China squeeze reshapes Japanese electronics giants

China Daily

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AvisitorwalkspastadisplayofPanasonicSmartViera4KultraHDtelevisionsatthePanasonicstandatthe53rdeditionoftheInternationaleFunkausstellungelectronicstradefairinBerlinonSept4, 2013.InChina,Panasonicisshiftingitsfocustohigh-endintelligentappliancesanddevices.[Photo/Agencies]

Iconicfirmsseekrevivalbyforayingintoawiderangeofnewbusinesssegments

TherewasatimewhenChineseconsumerswereenamoredofJapanesehomeappliancebrandssuchasSony,Panasonic,Toshiba,Sharp,SanyoandHitachi.Suchbrandsdominatedsegmentsliketelevisions,musicsystems,washingmachines,refrigerators,younameit.Notanymore.

TheriseofhomegrownChinesehomeappliancemakerssuchasHaierGroup,TCLCorpandHisenseGrouphashurtJapaneseelectronicsgiantsbadly,pushingthelatterintoareaslikehigh-endintelligenthomeappliances,business-to-businessorB2Bactivities,construction,nuclearpower,housing,automobiles,startupincubationandInternetofvehicles.

Forinstance,inJanuary,PanasonicCorpcloseditslasttelevisionproductionfactoryinChina,whichwaslocatedinJinan,capitalcityofShandongprovince.PanasonicsaiditwillinsteadoutsourceitsTVproductiontoChinesecontractmanufacturers.

InAugust,itshutafactoryinBeijingthatproduceslithium-ionbatteriesforlaptopsandsmartphones,layingoffabout1,300employees.

Thisyear,Panasonicshifteditsfocustobusinessesrelatedtoautomobiles,housingandB2Bactivities.Togainaquickentryandmarketsharethroughacquisitionoffirmsengagedinthoseareas,itsetupa1trillionyen($8.19billion)fund.

"Wehavesetagoalof10trillionyeninprofitin2018,withtheB2Bbusinessaccountingfor80percentofthetotal.FurtherdevelopmentoftheB2BfieldiskeytomovingPanasonicforward.WewillalsobecommittedtoB2BinChina,"saidHidetoshiOsawa,chairmanofPanasonicChina.

Besidesaudio-visualinformationandcommunicationtechnology,PanasonicwillprovideB2Bsolutionsforhousing,environmentalprojects,automobilesandelectricalsystems,hesaid.

Lastyear,PanasonicandTeslaMotorsInc,theUnitedStates-basedmakerofelectriccars,teameduptobuildlithium-ionbatteryfactoryintheUS.Panasonicistargetingtodoublesalesofitscarbattery-relatedbusinessto37.5billionyuan($6.47billion)in2018fromthe2014level.

In2011and2012,thecompanyreportedlossesof772.2billionyenand754.3billionyen,respectively.Thelossfromhomeapplianceswas8.5billionyeninthefirstquarterof2015.

Notunexpectedly,itlaidoffnearly10,000employeesinthepasttwoyears.Inthefirstquarterofthisyear,itsnetprofitwas59.5billionyen,upjust5.7percentyear-on-year,whichitattributedmainlytoitscar-relatedB2Bbusiness.

Asforitscorecompetenceinhomeappliances,Panasonicintendstofocusonthehigh-endsegmentofintelligentdevicesandmachinesinChina,tocatertothegrowinghigh-incomemiddleclassfamilies,saidMasanaoYamauchi,generalmanagerofPanasonicChinaAppliancesCo.

Panasonic'svisionistomakeproductsthatwouldenableconsumerstocontrol,say,electriccookersusingtheirmobilephones.

"Ouraimistoconnectdifferentsmarthomeappliancesandcreateintelligentindoorspacesforfamilies,communitiesandtowns,"saidYamauchi.

LikePanasonic,SonyCorpischasingarevivalinChina.EversinceKazuoHirai'sappointmentaspresidentandCEOin2012,thecompanyhasbeenrestructuringitself.ItsolditsVaiocomputerbusinessandspunoffitsTVdivision."Profitfromtheelectronicsbusiness,exceptthemobilephones,hasimprovedasaresultoftherestructuring,"saidHirai.

In2014,revenuewasabout$68.47billion,up5.8percentyear-on-year,andoperatingprofitwas$571million.ItsTVbusiness,nowwithfocusonhigh-endmodels,posteditsfirstprofitin11years.

"Wewillincreasesalesofhigh-endproductstoensureprofits.Wewillfocusonthepost-1980andpost-1990generationsandmiddle-classusersandcultivatenewbusinesseswithuniquetechnologies,"saidNobukiKurita,presidentofSonyChinaCoLtd.

ForSony,theChinesemarketisapriorityalongsidetheUS,hesaid.SonynowhasthreekeybusinessesinChina,includingconsumerelectronics,specializedbusinesssolutionsanddevices,saidKurita.

Inconsumerelectronics,Sony'sfocusisonvalue-addedproductslikehigh-resolution,extremelyslimtelevisionsets,andimagingproductsandsolutions,includingspecializedbroadcastingaudioequipment,projectors,digitalcinemaandB2Bbusinessinvolvingmedicalandtelecommunicationequipment,Kuritasaid.

Lastyear,SonylaunchedtheSeedAccelerationProgram,astartupincubatorthatseekstofast-trackpromisingnewbusinessideas.Theprogramhasalreadyspawnedstartupsforsmartlocks,smartwristbandsandsmartwatches.

TheJapaneseexitfromelectronicsextendedbeyondChina.ChineseTVmakerHisenseacquiredSharp'sTVfactoryinMexicoanditstelevisionbusinessfortheNorthandSouthAmericanmarkets.

Elsewhere,facedwithhugelosses,ToshibaCorpexitedTVproductionanddecidedtofocusonconstruction,nuclearpowerandinfrastructureandotherB2Bbusinesses.

Japanesegiants'effortstoremainrelevantarearesultofChineseenterprises'newlyacquiredmasteryinhomeappliancetechnologiesandcostadvantages,whichhurttheformer'sprofits,saidZhangYanbin,assistantdirectorofAllViewCloud,aBeijing-basedconsultancyspecializinginhomeappliances.Theshifttootherareas"isanecessity"anda"strategicadjustment",hesaid.

LiangZhenpeng,ananalystofconsumerelectronics,said:"Japanesecompaniesmustsimplifythedecision-makingprocess,improveoperationalefficiencyandstrengthenthetransformationtointelligentandinternet-enabledfields."

Whatisan'intelligent'orsmartappliance?

Smarthomeproductsaredevicesorappliancesthatcanbeoperated,controlledandmonitoredusingmobilephonesviaInternet.Theyusetechnologieslikecloudcomputingandbigdata,andhavethecapabilitytobeconnectedtoothersuchdevices.