Hyderabad: Japanese camera maker Nikon Corp., that reported global sales of 965 billion yen (Rs47,850 crore) in fiscal 2009, has seen falling sales the past three quarters in the US, Europe and Japan, its largest markets.
To make up for the fall, Nikon plans to penetrate more into emerging markets such as India. Hidehiko Tanaka, its managing director in India, said the firm plans to set up a software development unit in the country. Nikon is also keen on setting up semiconductor fabrication units if the government has a clear policy in place, he said. Edited excerpts:
After a third consecutive quarterly loss, Nikon had announced a global restructuring to reduce costs and improve profitability. Does India figure in the plan?
India opportunities: Nikon’s Hidehiko Tanaka (right) says India currently represents only around 1% of the firm’ global sales. Gurinder Osan / AP
We are planning to start a software development centre in India in the near future, as this country has a high degree of expertise in that area. As of now, the software development (mainly) happens in Japan, and we also have tie-ups with some Indian software developers. But we are hoping to have our own development centre in India, which will give us better control of our own operations and predictability. (Nikon focuses on embedded software for the digital equipment it sells, as well as on the image editing software it sells with its cameras.)
For 2009-2012, Nikon has announced a global R&D spend of 170 billion Yen. Will some of the investment come to India as well?
We have been eager to get into the semiconductor space in India, but unfortunately, the country still does not have a clear policy in place. There was a semiconductor fabrication facility planned in Andhra Pradesh, which did not take off. So, if the Indian policymakers get their act together, we are keen to enter the space. (Nikon sells precision equipment used in manufacturing integrated circuits on semiconductor wafers for the digital imaging industry.)
How do Nikon’s sales in India compare with its global sales?
As a part of our global sales, India currently represents only around 1%. But we believe this market, along with the Chinese, Russian and South American markets, has the potential for compensating for the declining sales we are witnessing in our major markets. Currently, in the DSLR (digital single lens reflex) camera segment, Nikon has a 37% market share (in India). We hope to improve that to 45% by the end of the current financial year. Similarly, in the compact digital camera space, we have a 7% market share, which we plan to raise to 10%.
What challenges does Nikon face in expanding in the Indian market?
Import costs currently constitute about 25% of unit price, which makes the product that much less accessible. We have been negotiating with the Indian government...to bring down the cost of importing.
China, which has a similar market to India, has zero per cent import costs; besides, the cost of transportation and our sales there constitute nearly 10% of our global sales, which we believe is achievable in India as well. If the import costs were brought down to zero, we believe the Indian digital camera market would grow by at least eight to 10 times.
What strategies will Nikon adopt to increase sales in India?
At present, we have only two DSLR zones—one each in Mumbai and New Delhi—where our entire DSLR range is available. By the end of the year, we will increase the exclusive DSLR zones to 20 across the country. We will also increase the number of distribution outlets to 1,200 from the current 800.