A global slump in demand for technology is forcing Japanese electronics firms to trim costs by shifting production to China where they can take advantage of cheaper labor and growing demand.
Troubled consumer electronics company Matsushita Electric Industrial Co. Ltd -- better known through its brands Panasonic and National -- said yesterday it would boost chip production in China to cut costs, while high-tech giant Toshiba Corp and photocopier maker Ricoh Co Ltd said they were making similar moves.
"We estimate the labor costs are much cheaper in China, up to one-seventh to one-tenth of Japanese labor charges," said a Matsushita spokesman.
Last week the firm posted its first ever quarterly operating loss of ?38.7 billion (US$312 million) in the three months to June, compared with a profit of ?21.2 billion in the same period last year.
Matsushita pledged to climb back into the black by implementing strict restructuring measures.
"The total demand for our company is diminishing," said the spokesman yesterday.
"We are going to increase production in China by using the production line at Matsushita Stone Semiconductor Corp [MSSC]," he said, referring to the firm's joint venture in Beijing.
Matsushita has a 60 percent stake in MSSC, while its Chinese partner Stone Semiconductor owns 30 percent. The remaining 10 percent belongs to Japanese trading company Mitsui Busan.
Toshiba was considering production of mobile phone components in China because it would be cheaper and there was a huge growth in demand there, said company spokeswoman Midori Suzuki.
Japan's second largest electronics maker would also contract out washing machine production to the Exicoya Group, a Chinese firm in Shangdong, China, because of an increase in demand, she said.
"Production will start from around this autumn and we hope to make 500,000 machines annually to sell in the country," Suzuki said.
Cost-cutting and strong demand also prompted Japanese office equipment maker Ricoh to increase production of digital photocopiers at a factory in Shensen, southern China, company spokesman Takanobu Matsunami said.
"It is simply a cost advantage," he said. "We should be able to reduce the cost of developing products by 40 percent as a result."
Ricoh has a second factory in Shanghai which makes fax machines, and production would also be boosted there, Matsunami said.
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