Japanese electronics parts makers grow, while Japan’s iconic electronics makers stagnate

Japanese electronics parts makers grow, while Japan’s iconic electronics makers stagnate

Japan’s iconic electronics groups combined are of similar size as the economy of The Netherlands

Parts makers’ sales may overtake iconic electronics groups in the near future – they have already in terms of profits

In the 25th edition of our analysis of Japan’s huge electronics industry sector, we compare the top 8 iconic electronics groups with top 7 electronics parts makers over the period FY1998 to FY2014, which ended March 31, 2015 for most Japanese companies. Except for Toshiba, all Japanese major electronics companies have now officially reported their FY2014 results.

Japan’s iconic 8 electronics groups (Hitachi, Toshiba, Panasonic, Fujitsu, Mitsubishi Electric, NEC, SONY and SHARP) combined are as large as the economy of The Netherlands – but while the economy of The Netherlands doubled in size between 1998 and 2015, the sales/revenues of Japan’s iconic 8 electronics groups combined showed almost zero growth (annual compound growth rate = 0.4%) and almost zero income (profits).

Japan’s top 7 electronics parts makers on the other hand – similar to the Netherlands – more than doubled their combined revenues (sales) over the 17 years from FY1998 to FY2014, and earned healthy and increasing profits.

While several of Japan’s iconic electronics groups are fighting for survival, Japan’s parts makers have very ambitious growth plans – some of them may well overtake the traditional electronics conglomerates in sales – they have already in terms of profits. And they aggressively acquire around the world.

Detailed data and analysis in our Report on Japan’s electronics sector (25th edition).
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Japan’s electronics parts makers combined more than doubled sales over the last 17 years

Japan's top 7 electronics parts makers grow at CAGR of 4.6%
Japan’s top 7 electronics parts makers grow at CAGR of 4.6%

Japan’s iconic top 8 electronics groups showed almost no growth over the last 17 years

Japan's top 8 iconic electronics groups stagnate - some fight for survival
Japan’s top 8 iconic electronics groups stagnate – some fight for survival

Japan’s electronics parts makers grow – the traditional electronics groups stagnate

Japan's electronics parts makers grow - Japan's iconic electronics groups stagnate
Japan’s electronics parts makers grow – Japan’s iconic electronics groups stagnate

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Kazuo Inamori, founder of Kyocera and DDI (KDDI), rebuilds Japan Airlines using Amoeba Management (アメーバ経営)

Kazuo Inamori, founder of Kyocera and DDI (KDDI), rebuilds Japan Airlines using Amoeba Management (アメーバ経営)

Kazuo Inamori (稲盛 和夫) one of Japan’s legendary serial entrepreneurs

Japan Airlines (日本航空株式会社) turnaround from bankruptcy

Bad news from Japan’s electronics industry sector makes global headlines this week (I was interviewed on BBC, US National Public Radio etc) – in this newsletter, lets look at some good news from Japan.

Kazuo Inamori (80 years old, born January 30, 1932), Japanese serial entrepreneur, founded Kyocera Corporation on April 1, 1959, founded DDI (now KDDI) in 1984, and turned around Japan Airlines (JAL) during the last two years.

Japan Airlines (JAL) went bankrupt on January 19, 2010, Kazuo Inamori turned around JAL, and JAL went public again on Tokyo Stock Exchange on September 19, 2012, returning substantial profit for the Enterprise Turnaround Initiative Corporation of Japan Fund.

Serial entrepreneur Kazuo Inamori
Serial entrepreneur Kazuo Inamori

Kazuo Inamori used his “Amoba Management” (アメーバ経営) techniques to rebuild Japan Airlines from bankruptcy

Kazuo Inamori is famous for “Amoeba Management (アメーバ経営)”, essentially Amoeba management means divisional accounting, and has been refined for the management of Kyocera and many other companies.

Today Kyocera is divided into about 3000 “amoebas” – applying the amoeba management methods to Japan Airlines

Applying “Amoeba management” to JAL, Kazuo Inamori installed a real time system, to determine the profit of each route and each single flight in real time, while in the past profits (or losses) at Japan Airlines, were calculated months after the fact.

Kazuo Inamori on leadership: “the leader must have a vision and burning determination to carry out the vision whatever the obstacles”, and must communicate aims and targets to everyone in the company.

On nuclear energy:

Japan’s energy / electricity sector is in upheaval, and given Japan’s respect for seniority, given Kazuo Inamori’s standing in Japan, understanding Kazuo Inamori’s opinion is very important for understanding how Japan’s energy landscape is likely to evolve in the future.

“In the past the problems of nuclear energy were hidden from the public, and in the future must be disclosed”.

“It is not possible to maintain the current sophisticated society without nuclear power”. He thinks that nuclear power is a necessary evil.

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Kyocera expands in Europe via acquisition of TA Triumph-Adler

Kyocera is one of Japan’s powerful electronics companies, which together are about as large economically as the whole of the Netherlands.

Taking advantage of low EURO exchange rates and the high YEN, and low valuations during the current economic crisis, Kyocera acquired 93.84% of TA Triumph-Adler AG for a total purchase price on the order of EURO 98.7 Million.

Triumph was founded 1896 as a bicycle maker, and has grown into a major European office equipment manufacturer and sales company. Triumph used to be famous for typewriters, with the disappearance of typewriters, Triumph went through a long sequence of restructuring and through many merger and acquisition transactions.

Kyocera acquired TA Triumph-Adler for its distribution network: TA Triumph-Adler has about 35,000 companies as customers in 33 countries, with 70% of sales in Germany, giving Kyocera a much larger distribution footprint in Germany and EU.

For an overview and analysis of Japan’s formidable electronics companies read our J-ELECTRIC report.

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