Toshiba draws up ambitious plan in China market

Toshiba, one of the most famous Japanese firms in China, has spelt out a hugely ambitious plan to grow its Chinese business to as big as its home market in the medium term. Takaaki Tanaka, former head of the overseas business development department of Toshiba, was assigned to lead Toshiba's Chinese business in February. In this exclusive interview with China Daily reporter Liu Baijia, he talks about Toshiba's strategies and goals.

Q: How important is the development of the Chinese market in Toshiba's overseas strategy?

A: Our revenues in fiscal 2006 were 66.4 billion yuan, including both domestic sales and exports. In April, our president and CEO Atsutoshi Nishida visited China. According to his plans, our projected growth will be 19 percent to reach 79 billion yuan. Of course, this growth must come with proportionate profit growth and every division and department of Toshiba here is working hard to achieve that goal.

Q: Nishida's visit showed Toshiba's emphasis on this market. Did he give any new instructions on the China strategy or its role in Toshiba's overall overseas strategy?

A: At present, the break-up of Toshiba's revenues between Japan and overseas markets is exactly 50-50, and the proportion of overseas markets will continue to grow.

Among all overseas markets, we think China has the most potential and will play a key role in Toshiba's sustained growth.

Since Nishida assumed the current post two years ago, Toshiba's profitability has continued to improve. The targeted annual growth rate from fiscal 2006 to 2009 is about 8 percent, with 2 percent in Japan and 12.5 percent from other regions. During his April visit, Nishida said the growth rate in China should be about 20 percent.

As for our strategy, we have two focuses. First, 60 percent of our sales in China come from electronic devices, 20 percent from digital products and home appliances, and the rest from social infrastructure.

Electronic devices, such as semiconductors, flash memory and small-sized LCD screens, have enjoyed a smooth development, but we must seek a faster expansion in the other two.

Secondly, we launched a new brand campaign in the business-to-consumer (B2C) area, such as TV sets, notebook computers and color copier products, and started airing our TV commercials with the Chinese diving star Guo Jingjing as the brand ambassador.

Q: What are the near- and long-term opportunities in tapping the environment-related market in China?

A: A real opportunity in this respect is the recent nuclear power plant contract that Westinghouse, now part of Toshiba, got. Other opportunities include electricity transmission.

Long-term opportunities include water treatment and greenhouse gas emission reduction. The reason they are long-term opportunities is these are usually comprehensive matters and governments need a holistic view and a comprehensive mechanism.

Q: Some Western companies have started developing products and selling them in China or global markets. GE and Philips, for example, develop their low-cost CT and ultrasound equipment here. What is Toshiba doing?

A: In the global medical equipment market, there are four major players: GE, Philips, Siemens and Toshiba. In the future, Toshiba is going to be a much bigger player.

We have developed a very advanced 256-slice CT, which our competitors do not have. We will bring products like this into China. We'll need time to find out if we can become one of the top three here.

In Dalian, we have a manufacturing company. We have a 200-people development team there and do researches with our units in Japan. It is working hard to develop products for China-relevant products.

Q: What are the challenges for Toshiba in China? Are these mainly internal or external challenges?

A: For me, working as the corporate representative of Toshiba in China is very exciting but also very challenging. For Toshiba, the biggest challenge is the demands of customers.

China is a huge country and changing rapidly. So coping with fast changes and using our resources effectively and efficiently is a key task. In our notebook business, we have 650 retail iShops in China and our plan is to grow them to 1,000. Through them, we hope to listen to the voices of customers, as they are very important to us.

Q: If we say a big achievement of your predecessor Nobumasa Hirata was to bring Toshiba back from a notebook crisis in 2001 and restore its image among the Chinese, what legacy would you like to leave for your successor?

A: Hirata was in China for six years and seven months, so I think my tenure will also be about six years. In this period, I hope Toshiba China can establish an appropriate structure and become an independent company according to the situation of China, not just a subsidiary of Toshiba.

I hope sales in China will exceed those in Japan ($30.50 billion in fiscal 2007). China has 1.3 billion people, much more than Japan's population. With its fast growth, I think it is quite achievable.

(China Daily 09/27/2007 page15)