How Foreign Multinational Enterprises Have Contributed To Technological Development In The Consumer Electronics & Appliance Industry In India.
An overview of the Consumer Electronics & Appliance Industry. 1
Japan’s contribution to the technology development in India. 3
Philips Software development hub. 6
Sony Corporation’s Contribution to Technological Development in Consumer Electronics and Appliances in India 7
Tapping into semi-urban and rural markets. 7
Leveraging the India Advantage. 8
An overview of the Consumer Electronics & Appliance Industry
The Consumer Electronics & Appliance Industry in India, one of the developing countries in South Asia, just like the other parts of the world, is going through pronounced transformations. For the past 10 years, advancements in technology and regulatory restructuring have to great degree transformed this industry.
India being the second-most populous country in the world and world’s tenth-largest economy by nominal GDP and third-largest by purchasing power parity (PPP), provides a very rich and profitable market for numerous multinational enterprises that deal in consumer electronics and appliances. India has become one of the fastest-growing major economy and it has been considered as a newly industrialized country. Though facing a number of economical challenges such as corruption, illiteracy, poverty, inefficient healthcare reforms e.t.c. just like any other developing country, it continues to be a target for a number of multinational consumer electronics and appliance manufacturers. (Bailey G. & Wenzek H, 2010)
There are numerous commodities in this industry, the most commonly used include: blenders, electric ovens, fans, televisions sets, freezers, gas cookers, irons, meat grinders, washing machines, popcorn makers, vacuum cleaners, hot plates, home theatres, radios etc.
The consumer electronics industry in India has been steadily growing at a double-digit rate since the past few years. Increased product awareness, higher disposable incomes, a shift in lifestyles and affordable pricing have all greatly contributed to changing the level and pattern of consumer spending on these commodities; thereby, producing a strong growth in the consumer electronics industry. The consumer electronics goods, like televisions, refrigerators and air conditioners although have low penetration in the country, leaving vast room for future growth and development ( Langlois R., & Robertson P 1995).
From time to time India has witnessed pronounced technological developments in the consumer electronics and appliances industry. Multinational companies in India which include: USA, China, Holland, Japan and South Korea.
The table below shows brands of electronics and appliances by brand and country of origin.
|Make of Electronic/Appliance (Company Name)||Country of Origin|
Table (i): Brand and Originality (Langlois R., and Robertson P, 1995)
It can be clearly seen that Japan has dominated this particular industry in India. Japan`s reputation in manufacturing quality and up to standard products have seen it vastly penetrate the Indian market easily unlike other countries like China.
Japan’s contribution to the technology development in India
From table (i) we can see that Japan dominates the market with its products. There are a total of 352 companies of Japanese origin in India. There has been introduction of numerous commodities in the market, table (ii) below shows what individual companies manufacture.
|Company||What it manufactures|
|Philips||Televisions, Home cinema sounds, headphones, portable multimedia, electric irons, vacuum cleaners, ovens, light bulbs, shavers, mobile phones, monitors etc|
|Sharp||Solar, Smartphones, LCD monitors, Digital MFPs etc|
|Sony||Cameras and Camcorders, Computers and Tablets, TV and Home entertainment, Games (Playstations), movies and music etc|
|Hitachi||Personal Computers, mobile phones, Refrigerators, Microwaves, Rice cookers, Washing machines vacuum cleaners, electronic irons, batteries, lamps, fans etc.|
|Sansui||Water dispensers, washing machines, refrigerator, microwave oven, car audio, air conditioners, home theatre system DVD player, Discman, Subwoofer, LCD, plasma display etc|
|Akai||iPhone and iPod, public address systems.|
|Aiwa||LED,LCD, CTVs, multimedia speakers microwave ovens, mobile phones, Washing machines etc|
Table (ii): Japanese Companies in India and what they manufacture.
According to the Embassy of Japan in India, Japanese companies setting up in India increased by 158 companies from 318 to 476 in the period between January 2006 and February 2007. 90 percent of this concentrated in the four major cities which are Mumbai, Delhi and its suburbs, Bangalore and Chennai.
Philips Contribution to Technological Development in Consumer Electronics and Appliances in India
It has lived up to its vision `simply making a difference to people`s lives`. One of the nation’s most well-known makes, Philips India Ltd. has greatly contributed just like other multinational enterprises that have set up businesses in India, to a great extent in the technological development and has literally become part of every India’s life. Its focus in consumer electronics and appliances has seen it gain household reputation as an innovative and reliable provider of such commodities that enhance the quality of user’s personal and professional life. Philips products are used virtually at every place in the daily life in various parts of India-home, work and even on open parks.
Philips India Ltd. Started operations in 1930 as “Philips Electrical Co. Private Ltd” with 75 employees. Currently the company has over 4500 employees and it is a leading producer of lighting, semiconductors, consumer electronics, domestic appliances, medical systems and wide range of multinational products of superior technology and design. With seven manufacturing locations spread in India, together with a world class innovation campus and research and development hub in Bangalore the company has dedicated to over 20 percent of the entire Philips resources for software development and high-tech research and development.
Philips has made investments of over USD 150 Million in all operations in India for the past 5 years. Philips India has become the market leader in nearly all its products, it has a 45.8 percent revenue share of the audio market such as, hi-fi stereos, CD players, Monos, DVD products, radios and home theatre systems. The company also leads in market share of lighting systems: particularly lamps and lighting electronics.
Philips has consistently led in the market of semiconductor industry in India. 60 percent of TVs in India have Philips chips. The chips are even available in the world`s thinnest watch which was also made in India. The company further has a top market share in dry iron and juice mixer categories.
The company has garnered a number of recognitions which are:
- Recognised by Business World magazine as “The Most Respected Company in India in the Consumer Durables Sector” in 2002.
- Recognised to be one of the best Indian employers by the Business Today (BT)-Hewitt Survey.
- India’s Philips Software Centre (PSC) was ranked in the top five in the Business World-Grow Talent “Great Places To Work” survey.
- Rated Number 16 in the Economic Times Brand Equity – India’s Most Trusted Brands 2003 survey.
The company has come up with products suited for the Asian market according to the consumer needs. It has customized these products from being referred as `European` to suite the Asian consumer. The company has also succeed in recognizing varied cultural and lifestyle demands by customizing technologies and products for the country`s consumers. The best example is when the audio equipment worldwide shifted from tapes to CD systems, the company developed a combined tape recorder and CD player since both media were widely prevalent in the country.
Philips has through its innovations introduced stereos that hook into high-speed internet connection to play music from the web.
Philips also has introduced televisions with improved audio facilities and capabilities like external sub-woofers and Woox technology; this is founded on the insight and believes that most Indians like to “hear” television. Philips televisions do have on-screen display in various regional languages. Several other numerous products are localized and customized such as steam irons, dry irons, microwave ovens, toasters and mixer-grinders. In the semi-Conductors category, Philips is coming up with “Made in India” applications and products for Asia Pacific and global solutions such as CORDECT and microcontroller-based solutions.
Philips has introduced product offerings across all price and performance points for the wide Indian market. Its product portfolio or combination includes global products that cater and are applied to “anywhere in the world” consumers, as well as styling and high-reliability products for the mass consumer base.
Philips has brought about global technology to consumers in India at affordable prices. It has been vocal in bringing latest technologies like digital widescreen TVs, integrated wireless FM, high-definition rear projection TVs with DVD, amongst several other commodities to consumers in India.
Tapping into rural India
To advance its penetration in rural and semi-urban markets in India, Philips has designed products specifically targeting the rural and semi-urban consumer in India. For example, it has developed a specific brand ‘Vardaan’ in its colour TV range, targeted at the semi-urban and rural markets. (Caves Richard ,1974).
To curb the power supply issue in rural India, Philips has customised its televisions to work on a lower voltage range of 90 volts to 270 volts, hence getting rid of the need for a voltage stabiliser. Philips also introduced the world’s first “Free Power Radio”, which has gained popularity in the rural market in India.
Philips has mastered the introduction of innovative promotion campaigns especially for rural markets. The Consumer Electronics and Lighting divisions of the company have launched integrated rural marketing programmes, which are spread across semi-urban towns having a population below 50,000 people.
Philips has also re-structured the pricing of its products to make them affordable for the target audience in rural areas and small towns. A best example, in this case, is, the company has introduced a portable CD system at an affordable price specifically for the rural and semi-urban consumers.
Philips Software development hub
The Philips Software Centre (PSC) in Bangalore satisfies the need for cost-effective, high-quality software development capacity within the Philips organization and employs 1200 people. PSC is an ISO 9001 / TickIT, SEI CMM Level 5 Company and has come out as a critical partner in the advancement of strategic and futuristic technologies for Philips worldwide. PSC develops close to 20 percent of the software content for Philips worldwide.
Philips is quickly expanding the scope of its research operations – research domains are in the process of being expanded from hardware and software to plastics and molecules.
Sony Corporation’s Contribution to Technological Development in Consumer Electronics and Appliances in India
Being one of the most recognized brand names in the world today, Sony Corporation, Japan, started its operations in India in November 1994, with focus on marketing and sales of Sony products in the country. Fifteen years on Sony India has exemplified the quest for excellence in the world of digital lifestyle by becoming the country’s foremost consumer electronics brand. With dedicated commitment to quality, consistent dedication to customer satisfaction and unique standards of service, Sony India is known as a benchmark for superior quality, new age technology, personalized service and digital concepts that has ensured loyal customers and nationwide acclaim to the industry (Ulrich, K. 1995).
Sony operates in six segments: Electronics, Music, Games, Pictures and Entertainment, Financial Services and Internet based services. Sony India operates the following segments:
- Television Entertainment/Media: Through Sony Entertainment Television it sells TV software and entertainment programmes.
- Movies: Sony does movie business through Columbia Tristar Films India Ltd.
- Music: Sells audiocassettes through its Sony Music India.
- Electronics: consumer goods like Colour Televisions, audio systems, digital cameras among many others.
Sony’s has a market share in the audio segment of 45 per cent by value and 7.8 per cent in CTVs by value. Software Architecture Division (SARD) and Sony India’s software division has been awarded the Software Engineering Institute’s Capability Maturity Model (SEI-CMM) Level 5 rating (Robert F, and Hamilton G, 2006).
Tapping into semi-urban and rural markets
Sony is tapping into the semi-urban and rural markets to increase its customer base by developing customized products at affordable prices. Sony launched “X-treme” VCD hi-fis with MP3 playback facility for the middle-income group and semi-urban consumer.
Leveraging the India Advantage
Sony set up a software architecture division, SARD, in 1998 at Bangalore, which exports 100 percent of the software created to its head office at Tokyo. SARD works in areas like digital media platforms, home networks and internet-enabled consumer electronic devices. Sony India exported software estimated to be worth over US$ 31 million in 2003.
Research & Development in product innovation
SARD has greatly contributed to many of Sony’s products, including CLIE, AIBO, VAIO PC and digital TV in terms of research and development. SARD woks in domains ranging from digital TV development to entertainment robot and to client server based AV products, network security and digital signal processors.
Sony Science Show
Taking its dedicated commitment towards the enhancement of scientific literacy forward, Sony India organized the Sony Science Show in Delhi from November 19 – 21, 2007. Aimed at fourth graders (nine years), the Science Show was held at Apeejay School; Sheikh Sarai was attended by over 7000 learners from 28 participating learning institutions.
Samsung India started its operations in December 1995; currently it enjoys a sales turnover of over USD 1 billion in just 10 years of operations. Samsung India has its headquarter in New Delhi and has a network of 19 branch offices located all over India. The Samsung manufacturing complex housing manufacturing facilities for Colour Televisions, Colour Monitors, Refrigerators and Washing machines is located at Noida, near Delhi.
Market share of mobile phones market
Figure (i): Market share of mobile phones market
Source: India Consumer Electronics Report Q3 2009.
LG has as many as 27 R&D centres and 5 design centres in India. Its leading products as shown in Table (i) include DVD players, residential air conditioners, CDMA handsets, optical storage systems and home theatre systems.
Whirlpool of India
Whirlpool is the most recognised name in home appliances in India and holds a market share of over 25 percent. The company has three state of the art manufacturing facilities at Pune, Faridabad and Pondicherry. The annual turnover in the year ending March 2006 of the company was Rs 13.75 billion. Surveys indicate that whirlpool enjoys the status of the single largest refrigerator and second largest washing machine brand in the country.
Hitachi India Ltd (HIL) got established in June 1998 and started engaging in marketing and sales of a wide range of products ranging from air conditioning and refrigeration equipment to international procurement of software, power and industrial systems and industrial components and equipment. HIL`s products range also includes display components and semi conductors. HIL also supports the sale of LCD projectors, Smart Boards, DVD Camcorders, Plasma TVs and LCD TVs.
Flat Panel TV-market sales
Figure (ii) Flat Panel TV-market sales
(Source: India consumer Electronics Report Q2 2011)
Sharp India Limited
Sharp India ltd was incorporated in 1985 as Kalyani Telecommunications and electronics Pvt Ltd, the company was later converted to a public limited company in the same year and the name was changed to Kalyani Sharp India in 1986. The company later into a joint venture with Sharp Corporation, Japan- a leading manufacturer of consumer electronic products to manufacture of VCRs/VCPs/VTDMs. Kalyani Sharp India manufactures consumer electronic goods and commodities such as VCRs, TVs, VCPs and audio products which are sold under the Optonica brand name( Caves Richard ,1974).
The consumer electronics and appliances industry continues to grow at breakneck speed: from MP3 players to home healthcare devices, consumers are adopting new and advanced technologies faster than ever before. The involvement of multinational enterprises in the Indian consumer electronics and appliances industry has enabled India get hi-tech and up to date products. Through the extensive R&D activities carried out by these multinationals, innovative products have been discovered hence fostering technological developments in this industry the term paper has looked into.
List of References
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