The Economic Times Tuesday, May 28, 2002
Matsushita China unit to double output REUTERS TOKYO: Matsushita Electric Industrial Co, maker of Panasonic goods, said on Tuesday, it aims to more than double its output over the next three years in China, which it called the new benchmark for competitiveness in manufacturing. Matsushita, the world's second-largest consumer electronics maker, has targeted 450 billion yen ($3.6 bn) in revenues from Chinese operations in the business year to next March, and hopes to boost that to one trillion yen by 2005/06. "If you can't win in China, you can't win globally. China will provide the benchmark," Toshio Sugiura, a Beijing-based director and board member at Matsushita, said. He cited examples such as DVD players and microwave ovens where his company had targeted the low-price, high-volume sectors of the Chinese market, competing head-on with local manufacturers. Developing local R&D, design and procurement operations, aided by the extensive deployment of Taiwanese employees, would be key to cutting costs and succeeding in China, as would cooperative relations with other firms, he said. In April, Matsushita announced a deal with TCL International Holdings, a consumer electronics maker and China's largest TV manufacturer, to explore areas of cooperation including selling Matsushita products via TCL's sales network in China. MANUFACTURING ANGST Sugiura reiterated Matsushita's position, however, that it had no intention of selling TCL products in Japan, unlike Sanyo Electric Co, Japan's third-largest consumer electronics maker, whose alliance with China's Haier Group includes distribution of the appliance giant's goods in Japan. Japanese firms have been rushing to shift manufacturing operations to China, drawn by its low labour costs and recent entry into the World Trade Organisation. While this has fuelled angst in Japan about a hollowing out of its industrial base and a massive loss of manufacturing jobs, Sugiura said it would be more constructive to accept reality and find a new role for Japan. "Globally, this is the way the tide is going," he said. "Nothing will be resolved by simply being afraid of a hollowing out. It would be easier to envision a future scenario by accepting there will be a hollowing out and rethinking (the roles of) Japan and China." Making profits in China has proved a challenge for many foreign manufacturers, however, and Sugiura declined to reveal his company's profits in China in the last business year. He said Matsushita hoped to boost profits in China by 2.5 times this year and to achieve a 10 per cent profit margin by 2005/06. He also acknowledged there was political risk to operations in China, including possible fall-out from China-Japan diplomatic spats, and argued for a diversified global manufacturing strategy that maintained sites in Southeast Asia and elsewhere. Matsushita's shares ended 1.42 per cent higher on Tuesday at 1,780 yen, outdistancing a virtually unchanged finish in the Tokyo Stock Exchange's electrical machinery index. Copyright © 2002 Times Internet Limited. All rights reserved.
