Economy & Tech
Business Magnate K.K. Modi Talks of India's Competitiveness
Krishan Kumar Modi, Indian entrepreneur and director of Modi Enterprises, visited Japan recently and sat down with members of JAPAN Forward for an interview.
Popularly known as K.K. Modi, he oversees—alongside other members of his family, including his wife Bina and their children—a vast multi-generational business empire. This includes tobacco (with a 26% stake in cigarette manufacturer Godfrey Phillips India), beverages, confectionery goods, a profitable convenience store chain, cosmetics, and, perhaps most notably, agribusiness.
Beginning with Rai Bahadur Gujarmal Modi, a renowned industrialist who established the city of Modinagar (located near New Delhi) in 1933, the family’s economic interests have greatly expanded from sugar, oil, rubber, and textiles, and are no longer limited to South Asia.
Modi himself admits that India still craves foreign investment, while many in the subcontinent are looking outward for business opportunities. Speaking on this topic, he described his personal relationship with Japan and future prospects for cooperation.
Here are excerpts from the conversation.
Family Business
My father started the business in 1933. We built a city near New Delhi called Modinagar, which is named after our family. Our business grew very fast afterwards, especially in the 1960s, when we started cooperating with foreign companies. We had major companies as our partners, but since the World Trade Organization (WTO) was established, even more companies have been coming to India. Likewise, Indian companies are investing overseas and looking for new investment opportunities. We hope to do the very same.
All my brothers now live outside India. So we want to do international business.
Back in India, however, we’re now establishing a university called K.K. Modi University. My children are involved with the family business too, both in India and internationally.
Beginnings in Japan
I’ve probably visited Japan more than 100 times, starting in the 1960s. The first time I came was to just discover different parts of the world and see a few of things coming to India from Japan.
When I became 20 years old, I wanted to see the world and to go to Japan. Our company had purchased steel-making equipment from Japanese manufacturers. They were happy to host a foreigner, and my father said, “Okay, you go and look at Japan.” And that was my first experience in Japan.
In those days, Japanese companies were very hospitable to foreigners. So I had a person who accompanied me all over Japan to show me around. He was my guide the entire time, when I went to Hakone, Kobe, all the sightseeing areas. That was the beginning of a very fascinating time for me.
Having a Japanese person to guide us around helped a lot, especially with language barriers. He introduced us to the Japanese way of life. We experienced everything from onsen to textiles. The Japanese were very good hosts and had a reasonable budget for customers.
Expanding Business in Japan
We’ve had many projects with Japanese firms over the years. The first time, we bought some technology to make specialty steel from a Japanese company. We also bought tobacco, which improved the quality of our cigarettes. Now we have opened stores which are similar to 7-Eleven. Many Japanese have worked with us in India for many years, teaching us how to run these convenience stores.
7-Eleven is American, but I think the company was more successful in Japan. Toshifumi Suzuki essentially imported 7-Eleven to Japan. There is a television program about how Suzuki originally discovered 7-Eleven and made it different from the American version. Now 7-Eleven is a subsidiary of a Japanese company and more successful in Japan than America.
We tried to learn from 7-Eleven Japan. Our brand is called Twenty-Four Seven because we are open 24 hours a day, seven days a week. Maybe in the past the name in the U.S. was 7-Eleven because it wasn’t open 24 hours, but rather morning till night. In Japan now all the stores are open 24 hours, and we also adopted that model.
Right now, we have 61 stores, but India could easily have thousands of stores. We hope, this year, to add another 200 stores. We started experimenting with Twenty-Four Seven five years ago because we did not know exactly how to manage a large convenience store chain, but we hired people from Japan to work for us in India. It’s been a good experience.
Cooperation in Agribusiness
We’ve cooperated with Japanese companies in the manufacture of certain chemicals for agricultural purposes. There are some molecules we have registered in India, but we import the technical components from Japan and make them into usable products in India.
This project is just starting.
Japan has a lot of technologies and standardization in the manufacturing process. We’ve adopted that system, which is often called 5-S. Many Japanese have worked for years in India, where they improved existing processes and standardization. We are a great fan of Japanese technology.
High-speed Railway
Japan’s Prime Minister Shinzo Abe along with Prime Minister Narendra Modi of India announced they would connect Mumbai with Ahmedabad with a high-speed railway.
We’re not involved, it’s a very large project.
I think Japan is a leader in high technology and now Japanese cars are manufactured in India, all the famous car companies are in India too. Japan has much to offer India.
Looking Ahead
Some Japanese companies have recently begun to show an interest in Indian real estate. Now cities are becoming smarter. You take the old city and you add all the electronics and communications, making the city smarter. There is a move towards cooperation in real estate with Japan in this regard.
I think high technology is coming in buildings and city planning. India has a very large population moving from rural areas to cities. So, if you need to construct a city, it should be done smartly. This is where Japan can and is playing a role.
I think you’ll see a lot of this smart planning begin in Ahmedabad, where Prime Minister Modi is originally from. As you build the high-speed railway, the scope to develop more cities will spread outwards.
Concerns About China and North Korea
China, in many areas, is the main competition to India. Of course, China has a very big trade interest with Japan. There are quite a few internal economic problems within China, however, and this allows for increased cooperation between India and Japan. That being said, many Japanese companies have a sizable investment in China, and the Chinese have significant investments in Japan. The investment between these two countries is quite intense, but India would like to catch up.
Security concerns are not really there, but competition does exits.
We have a very good relationship with South Korea, but we don’t know much about North Korea. I don’t think a North Korean war is going to happen because there is going to be a solution on the Korean Peninsula. I believe that Japan, China, the U.S., and India will all cooperate in this regard.
Competition in Southeast Asia and China’s BRI
We speak English—it’s a common language. The Chinese are not so proficient in English. We have an advantage, but Southeast Asia is an area with a lot of interest to India and China. I think right now the time for India is better. We’re in high growth period, our cost of manufacturing is lower, Indian companies and populations are in these countries, so there is an opportunity for growth.
Regarding BRI, I think for the first time, people are realizing that the countries like China and India, with high populations but low income, are likely to experience continuous growth. So, in the next 10 to 15 years, I think the gap between Western economies and India and China will narrow.
Right now, China has a very high market share in international business. There is pressure among Chinese to reduce exports and balance trade. India, on the other hand, is already more balanced. We import more than we export. So, I think, internationally, India will have a better reception. We’re more balanced, while the Chinese are mostly focusing on export, but not focusing on import.
So India will also be a good customer for doing trade.
There will be a time India offers its own alternative to the BRI, definitely. India offers an opportunity for cooperation and we’re opening our market. For instance, we’ve had heavy investment from a U.S. company in IT, and SoftBank from Japan is also a shareholder. There is increasing cooperation with India.
I think some people believe that India and China should also cooperate in the Asia-Pacific area together. Now, [U.S.] President Trump is raising a voice against such agreements, believing they’re not in the interest of the U.S, the major reason being that Asia is exporting and not importing so much. So India is more balanced in that way.
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