Earlier this year, we blogged about the financial results of some of the world’s top electronics manufacturer. What was clear was that Japanese firms such as Sony and Sharp were not doing well, whereas Korean-based Samsung and Chinese firms were thriving. And we said we would look into this. Well, thanks to the BBC, we have an answer.
The first major factor has been the digital revolution. Japanese companies became successful making complex electronic products, but these did not contain software and so were basically ‘machines’. Today’s electronic products all contain software, and the Japanese companies have not been good at developing this. But secondly, the chip that drives the product can be purchased by any manufacturer, so that those in lower cost economies can make products more cheaply than operators in Japan.
The article concludes with an insight into Hitachi, who in response to the challenge from outside Japan, changed its operations strategy all together. It got rid of its consumer electronics business and refocused on what originally had been its core business – heavy engineering.