Japan has been the synonym for technology and manufacturer of cutting edge electronic products for many decades. They pioneered consumer-based electronic products. Japanese Electronic Industry in itself is an inspiration for many countries to focus on the technological development of their country. Howbeit, recently this industry is struggling in the market to maintain its sustainable impression. In the past, the only competition a Japanese electronics industry used to have was with another Japanese electronic industry of different names. In recent years, a steep downhill in seen in the consumer based electronic industry because of new competition, ignorance of the digital revolution and poor business model exploring the international market.
In an article published in Nikkei Asian Review, the annual operating profit between Samsung and electronic giants from Japan is compared. Samsung had an operating profit of $36.1 billion whereas the operating profit of Japanese top electronic companies combined was around $19.3 billion. Samsung Electronics today alone defeats all the Japanese Electronic companies combined regarding sales and profits. The competition from countries like Taiwan and China is further adding burden to the Japanese Electronic Industry which is more or less torn apart by the South Korean electronics giant.
In 1970s Korea was exporting large chunk of components product whereas Japan was manufacturing and exporting final finished goods. Things are changing now. Japan although it produces consumer gadgets, their market is confined within Japan. The situation is getting worse Japanese companies are planning to sell their poor performing units. NEC sold its LCD panel business to a Chinese company AVIC and partnered with Lenovo. In 2011 Toshiba outsourced the production of the Logic chip to Samsung.
Why are the competitors taking over the business from Japan? It was because of the failure of the Japanese company’s adaptation to the digital revolution. For example, Samsung embraced and embedded the software and digital revolution to their product whereas the Japanese were either ignorant or late in realizing the change this revolution was going to make in the consumer experience. According to scholars, Japanese electronic products heavily dependent on mechanical components. It is true for example, Walkman that redefined and revolutionized the meaning of personal music. Walkman was not compatible with the software. They were entirely mechanical. So was the case with the refrigerator, washing machines, and television.
Japanese electronics failed to add several digital functions in a single component because of the inability to embrace the software boost. Modularization proved to be beneficial for Korean and Chinese because it made the mass production of elements possible and countries having a cheap labor cost benefited. It turned out to be a huge loss for Japanese electronics because they tend to be more expensive when compared with those of countries with low labor costs.
Samsung and other competitors made products targeting consumers in the market of developing nations. It made a huge surplus for these competitors of Japanese electronics. Japanese electronic business model failed to create an inclusive market for potential consumers in third world countries. On the contrary, their competitors are exploring new markets and are launching products that are more affordable to these people. For example, the Indian smartphone market is dominated by Samsung and other Chinese brands such as Vivo, Oppo, Lenovo, and Xiaomi. All these companies did one thing right they did not ignore the middle-income population of developing countries. Japanese companies could not cater to this group of customers. Japanese products were simply out of the budget of these low income earning sector
It would be wrong to say that Japanese Electronic companies lack innovation. The sophisticated toilets explain their innovative skills. However, it will not be wrong to say that Japanese major Japanese companies will be shifting their range of products from consumer-based electronic to heavy engineering and giant machines used in infrastructure and development such as trains, turbines, motors, etc. Competition in a market with a large number of customers is inevitable. It is to be seen how Japanese companies for consumer electronics will be performing in the coming days.