Debt-ridden! Sharp plans to close its Chinese TV factory

Japan's consumer electronics industry has been reorganizing and saving itself in the face of difficulties, and its business in China has been affected and impacted to varying degrees. According to the latest report from Nikkei News, Sharp, known as the "Father of LCD", has recently submitted a restructuring plan to its partner banks, which will shrink its LCD TV business from many countries around the world, and the plan also mentions the closure of LCD TV assembly plants in China.

Sharp is currently in a difficult situation again, with a high debt and business falling into losses again. The company is currently negotiating with two major transaction banks, Mizuho Bank and Mitsubishi Tokyo UFJ Bank, and the two banks will provide $1.7 billion in capital assistance, but as a condition, Sharp must carry out large-scale business restructuring.

According to Nikkei, Sharp has reached a consensus with the two banks on the restructuring plan, and the content of the restructuring plan has also been exposed by the media.

Sharp's restructuring plan includes reducing the number of employees through voluntary retirement, and selling its headquarters building to recover funds.

Sharp Corporation plans to make a strategic withdrawal from two major businesses, including the Sharp TV business that Chinese consumers are most familiar with (not Sharp's more important LCD panel business).

Like Sony, Sharp's TV business is currently in a business quagmire. Sharp will shrink globally, including withdrawing from the North and Central American markets and shrinking the Asian market.

As a specific measure of contraction, Sharp's restructuring plan proposed the transfer of its TV factory in Mexico. In addition, in the latest version of the plan, Sharp also proposed the transfer of its LCD TV factories in Malaysia and China.

It should be noted that the closure of the Chinese factory is only a matter of discussion in the restructuring plan, and it is not set in stone. Sharp has not officially announced that it will close its TV factory in China.

Sharp will also integrate its manufacturing bases in Japan. According to Nikkei News, the restructuring plan proposes closing a major domestic production base in Japan and concentrating manufacturing operations at the Osaka Yao Factory, which produces white goods.

Japanese media pointed out that LCD TVs were once a core business of Sharp, but due to poor performance, Sharp has strategically withdrawn.

Sharp will also make changes to its electronic components business. In the first half of fiscal 2016, the company plans to close the Mihara plant that produces LEDs. And in fiscal 2015 (ending in March next year), all LED production will cease.

Solar panels (known as photovoltaics in China) are also a controversial business for Sharp. There were previous reports that Sharp would withdraw from the photovoltaic industry. However, in the latest restructuring plan, Sharp said it would temporarily retain the photovoltaic business.

Before July, Sharp will suspend the production of ordinary solar panels and focus on photovoltaic products with higher added value. In addition, Sharp will consider more cooperation with partners and does not rule out the possibility of transferring its photovoltaic business in the future.

Interestingly, Sharp will also adopt a similar approach to Sony in terms of restructuring strategy. Sony has already announced the failure of the "One Sony" strategy and instead expanded the autonomy and assessment mechanism of its subsidiaries.

It is reported that Sharp will introduce a corporate system, and its businesses will be organized into four independent companies, responsible for home appliances, copier and robot businesses, energy business, and LCD panels and other equipment businesses.

Different companies can formulate their own business development strategies. According to analysis, after being split into independent companies, Sharp will be more convenient in transferring businesses in the future.

Sharp plans to complete the restructuring plan by the end of March next year and return to profitability in fiscal 2016.

It is reported that Sharp will officially announce its medium- and long-term development plan in May, and relevant actions such as whether to close its Chinese factories may be officially announced at that time.

Earlier, Japanese TV manufacturers Toshiba and Panasonic had also closed their manufacturing bases in China. Sony's TV business is also currently undergoing restructuring and adjustments. According to reports, Sony's TV business achieved profitability for the first time in a decade in the fiscal year ending in March.

The Chinese TV market is highly competitive. Some believe that Japanese brands’ strategies in the Chinese market are too rigid and lack flexibility. They have been sticking to high-price and high-end positioning for more than a decade, which has affected the expansion of their market share and led to new manufacturers such as Xiaomi, LeTV, and Lenovo Group still having opportunities to develop in the TV market.

The cost-effective "Internet TV" (purely sold through online channels) that imitates the "Internet mobile phone" is gaining popularity among young Chinese consumers. Traditional domestic TV manufacturers are on pins and needles, and Japanese brands, which are very slow in moving, naturally have no ability to fight back and can only choose a strategic retreat.

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.