For past several decades, Japan has been famous for its consumer electronics. Nikon, JVC, NEC, Casio, Nintendo, and Sony, just to name a few, are all big brands not only in the Asian market but also in the global one. Japan’s robust economic power also arouse scholars’ interests in investigating its key success factors. A great amount of academic writings and books related to Japan were published, such as Journal of Japanese Studies, Social Science Japan Journal, The Lone Samurai (William Scott Wilson, 2004), and Japan as Number One (Ezra Vogel, 1979). However, since 2008, started with the impact of global financial crisis, Japan has suffered from a series of difficulties. It would be interesting to update our knowledge of the current status of Japan’s economy and specifically to watch over the performance of Japanese consumer electronics companies.
The article took Sharp and Panasonic as the examples of Japanese consumer electronics companies. Recognized by the article, these companies are now facing several challenges: (1) the high technology does not translate into high price/profit, (2) companies from other countries successfully use low-price started to defeat their market share, (3) companies from other countries have also developed competitive technologies, (4) the continued appreciation of Yen, and (5) the weaknesses in product design and marketing. In short, the issues discussed are: (1) R&D investment, (2) marketing and pricing strategy, (3) currency policy, and (4) product design. The consumption of consumer electronics is tied to people’s salaries; meanwhile, people’s salaries are tied to the development of economy. That is to say, to figure out the future market capacity, we first have to precisely forecast whether it will be a bull market or a bear one. Consider the likely economic growth in the future two years (announced by Fed officials), it is quite possible that consumers can accept high-price consumer electronics. Thus, Sharp and Panasonic may keep developing their high technology and charging higher prices. In addition, due to the death of Steve Jobs, Apple’s design and marketing capability has now aroused some analysts’ doubt. I believe that in future three to five years, Apple will not be as prosperous as when Jobs was alive. And these future three years may give them a great chance to catch up their design and marketing capability. I also believe that the low-price strategy adopted by Chinese companies, Taiwanese ones, and Korean ones will keep working in future years -- since they do not possess that high-level technology as Japanese companies do, low pricing is their only exit. All Japanese companies have to do to compete with Chinese companies, Taiwanese ones, and Korean ones is to establish a reasonable price-quality set that the market can accept.
Consider all of the factors above, the practicing managers of Japanese consumer electrics companies still have to do the thorough market research to know what the market expect the quality should be and how it expect the reasonable prices will be before conducting technology development and setting prices. In addition, it would be wise to take advantage of their high technology to produce quality products and to differentiate them from the low-price competitors.
Author: Jeff Uscher
Reference:
1. http://news.cnet.com/8301-1001_3-57547921-92/the-era-of-japanese-consumer-electronics-giants-is-dead/
2. http://www.businessweek.com/articles/2012-11-08/sharps-profits-on-lcd-panels-worse-than-flat
3. http://www.guardian.co.uk/business/2012/nov/11/japan-electronic-money-short-circuits-economy
4. http://www.bloomberg.com/news/2012-11-09/sharp-says-foxconn-talks-could-continue-beyond-march-deadline.html
5. http://www.businessinsider.com/japanese-gadget-makers-need-a-miracle-2012-11
Sharp and Panasonic also need to be concerned about increased competition from Microsoft. With the recent release of the Surface tablet and Windows 8, Microsoft is jumping into the computer hardware business even more so than with their gaming console, Xbox. With the tablet market increasing in volume going forward, it may be harder for LCDs sales going forward, especially if they cost more due to "better technology" such as IGZO LCDs.
ReplyDeleteSpeaking of the Surface tablet, iPad is "now" still matchless in that field. However, some recent issues such as the defects of iOS6, the problem of Maps, and the lack of creativity and uniqueness of new released products have aroused the doubt to Tim Cook. Apparently, Tim Cook is not that kind of genius as Steve Jobs was and I don't think that he can lead Apple to a bright future.
DeleteI still remember when I was a child, in 1990s, in my country, Viet Nam, the family who had a Sony TV, Sharp refrigerator,...,had a proud of themselves in the neighborhood. Every Vietnamese family wished for an electronic device made in Japan in its household. Japanese products have been notable for durable and good quality. However, its unique position is degrading because they by themselves are losing their image. Confronting with fierce competition, they produce in mass of production without caring about quality like before. Loyal customers of Japanese products now switch to Samsung or LG products when they find that these products are more reliable on quality.
ReplyDeleteWell, Japanese companies, for a long time, have adopted an unique policy -- to sell the best-quality products in Japan and to export those less quality ones. It's still too early to judge that Japanese products are losing the image because of the low quality; as a matter of fact, Japanese products are now still viewed as the quality ones, though their sales volume are decreasing, especially compared to that in 1990s.
DeleteThe rise of China and South Korea is indeed the most important factor that lowers Japanese companies' sales volume. I think the appropriate strategy for Japanese companies is to differentiate themselves from Chinese and Korean competitors in quality but not in price. On the other hand, to figure out how Korean companies success in these 15 years would be an interesting topic.