Matsushita Electric Industrial Co is reshaping its China business because of fears that Chinese rivals are threatening to overtake the global domination of Japanese electronics makers, the head of the company's China operations said yesterday.
"We have a sense of crisis that not winning in China will mean we won't be able to win anywhere in the world," Matsushita director Toshio Sugiura said. "If you can't win in China, you can't win in Japan. If you can't win in China, you can't win in the United States."
Sugiura's remarks underline the growing efforts by Japan's major electronics manufacturers to strengthen their Chinese business. It also points to the deep fears among some Japanese that their position as an economic power is being eroded away by the growing might of their Asian neighbor.
For electronics makers like Matsushita, which makes the Panasonic brand, Chinese makers are beating them in global markets with cheaper products at a time when China is growing as a huge attractive market.
Sugiura said the cost of labor in Japan was about 20 to 40 times the cost of labor in China. When US makers began to lose out to the Japanese in the last few decades, the cost of labor in Japan was just about one-fifth that of the US, Sugiura said.
"We need to humbly face up to this situation," he said.
Matsushita's Chinese business is worth about ?450 billion (US$3.6 billion) in sales this fiscal year. Sugiura hopes to expand that to ?1 trillion (US$8 billion), or about a third of the company's overseas production by 2005.
While acknowledging that details of a China strategy are still being worked out, Sugiura said Matsushita is streamlining the management of its 41 companies in China to cut costs and speed up decision-making.
Matsushita will also empower its companies in China to make their own decisions, expand research and development in China and utilize resources in Taiwan -- including workers hired there -- for its Chinese business, Sugiura said.
Matsushita's business in China, with its potential for low costs and nimble decision-making, will likely be a model for the Osaka-based company's global business, he said.
In April, Matsushita reached a deal with TCL Holdings, a major Chinese electronics maker, to sell TCL televisions and other lower-end products under the Panasonic and National brands in China, while selling Matsushita products through TCL sales channels in China.