WHAT'S WRONG WITH JAPANESE ELECTRONICS?

Stock price of Sony, Panasonic

SONY, PANASONIC was the world class electronics brand until 10 years ago. Then today their brand image, market share, stock price and profit are all in deep bottom and looking up Samsung, LG and Chinese makers who used to be subcontractors for their own. The employees in Sony, Panasonic and other major Japanese large makers are always very stoic and work very hard. But still they cannot make it.


Why this happened? Here is my observation as one of ex-employee of Japanese Giants.


BUSINESS MODEL

• "NOW THEY CANNOT SELL THE PRODUCTS AT THE PRICE THEY WANT"
  Such a simple phrase tells everything.  They always think about customers and market, and trying to create the best products for them.
  Why they do such a hard-work but cannot get return?
  



Sony HQ building, Tokyo

• "They spend their time to the area customer is not interested.They are always under pressure that they always have to fully satisfy their customers. They believe customer always wants the best quality, best design, grate number of features. They show the excellent craftsmanship to build the excellent products which they want. Then cost goes up, and their profit never catch up the cost.
  
•  "Market needs new value measurement"Yes there are some customers who wants the best quality, best design and best features. But it is not the majority of customer's voice any more. Sony launched Walkman at 1971.  It does not have speaker.  No recording function.  Sound quality was just so so, not comparable to nice audio set in a living room. But it has got great value for young generation.  It was the moment that music went out from houses.
  
• "Same device everywhere, anyone can make the same"
  From the late 1990s, manufacturing process comes to component block assembly.
  Device is standardized, subcontractors becomes competitors. Competitors make the market price lower, and made Sony, Panasonic less competitive.
  
• In balance of cost and market value, this is what they have to understand.
  If they make the products same as Apple computer, they cannot beat Korean and Chinese. Because they make the same products as Apple while you look at the production capacity and cost, it is obvious.
  
• What they need to do?
  They should admit conventional electronic business almost ended. In order to survive and get out from financial crisis, they cannot help but downsize the operations. They have to limit manufacturing facilities only for extra high value.
  Then they have to challenge and create totally different market value.
  In such movement, they should not stick to the high quality, many feature, good design.  They are competencies for Japanese, but you have to believe their creativity can overcome these existing competencies.
  

FINANCING

•  "DIRECT FINANCING WAS TOO SUCCESSFUL IN THE PAST"
• Sony is the first Asian company who bring their stock in overseas stock market (in 1970 at NY exchange market).
• Sony's stock was appreciated in the world, and it makes Sony much easier to finance at competitive rate.
• When the business goes well, it worked very much, but it's side effect (fluctuation of market price) suffers the company more when the business does not go well.
  

MANAGEMENT ISSUES

• "SAME AS ALL OTHER HUGE COMPANY BUT .."
• Too frequent organization change and management change.  It was Sony's culture from the founder's period. But nowadays, it's too much.
  They changed 7 directors of TV business group in 10 years. 
• Managements look for only monthly bases not decades as the result of this frequent changes. Middle management also do the same.
• It make all staffs unconcerned about top management message (since it changes frequently) and loose loyalty to company.
• By having many job cut, many 1st class people left from the company, and many of them becomes assets in competitors in Korea, China or other industries.
• Bureaucratic grows and makes all process slow, conservative and creates many new staffs who has excellent background but just critics.

　

TO BE A CHALLENGER

Sony History Museum in Shinagawa, Tokyo

• Don't be pressed by huge success story in the past, but do learn from the spirits and motivations what their founders had. 

When I remember I love Japan, it is always by chilled fine Japanese rice wine and fresh fish "sashimi" (raw fish meet). Things we should not forget is the fish has to be very fresh. Fresh as much as possible.

The best is to eat on the fisherman's boat. The second is to east them at fisherman's village. Here is "Eat fish at there then die" list in Japan.　Late autumn and winter is the best season.

NO. 1 氷見（ひみ）　富山県氷見市 HIMI @ Himi City, Toyama Prefecture

　Yellowtail in winter (Kan-Buri) is famous. Toyama is also famous as fine rice wine production, the combination is perfect.

NO. 2 境港（さかいみなと）　鳥取県境港市 SAKAIMINATO @ Sakaiminato city, Tottori Prefec.

　It's in south-west of Japan but very cold place. Crab from Japan sea is very lovely.

NO. 3 安乗（あのり）　三重県志摩町 ANORI @ Shima town, Mie Prefecture

　Secret spot for the natual globefish, and famous by lobster.

NO. 4 勝浦　千葉県勝浦市 KATSUURA @ Katsuura, Chiba Prefecture

　Famous by alfonsin. Close location from Tokyo.

NO. 5 浜坂　兵庫県新温泉町　HAMASAKA @ Shin-Onsen, Hyogo Prefecture

Crab is nice, and hot spring bath is around.

NO. 6 呼子　佐賀県唐津市 YOBUKO@Karatsu, Saga Prefecture

Squid is very famous.

NO. 7 塩釜　宮城県塩釜市 SHIOGAMA@Shiogama, Miyagi Prefecture

　Tuna from near seas, and any kind of fish from Sanriku-coast. So many Sushi restaurants as such a rather small town. Famous sightseeing spot "Matsushima" is quite close from here.

NO. 8 平潟（ひらかた）　茨城県北茨城市 HIRAKATA@Kita-Ibaragi city, Ibaragi Prefecture

　Angler looks rather grotesque but very good taste.

NO. 9 厚岸（あつけし）　北海道厚岸町 ATSUKESHI@Atsukeshi, Hokkaido

　Best for any seafoods, especially Oyster.

NO. 10　那珂湊（なかみなと）　茨城県ひたちなか市 SAKAIMINATO@ Hitachi-naka city, Ibaragi Prefecture

　

Again Angler is famous.

　While making this list, my mouth became full of water..

JAPAN's "CHANGE"

Not only me but the most of Japanese were really fed up with Liberal Democratic Party's governance for the last 50 years though, they had been still in power since 1955. Democratic Party of Japan won at last.

The model of Japan's politic system is United Kingdom. But the big difference is the voters attitude. It seems that British voters get used to letting Conservatives and Labors to compete, and knows how to control politic parties. On the other hand, Japanese voters get used to being controlled by them and took quite long time to realise they themselves are the rulers of this country.

This is just a start for real change. There are huge numbers of undone homeworks left by LDP.

New Rome will not be built in a day...

(photo is the National Diet Building in Tokyo)

Masks for Hay Fever

From mid Feb for one month, 1/4 of Japanese are bothered by putting flu-mask and taking madicine in order to protect themselves from Hey Fever. 

Japanese hey fever is normally caused by Ceder trees but also by pine, cypress,  house dust and many others.   This is ok, since this problem is in may countries.  Perhaps the most foreign people may think strange is when they see the masked Japanese crowd commuting to their jobs and schools.

Actually I am the one of them, and luckly I have to wear a mask for one more month than other people thanks to Ceder, Cypress and Pine trees.  

Government official says they invented flower-powderless ceder trees, this is good news! 

So I can be free from this holly allergy after the new invented ceders grow up. 

Let's say, just another 30 to 40 years!

UK business trip - Exchange rate

I am now at a hotel in London Heathrow, UK.

We have just finished customer visits as well as exhibition attending.

It has been four years from my last business trip to UK, but the beauty of England never changes. I mean not airport or cities. Local towns and villages. This time, again, we had a wonderful time with my English friends in a 16c country cottage pub(photo left). Drink, chat and photos so on.

By the way, the prices in UK are too much. This is what I thought. If you take just a pub lunch, it costs 6 to 7 GBP at the cheapest. Perhaps over 10 GBP at pubs in nice atmosphere. Even country side. My office in Tokyo located in south part, there are many skyscrapers and rather expensive area. But still lunch menu in hotel restaurant is around 4 to 5 GBP.

Besides of some inflation in UK or British people becomes rich thanks to Lady Thatcher and Blair period, besides of deflation in Japan after the corruption of economy in 1990, there is something wrong. Exchange rate of GBP and JPY is 1 : 210. One pound is 210 yen.

With one pound you can't buy even one bottle of Coke at an airport Kiosk, but with 210 yen I can buy a bottle of Coke and perhaps some small chocolate bar. Even considering the decrease of Japanese population and low expectation to further growth of economy in Japan, I think Yen is underestimated much.

My feeling on exchange rate is 1:100 to 1:150. I have got some money in Citibank UK therefore partly I am happy though I rather prefer to putting some adjustment on it. God hands in the market often makes wrong.