Panasonic plans to shift its focus from narrow-margin appliances such as TVs to items that will make bigger profits.
Consumer and electronics giant Panasonic is looking to the Middle East and largely untapped African markets to boost its sales after two years of losses and more than 40 000 job cuts.
At a press conference in Dubai, which was held to outline the company's mid-term and long-term strategies, the managing director of Panasonic Asia Pacific, Yorihisa Shiokawa, said earlier this month that the two regions were key to the company's growth. "The developed Middle East market and the African market are contributing significantly to Panasonic's global sales."
Panasonic believes that a new range of environmentally friendly products – which are more energy efficient, able to withstand sudden changes in voltage or, in the case of air conditioners, able to produce better quality air – will attract sales in these regions.
Shiokawa said the company was also targeting the business-to-business sector with new products – an area he felt has not been explored. The company, like its Japanese counterparts, Sony and Sharp, has found itself squeezed by the global slowdown and competition from the likes of Apple, Samsung and LG Electronics.
Panasonic spent 440-billion yen (about R41-billion) on restructuring its operations – more than it originally expected to spend. This contributed to a 765-billion yen loss for the financial year to March 2013, following a 772-billion yen loss the previous financial year.
And if that was not enough, Panasonic's debt is rated junk by Fitch, according to Bloomberg. It has 180-billion yen in bonds that reach maturity this year.
Cutting back the costs
In a bid to cut back costs, Panasonic cut its divisions from 88 to 46. These were organised into appliance, eco solutions, AVC Networks (the digital products) and automotive and industrial solutions.
"This strategic plan will see Panasonic focusing on four major business areas: home networking, eco and business solutions, mobility systems and personal devices," Shiokawa told a packed hall of buyers and media.
Panasonic has long been dedicated to producing environmentally friendly products and it hopes to win over the two regions, which have demands on their resources, with products that use less energy and water. It plans to be recognised as the world's greenest innovation company by 2018, which just happens to be the year the company turns 100.
The Middle East and Africa are also showing growth in some business-to-business products where, to quote one Panasonic senior staff member, the global market is flat.
From solar panels to portable chargers for tablets, more efficient back lighting of screens and purifying air conditioners, Panasonic is looking at going into areas where its competitors are yet to target.
However, it may have some way to go when it comes to promoting products. One Dubai buyer lamented that the company did not advertise enough in the Middle East, where electronic goods proliferate.
Creating a comfortable living
Anthony Peter, director of communication and customer care for the Middle East and Africa, said: "The new products are intended to create a comfortable living and commercial space, while considering the environmental impact."
In the Middle East, where, according to Peter, one in four people suffers from asthma, air quality and the ability to filter dust efficiently is a big selling point.
For those more interested in the gadgets, Panasonic revealed some integrated systems which allow interaction between tablet devices, televisions and sound systems. These will be released later this year.
Panasonic, like Sony and Sharp, has to look at a new way of operating in a world where impressive quality is no longer enough to secure its position. After decades of making everything from washing machines to eyelash curlers, Kazuhiro Tsuga, the head of Panasonic Corp, has decided the company needs to narrow its focus and move from narrow-margin products such as television sets to its lesser known but higher-margin products such as its beauty range.
Shiokawa announced that a beauty "club" would be launched in Africa and the Middle East, where new products and advice could be shared. A new range of male grooming products was also unveiled.
Bloomberg said much hope was being placed in Tsuga's ability to turn the company around. Within months of being in charge of the TV operations, Tsuga halved production in that division – creating the impression that he is capable of doing much the same thing on a larger scale.