ID :
18801
Wed, 09/10/2008 - 15:22
Auther :
Shortlink :
http://m.oananews.org//node/18801
The shortlink copeid
Allure of China's Huge Market Drawing Many Japanese Firms
Tokyo, Sept. 9 (Jiji Press)--The strategies of Japanese companies
doing business with China after the Beijing Olympics are expected to become increasingly domestic demand-oriented, reflecting the continuing allure of the 1.3-billion-strong market.
Although worries persist over an economic slowdown in China as the
Chinese export industries' competitiveness has been hurt by rises in labor
costs and the value of the yuan, the dominant view is that the economy will
not suffer a major slowdown.
Rather, expectations are building for consumption growth in China.
"Things are beginning to sell well, not only in coastal cities like Beijing
and Shanghai but also in inland regions," a Honda Motor Co. <7267> official
says.
Change in Consumption Trend
Toyota Motor Corp.'s <7203> auto sales in China are growing at a
year-on-year pace of some 30 pct, led by the Camry sedan, the automaker's
mainstay model in China.
Besides the Camry, more luxurious Toyota cars like the Land Cruiser
Prado sport-utility vehicle are also attracting strong demand, with
higher-than-expected sales.
A Toyota executive expresses surprise at the emerging popularity of
luxury cars, admitting that "this change was beyond my expectations."
Some Japanese businesses are focusing on the change in Chinese
eating habits.
Anticipating a sharp increase in China's bread consumption,
Japanese trading house Marubeni Corp. <8002> has invested in a Chinese group
as a way into the bread and confectionery market, mainly in Shanghai.
Japanese trader Itochu Corp. <8001> and bread maker Shikishima
Baking Co. are planning to start production and sales of bread in Shanghai
in 2010.
Among Japanese retailers, Aeon Co. <8267>, Ito-Yokado Co. and
Seven-Eleven Japan Co. plan to expand their networks in China, while Isetan
Co. operates department stores in Shanghai, Tianjin and Chengdu.
Electrical equipment giant Hitachi Ltd. <6501> is focusing on sales
of not only digital media devices, such as flat-panel televisions, but also
infrastructure-related equipment, such as elevators, construction machinery
and railroads.
Of the 13-billion-dollar sales Hitachi aims to achieve in China in
2010, sales through exports to third countries from China account for only
one billion dollars. "China is no longer a mere production base," says a
senior Hitachi official.
Aiming to Offset Decline in Japan
One factor behind efforts by Japanese companies to expand sales in
China is Japan's consumer market decline, which is seen as inevitable
because of the falling birthrate and aging society.
With the possibility of a sudden upturn in the Japanese market seen
as remote, many Japanese businesses have no choice but to boost their
Chinese operations in order to cover falling demand back home, says an
analyst at a Japanese financial institution.
In September last year, Advantage Partners LLP became the first
Japanese investment fund to open an office in Hong Kong. The office supports
Chinese market entries of Japanese retailers and restaurant operators, in
which the fund invests.
"The recent Chinese stock market slump has created a good
environment for Japanese companies thinking of forming capital alliances
with or making investment in Chinese firms," an investment fund executive
says.
However, there are also cases where things have not gone as well as
expected.
Isetan shut down an outlet in Jinan last September and will close
one of its two stores in Shanghai this November. Both closures are due to
sluggish sales.
Mizuno Corp. <8022>, a Japanese maker of sporting goods, had
originally planned to increase the number of its Chinese outlets to 1,200 by
next spring from 865 as of last July, but the company revised down the
target figure to 900.
A spokesman for the company says the Mizuno brand has yet to gain
sufficient recognition in China, where world-class brands such as Nike are
popular.
Although many Japanese companies doing business in China are
increasingly focusing on driving domestic demand, these examples show that
the strategy does not necessarily work for all Japanese businesses.
doing business with China after the Beijing Olympics are expected to become increasingly domestic demand-oriented, reflecting the continuing allure of the 1.3-billion-strong market.
Although worries persist over an economic slowdown in China as the
Chinese export industries' competitiveness has been hurt by rises in labor
costs and the value of the yuan, the dominant view is that the economy will
not suffer a major slowdown.
Rather, expectations are building for consumption growth in China.
"Things are beginning to sell well, not only in coastal cities like Beijing
and Shanghai but also in inland regions," a Honda Motor Co. <7267> official
says.
Change in Consumption Trend
Toyota Motor Corp.'s <7203> auto sales in China are growing at a
year-on-year pace of some 30 pct, led by the Camry sedan, the automaker's
mainstay model in China.
Besides the Camry, more luxurious Toyota cars like the Land Cruiser
Prado sport-utility vehicle are also attracting strong demand, with
higher-than-expected sales.
A Toyota executive expresses surprise at the emerging popularity of
luxury cars, admitting that "this change was beyond my expectations."
Some Japanese businesses are focusing on the change in Chinese
eating habits.
Anticipating a sharp increase in China's bread consumption,
Japanese trading house Marubeni Corp. <8002> has invested in a Chinese group
as a way into the bread and confectionery market, mainly in Shanghai.
Japanese trader Itochu Corp. <8001> and bread maker Shikishima
Baking Co. are planning to start production and sales of bread in Shanghai
in 2010.
Among Japanese retailers, Aeon Co. <8267>, Ito-Yokado Co. and
Seven-Eleven Japan Co. plan to expand their networks in China, while Isetan
Co. operates department stores in Shanghai, Tianjin and Chengdu.
Electrical equipment giant Hitachi Ltd. <6501> is focusing on sales
of not only digital media devices, such as flat-panel televisions, but also
infrastructure-related equipment, such as elevators, construction machinery
and railroads.
Of the 13-billion-dollar sales Hitachi aims to achieve in China in
2010, sales through exports to third countries from China account for only
one billion dollars. "China is no longer a mere production base," says a
senior Hitachi official.
Aiming to Offset Decline in Japan
One factor behind efforts by Japanese companies to expand sales in
China is Japan's consumer market decline, which is seen as inevitable
because of the falling birthrate and aging society.
With the possibility of a sudden upturn in the Japanese market seen
as remote, many Japanese businesses have no choice but to boost their
Chinese operations in order to cover falling demand back home, says an
analyst at a Japanese financial institution.
In September last year, Advantage Partners LLP became the first
Japanese investment fund to open an office in Hong Kong. The office supports
Chinese market entries of Japanese retailers and restaurant operators, in
which the fund invests.
"The recent Chinese stock market slump has created a good
environment for Japanese companies thinking of forming capital alliances
with or making investment in Chinese firms," an investment fund executive
says.
However, there are also cases where things have not gone as well as
expected.
Isetan shut down an outlet in Jinan last September and will close
one of its two stores in Shanghai this November. Both closures are due to
sluggish sales.
Mizuno Corp. <8022>, a Japanese maker of sporting goods, had
originally planned to increase the number of its Chinese outlets to 1,200 by
next spring from 865 as of last July, but the company revised down the
target figure to 900.
A spokesman for the company says the Mizuno brand has yet to gain
sufficient recognition in China, where world-class brands such as Nike are
popular.
Although many Japanese companies doing business in China are
increasingly focusing on driving domestic demand, these examples show that
the strategy does not necessarily work for all Japanese businesses.
