Bogged in Deficit, Japanese Enterprises Rivet Eyes on Chinese Market

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Last updated at: (Beijing Time) Monday, April 29, 2002

Bogged in Deficit, Japanese Enterprises Rivet Eyes on Chinese Market

National saw 431 billion-yen in deficit, Toshiba, a loss of 254 billion-yen and Hitachi 483.8 billion-yen in the red�� The manufacturing empire of the bygone days is confronted with an unprecedented predicament of difficulties. As a counter-measure the manufacturing bases of Japanese enterprises are on a move out into the developing countries, especially China.

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National saw 431 billion-yen in deficit, Toshiba, a loss of 254 billion-yen and Hitachi 483.8 billion-yen in the red�� April 26 witnessed the publication of the final accounts of the Japanese companies of the 2001fiscal year in which we came to find that many world-renowned Japanese transnational corporations were bogged in a quagmire of red letters.

The manufacturing empire of the bygone days is confronted with an unprecedented predicament of difficulties. As a counter-measure the manufacturing bases of Japanese enterprises are on a move out into the developing countries.

This will surely exert a great impact on the Chinese manufacturing industry, especially on the household electric apparatuses, covering the scope and stratum of products and even to the structure of property right.

In the financial year of April 1, 2001 to March 31, 2002 the National Electric, the largest in scale in Japan was for the first time landed in the deficit in a history of 48 years with the red letter to hit 431 billion-yen. It is followed by Hitachi, Toshiba, NEC, Fuji and Mitsubishi Electric to register a deficit of 483.8 billion-yen, 254 billion-yen, 312, 382.5 and 77.9 billion-yen respectively. Whereas Sony has only gained 15.3 billion-yen, an equivalent of RMB 100 million-yuan, which can only be regarded as of no loss.

They point out, influenced by the retardation of the global IT industry and of the US economic development which was intensified by multiple outbreaks of terrorist activities the world over, although their businesses witnessed an expansion in Asia, Europe and many other regions the domestic consumption in Japan was low with facility investment at a low tide, thus reducing it to a serious plight as never seen before.

Therefore, we saw a sudden speed-up in the reform of Japanese enterprises. Take the National for example, 2001 witnessed the forceful practice of the policy for cost-controlling and increase of sales-volume with fixed assets tightened and the earlier retirement of employees on the one hand and on the other with different products brought into the different world markets.

In China, it has pushed forward a series of products of low prices with microwave oven of RMB 398 yuan and air-conditioner of 1,800 yuan to seize the market shares. Chinese consumers will later on see more and more foreign cheap goods in the Chinese market.

In the meanwhile, by way of providing techniques, mutual exchange of distribution networks and even by direct infusion of capital-shares by taking the advantage of the shareholding reform of Chinese enterprises these will be the more important means for Japanese enterprises to make a big breakthrough into the Chinese market.

At present, Toshiba has just realized its injection of shares into the TCL Group by taking the advantage of its shareholding reform and here we see again the National reach an agreement with TCL for cooperation and it is ready to infuse capital into it. In the fiscal year report, the National expressed, "In view of the limitless intensification of competition, it is necessary to entrust rights to overseas producers to the greatest extent in the development, manufactory and distribution fields.

Especially in developing the Chinese market a flexible way, including the alignment, must be used to motivate the competitiveness of the Chinese market so as to develop the business in a forceful way." To the Chinese enterprises, this means another round of co-existence of challenges with opportunities.

By PD Online staff Han Rongliang

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