Japanese TV makers retreat to their home market

Recent earnings reports from Sharp to Panasonic show a sharp drop in sales for Japanese TV makers as they opt out of tackling South Korean and Chinese rivals and retreat from overseas markets to return to Japan.

Faced with increasing competition in price and product configuration, Japanese TV manufacturers, long the global leader in the TV industry, have fallen to third place in the world. In order to stop the downward trend, they are now focusing more on high-end products and intend to revive their domestic market, where they still dominate the market.

"For Japanese manufacturers, international competition is so fierce that it is unprofitable," said Hiromi Yamaguchi, an analyst at market research firm Euromonitor.

The big guys are collectively down and out

Sharp said on Tuesday it sold 1.74 million TV sets worldwide in the fourth quarter of last year, down about 20% from a year earlier. The company expects a net loss of 30 billion yen ($255 million) for the fiscal year ending March 31. Previously, the company expected a profit of 30 billion yen this fiscal year.

Sharp said it plans to reduce the variety of products it sells in the U.S. after reducing sales in Europe last year. At the same time, the company said it will expand its TV lineup in Japan.

Sharp President Kozo Takahashi said at a news conference that the company has realized a "strong sense of crisis." "Given the different positions of Sharp in the United States and Japan, we will adopt different strategies, and I think this is the right strategy," Takahashi said.

Panasonic on Tuesday also forecast a seventh straight year of losses in its TV business for the year ending March 31. Panasonic Chief Financial Officer Hideaki Kawai said the company believes the TV business will soon become profitable.

In the fourth quarter of last year, Panasonic's TV sales fell to 148.6 billion yen, compared with 159.9 billion yen in the same period last year. The company's TV business had an operating profit of 1.4 billion yen in the same period last year, but turned to a loss of 5.4 billion yen in the fourth quarter of last year.

Panasonic said on Monday it would stop making TVs in China because of slow market growth and a fierce price war. On Tuesday, Hideaki Kawai said the company was reviewing its U.S. TV business but had not yet made a decision. "The Japanese and European markets remain important to us," he said.

Toshiba, Japan's third-largest TV maker, said last week that it would stop making TV products in North America in March and sell its North American brand to Taiwanese contract manufacturer Compal.

Toshiba said it would try to cut costs and focus on high-end TV products, including large-screen TVs and smart TVs, which remain in demand in a fiercely competitive market. In the first nine months through December, Toshiba's TV unit posted an 8 percent drop in sales and a loss of 63.5 billion yen.

Sony's TV business has lost more than $7 billion over the past decade, but the company said it expects to be profitable in the 2014 fiscal year ending in March. Masashi Imamura, head of Sony's TV business, said TV remains the company's core business. However, analysts pointed out that the company's recent spin-off of the TV business into an independent unit and full control of its operations was clearly paving the way for a sale.

As of 2011, Japanese brands accounted for 35 percent of global TV sales, while South Korea accounted for 33 percent, according to market research firm DisplaySearch. Last year, South Korea and China accounted for 38 percent and 23 percent, respectively, while Japan accounted for 20 percent.

Limitations of the local market

The last stronghold for Japanese TV makers is their home market, where Japanese brands hold more than 90 percent of the market. Japan accounted for 15 percent of Toshiba's sales in 2013, compared with 9 percent in 2004, according to Euromonitor.

Japan is also one of the few markets that Samsung Electronics of South Korea has not yet conquered. Samsung stopped selling TV products in Japan in 2007. Although LG, another South Korean company, is still holding on, its market share is only 2%. As for Chinese brands, they can basically be ignored.

While American consumers increasingly view televisions as a daily necessity, with price as the main factor influencing their purchase, Japanese consumers, however, still have a soft spot for domestic brands. Japan’s retail industry is dominated by large electronics department store chains, whose strong position ensures that TV prices and profit margins are higher than in other markets.

However, Japan's domestic market is no longer the cash machine it once was. Euromonitor data shows that the country's TV sales fell from 24.8 million units in 2010 to 5.6 million units last year. From 2009 to 2011, TV sales were supported by subsidies for energy-saving electronics and home appliances. Before that, sales were around 9 million units per year.

Japanese TV makers have difficulty enjoying the export benefits of a weak yen due to their increasing reliance on the domestic market.

Although global TV sales grew last year, DisplaySearch analyst Hisaichi Torii expects a decline after 2016, citing a slowdown in the pace of upgrading to 4K TVs. Japanese TV makers should act quickly ahead of this product cycle to avoid overcapacity. "Japanese TV makers should prepare well and make a difference," he said. "Continuous reform is necessary to survive."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.