Following the acquisition of Sharp, the father of LCD in Japan last year, by Taiwan’s Hon Hai Group, Toshiba’s huge loss of 4.9 billion U.S. dollars was recently announced. The company’s first public disclosure of its business was unsustainable. Back in 1995, there were 149 Japanese companies on the World Top 500 list. By 2015, only 54 Japanese companies had reached the list, Hitachi fell to 78, and the other companies had dropped to 100.
Why did the once brilliant Japanese electronics industry decline? What are the unique advantages? What will be the way out?
Most of the trapped Japanese electronics giants chose to go to home appliances to conduct business restructuring and instead vigorously develop B2B services. “More Japanese companies are shifting their businesses to high-margin, high-growth upstream and social-public businesses, which is undoubtedly the most effective choice to stop or revive.â€
Reporter Yao Yao Shanghai Report
Following the acquisition of Sharp, the father of LCD in Japan last year, by Taiwan’s Hon Hai Group, Toshiba’s huge loss of 4.9 billion U.S. dollars was recently announced. The company’s first public disclosure of its business was unsustainable.
Back in 1995, there were 149 Japanese companies on the World Top 500 list, more Japanese electronics companies entered the top 50, Hitachi ranked 13, Panasonic ranked 17, Toshiba ranked 36, Sony ranked 43, NEC Rank 48. By 2015, only 54 Japanese companies had reached the list, Hitachi fell to 78, and the other companies mentioned above fell to 100.
Why did the once brilliant Japanese electronics industry decline? What will be the way out?
Loss of financial statements for consecutive years
Matsushita lost 700 billion yen in fiscal year 2012, and then lost another 700 billion yen in fiscal year 2013. In the eight fiscal years from fiscal year 2008 to fiscal year 2015, Sony only made profits in fiscal year 2012 and fiscal year 2015. Prior to being acquired by Foxconn, Sharp lost for two consecutive fiscal years. According to the 2016 fiscal year forecast announced by Toshiba, the company expects to lose for three consecutive financial years.
Looking at the global LCD TV market, Japanese manufacturers’ share has also declined year after year. According to a report published by DisplaySearch, a panel research and research organization, Sony's global share of LCD TVs dropped from 13.7% to 5.6% from 2008 to 2016; Toshiba’s share in 2008 was 6.4%, and it was pushed out of the major rankings by 2015. In 2008, Sharp also had a 9% share, and it was also out of the major rankings by 2014.
The same situation also occurs in markets such as the global computer and mobile phones, and the share of Japanese brands continues to shrink.
Taking home appliances as an example, after the Second World War, due to the strong support of the United States and the active industrial atmosphere of Japan, Japanese manufacturing industry rapidly emerged. In the white goods industry, Sanyo, Panasonic, and Toshiba are more representative. In the last century, 90 In the 1980s, these household electrical appliances entered China one after another, resulting in a large number of loyal consumer groups. Over the years, as the consumption threshold has been reduced, the level of Chinese household consumption has continued to increase, and Japanese companies have achieved substantial benefits in China.†Guo Baide, the vice president of the White Line, accepted the report from the 21st Century Business Herald. However, in the last ten years, the Japanese home appliance brands have become increasingly rare in the Chinese market and replaced by the rapid rise of Chinese brands.
Missing digital revolution opportunities
Some analysis pointed out that Japanese companies are good at hardware manufacturing, and software technology is in a weak position. This has also caused many Japanese giants to fall into adversity during the global digital revolution.
Hitachi's CEO Hiroshi Wakame once told the media: “Digital technology has changed everything, and as long as a chip can produce a high-quality TV in the TV industry, this means that new companies from South Korea and China have advantages.â€
"Japanese companies are good at excellence in manufacturing processes and quality control, as well as strict rules in process management. In the current era, the reduction of consumer electronics manufacturing thresholds and excess mature production capacity, coupled with the impact of the Internet era, the strength of Japanese companies is Weakening, and some aspects are also slightly redundant. Therefore, Japanese companies globally, whether home appliances or consumer electronics are declining.†Dong Wei, vice president of Owen Cloud Network, General Manager of the Black Power Division, told reporters in the 21st Century Business Herald Indicated.
“It seems that in the face of the digital revolution, Korean and Taiwan companies have responded more proactively than Japanese companies. Japan’s domestic market is slightly behind in the smart phone and 4G network applications compared to South Korea and other markets. This has led to these local-oriented Japanese giants missing out on the opportunities brought about by the digital revolution. By the end of 2016, the adoption rate of LTE (a type of 4G network) in Japan was about 60%, and the level in Korea had exceeded 70%.†Peng Lai Ting, an analyst in Bo industry research in the Asia-Pacific technology, telecommunications and Internet industry, said in an interview with the 21st Century Business Herald.
“After the global financial crisis in 2008, Korean companies represented by Samsung and LG took advantage of the window time of the Korean Won to depreciate the yen, and they had a certain market share from Japanese competitors. Even if the exchange rate was normalized, many days The company is still plagued by many problems, mainly because many years of underinvestment has made operational efficiency lower than its peers. The consumer electronics business's contribution to the profits of Japanese giants has been declining, which prompted these companies to start large-scale business restructuring." Lai Yating told 21st Century Business Herald.
Forced transition: "turning home appliances"
As a result, in recent years, the Japanese home appliance giants have been peeling off the old-fashioned consumer electronics business in search of a transition.
In 2011, Haier acquired the white power business of Sanyo, Japan. In 2012, Hitachi announced that it had withdrawn from the 56-year-old TV manufacturing business, and instead commissioned OEM. In 2013, Toshiba and Panasonic announced the closure of their TV plants in China. In 2014, Sony cut its core VAIO business and completely withdrew from the computer market. In 2015, Toshiba sold Indonesia's TV and washing machine factory to Skyworth, and Panasonic completely withdrew from TV production in China. In 2016, Foxconn acquired a majority stake in Sharp, NEC sold most of the shares in the computer joint venture company to Lenovo, and Toshiba sold the white power business to the United States. Panasonic decided to completely withdraw its LCD panel production business.
Most of the trapped Japanese electronics giants chose to go to home appliances to conduct business restructuring and instead vigorously develop B2B services. "More Japanese companies are shifting their businesses to high-margin, high-growth upstream and social-public businesses, which is undoubtedly the most effective option for stopping bleeding or reviving," said.
Hitachi's transformation is a typical example. When Zhongxi Hongming took over Hitachi as CEO in 2010, he faced huge losses. He decided to restructure: Closed or sold a part of the loss-making business, most of which was consumer electronics, and instead returned to heavy industry manufacturing, such as nuclear power plants and high-speed rail. Wait. Chinese and Western Hung Ming thought that there was a structural change in the consumer electronics industry, and Hitachi had no way to adapt to the environment. Then it retreated to Hitachi’s business that still had a comparative advantage, and the developing countries still had a lot of demand for infrastructure.
According to Hitachi's official website, at present, 21% of the company’s revenue comes from social industry systems (public, urban, and transportation), revenue from information and communications system business accounts for 19%, revenue from high-performance materials accounts for 14%, revenue from logistics and freight-related businesses accounts for At 11%, 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%, which is the second-lowest number in all businesses.
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