Osaka - Sunday, July 31, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on July 29 that more Chinese companies have been acquiring Japanese companies, taking the opportunity of reporting the announcement made by Panasonic on July 28 that refrigerator and washing machine business originally of Sanyo is to be sold to Haier, a leading Chinese consumer electronics company.
1. What is the acquisition by Haier of Panasonic’s business all about?
1) What is the overview of the acquisition?
On July 28, Sanyo reached a basic agreement with Haier to transfer stocks of 9 companies of refrigerator and washing machine business including Sanyo Aqua by the end of the year. Sanyo will also transfer home appliance businesses including air conditioners for 4 South East Asia countries including Vietnam, allowing the use of “Sanyo” brand for a few years.
The business size of the business to be acquired by Haier is approximately 70 billion yen (for 2010), engaged by 2,300 employees worldwide. The acquisition cost is not revealed but experts estimate that it is around 10 billion yen. Panasonic (Sanyo) and Haier are to reach the final agreement by the end of September.
2) Why Haier decided to acquire Sanyo’s refrigerator and washing machine business?
It is to develop high value products leveraging leading edge technologies of washing machines and refrigerators that Sanyo poses. In this way, Haier will be able to meet the needs of drastically increasing middle class in emerging countries and accelerate globalization of their businesses. Such technologies include washing clothes without water using Sanyo’s washing machines and minimizing noise during operation of Sanyo’s washing machines and refrigerators.
Haier started to globalize their business from the end of 1990s and has been expanding sales channels in the U.S., the Middle East etc. The company also had established development sites outside China to launch products meeting local needs. In addition, the company had been manufacturing locally to improve cost competitiveness to grow their business.
Today, their 1/4 of the worldwide business (1,640 billion yen in 2010) is generated from production and sales outside China. The company’s vision is to become the worldwide leader in home appliances, with their business generated from production and sales outside China reaching 1/3 of their worldwide sales.
With the acquisition, the company will be able to obtain sales/distribution channel in Japan and in some major South East Asia, a great “weapon” to achieve their vision. Sanyo had spent 40 years establishing production sites and sales channels and penetrating their brand in South East Asia. That is why recently Sanyo has been enjoying market share of 30% in washing machine and refrigerator business in Vietnam and 10% in Indonesia. In fact, 1,600 employees out of 2,300 employees that have been engaged in the businesses acquired by Haier are in Vietnam and Indonesia.
3) Why Panasonic decided to sell Sanyo’s refrigerator and washing machine businesses to Haier?
It is to focus their limited management resources to other businesses and markets especially emerging markets such as India and Latin America. This would enable them to strengthen product competitiveness and grow business.
Panasonic’s home appliance business for April – June was strong with operation income of 9.8% largely attributing to strong demand of energy saving products after the Japan disaster. However, to further grow their business, strengthening their overseas business in such markets as India, Latin America and Europe is a challenge they currently face.
2. What other acquisitions of Japanese companies/businesses have been made by Chinese companies?
The major ones are summarized in the chart below, followed by a brief outline of a few major M&As.
Recent acquisitions and funding of Japanese companies by Chinese companies
(Source: Nikkei, translated by the author)
Japanese Companies (business seller) / Chinese companies (acquirer or investor) / Timing of announcement / Overview of the M&A
Panasonic Haier July 2011 Acquire Sanyo’s home appliance business
Laox Suning June 2011 Raise investment ratio to make Laox its affiliate. Open new shops in Greater China
NEC Tianma Feb 2011 Acquire 70% stock of small-mid sized LCD panel business affiliate
Panasonic Hunan Corun New Energy Feb 2011 Acquire Nickel-Hydride battery business for bicycles with 500 mil yen
NEC Lenovo Group Jan 2011 Merger in PC business. Lenovo invests 50%+
Renown China Ruyi Group May 2010 Acquire 40% stocks with 4 bil yen
Ogihara BYD March 2010 Acquire factory to obtain molding technologies
Evatech A-Power Feb 2011 Acquire solar battery venture under restructuring with 4.5 bil yen
Honma Golf Marlion Holdings Acquire 50%+ stock owned by the 2 parent companies
1) Why Lenovo acquired NEC’s PC business?
After announced the M&A in January 2011, Lenovo completed acquisition of management right of NEC’s PC business in Japan, a big step forward to gain #1 market share in Japan as well as in Greater China. Lenovo aims to enhance purchasing power and reduce component cost.
2) Why BYD acquired Ogihara’s factory?
It is to expand manufacturing capacity of high quality molding of automobile bodies. Thus, BYD, a new and growing Chinese automobile company, acquired molding factory of Ogihara, a leading Japanese molding company in March 2010.
3) Why Suning made Laox one of its affiliates?
It is to absorb know how of Japanese style shop management and acquire more customers in the Chinese market leveraging Japanese brand.
3. Why have acquisition of Japanese companies by Chinese companies been increasing despite high yen?
It is, as prominent from the above cases, Chinese companies would be able to leverage leading technologies, brand and sales/distribution channel cultivated by Japanese companies, to accelerate their growth and globalization of their business.
It is case by case for Japanese companies. Japanese companies can sell businesses that have little value to them such as the case of Panasonic and Evatech, or obtain an access to Greater China market such as the case of Laox.
In addition, a Japanese M&A advisor pointed out that the mindset and attitude of Japanese companies towards M&A has been changing. He says that more Japanese executives now believe that selling their businesses of little value to them to Chinese companies would result in more growth than restructuring and integrating their domestic businesses.
Resources:-
Increasing Chinese companies have been acquiring businesses of Japanese companies to leverage technologies, brand and sales/distribution channels that Japanese companies have been cultivating for years, to boost their business globalization and worldwide business growth. Such trend is driven by the change in mindset of Japanese executives, many of whom now believe that selling their businesses with little value to them to Chinese companies would result in greater growth than restructuring and integrating the businesses.
2011年7月31日日曜日
Japanese Electronics Business and Performance – Why Strong and Weak?
Osaka - Sunday, July 31, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on July 30 that announcement of financial performance of 8 major Japanese electronics for April – June 2011 (consolidated base) was complete and that there were large contrasts among them.
It is true that the Japan disaster that occurred on March 11 have negatively impacted them all attributing to shortage of components; however, it is apparent that some companies performed far better than others. This attributes to the differences in recovery and strength of business sectors. Some have started to recover and some others have been rather strong when some others have been weak.
1. How was the financial performance of the eight major Japanese electronics?
It is summarized in the chart below.
For Fiscal Year 2011, Consolidated
Company name / Sales (amount) / Sales (change from previous year) / Profit (amount) / Profit (change from previous year)
Hitachi* April-June / 2,150.6 / 0% / 2.9 / -97%
Hitachi* April-March / 9,500.0 / 2% / 200.0 / -16%
Panasonic* April-June / 1,929.5 / -11% / -30.3 /Fell to negative
Panasonic* April-March / 8,700.0 / 0% / 30.0 /-59%
Sony* April-June / 1,494.9 / -10% / -15.5 / Fell to negative
Sony* April-March / 7,200.0 / 0% / 60.0 /Returned to positive
Toshiba* April-June / 1,326.1 / -9% / 0.4 / 1%
Toshiba* April-March / 7,000.0 / 9% / 140.0 / 2%
Fujitsu April-June / 986.0 / -6% / -20.4 / Fell to negative
Fujitsu April-March / 4,600.0 / 2% / 60.0 / 9%
Mitsubishi Electric* April-June / 813.6 / 4% / 27.1 / 4%
Mitsubishi Electric* April-March / 3,790.0 / 4% / 135.0 / 8%
NEC April-June / 669.1 / 0% / -29.7 / Remained in negative
NEC April-March / 3,300.0 / 6% / 15.0 / Returned to positive
Sharp April-June / 640.3 / -14% / -49.2 / Fell to negative
Sharp April-March / 3,050.0 / 1% / 6.0 / -69%
* GAAP: Generally Accepted Accounting Principles
2. Which sectors started to smoothly recover from the disaster?
It is automobile related business sectors, which have started to recover above the original outlook.
Mainly for this reason, Hitachi made upward revision in their estimation of net profit for April – September from zero to 10 billion yen. The company also revised upward of their operation income estimation from 80 billion yen to 100 billion yen and expects 76 billion yen operation income in black. The growth in their construction machinery business in Asia and other emerging countries also is the reason for their upward adjustment. As a result, although high yen is a negative factor, the company did not revise downward their estimation for the fiscal year 2011 ending March 2012.
For the very similar reason, Mitsubishi Electric made upward revision their estimation of net profit for April – September from 45 billion yen to 55 billion yen. The order they received in June for automobile related business recovered to the same level as a year ago, and their factory automation related business in Asia remains strong. As a result, the company revised upward their estimation of the net profit for the fiscal year 2011 ending March 2012 from 135 billion yen from 10 billion yen.
3. Which sector in consumer electronics was strong?
It is home appliance. This is because after the disaster the general public became extremely aware of the eco (ecology and economy, i.e. energy saving) due to nationwide electricity shortage. This led to strong revenue in many home appliance businesses of energy saving products, in particular air conditioners, resulting in stronger performance of Mitsubishi Electric, Toshiba and Hitachi compared to other 5 companies.
Home appliances, although their price is stable compared to digital AV products, have been regarded as not as strong as digital AV because replacement cycle is long. However, home appliances profitability improved because each company launched value-added products of energy saving, antibacterial system/coating and so forth. Home appliance sales were strong in emerging countries where their life standard has been uplifting.
Mitsubishi Electric benefited from such strong home appliance businesses in addition to the recovery of automobile related businesses and strong social infrastructure businesses in Asia. Their worldwide sales of air conditioners and other energy saving home appliances such as refrigerators were strong. This contributed to 4% increase in the operating income for April – June from a year ago for their consumer electronics business.
For the very similar reason, Toshiba’s operating profit for April – June came back to black (positive) after 9 years.
4. Which sector in consumer electronics was weak?
It is digital AV. Flat panel TV demand has been sluggish especially in Europe. Prices have dropped dramatically in most products due to severe competition. As a result, revenue and profitability deteriorated yet there is no sign of improvement for the time being.
For this reason, Panasonic, Sony and Sharp, the three companies with large portion of their business in digital AV products fell in red (negative) for April – June.
Resources:-
The recent contrasts of financial performance announcement of 8 major Japanese electronics companies attributes to which business sectors each of them focuses in. Automobile related sector recovery is above original expectation when others are not, Asia social infrastructure businesses have been strong, home appliances businesses were strong but digital AV businesses were weak.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on July 30 that announcement of financial performance of 8 major Japanese electronics for April – June 2011 (consolidated base) was complete and that there were large contrasts among them.
It is true that the Japan disaster that occurred on March 11 have negatively impacted them all attributing to shortage of components; however, it is apparent that some companies performed far better than others. This attributes to the differences in recovery and strength of business sectors. Some have started to recover and some others have been rather strong when some others have been weak.
1. How was the financial performance of the eight major Japanese electronics?
It is summarized in the chart below.
For Fiscal Year 2011, Consolidated
Company name / Sales (amount) / Sales (change from previous year) / Profit (amount) / Profit (change from previous year)
Hitachi* April-June / 2,150.6 / 0% / 2.9 / -97%
Hitachi* April-March / 9,500.0 / 2% / 200.0 / -16%
Panasonic* April-June / 1,929.5 / -11% / -30.3 /Fell to negative
Panasonic* April-March / 8,700.0 / 0% / 30.0 /-59%
Sony* April-June / 1,494.9 / -10% / -15.5 / Fell to negative
Sony* April-March / 7,200.0 / 0% / 60.0 /Returned to positive
Toshiba* April-June / 1,326.1 / -9% / 0.4 / 1%
Toshiba* April-March / 7,000.0 / 9% / 140.0 / 2%
Fujitsu April-June / 986.0 / -6% / -20.4 / Fell to negative
Fujitsu April-March / 4,600.0 / 2% / 60.0 / 9%
Mitsubishi Electric* April-June / 813.6 / 4% / 27.1 / 4%
Mitsubishi Electric* April-March / 3,790.0 / 4% / 135.0 / 8%
NEC April-June / 669.1 / 0% / -29.7 / Remained in negative
NEC April-March / 3,300.0 / 6% / 15.0 / Returned to positive
Sharp April-June / 640.3 / -14% / -49.2 / Fell to negative
Sharp April-March / 3,050.0 / 1% / 6.0 / -69%
* GAAP: Generally Accepted Accounting Principles
Source: Nikkei, translated by the author
2. Which sectors started to smoothly recover from the disaster?
It is automobile related business sectors, which have started to recover above the original outlook.
Mainly for this reason, Hitachi made upward revision in their estimation of net profit for April – September from zero to 10 billion yen. The company also revised upward of their operation income estimation from 80 billion yen to 100 billion yen and expects 76 billion yen operation income in black. The growth in their construction machinery business in Asia and other emerging countries also is the reason for their upward adjustment. As a result, although high yen is a negative factor, the company did not revise downward their estimation for the fiscal year 2011 ending March 2012.
For the very similar reason, Mitsubishi Electric made upward revision their estimation of net profit for April – September from 45 billion yen to 55 billion yen. The order they received in June for automobile related business recovered to the same level as a year ago, and their factory automation related business in Asia remains strong. As a result, the company revised upward their estimation of the net profit for the fiscal year 2011 ending March 2012 from 135 billion yen from 10 billion yen.
3. Which sector in consumer electronics was strong?
It is home appliance. This is because after the disaster the general public became extremely aware of the eco (ecology and economy, i.e. energy saving) due to nationwide electricity shortage. This led to strong revenue in many home appliance businesses of energy saving products, in particular air conditioners, resulting in stronger performance of Mitsubishi Electric, Toshiba and Hitachi compared to other 5 companies.
Home appliances, although their price is stable compared to digital AV products, have been regarded as not as strong as digital AV because replacement cycle is long. However, home appliances profitability improved because each company launched value-added products of energy saving, antibacterial system/coating and so forth. Home appliance sales were strong in emerging countries where their life standard has been uplifting.
Mitsubishi Electric benefited from such strong home appliance businesses in addition to the recovery of automobile related businesses and strong social infrastructure businesses in Asia. Their worldwide sales of air conditioners and other energy saving home appliances such as refrigerators were strong. This contributed to 4% increase in the operating income for April – June from a year ago for their consumer electronics business.
For the very similar reason, Toshiba’s operating profit for April – June came back to black (positive) after 9 years.
4. Which sector in consumer electronics was weak?
It is digital AV. Flat panel TV demand has been sluggish especially in Europe. Prices have dropped dramatically in most products due to severe competition. As a result, revenue and profitability deteriorated yet there is no sign of improvement for the time being.
For this reason, Panasonic, Sony and Sharp, the three companies with large portion of their business in digital AV products fell in red (negative) for April – June.
Resources:-
The recent contrasts of financial performance announcement of 8 major Japanese electronics companies attributes to which business sectors each of them focuses in. Automobile related sector recovery is above original expectation when others are not, Asia social infrastructure businesses have been strong, home appliances businesses were strong but digital AV businesses were weak.
2011年7月24日日曜日
Sluggish Direct Investment in Japan – Why and How to Improve
Osaka - Sunday, July 24, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, explained today about the target that was set by the Japanese government in the Koizumi Administration and its achievement.
The target wet was to double the direct investment in Japan by foreign capital in four years to increase to 5% of GDP by the end of 2010; however, the achievement was 3.7% of GDP. Percentage of the increase in the direct investment in Japan was only around 50% of the original target.
This did not draw much attention from the economists and general public because the target was set by the Liberal Democratic Party (LDP), the leading party of that time and not Democratic Party of Japan (DPJ), the current leading party. However, this has much meaning to the economy.
1. What is the main reason/background that the target was not achieved?
It is the drastic decrease in the importance of Japan in Asia. According to a survey executed by Ministry of Economy, Trade and Industry (METI), the number of foreign capitals/companies withdrawing from in Japan has been larger than the number of foreign capitals/companies that has been entering Japan.
The recent survey executed by METI targeting foreign capitals/companies asking how attractive Japan is as a business site in Asia explicitly supports it. Japan was #1 for R&D site in 2007 but the #1 position was taken over by China and Japan became #2. Japan was #1 also as APAC Regional HQ but fallen to #4.
2. Why Japan is not as attractive as other Asian countries to invest in?
The main reason for decrease in the attractiveness of Japan as a business site in Asia (i.e. a country to invest in) might be summarized as the smaller growth compared with other countries but that is not all.
Other reasons include slow start of joining the competition with other countries of providing incentives to attract foreign investment in the country. Countries such as China, Korea and Singapore have been proactively providing incentives in the area of tax and regulation to promote foreign capitals entering their country.
The Japanese government also started to set policies to promote Japan as an attractive country to invest in but is rather slow. The plan of decreasing corporate tax that is currently extremely high compared with other countries is yet to be implemented. Tax incentives to be given to foreign capitals when requirements of investment, employment etc. are met is still being studied in the Diet and it seems that it takes a while for its implementation.
3. Is this issue only about foreign capitals? Would it affect decision making of Japanese companies as well?
It is not only about foreign capitals and it is more than likely to affect global strategy of Japanese companies as well. This is because all global companies including those based in Japan would need to develop and execute their global strategy pursuing optimum location in the world.
Indeed, a few Japanese global companies started to relocate “strategic and intelligence-oriented functions” such as strategic planning, R&D and marketing to other countries in Asia. Today, when more than half of the business is operated and revenue is generated outside the home country, global companies located in Japan would be asked for accountability to locate strategic department in Japan.
This means that not only manufacturing sites but also strategic and intelligence-oriented functions may well outflow from Japan to other countries in Asia if appropriate measures are not taken by the government, academia, and industries, both public and private sectors.
4. What is one possible primary solution in avoiding outflow of strategic and intelligence-oriented functions?
It is attracting and acquiring globally-competitive talents. According to Ms. Sanae Tachibana Fukushima, the advisor of Korn/Ferry International APAC, top management of Japanese global companies started to realize this in the last year or two. They did not understand the significance of recruiting non-Japanese talent in the global HQ located in Japan but now they are extremely proactive in acquiring talent from around the globe.
If globally-competitive talent can be attracted and acquired in Japan from around the globe, the significance of locating HQ and other strategic and intelligence-oriented functions in Japan as the site to develop and execute global strategy would drastically increase.
5. What would be necessary to create an environment to attract and acquire globally-competitive talents?
1) Talents from around the globe
The most important policy would be creating an environment for non-Japanese talents to work in Japan such as making them easier to acquire visa to live and work in Japan. Providing them with tax incentive could be another option. Of course, providing talents with attractive work environment and challenging opportunities for development would also be vital as well.
2) Japanese talents from Japan
Improve education level of universities in Japan to up-level new graduates and increase the talent pool especially of scientists and engineers. And provide talents with attractive work environment and challenging opportunities for development.
6. What other requirements are necessary to make Japan more attractive country to invest in?
One is to make Japan be involved in the global network of EPA. Another is globally-competitive financial (stock/capital) market.
Both requirements are vital in today’s global economy, which requires initiative from the government meaning strong leadership.
Resources:-
Direct investment to Japan by foreign capitals has been sluggish when direct investment to other countries in Asia has been increasing. This attributes mainly to the differences in tax and regulation incentives to attract investments by foreign capitals, which would impact global strategy of Japanese companies as well. Creating an environment to attract globally-competitive talents worldwide, joining EPA and improving globally competitive financial market are requirements to improve the attractiveness of the country to invest in.
Nikkei, Japan’s leading newspaper specialized in business and economy, explained today about the target that was set by the Japanese government in the Koizumi Administration and its achievement.
The target wet was to double the direct investment in Japan by foreign capital in four years to increase to 5% of GDP by the end of 2010; however, the achievement was 3.7% of GDP. Percentage of the increase in the direct investment in Japan was only around 50% of the original target.
This did not draw much attention from the economists and general public because the target was set by the Liberal Democratic Party (LDP), the leading party of that time and not Democratic Party of Japan (DPJ), the current leading party. However, this has much meaning to the economy.
1. What is the main reason/background that the target was not achieved?
It is the drastic decrease in the importance of Japan in Asia. According to a survey executed by Ministry of Economy, Trade and Industry (METI), the number of foreign capitals/companies withdrawing from in Japan has been larger than the number of foreign capitals/companies that has been entering Japan.
The recent survey executed by METI targeting foreign capitals/companies asking how attractive Japan is as a business site in Asia explicitly supports it. Japan was #1 for R&D site in 2007 but the #1 position was taken over by China and Japan became #2. Japan was #1 also as APAC Regional HQ but fallen to #4.
2. Why Japan is not as attractive as other Asian countries to invest in?
The main reason for decrease in the attractiveness of Japan as a business site in Asia (i.e. a country to invest in) might be summarized as the smaller growth compared with other countries but that is not all.
Other reasons include slow start of joining the competition with other countries of providing incentives to attract foreign investment in the country. Countries such as China, Korea and Singapore have been proactively providing incentives in the area of tax and regulation to promote foreign capitals entering their country.
The Japanese government also started to set policies to promote Japan as an attractive country to invest in but is rather slow. The plan of decreasing corporate tax that is currently extremely high compared with other countries is yet to be implemented. Tax incentives to be given to foreign capitals when requirements of investment, employment etc. are met is still being studied in the Diet and it seems that it takes a while for its implementation.
3. Is this issue only about foreign capitals? Would it affect decision making of Japanese companies as well?
It is not only about foreign capitals and it is more than likely to affect global strategy of Japanese companies as well. This is because all global companies including those based in Japan would need to develop and execute their global strategy pursuing optimum location in the world.
Indeed, a few Japanese global companies started to relocate “strategic and intelligence-oriented functions” such as strategic planning, R&D and marketing to other countries in Asia. Today, when more than half of the business is operated and revenue is generated outside the home country, global companies located in Japan would be asked for accountability to locate strategic department in Japan.
This means that not only manufacturing sites but also strategic and intelligence-oriented functions may well outflow from Japan to other countries in Asia if appropriate measures are not taken by the government, academia, and industries, both public and private sectors.
4. What is one possible primary solution in avoiding outflow of strategic and intelligence-oriented functions?
It is attracting and acquiring globally-competitive talents. According to Ms. Sanae Tachibana Fukushima, the advisor of Korn/Ferry International APAC, top management of Japanese global companies started to realize this in the last year or two. They did not understand the significance of recruiting non-Japanese talent in the global HQ located in Japan but now they are extremely proactive in acquiring talent from around the globe.
If globally-competitive talent can be attracted and acquired in Japan from around the globe, the significance of locating HQ and other strategic and intelligence-oriented functions in Japan as the site to develop and execute global strategy would drastically increase.
5. What would be necessary to create an environment to attract and acquire globally-competitive talents?
1) Talents from around the globe
The most important policy would be creating an environment for non-Japanese talents to work in Japan such as making them easier to acquire visa to live and work in Japan. Providing them with tax incentive could be another option. Of course, providing talents with attractive work environment and challenging opportunities for development would also be vital as well.
2) Japanese talents from Japan
Improve education level of universities in Japan to up-level new graduates and increase the talent pool especially of scientists and engineers. And provide talents with attractive work environment and challenging opportunities for development.
6. What other requirements are necessary to make Japan more attractive country to invest in?
One is to make Japan be involved in the global network of EPA. Another is globally-competitive financial (stock/capital) market.
Both requirements are vital in today’s global economy, which requires initiative from the government meaning strong leadership.
Resources:-
Direct investment to Japan by foreign capitals has been sluggish when direct investment to other countries in Asia has been increasing. This attributes mainly to the differences in tax and regulation incentives to attract investments by foreign capitals, which would impact global strategy of Japanese companies as well. Creating an environment to attract globally-competitive talents worldwide, joining EPA and improving globally competitive financial market are requirements to improve the attractiveness of the country to invest in.
2011年7月18日月曜日
Retailers Invest in Toyoku for Recovery from the Japan Disaster
Osaka - Monday, July 18, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that leading Japanese retailers are heavily investing in Tohoku area, the most hard hit regions by the earthquake and tsunami that broke out on March 11 such as opening new shops and reforming current shops.
Population of Tohoku region has been on the decrease and recovery plan of local government from the disaster has not been proceeding quickly; however, the retailers believe that recovery consumption from the disaster to rebuild everyday lives of the victims would be sustainable and therefore they have started to heavily invest in the area.
1. How has been the recent business trend of retailers in the Tohoku area?
According to sales trend of large retailers recently announced by Ministry of Economy, Trade and Industry (METI), sales of department stores and supermarkets for May in the 6 Tohoku prefectures (Aomori, Akita, Iwate, Miyagi, Yamagata and Fukushim) was 1.5% increase from May 2010 when it was 1.3% decrease from Ma 2010 for nationwide. Similarly, it was 10.9% increase for convenience stores in six Tohoku prefectures when it was 7.3% increase for nationwide.
This partly attributes to the fact that large franchise retailers have been investing to cover up for the local shops that went out of business immediately after the disaster.
Consumer electronics mass merchandisers and others follow the very similar trend as well.
2. How are retailers aggressively opening new shops in Tohoku?
1) Convenience Stores
Mini Stop (under the umbrella of Aeon, the leading supermarket in Japan), is to open 100 new shops in Miyagi and Fukushima in three years starting 2011. This is three times more new shops to be opened from the original plan made before the outbreak of the disaster. The locations of the new shops are concentrated in such cities as Imaki in Miyagi and coastal areas of Sendai where the recovery and rebuilt of the area is needed the most. The company plans to employ victims as contract workers and support relocation and housing.
Family Mart plans to open 85 new stores in Iwate, Miyagi and Fukushima including temporary ones, which is five times that of the original plan made before the disaster outbreak.
Seven Eleven Japan and Lawson have not changed their plan of new store opening but they are to proactively open temporal stores in the devastated area according the local needs.
2) Others
K’s Holdings, a consumer electronics mass merchandiser, say that their sales for June in the six Tohoku prefectures were 50% increase from June 2010, when it was 40% increase nationwide. The chairman of the company commented that the recovery consumption is estimated to continue for the next two or three years and therefore the company is to increase the number of new stores to be opened from its original plan of one to four.
Yamada, the consumer electronics mass merchandiser leader in Japan, also plans to open 15 to 20 stores in the six Tohoku prefectures this year.
Tsuruha Holdigs, a leading drug store in Japan, plans to open 34 new stores in 2011. This is 60% increase from the previous year.
3. How retailers plan to meet recovery demand by reviewing their current shops?
Aeon is to invest 12 – 13 billion yen in reforming their current supermarket stores in Tohoku, in addition to their regular reform investment. The company also plans to expand shop floors of housing related products and services and so forth to meet the local needs that are to go through recovery from the disaster.
Itoyokado, supermarket franchise company under the umbrella of Seven and i Holdings, originally planned to close seven stores nationwide in 2012 but revised to close two stores because the recent consumption is strong. The five stores that are now to continue their business seem to include those located in Tohoku. The top executive of the company commented that their plan revision is also to support the recovery of the devastated area.
4. Is it only retailers that are proactively investing in Tohoku?
No, because the recovery consumption is expected to range not only in other sectors as well.
For example, Kohnan, a leader in Do It Yourself (DIY) industry in Japan, is to open new stores specialized BtoB in selling building materials and industrial tools for construction companies operating in Tohoku in order to benefit from increase in construction demand in the area. The company plans to open the first store in October in Sendai City and five or six more stores in Miyagi by the end of this year.
Resources:-
When many factories etc. are being relocated away from Tohoku and eastern Japan, retailers are proactively investing in Tohoku, especially in the devastated area, in order to benefit from recovery consumption from the disaster and also to support the recovery and reconstruction of the devastated area. The recovery consumption is likely to be not limited to retailers (products and services related to everyday lives of people) but also to other sectors such as BtoB of construction related industries.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that leading Japanese retailers are heavily investing in Tohoku area, the most hard hit regions by the earthquake and tsunami that broke out on March 11 such as opening new shops and reforming current shops.
Population of Tohoku region has been on the decrease and recovery plan of local government from the disaster has not been proceeding quickly; however, the retailers believe that recovery consumption from the disaster to rebuild everyday lives of the victims would be sustainable and therefore they have started to heavily invest in the area.
1. How has been the recent business trend of retailers in the Tohoku area?
According to sales trend of large retailers recently announced by Ministry of Economy, Trade and Industry (METI), sales of department stores and supermarkets for May in the 6 Tohoku prefectures (Aomori, Akita, Iwate, Miyagi, Yamagata and Fukushim) was 1.5% increase from May 2010 when it was 1.3% decrease from Ma 2010 for nationwide. Similarly, it was 10.9% increase for convenience stores in six Tohoku prefectures when it was 7.3% increase for nationwide.
This partly attributes to the fact that large franchise retailers have been investing to cover up for the local shops that went out of business immediately after the disaster.
Consumer electronics mass merchandisers and others follow the very similar trend as well.
2. How are retailers aggressively opening new shops in Tohoku?
1) Convenience Stores
Mini Stop (under the umbrella of Aeon, the leading supermarket in Japan), is to open 100 new shops in Miyagi and Fukushima in three years starting 2011. This is three times more new shops to be opened from the original plan made before the outbreak of the disaster. The locations of the new shops are concentrated in such cities as Imaki in Miyagi and coastal areas of Sendai where the recovery and rebuilt of the area is needed the most. The company plans to employ victims as contract workers and support relocation and housing.
Family Mart plans to open 85 new stores in Iwate, Miyagi and Fukushima including temporary ones, which is five times that of the original plan made before the disaster outbreak.
Seven Eleven Japan and Lawson have not changed their plan of new store opening but they are to proactively open temporal stores in the devastated area according the local needs.
2) Others
K’s Holdings, a consumer electronics mass merchandiser, say that their sales for June in the six Tohoku prefectures were 50% increase from June 2010, when it was 40% increase nationwide. The chairman of the company commented that the recovery consumption is estimated to continue for the next two or three years and therefore the company is to increase the number of new stores to be opened from its original plan of one to four.
Yamada, the consumer electronics mass merchandiser leader in Japan, also plans to open 15 to 20 stores in the six Tohoku prefectures this year.
Tsuruha Holdigs, a leading drug store in Japan, plans to open 34 new stores in 2011. This is 60% increase from the previous year.
3. How retailers plan to meet recovery demand by reviewing their current shops?
Aeon is to invest 12 – 13 billion yen in reforming their current supermarket stores in Tohoku, in addition to their regular reform investment. The company also plans to expand shop floors of housing related products and services and so forth to meet the local needs that are to go through recovery from the disaster.
Itoyokado, supermarket franchise company under the umbrella of Seven and i Holdings, originally planned to close seven stores nationwide in 2012 but revised to close two stores because the recent consumption is strong. The five stores that are now to continue their business seem to include those located in Tohoku. The top executive of the company commented that their plan revision is also to support the recovery of the devastated area.
4. Is it only retailers that are proactively investing in Tohoku?
No, because the recovery consumption is expected to range not only in other sectors as well.
For example, Kohnan, a leader in Do It Yourself (DIY) industry in Japan, is to open new stores specialized BtoB in selling building materials and industrial tools for construction companies operating in Tohoku in order to benefit from increase in construction demand in the area. The company plans to open the first store in October in Sendai City and five or six more stores in Miyagi by the end of this year.
Resources:-
When many factories etc. are being relocated away from Tohoku and eastern Japan, retailers are proactively investing in Tohoku, especially in the devastated area, in order to benefit from recovery consumption from the disaster and also to support the recovery and reconstruction of the devastated area. The recovery consumption is likely to be not limited to retailers (products and services related to everyday lives of people) but also to other sectors such as BtoB of construction related industries.
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