Following the acquisition of Japan's "Father of LCD" Sharp by Taiwan's Hon Hai Group last year, Toshiba recently reported a huge loss of US$4.9 billion, and the company publicly stated for the first time that its business may be unsustainable. Back in 1995, there were 149 Japanese companies on the Fortune Global 500 list, and several Japanese electronics companies were in the top 50, with Hitachi at 13th, Panasonic at 17th, Toshiba at 36th, Sony at 43rd, and NEC at 48th. By 2015, only 54 Japanese companies were on the list, with Hitachi falling to 78th and the other aforementioned companies falling outside the top 100. Why did the once-glorious Japanese electronics industry decline? And what is the way out? Financial reports show losses for consecutive years Panasonic lost 700 billion yen in fiscal 2012 and another 700 billion yen in fiscal 2013. Sony only made profits in fiscal 2012 and 2015 in the eight fiscal years from fiscal 2008 to fiscal 2015. Before being acquired by Foxconn, Sharp lost money for two consecutive fiscal years. According to Toshiba's recent forecast for fiscal 2016, the company is expected to lose money for three consecutive fiscal years. In the global LCD TV market, the share of Japanese manufacturers has also been declining year after year. According to a report released by panel research organization DisplaySearch, from 2008 to 2016, Sony's global share of LCD TVs fell from 13.7% to 5.6%; Toshiba's share was 6.4% in 2008, but was squeezed out of the main ranking in 2015; Sharp still had a 9% share in 2008, but was also squeezed out of the main ranking in 2014. The same situation is also happening in global markets such as computers and mobile phones, where the share of Japanese brands continues to shrink. Taking home appliances as an example, "After World War II, Japan's manufacturing industry rose rapidly due to the strong support of the United States and the active industrial atmosphere in Japan. In the white appliance industry, the more representative ones are Sanyo, Panasonic and Toshiba. In the 1990s, these home appliances entered China one after another, which produced a large number of loyal consumer groups. Over the years, as the consumption threshold has been lowered and the consumption level of Chinese residents has continued to increase, Japanese companies have reaped rich benefits in China." Guo Meide, vice president of white goods at AVIC Cloud Network, told a reporter from 21st Century Business Herald that in the past decade, Japanese home appliance brands have become increasingly rare in the Chinese market, and have been replaced by the rapid rise of Chinese brands. Missing the opportunity of the digital revolution Some analysts pointed out that Japanese companies are good at hardware manufacturing but are weak in software technology, which has also led many Japanese giants to fall into adversity in the global digital revolution. Hitachi CEO Hiroaki Nakanishi once told the media: "Digital technology has changed everything. In the TV industry, only one chip is needed to produce a high-quality TV. This means that new companies from South Korea and China have an advantage." "Japanese companies are good at pursuing excellence in manufacturing technology and quality control, as well as strict rules in process management. At present, with the lowering of the threshold for consumer electronics manufacturing and the excess mature production capacity, coupled with the impact of the Internet era, the advantages of Japanese companies are weakening, and some aspects are even slightly redundant. Therefore, Japanese companies are declining globally, whether in home appliances or consumer electronics." Dong Min, vice president of AVIC Cloud Network and general manager of the black electronics business unit, told the 21st Century Business Herald reporter. "It seems that Korean and Taiwanese companies have responded more proactively to the digital revolution than Japanese companies. Japan is slightly behind markets like South Korea in terms of smartphone and 4G network applications, which may have caused these locally oriented Japanese giants to miss out on the opportunities brought by the digital revolution. As of the end of 2016, Japan's LTE (a 4G network) adoption rate was about 60%, while South Korea's level exceeded 70%," said Lai Yating, technology, telecommunications and Internet industry analyst for Asia Pacific at Bloomberg Industry Research, in an interview with 21st Century Business Herald. "After the global financial crisis in 2008, South Korean companies represented by Samsung and LG took advantage of the window of depreciation of the won against the yen and won a certain market share from Japanese competitors. Even though the exchange rate has long been normalized, many Japanese companies are still plagued by many problems, mainly because years of underinvestment have resulted in lower operating efficiency than their peers. The contribution of consumer electronics business to the profits of Japanese giants has continued to decline, which has prompted these companies to begin large-scale business restructuring." Lai Yating told 21st Century Business Herald. Forced transformation: "de-electricalization" As a result, Japanese home appliance giants have divested their once-thriving consumer electronics businesses in recent years in an effort to seek transformation. In 2011, Haier acquired the white goods business of Japan's Sanyo. In 2012, Hitachi announced its withdrawal from the 56-year-old TV manufacturing business and switched to outsourcing. In 2013, Toshiba and Panasonic announced the closure of their TV factories in China. In 2014, Sony cut its core VAIO business and completely withdrew from the computer market. In 2015, Toshiba sold its TV and washing machine factories in Indonesia to Skyworth, and Panasonic completely withdrew from TV production in China. In 2016, Foxconn acquired a majority stake in Sharp, NEC sold most of its shares in the computer joint venture to Lenovo, Toshiba sold its white goods business to Midea, and Panasonic decided to completely withdraw from the TV LCD panel production business. Most of the troubled Japanese electronics giants have chosen to "de-home appliance" to restructure their businesses and vigorously develop B2B businesses. "More Japanese companies will turn their businesses to high-profit, high-growth upstream and social public businesses, which is undoubtedly the most effective choice to stop bleeding or revive." Hitachi's transformation is a typical example. When Hiroaki Nakanishi took over as CEO of Hitachi in 2010, he decided to restructure the company in the face of huge losses: he closed or sold some of the loss-making businesses, most of which were consumer electronics, and returned the focus to heavy industrial manufacturing, such as nuclear power plants and high-speed rail. Nakanishi believed that the consumer electronics industry had undergone structural changes and Hitachi had no way to adapt to the environment, so he returned to the business where Hitachi still had a comparative advantage, and that developing countries still had a large demand for infrastructure. According to Hitachi's official website, 21% of the company's revenue comes from social industrial systems (public, urban, and transportation), 19% from information and communication systems, 14% from high-performance materials, and 11% from logistics and freight-related businesses. In addition, it also operates businesses such as construction machinery, electronic device systems, and automotive systems. Although Hitachi still retains its digital media appliance business, its revenue contribution is only 6%, ranking second from the bottom among all businesses. 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. |
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