Japan has developed a leading manufacturer of electronic products for the consumers and professional market. Sony and Matsushita Electric, the two largest Japanese consumer electronics companies, have continuously developed the business strategies to satisfy the consumers’ demands in Japan and in the world. With the China’s low wage and low cost advantages, China became the largest production workshop in the world. Many multinational companies transferred their factories from local to China that seeks for a high profit margin with low production cost. Those Japanese electronic manufacturers combine with the local advanced techniques maintains the high quality of products and reduces the cost in labor and land to gain the competitive advantages in the world. This production model can help the firm to reduce its products’ price and increase the demands in the global market to compete in the price’s war. Matsushita had 144 overseas manufacturing subsidiaries and expanded 49 spots in China while Sony has six spot of 35 factories are located in China. In 2002, Matsushita and Sony executed different production strategies, Matsushita was expand more industries in China but Sony decided to move some of its manufacturing factories from China to Japan (1). In all electronic manufacturers, Sony had a leading position in the market; many other manufacturers like Sharp and Matsushita competed the price by copying the new technologies from Sony. Matsushita and Sony were both came from Japan and had a similar business size and brand reputation. However, those two electronic companies use different product strategies to win the consumers’ demands. Sony is one of the leading manufacturers of electronic products for the consumers. The company won the reputation on the products for quality, reliability, innovation and stylish design. In the other words, Sony has the competitive advantages on the product leadership. For example, in the early 1990s, Sony has been successful on innovating the digital cameras by continuously adding some new technologies and improving the product designs which increasing the brand reputation and a high profit margin (2). On the other hand, the innovation products usually have to face four stages: introduction, growth, maturity and decline. And most innovations products have a short life cycle that is a challenging for Sony Company. With this innovation advantage, at that time, Sony only has few competitions that gain a large profit margin. On the contrary, Matsushita come up with the new product usually base on Sony’s technology. Matsushita copied new technology from Sony that reduced the development cost while offering more competitive prices. Matsushita took the advantage of Sony’s innovation products by spend less money to test the products in the market, however, Sony company has to suffer a huge losses in sales and profits by competing with other electronic companies likes Matsushita.
As we mentioned, China has became the biggest manufacture workshops in the world. Along with this trend, many multinational electronic companies have to lower the price to compete with Chinese competitors’ low price. The high cost of products will lose the competitive advantage to other electronic companies. In order to compete in the price war in Chinese market, Matsushita and Sony have to adjust the supply chains of components and the manufacture factories to a place with cheaper supply of materials and labors. For Matsushita Electric, the company spent lot of money to understand the consumers’ demands in the local market and worldwide. Finally it originated the strategy of “Eradicating and Creating” to reestablish the supply chain in China. Matsushita realized the advantage of its Japanese advanced techniques that Chinese companies cannot compete with, therefore, combining with Japanese advanced techniques and Chinese cheap labor will help the company to reduce the cost and increase the profits. There are four fundamental changes in Matsushita’s new supply chains. (3) Firstly, moving the manufacturing factories from different countries to China. Secondly, establishing Electric R&D department in China in order to understand the local consumers’ demands and then expand the products into international market. Thirdly, centralizing all material supplies in China to decrease the cost of the product and also increase the flexibility of the consumer supply chain. Lastly, increasing the store distribution so the electronic products can be sold to rural and inland area and international market.
On the contrary, in 2002, Sony decided to move the manufacture industries of its camcorders and digital cameras from China to Japan. As the leading electronic manufacturer, Sony needs to consider the overall company’s development. For the innovation products, reducing the cycle-time is the way to save the product costs so the company could maximum profit in producing a new product. The other reason that Sony wanted to it moves the industries in China to Japan it is because the industries in Japan can save manufacturing cost. In fact, the supply of polystyrene in China is cheaper than in China. The industries for camcorders and digital cameras in Japan can save the material costs as well as transpiration costs. If the camcorders and digital cameras industries are in Japan, it is easy for the industries to adjust the product design and cutting lead times so the supply chain can be more flexible. In addition, Sony wants to mainly focus on local market so it can provide the new advanced products for the local people base on Japanese’s cultures.