Japanese Electronic Businesses Report Surpluses

After having long suffered from the collapse of the “IT bubble,” Japanese electronic industries strive to take a second leap, with their digital household electronic appliances as a main breakthrough.

According to the last quarter report, dated from October to December 2003, all of the ten top-ranking companies have achieved surpluses in terms of sales outcomes. These companies have also shown an increase in sales amounts, with the exception of Mitsubushi Electric Co., whose semi-conductor industry was divided out.

Experts analyzed that an increased demand for digital home electronic appliances enhanced the electronic market and therefore encouraged business for companies that used to lag behind in the sector.

Matsushita Electric and Sharp, whose key products are digital home appliances, have made great advances, whereas Toshiba and Fujitsu produced far fewer profits, reflecting a distinct gap among companies of the sector.

▽ Relief from digital home appliance sector = The recent rebounding of Japanese market is referred to as the “digital market,” differing from the bubble market of the 1980s and the IT market of the 1990s. In particular, market-boosting items such as digital cameras, wall-mounted TVs, and DVD recorders are highly regarded for encouraging the nation’s electronic industries.

The front-runner leading the digital home appliance industry is Matsushita. As a result of its dedicated research and development in digital home appliances, Matsushita dominated more than 30-percent of the market share in Japanese digital TVs. Not only digital TVs but also DVD recorders maintain first place rankings in the market and the company gained two times the operating profits.

It is expected that Matsushita will reach 160 billion Yen of pretax income in March closing (fiscal year 2003), which is 2.3 times more than that of a year ago.

Small-size companies like Sharp and Pioneer also overwhelmed their competitors by their “target and focus” strategies.

Sharp saw 38 percent of operating profits with its leading liquid crystal indicator technology, and Pioneer recorded its highest sales amount in the final quarter due to the huge popularity of Plasma TVs and DVD recorders.

▽ Sony and traditional companies’ rebounding effort= Having faced a few critical moments with poor advances in new product development, Sony held its high rank in sales and operating profits via its price discounts and promotions. The company saw its first sales increase in one and a half years for its main electronics division. However, experts pointed out that Sony’s strategy of discounting sale prices ultimately negated profitability and brand image as well.

NEC and Fujitsu, who have been in slumps for the past few years, established surpluses thanks to their digital home appliances and electronic parts. Hitachi marked increased operating profits with its data communication equipment.

Although those companies reached surpluses, Nihon Geizai Shimbun reported that the outlook is hard to forecast given that the price of competition is growing more and more intense.

parkwj@donga.com