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| Japanese Manufacturing Bases for Digital Consumer Electronics, etc., Clearly Coming Back to Japan; a Move towards Strategies to Prevent Handing Everything Over to China | FEB. 1. 2005 | |
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Yamanoi Norio
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| A trend toward relocating overseas Japanese manufacturing bases for competitive cutting-edge products, particularly those in the field of digital consumer products, back to Japan is making itself apparent. A sense of crisis of a hollowing out - that Japan was starting to lag behind China, South Korea and Taiwan not only in terms of price but also in innovative manufacturing techniques - began to arise and has aroused a new movement among manufacturers in Japan. |
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| Accelerated Move towards the Manufacture of Components in Japan |
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Fuji Photo Film Co., Ltd. will be building a new plant in Japan for the manufacture of liquid crystal display (LCD) components. The company will be investing over 100 billion yen in one of the largest investments to be made for the production of liquid crystal related components. Fuji Film is aiming to make the plant operational sometime after 2006. Meanwhile, Sharp Corporation's cutting-edge liquid crystal panel plant in Kameyama City, Mie Prefecture has been in operation since January 2004, while Matsushita Electric Industrial Co., Ltd. is currently building a plasma display panel (PDP) plant in Amagasaki City, Hyogo Prefecture. In all three cases, domestic, rather than overseas manufacturing was judged to be more advantageous. This was because a manufacturing base located close to research facilities was desirable in order to keep up with the rapid pace at which the upgrading of cutting-edge products proceeds. Furthermore, this is a manufacturing sector in which automation has advanced and does not involve a great amount of labor costs.
Japan was a consumer electronics giant until the 1980s. Videocassette recorders (VCRs) and camcorders were mass produced and exported around the world, earning foreign currencies. This structure began to crumble, however, in the 1990s. The appreciation of the value of the yen made Japanese consumer electronics less cost competitive, and many manufacturing bases for products that were not very competitive were transferred to China and Southeast Asia where labor costs were low.
Although these relocations of plants to overseas locations were effective in terms of cost reduction, Japanese companies were unable to foresee that they would also result in the establishment of new consumer electronics companies by local engineers based on what they had learned or that these companies would grow to become their rivals.
Some of the world's largest consumer electronic companies - such as Matsushita and Sony Corporation - can still be found in Japan. However, the truth is that because of the competition they are facing by other companies in Asia, including China, they are unable to attain the kind of huge profits that they had marked in the past.
This situation, however, is starting to change for the better as a result of a major boom in digital consumer electronics. Although called a "boom," it is not something that will be short-lived. A major change is taking place, much as in the way that color television sets replaced black and white TVs and compact discs replaced records. Japanese consumer electronics manufacturers are beginning to recover their international competitiveness and are once again becoming major players. |
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