We entered the business together in India in 2013, so it has been 9 years since then.
That was fast!
India is said to be a huge market these days and is attracting a lot of attention. How do you see the Indian market?
Although there is a gap between the rich and the poor, there is no doubt that India is steadily developing its economy and expanding its cities. I am convinced that it will become the most remarkable market in the world.
The United Nations’ estimate that India’s population will surpass China’s in 2023 and become the largest in the world made the news. When I was doing business in India, I thought, “India is a country of diversity. India has 28 states divided by ethnicity, and each state has a different language and culture. In other words, I believe it is important to have a perspective of diversity rather than simply entering a country because of its large population. In India today, the wealthy make up about 1% of the population and the middle class about 38%, but the middle class is on the rise. In our restaurant business, we target the middle class and above, so we think that the growing middle class is attractive as a market. I don’t think any other country has such diversity and growth potential, what do you think, Mr. Fukuhara?
India is the only country I have seen where there is such ethnic diversity and it is divided by state. I have also worked in China, but the language and ethnicity were not as divided as in India. From this point of view, I think there are some difficulties because of the diversity.
If you don’t know the situation of the country, you may fail to enter the Indian market. By having a firm grasp of the country’s situation, the probability of business success increases, doesn’t it?
Yes, for example, “From which region do we have a higher probability of success?” It would be necessary to think about this as well.
Plus, salary is going up by 10% per year!
From Japan’s point of view, Japanese envy Indian!
10% per annum means that the population will double in 10 years, so there will be a shift from the poor to the middle class one after another. Therefore, I think it is important to understand the situation and diversity of the middle class in order to understand the Indian market.
In addition, what I find difficult is “licensing”. There are differences in licenses from state to state, so it takes an enormous amount of time just to find out about them. Furthermore, there is a difference in the time it takes to obtain a license in each state. Some can be obtained in six months, others in a year. We anticipated some difficulties in this area, but Mr. Honda’s help was extremely helpful.
Thank you very much. The licensing issue is quite a hurdle unless you have experience in starting a local business. In India, Japanese companies are entering the market one after another. Famous manufacturers of automobiles, home appliances, sanitary products, etc. have been successful and are taking over the market. Of course, Mr. Fukuhara’s KUURAKU Group is one of them. But, of course, not all companies succeed. So, by all means, what is the secret of success for you, Mr. Fukuhara?
I can clearly say that it is “who you work with. Of course, “what” and “where” are important, but who you work with is even more important. In our case, the fact that we had Mr. Honda as a partner was a big factor. In addition, one of our executives is from India, and he is playing a very active role in our company. I think the most important point for success is who you partner with.
In the past, there was news that a major telecommunications company and a pharmaceutical company entered the market in the form of a joint venture, but withdrew after incurring losses of several hundred billion dollars. When I entered India, I thought to myself, “Bringing Japanese technology as it is will not work. I think it is important to conduct a series of test marketing activities and carefully consider the selection of partners before investing in a company.
I believe that the important thing when selecting a partner is “how much determination the leader has. For example, do they go with the mindset of “I will work my way through until I take root in India,” or do they only have the mindset of “I heard that India is an opportunity, so I might as well give it a try? Even if the action of going to India is the same, the probability of success will be completely different.
Indeed, most of the top Japanese expatriates also generally have a term of 3 to 5 years. On the other hand, many Korean companies have their expatriates for 10 to 15 years, and I feel there is a difference in enthusiasm; once they leave after 3 or 5 years, the staff who follow them will look at them and say, “They will probably leave after 3 years anyway,” and they will not follow them. There is also a strong image that life in India is difficult. I would like to dispel this image through our Japanese restaurants and spread the word that India is a paradise. We can hire maids and drivers, and of course, there is kuraku. One of the concepts of our business is that you don’t have to worry about living in India at all, so in that sense, I think we are doing very well now.
In particular, we were opening Japanese restaurants because we wanted to “be a source of energy for the minds and bodies of expatriates working in foreign lands. Therefore, I think it was really important that our restaurants were prosperous when people came to visit us for interviews.
That’s right. We were really happy that Japanese people working in India were happy to see us.
Some say that it is difficult to capture the Indian market. But we have opened six stores in the nine years since we started in India, and we plan to keep expanding. So, could you give us some kind of a shout-out or hint for Japanese companies that are planning to expand into India in the future?
First of all, I recommend that you make an inspection tour. After actually seeing the country with your own eyes, you can decide whether or not to do business in India. If you do not make an inspection tour and wonder, “Will India be profitable? I think you will regret it very much. Incidentally, I was allowed to visit India for the first time about 10 years ago. Before I went there, I did not have a very good impression of the country, thinking that the streets were dirty and overcrowded with people. However, upon arrival, I was immediately shocked by the very fine and luxurious airport. When I went out into town, I found that although there were areas where poor people lived, there was also a modern city with skyscrapers beyond. When I saw this scene, I felt that India has a lot of room for development and will eventually become one of the leading countries in the world.
I would say, “Let’s just go there for the time being. It takes only 9 hours one way.
It is closer than I imagined.
When you actually go there, you certainly feel as if your senses are stimulated from the moment you land at the airport. I think it would be a good idea to get some information about Indian values and diversity beforehand before you go there and think about what kind of business you are going to do there. Or, you could bring Japanese technology and services as they are, see the streets of India, and rework your strategy. We can be flexible there. Business will not succeed if you just sit in Japan, so you need to see for yourself before making a plan and thinking about who you will work with. That is where our company can help.
When we visited India for the first time, Mr. Honda’s company arranged an inspection tour for us, which was very helpful. They arranged a car for us and we were able to visit various places such as markets, restaurants, and meat factories. Thanks to your help, we were able to tour around efficiently, and I believe we were able to gain a deeper understanding of India.
India is “a country where you lose if you don’t know. They will blow the price in various negotiations. To be honest, it is difficult to trust the information provided by the staff alone, so one of the keys to success in India is to see with your own eyes.
That’s right. There is an overwhelming difference between what you see in magazines and news reports and what you feel live when you actually go there. And going to see the event is not such a high hurdle. By first going there and then thinking about it, you should be able to see great opportunities and possibly come up with other business ideas.
I would like to create a successful case study with us and show that we can make good money without any loss.
Yes, I look forward to continuing to work with you.