national security adviser. Comment at

[email protected]


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stratedic alliance - suzuki

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