Looking out of the window of his office across the street from the busy Hung Hom Railway Station where hundreds of thousands of travellers to and from the mainland pass through each day, Kensaku Konishi, the new president of Canon Hongkong makes a strong case for introducing at least 100 new products to this market in 2004.

Hong Kong has always been a thriving market for the Japanese camera and printer giant. Now, the market is not only thriving, it is ballooning in size and potential as the influx of mainland tourists has created a strong demand for a wide variety of branded consumer products from Europe and Japan.

"Mainland tourists in Hong Kong are becoming a major force in the retail market here," says Konishi. Canon products are distributed through a host of wholesalers and retailers here and considering the fall in retail sales for many months before the tourism boom in the second half of last year, it can safely be assumed that mainland tourists have been largely responsible for Canon's strong performance last year.

Konishi says that the company's sales in Hong Kong rose nearly 20 per cent in 2003 to US$580 million and are expected to increase to US$700 million this year. The biggest selling items, he says, have been the company's line of mid-market digital cameras at prices ranging from HK$5,000 (US$641) to HK$6,000 (US$769). Also selling well are the company's copiers as many businesses are switching to colour because of falling prices of the new colour technology.

Konichi declines to disclose details of the new products to be introduced in the Hong Kong market later this year but says that they are the lifeline of a technology company like Canon.

Indeed, the shortening product life-span is forcing consumer technology developers into a hectic new product race. "The time for a new product to become obsolete is getting shorter and shorter," Konishi says. "The manufacturer of that product will be forced to sell it at an ever lowering price."

To avoid falling into that trap, "we must come out with a new product every three months or so," Konishi says.

Industry experts used to expect that a high-end model would become obsolete in 18 months. Now it seems that the timeframe has shrunk by half. Some years ago, Canon wowed the market by introducing a SLR (single lens reflex) digital camera, the D30, at a price affordable to serious consumers. All other digital SLRs at that time were definitely pro-market products selling at more than US$8,000 apiece.

About a year and a half later, the company came out with the D60 armed with more functions and a lower price tag. In less than a year, the new boy on the block was itself displaced by a cheaper and more technologically advanced 10D. At around the same time, Canon introduced a bargain version of the SLR digital, the 300D, that sells for under US$1,000.

"The 300D is a 'breakthrough' product that comes out every three or four years," says Konishi. Canon is said to be selling as many 300Ds as it can produce, and in some markets, there is a waiting list for delivery.

But Canon is not going to have the market to itself for long. In the past several months, some of its main rivals in Japan have introduced their own blockbuster SRL digitals. Quite a few Hong Kong camera buffs claim that the Nikon D70, which is priced similar to Canon's 300D is arguably a better camera.

If Konishi is worried, he is not showing. "In normal usage, our camera produces the best picture," he says. The key word here is "normal", meaning that no additional tweaking, such as manual adjustment of white balance, is involved in the picture taking process. "Our design philosophy is to make it as easy to the user as possible," he says.

That philosophy is centre to the design of the company's entire range of products, Konishi says. For example, Canon research shows that consumers take 10 times more pictures with digital cameras than with film cameras. But very few of these digital shutterbugs have ever bothered to print out their pictures largely because they found the process too technologically challenging, Konichi says.

"We spent a lot of efforts in developing the hardware and software to greatly simplify the process so that the consumers can enjoy the pictures they have taken with their digital cameras in print," he says. The product is usually complicated and the technology is hard to understand, Konichi says. But it must be simple to operate.

One of the first things Konichi did after taking over the stewardship of the Hong Kong office was to upgrade the company's after-sales service with special attention to the growing number of buyers from the mainland. For instance, the warranty of products sold in Hong Kong now covers not only Hong Kong but also the mainland and Macao, Konichi says. "We want to attract more mainland tourists to buy our products when they are visiting Hong Kong," he says.

What's more, "we are trying to upgrade customer support in Hong Kong," he says. The focus is on answering customers' questions on the phone and on the Internet. "Even if we can't solve the customers' problems immediately, we'll have to ensure that they will be attended to in the shortest time," he says.

Although Canon produces a wide range of office products, such as copiers and scanners, it is best known in Hong Kong as a camera manufacturer. The company, he says, takes great pride in the fact that it develops most of the technology used in its products on its own.

To be sure, there are consumers in Hong Kong who insist that Nikon produces better glass and Epson's printers are hard to beat. "But none of our competitors has the capability to produce as wide a range of imaging products as we do," Konichi says.

(HK Edition 05/25/2004 page16)