BY HIDEO KAITO

THE ASAHI SHIMBUN

2009/12/28

Eco-friendly and emerging markets are the new buzzwords of Japanese industry, especially among automakers.

Many of the nation’s leading companies are redrawing their business plans to focus on these new opportunities.

In the automobile sector, for example, an announcement Dec. 9 in Tokyo was symbolic of the way the auto industry is embracing this new era. It was the day that Suzuki Motor Corp. and Volkswagen AG trumpeted their agreement to enter into a comprehensive alliance, including a capital tie-up.

In announcing the formation of the world’s largest auto-making group, Volkswagen Chairman Martin Winterkorn said the agreement would allow his company to make substantial inroads into Asian markets. For its part, the Japanese automaker stands to gain environmental technology developed by Volkswagen.

Suzuki has a strong base in the fast-growing market in India with its low-cost technology in producing minicars. Volkswagen has a strong presence in China and a reputation for “green” technology.

The global automobile market is still reeling from the global recession that hit in fall 2008. In 2008, global sales of new vehicles reached 61 million units. The figure is projected to plummet to around 55 million vehicles this year.

However, demand for automobiles in newly emerging economies is expected to remain strong. In industrialized economies, demand for eco-friendly cars is expected to increase.

In another move that is linked to accelerating the development of electric cars, Mitsubishi Motors Corp. revealed in early December that it had asked PSA Peugeot Citroen for a possible capital injection. MMC is set to supply its i-MiEV electric cars to the French group for sales under the latter’s own brand.

Two American automakers that filed for bankruptcy protection this spring are also moving to strengthen their positions in the global market.

Chrysler Corp. received a capital injection from Italy’s Fiat group and is pinning its hopes on the development of compact cars to bring about its recovery.

General Motors plans to invest $700 million (about 62 billion yen) in production facilities for the Chevrolet Volt electric car. It also retracted its plan to sell the German automaker Opel, which has a strong presence in compact cars.

Japanese electric appliance producers are also focusing on the environment and newly emerging economies.

In an October speech at an electronics exhibition in Makuhari Messe in Chiba, Panasonic Corp. President Fumio Ohtsubo stated: “We will place ‘ecology’ as the main axis of all our business operations. We also want to create a new volume zone in the various regions depending on what people there want. This will be different from simply selling cheap products.”

Panasonic made Sanyo Electric Co. a subsidiary on Dec. 21. One objective in acquiring Sanyo was to ramp up its efforts to sell appliances in newly emerging economies while also taking advantage of the rechargeable battery technology developed by Sanyo for eco-cars.

Sony Corp. is strengthening sales of low-priced LCD TVs in China, India and Brazil. In November, Sony revealed it was also moving into the rechargeable battery field.

In April, Takashi Kawamura, chairman and president of Hitachi Ltd., said his company’s business operations would focus on social infrastructure sectors for a low-carbon society, such as railways and nuclear power generation.

Japanese companies are trying to diversify while undergoing major restructuring.

Many domestic factories have been shut or moved overseas, and thousands of nonregular workers have lost their jobs. Companies have also implemented early-retirement programs to trim their payroll of regular employees.

The streamlining has reverberated among the small businesses that serve as parts suppliers. Some executives of major electronics companies say it will be difficult in the long run to maintain a manufacturing sector in Japan due to high labor costs and a strong yen.

Even while Japanese companies focus more on the environment and newly emerging economies, the average Japanese consumer is unlikely to benefit.(IHT/Asahi: December 28,2009)
Source: Asahi Shimbun