India is next to inspire Hitachi
Company will pump millions into factories there because it expects sales to outshine China
Hitachi announced a 70 billion yen (US$838 million) India investment plan as it tries to triple sales dwarfed by its business in China.
The company aims to boost India revenue to 300 billion yen (HK$367 billion) in the year ending March 2016 from 100 billion yen last fiscal year, according to a statement.
Its directors approved the plan in New Delhi yesterday, the first overseas board meeting in the Tokyo-based company's 102-year history.
Hitachi sales in India are less than 10 per cent of that in China, where a building boom has spurred demand for construction equipment, air conditioners and power plants.
The company expects faster sales growth in India as it boosts operations and anticipates quicker economic expansion than in China.
"India is currently one of our highest priorities," Hitachi president Hiroaki Nakanishi said. Its "growth rate will exceed China's", he said.
Hitachi will double its India workforce to 13,000 as it turns to emerging markets to counter a shrinking population in Japan and government spending cuts that are hitting sales in Europe.
The company generated 57 per cent of its 9.7 trillion yen global revenue in Japan last fiscal year. It got about 11 per cent in China, 8 per cent in Europe and 1 per cent in India.
India might account for 3 per cent of global sales by March 2016, with China's figure growing at a slower pace, Nakanishi said.
Under the India plan, Hitachi intends to increase local production of its electronics, construction machinery and industrial air conditioners, as well as set up a car-parts factory in Chennai.
"India needs infrastructure and Hitachi is strong in infrastructure," said Masayuki Kubota, of Daiwa SB Investments in Tokyo. The country also "has a lot of growth potential".
The company will increase its use of India as an export centre for African and Middle Eastern markets, including shipments of excavators and trucks.
It would also use India as a base for growing its infrastructure systems business in Africa, it said. India intends to attract US$1 trillion in infrastructure investments by 2017 as its steps up construction of highways, ports and power systems to support economic growth and trade.
Work has previously lagged behind targets in India because of land disputes, bureaucracy and other government policies.
"Sometimes, India's insistence on public-private partnerships makes it very difficult to set up positions for future investment," Nakanishi said.