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Sony builds its local business
( 2003-10-27 09:29) (China Daily)

The massive job cuts planned by Japanese electronic giant Sony will not impact on its business in China. Instead, the firm plans to expand its Chinese operations, a top Sony executive told China Daily over the weekend.

Kunitake Ando, president and chief operations officer of Sony Corp, said the production restructuring and job losses will mainly target developed economies.

China will not be affected by the job cuts. Sony will boost its business in China because its market has huge potential, Ando said.

According to media reports last week, Sony Corp is considering slashing up to 20,000 jobs or 12.5 per cent of its workforce worldwide by March 2006.

Ando said Sony Corp had held a meeting in Tokyo in May that decided to increase its profit ratio to 10 per cent by 2006.

To achieve that goal, the corporation will concentrate its resources on markets with great potential and focus on products with higher profit margins.

As a result, the corporation will restructure its low profit-margin products and downsize programmes in some developed countries.

Consumption levels in the Chinese market compare well with those in developed countries and even lead some markets, Ando noted. Therefore, Sony will launch its latest products on the Chinese market simultaneously with developed markets.

Ando said Sony has been in the Chinese market for 10 years since its first joint venture was established in Shanghai.

It has now basically completed its first-stage development strategy - manufacturing - in China. And it will soon start its second-stage development strategy: emphasizing local research and development and improving on its manufacturing processes in the country.

Morio Minoru, executive vice-chairman and chief production officer of Sony Corp, said production in Asia (including China, Japan and Southeast Asia) accounts for about 80 per cent of Sony's global total output.

Manufacturing on the Chinese mainland accounts for one-third of Sony's production in Asia.

Minoru outlined the major advantages of local research and production in China: a rapidly growing market, price-competitive components and spare parts supply systems, and abundant local labour.

He said his corporation will adapt to changes in the Chinese market by strengthening its local engineering and manufacturing technologies here.

Sony plans to increase its sales in China to US$4 billion by 2005.

Despite the impact of the SARS epidemic this year, Sony's sales revenue for China from April to September rose by more than 50 per cent over last year.

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