Suzuki’s xenophobia vs Unilever’s Indianization3 min read . Updated: 31 Jul 2013, 04:09 PM IST
The absence of Indians in Suzuki's top leadership is mystifying
Toshihiro Suzuki, the son of Suzuki Motor Corp. chairman Osamu Suzuki, may be inducted on to the board of Maruti Suzuki India. Toshihiro is, of course, already on the board of the Japanese auto company so the move appears logical. What doesn’t though is that Maruti’s board now has only Japanese in executive positions while the Suzuki Motor Co. board does not have a single Indian despite the fact that the Indian subsidiary has been the key driver of the Japanese company’s fortunes for some years now. In fact, Jagdish Khattar, former managing director and chief executive, was the last Indian to have executive powers on the Maruti board.
Before leaving India, Maruti Suzuki’s last outgoing chief executive officer Shinzo Nakanishi did say that the parent company Suzuki Motor Corp. should appoint an Indian on its global board, given the importance of the Indian company in Suzuki’s balance sheet. But past record and the latest move suggests it’s not likely to happen any time soon.
Suzuki, Japan’s second largest manufacturer of small cars and trucks, depends on its Indian subsidiary for its growth momentum which has spluttered in more developed markets. Last December, the company pulled out from its unprofitable venture in the US after struggling for years. Its Indian foray 31 years ago has by contrast paid off amply. Maruti Suzuki contributed 45% to Suzuki Motor’s sales in vehicle units and 25% to the Japanese giant’s sales revenue in the last fiscal. Since 2007-08, the year Nakanishi took over as the chief executive, Maruti has been selling more cars in India than Suzuki does in Japan. What’s more, profits in India are coming in handy at a time when the Japanese parent faces a squeeze elsewhere. The cash reserves Maruti has accumulated in India will now be utilized by the parent company to set up assemblies in other parts of the world.
Against the background of its success in India, it is therefore intriguing why no Indian has been deemed good enough to be inducted into the parent company’s top leadership. It reveals a different view of globalization than is increasingly the norm among multinationals.
Contrast Suzuki’s attitude with that of Unilever which last week co-opted its India CEO, Nitin Paranjpe on to its top decision-making body, the Unilever Leadership Executive. Paranjpe was of course a star performer having led India’s largest consumer packaged goods company on a successful growth charge over the last five years despite a tough macroeconomic environment.
But he is not the first Indian manager to be drafted into the parent company’s upper echelons. Paranjpe follows earlier Indian heads Harish Manwani and Vindi Banga, who after successfully steering the Indian operations went on to join the Unilever executive board. Earlier too, Ashok S. Ganguly, who was the chairman of the local unit from 1980 to 1990, went on to become a member of the Unilever board of directors from 1990 to 1997.
Hindustan Unilever is, of course, the jewel in Unilever’s crown though not quite as priceless as Maruti has been for Suzuki. Just last month, Unilever paid $3.2 billion for an additional 14.8% in its Indian subsidiary which contributes 15-20% of its revenue. Both companies are now majority owners of their Indian subsidiaries but the contrasting manner in which the two treat the managerial talent out of India is illuminating.
Unilever, of course, has had a tradition of hiring and grooming local managers to head up local units. What began with its Indian subsidiary in 1942 is now a worldwide management process that is referred to as “ization", which is basically filling local executive and technical positions with local managers.
Nor has the Anglo-Dutch company treated India merely as a kindergarten for nurturing talent. Paranjpe was replaced in India by Sanjiv Mehta, currently Unilever’s chairman for North Africa and Middle East in a seamless display of cross-border talent movement which, at its most basic level, is simply the old “horses for courses" principle.
Suzuki has been in India for almost 31 years, but its leadership in India after it took control of Maruti, has been essentially Japanese. That may or may not explain the company’s declining market share as well as its increasing disconnect with the realities on the ground but as its prolonged labour problems suggest that there has been a cultural imbalance. By all yardsticks, Suzuki has been a spectacular success in India with its small car culture blending perfectly with the consumer ethos. But going forward its clear xenophobia in terms of managing top talent may put a question mark on its ability to leverage success in India for gains elsewhere.
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