Wed, Feb 16, 2011 - Page 11 News List

Canon mulling production expansion in PRC, Taiwan

Bloomberg

Canon Inc, the world’s largest maker of digital cameras, is considering expanding production capacity in China and Taiwan as it aims to counter mounting competition and falling prices.

The extent of the expansion of the facilities in Zhuhai, China, will depend on market trends, Masaya Maeda, head of the Tokyo-based company’s Image Communication Products Operations, said in an interview on Monday.

The site makes about 10 million compact cameras annually, he said, about half of Canon’s 21 million point-and-shoot cameras sold last year.

Canon, which also makes PowerShot compact cameras in Japan and Malaysia, may be turning to China to cut costs and fend off competition from Sony Corp and Samsung Electronics Co.

Global sales of compacts fell 2 percent to ¥1.14 trillion (US$14 billion) last year because of lower prices, according to the Camera & Imaging Products Association.

Demand for compact models this year will remain strong in China and other developing nations to offset slowness in saturated markets such as the US, Europe and Japan, Maeda said.

Demand in Asia this year will probably grow at a similar pace to last year’s 30 percent, he said.

In March last year, Canon started operation of a camera factory in Nagasaki Prefecture in Japan. Canon has two other camera plants in the nation.

The company may also expand production capacity in Taiwan, where Canon makes EOS single-lens-reflex cameras, by at least 20 percent to meet demand for devices with interchangeable lenses, Maeda said.

Canon last month said its sales of SLR cameras would rise 18 percent to 7 million units, driving a projected 11 percent growth in revenue and 26 percent jump in net income for this year.

Sales of SLR models and lenses will probably account for 69 percent of Canon’s total revenue from its camera operations this year, up from 65 percent last year, Maeda said.

The number of compact cameras sold industry-wide will probably increase 5 percent this year, with revenue dropping 2 percent, Barclays Plc estimated last month. SLR shipments will probably rise 12 percent while revenue increases 6 percent, the financial firm estimated.

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