Hyderabad: Hitachi Solutions Ltd, the information and telecommunication systems arm of Japan’s Hitachi Ltd, said it would expand its operations in other markets in Asia-Pacific at the cost of China, as political tensions take a toll on the relationship of Asia’s two biggest economies.
Relations between Japan and China soured over territorial claims on a chain of islands in the East China Sea called Senkaku in Japanese and Diaoyu in Chinese. Taiwan, which also claims the islands as part of its territory, calls them Diaoyutai Islands.
Tensions escalated in the region when China last month imposed an air defence identification zone over an area that includes the disputed islands. Japan has asked its commercial airlines not to comply with China’s demands of submitting flight plans to fly in the newly-established zone.
“China has been very difficult in terms of political thing and economic side of it,” Masakazu Kuji, executive officer of Hitachi Solutions, said in Hyderabad. “We do have some issues between Japan and China.”
“China has another development centre which we found interesting 10-15 years ago,” he said. But the market is changing now and operating a development centre is difficult from an economic point of view, Kuji explained.
Kuji, however, clarified that his firm will continue to work with existing customers and Japanese entities, including other Hitachi entities, doing business in China. The company’s existing development centre in China caters primarily to the Japanese market.
Instead of China, Hitachi Solutions will expand to other emerging economies in Asia-Pacific such as India, Vietnam, the Philippines and Myanmar.
“India has been a partner of development (for Hitachi) than China in the past,” Kuji said. “We think it is much easier to have sustainable growth here in India.”
India’s “high standards” on the IT delivery side, thanks to its English-speaking workforce, compared to other economies in Asia including even Japan, makes it a natural destination to operate from, he explained.
Hitachi Solutions America Ltd, a subsidiary of Hitachi Solutions, opened a new development centre in Hyderabad on Thursday to work closely with Microsoft Corp.’s research and development facility in the city.
Hitachi Solutions America, which builds solutions on Microsoft Dynamics AX and Microsoft Dynamics CRM software, entered the Indian market in July this year and employs 200 people at its three centres in Hyderabad, Chennai and Pune.
The Indian unit will cater primarily to customers in North America and Europe in oil and gas, construction, retail and manufacturing segments. The technology services provider plans to take its India headcount to 550 by 2015.