Japan’s electrical groups need new business models (BBC-interview: Yen ‘not the cause of woes of Japan’s electronics firms’)

Japan’s “Big-8″ electrical groups (Hitachi, Panasonic, Sony, Mitsubishi-Electric, Sharp, Toshiba, Fujitsu, NEC) combined are of similar economic size as the Netherlands.

Over the last 15 years, their combined annual sales growth was zero, and their combined annual loss was YEN 50.6 billion/year (= US$ 0.6 billion/year).

Compelling evidence that new business models for this sector present a huge opportunity – as explained in this BBC interview.

Sales growth of Japan's
Sales growth of Japan’s “Big-8″ electrical manufacturers vs top 7 electronics component makers

Contrasting Japan’s “Big-8″ electronics groups (Hitachi, Panasonic, Sony, Mitsubishi-Electric, Sharp, Toshiba, Fujitsu, NEC) with Japan’s 7 electronic parts makers (Murata, Kyocera, TDK, Alps, Nidec, Nitto, ROHM):

Over the last 14 years since FY1997, the combined growth in revenues (=sales) of Japan’s “Big-8″ electronics groups was zero.
The compound annual growth rate (CAGR) of Japan’s top 7 electronic parts makers combined was +3.1%.

Net income/losses of Japan's
Net income/losses of Japan’s “Big-8″ electronics giants vs top-7 electronics components makers

Net income (profit) of Japan’s “Big-8″ electronics groups vs top-7 electronics parts makers:

Over the last 14 years since FY1997, Japan’s “Big-8″ electronics groups combined showed average losses of YEN 50.6 billion/year (=US$ 0.6 billion/year), while Japan’s top 7 electronic parts makers combined earned YEN 196 billion/year (= US$ 2.4 billion/year).

Net income/losses of Japan's top electrical groups
Net income/losses of Japan’s top electrical groups

Net after tax income of Japan’s “Big-8″ electronics groups:

This figure shows net after tax income for Japan’s “Big-8″ electronics groups (Hitachi, Panasonic, Sony, Mitsubishi-Electric, Sharp, Toshiba, Fujitsu, NEC), for the years since FY1997. For 5 of these 14 years the industry sector reported combined losses, which in total exceeded the profits achieved in good years.
As a result, averaged over all 14 years, the industry sector shows combined losses on the order of US$ 0.6 billion/year.

Creating new business models for this very large industry sector (of similar economic size as the Netherlands) is a huge opportunity.

Net income/losses of Japan's top-7 electronic component makers
Net income/losses of Japan’s top-7 electronic component makers

Net income of Japan’s top 7 electronic parts makers:

Japan’s top 7 electronic parts makers are in a much better financial situation than Japan’s electrical groups.

Over the last 14 years since FY1997, this industry sector only showed a net overall loss one single time – in the year following the Lehman shock, but showed combined net profits during all other years, resulting in average annual net profits on the order of US$ 2.4 billion/year.

BBC interview:
BBC interview: “New business models for Japan’s electrical groups needed”

BBC interview:
Watch an extract of the BBC interview about Japan’s electrical industry sector here: Yen ‘not the cause of woes of Japan’s electronics firms’.

More detailed data and analysis in our report on Japan’s electronics industry sector.

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