Sony Corp plans to move production of its PlayStation 2 console to China next year, as the rivalry from Microsoft Corp's Xbox forces the world's largest video-game console maker to tighten control on costs and prices.
Sony Computer Entertainment Inc currently makes half of its PlayStation 2s at two plants in Japan. Sony expects to move all of its production to Chinese plants run by Taiwanese companies Hon Hai Precision Industry Co (
Shifting PlayStation 2's assembly operations to China may allow Sony to increase profit margins at its video-game unit, which accounted for 36 percent of the company's operating profit in the three months ended Dec. 31.
China's lower labor costs may also give Sony room to cut the PlayStation 2's retail price, giving Sony an edge over Microsoft's Xbox.
"A price cut will happen this year, probably between May and summer," said Zachary Liggett, an analyst at WestLB Securities Pacific Ltd. "Moving production will give Sony the flexibility to cut prices."
According to data from the Chinese National Bureau of Statistics and the US Bureau of Labor Statistics, it takes the average Chinese worker a year to earn what a US worker earns in two and a half weeks.
Sony makes digital cameras, camcorders and Vaio computers in China. Last month, the company said it will increase production of its digital cameras tenfold in China to meet demand.
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