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Panasonic to focus on high-value-added TVs to maintain profitability

Courtesy of Panasonic Corp.
A TV model equipped with casters launched in October

Akira Toyoshima, head of Panasonic Corp.’s television operations, said in an interview with The Yomiuri Shimbun and other media that the company will concentrate its management resources on developing high-value-added products to maintain profitability.

In October, Panasonic established the Entertainment & Communication Business Division to handle digital cameras and audio equipment, in addition to televisions. Toyoshima is the president of the division, which will be spun off from its holding company in April 2022.

Panasonic has agreed with Chinese major electronics maker TCL to outsource the production of low-cost TV models. But, in the interview, Toyoshima did not mention specific partners for its future TV business operations, including TCL, only saying, “We have contacted some companies and reached agreements for partnerships.”

Regarding Panasonic’s past TV business operations, Toyoshima said its products had been produced “from the perspectives of a manufacturer, and not appreciated by consumers.”

The mishandling had been “reflected in the sales prices and business environment,” he added.

Toyoshima also revealed a plan to reduce the number of TV models by more than 10% from the fiscal 2020 level by the end of fiscal 2021. “We will prioritize the value that our customers pursue rather than scale and market share,” he said.

An example of such a strategy is a TV model launched in October that is equipped with casters, allowing it to be placed or positioned freely. The design reduced wired accessories compared with conventional models, adding to its mobility. Panasonic plans to focus on such innovative products from now on.

Major Japanese electronics makers had kept TVs as their flagship products and achieved high shares of the world market. However, Chinese and South Korean makers, which have price competitiveness, outmaneuvered their Japanese rivals with low margins and a high-turnover business model.

As a result, Hitachi Ltd. stopped domestic production in 2012, and Toshiba Corp. sold its TV business to China’s Hisense in 2018. Mitsubishi Electric Corp. also sharply curtailed production and sales in September.

In cooperation with TCL, Panasonic will reduce the scale of its own annual production to about 1 million TV units, one-twentieth of its peak production.

An executive of Panasonic said, “We want to secure the Japanese market at all costs.”

In Japan, however, emerging companies such as Iris Ohyama Inc. are steadily gaining market share, in addition to foreign companies such as Hisense and TCL, according to British research firm Omdia.

“Chinese manufacturers’ products are no longer ‘cheap and low-quality.’ Competition in the domestic market is severe. Companies cannot survive unless they develop products that really resonate with customers,” said Atsushi Osanai, a Waseda University professor familiar with the electronics industry.