Challenges for electronics makers

Electronics makers, which served as a crucial engine of the Japanese economy during the period of high growth, are now experiencing difficult times. Certainly they suffered greatly from external factors such as the 3/11 disasters, the floods in Thailand and the strong yen. But leaders of these companies should realize that a failure to correctly grasp the needs of consumers as well as the moves of their overseas rivals and the market situation abroad have also contributed to their difficulties.

Panasonic, Sony and Sharp are expected to suffer big losses on the consolidated basis in the business year that ends March 31. Their under-performance is attributable partly to their failure to effectively compete in pricing for thin-display televisions.

In the 2012 business year, Panasonic and Sharp are expected to register a record group net loss — ¥780 billion and ¥290 billion, respectively. Sony is expected to suffer a group net loss of ¥220 billion. The combined losses of these three companies reach a staggering figure of nearly ¥1.3 trillion.

South Korean electronics makers such as Samsung Electronics and LG Electronics are waging fierce offensives in overseas markets and undermining the footing of Japanese rivals. Although they have been helped by the weak won, their management’s ability to make quick decisions contributed significantly to their success. Samsung now has the largest global market share for thin-display TVs.

Japanese electronics makers should feel a sense of crisis. For example, Samsung has succeeded in developing a TV set with an organic electroluminescent display, which is dubbed as the next generation TV. Leaders of Japanese electronics makers should realize that South Korean electronics makers are technologically ahead of Japanese rivals in some areas.

Personnel changes have been announced at Panasonic, Sony and Sharp, and new presidents will lead them. They have the heavy responsibility of lifting their companies out of their slumps. They must not only set up structures that can flexibly cope with new challenges but also develop corporate cultures that cherish in-house efforts at technological innovation.

Even though their traditional management styles led to success in the past, they must now drastically change their companies’ ways of thinking and approaches to innovation, product development, consumer needs and global competition.