Electronics giants home in on lifestyle


  • Business
  • Saturday, 13 Dec 2003

Today's CEO Outlook features the big boys in the consumer electronics industry. They are: Jiro Tomotani of Panasonic (M) Sdn Bhd, Rajah Kumar of Philips (M) Sdn Bhd, and Kazuo Suyama of Sony (M) Sdn Bhd. 

The consumer electronics business is fiercely competitive, particularly with the emergence of strong, lower-cost players from China, Taiwan and South Korea. 

From a global perspective, the strategy of Matsushita Electrical Co of Japan (parent of Panasonic), Philips and Sony is to exploit the exploding growth of technology to produce leading edge consumer products and systems that enhance lifestyle and delight customers. But each of them is going about it its own way, focusing on its own core competencies and market strengths. 

Despite their size and global reach, the consumer electronics giants have to be nimble footed as well. Gone are the days when a revolutionary product like the Walkman would allow Sony to enjoy premium prices for a couple of years. These days, the lead is only six months or less before competitors come up with similar gadgets – at lower prices. 

Back in Malaysia, Tomotani's immediate priority is to ensure the success of the company's worldwide policy to use only the Panasonic name. This means dropping the National brand without upsetting its loyalists. 

Kumar's mission is to tell Malaysians that Philips is not just a name that has been around for a while. It's an exciting company with exciting products that enhance their lifestyle.  

Sponsorship of the Philips International Jazz Festival is one way of telling the story. 

For Suyama, Sony is now an audio-visual/information technology (AV/IT) company. In the past, the focus was on the home; now Sony is also directing its efforts at the corporate sector. 

Kazuo Suyama

KAZUO SUYAMA 

Managing director 

Sony (M) Sdn Bhd 

 

Challenges and prospects for Malaysia's economy in 2004? 

We believe Malaysia's economy in 2004 will continue to grow as global economy improves. Based on the Mid-Term Review of the 8th Malaysia Plan, it is projected that the national gross domestic product is targeted to grow at an average 6% per year. This reflects a strong economic stability on the domestic front. 

While key driving factors such as strong recovery signs from the manufacturing and export sector, tourism industry and pegging of Malaysia ringgit have helped to cushion difficult times, we feel it is important for the country to continuously remain attractive to foreign investors. 

Malaysia is still a good country to invest in and has good bilateral relations with its neighbouring countries. China has been seen as a potential challenge in terms of foreign investment from the macro-economic aspects but we feel that Malaysia’s long historical success can meet the challenges ahead. 

 

Effect of SARS and the Iraq war on your company? 

During the SARS and Iraq war period, we conducted a survey and found that most of our retail businesses were affected due to low customer confidence.  

At the same time, we were focusing our efforts to enhance our digital imaging business and as a result, overall, we were not so badly affected. 

 

Focus of your company/group next year? 

The emergence of broadband wave has given us a new outlook for our business. We foresee new trends influencing the society’s lifestyle.  

For 2004, we feel that it is right time to reinforce our group efforts with our counterparts in the manufacturing sector and software partners, such as in the music and pictures industries, to focus on promoting our global corporate vision, the 'Ubiquitous Value Network’ (UVN) concept. 

UVN refers to an environment where PC and consumer electronic devices are connected seamlessly to each other and to the network, giving users easy access to rich content or service, everywhere. 

On the hardware product business front, we have introduced new line ups of Network AV/IT products that adopt a convergence of AV and IT technology to offer seamless product connectivity for the broadband lifestyle.  

With products ready to support the broadband wave, we will introduce more lifestyle proposals to show how they can enhance the future ubiquitous lifestyle. 

Our business approach has also shifted to enhance customer communication and services. Support such as My Sony website and customer contact centre are key channels to strengthen our relationship with our customers.  

In addition, we have adopted an integrated marketing approach in some of our promotion activities combining both online and offline activities with content services from the support of our software partners. 

Sony will no longer be just a hardware company.  

Since we became a market leader in AV business, we have progressed into a Network AV/IT company.  

It is our aim to be a total broadband network entertainment company one day by converging both hardware and software businesses together. 

 

Do you expect your company/group to do better or worse in 2004, compared with 2003? 

We expect to perform better in 2004. Sony has transformed and progressed into a Network AV/IT company, differentiating itself from its competitors. Apart from the current AV business, our new business avenue in the network IT field will give us the opportunity to tap into the new markets that demand digital network products and services.  

While in the past, our products were mainly home-oriented, we are now offering to both home and corporate sectors, giving us a larger market share. 

On the economic front, the government has forecast a robust economy ahead, adding a boost of confidence to our business.  

The government is also making efforts to promote its tourism industry, which we feel will benefit retail business that includes Sony. 

On the operations side, we have initiated a supply chain management system together with our factories to offer efficient logistics operation and inventory management. Such a system promotes effective sales to our dealers and save overall costs, thereby helping us to perform better. 

 

What do you think should be the new Prime Minister's priorities for the country and the industry you are in? 

We believe Datuk Seri Abdullah Badawi has given us the confidence that he is a great leader for the nation, promoting stable economy and harmony for the country. As a foreign investor, we hope to have his continuous support for our business. 

Jiro Tomotami

JIRO TOMOTANI  

Managing director 

Panasonic (M) Sdn Bhd 

 

Challenges and prospects for Malaysia's economy in 2004? 

The brighter global economy augurs well for Malaysia's economy in 2004. The strengthening of global demand for electrical and electronics goods manufactured in Malaysia as well as firm commodity prices will put us in a good position to realise the 5.5%–6.0% gross domestic product growth as forecast in the Economic Report

In my opinion, the challenges facing Malaysia's economy will be: 

(i) Sustaining the momentum of economic growth of the private sector, especially the small- and medium-sized industries (SMIs), in the face of ever increasing global competition in terms of higher productivity and improved value of goods and services. 

The Malaysian government has put in place the necessary infrastructure and incentives to stimulate greater economic activities. It is now up to the SMIs to take the initiative to move on from domestic activities and become globally competitive. 

(ii) How to transform from a manufacturing and commodity-based economy to one that is more services-oriented by further developing or attracting more investment in the knowledge-based industry. 

 

How badly was your company affected by SARS and the Iraq war and has your company recovered from these events? 

Although SARS and the Iraq war had directly affected the tourism industry, it had a knock-on effect on other industries. 

Our cash-and-carry products targeted at tourists were affected to a certain extent. As the SARS threat was overcome and the Iraq war came to a rather quick end, yes, our company had recovered. 

 

The focus of your company/group next? 

For 2004, our focus will be to strengthen our single brand – Panasonic.  

Currently, we are undergoing a brand unification exercise, focusing only on one brand, Panasonic.  

All our products, especially home appliances, now carry the Panasonic brand. Our audio-visual and business systems products maintain the Panasonic brand name. 

In this respect, new flagship products – from home appliances, audio-visuals to business systems – are and will continue to be introduced to the market in 2004. 

 

Do you expect your company/group to do better or worse in 2004, compared with 2003? Why? 

At Panasonic Malaysia, we expect our sales to grow by 10% in 2004.  

This is in view of our new branding strategy, coupled with new value-added products that are expected to hit the market. 

 

Is China an important factor in the management of your operations? 

China will continue to dominate the world market with mass production, varied products and cheap pricing. In this sense, it is good, as it will help boost consumption of electrical products. 

However, at Panasonic, we are focused on offering products that are reliable, innovative and of high-technology, with good after-sales service; and we will continue providing better ideas for life. 

 

What should be Prime Minister Datuk Seri Abdullah Badawi's priorities for (i) the country, and (ii) the industry you are in? 

We feel that his priorities should be to continue the country's stability so that investors' confidence can be maintained. 

His aspirations to revamp public sector efficiency and integrity are good. I think improvement in public sector service efficiency will have a significant impact on economic productivity and stability.  

At the same time, his focus to strengthen the domestic economy through new sources of economic growth will continue to support Malaysia's growth in the future. 

Our Prime Minister has been quoted a saying that his administration will be “business friendly”. In this respect, we believe that the business condition will be favourable and we can look forward to continued economic growth. 

Rajah Kumar

RAJAH KUMAR 

Chief executive officer 

Philips (M) Sdn Bhd  

 

The outlook for the global economy appears to be much brighter than it was a year ago. What do you see are the challenges and prospects for Malaysia's economy in 2004? 

Malaysia is interconnected and interlinked with the global economy and external influences do have an impact. Our products and services serve the global economy and the effect of globalisation, positive and negative, is inevitable. 

Malaysia will benefit locally and internationally from the growing positive business sentiments. Our Prime Minister has also acknowledged the good prospects and has added the need to strengthen the domestic economy and increase productivity and services. 

Challenges will arise if the world economy and demand start to slow down after signs of a good recovery. Malaysia is balancing this very well with the focus on domestic market and growth. 

 

How badly was your company affected by SARS and the Iraq war and has your company recovered from these events? 

Philips' business in Malaysia is more focused on the domestic market. The initial shocks were there but we recovered due to the positive consumer sentiment. We implemented the right strategy to introduce new products and dedicated approaches to the market. We focused on our customers and channels and improved our market share. 

Customer intimacy and to be customer’s choice were key factors during the downturn and these have significant positive impact as the market improves. For Philips, this is possible with our strong technology, over 70,000 patents and the approach to marketing. 

We supply semiconductors to manufacturers that make products for their global supply chain and did see some slow booking as a result of these incidents. As growth is now seen in the semiconductor industry, our booking is also improving and we are growing well with the market. 

 

What will be the focus for your company/group next year? 

We will continue to serve the existing markets and focus and extend coverage to east Malaysia and also the rural markets in the country. We will talk – 'delight customers' and 'deliver on commitments' – and also walk the talk. 

We will continue to introduce new products and technologies that will help improve the quality of healthcare and lifestyle of the people of Malaysia. We will continue to be in the top three positions in all our businesses in Malaysia. 

We will continue to focus on good corporate governance on which we will further build our economic, environmental and social responsibilities. We will further improve the quality in all our endeavours, be it business or sustainability initiatives, or in providing educational and healthcare support. 

Our focus will be on our employees and the values in this respect are to 'develop people' and 'depend on each other'. We strongly believe we have to be the employees’ as well as customers’ choice for the next 100 years from where we came 112 years ago, globally. 

 

Do you expect your company/group to do better or worse in 2004, compared with 2003? 

We want Philips to continuously do better year after year. This is possible due to the right partnerships with our stakeholders and the enormous potential in terms of products and technologies to bring to market. We hold our customers in high esteem, as they are our sense organs to give us the direction in this march forward. 

We have put in place measures to stay competitive and be very quality-oriented. We very much believe in speed and this is what we always refer to as BEST – Business Excellence through Speed and Teamwork. 

The businesses we acquired in Medical Systems will make a dramatic impact with the excellent product, technical and application support that we provide. We do not just believe in selling a product but a solution to the customer to bring his consumer from the present stage to a better stage in terms of quality of life, be it an integrated chip for a digital television or a colour display for a mobile phone or a three-dimensional ultrasound for imaging the heart or a home defibrillator to save the increasing mortality due to sudden cardiac arrest. 

 

China's economy continues to power ahead. Is China an important factor in the management of your operations? 

China is important to all of us as it is a major market and is growing at a very fast rate. Philips has number of investments in China and we will continue to focus on that market. Likewise, India and Asean will continue to play a major role as local markets for consumption and also products manufactured there. 

The Asia-Pacific is a potential market now and in the future. Philips is deriving substantial revenue from this region. We will focus on the entire value chain from research and development (R&D) to manufacturing to supply chain and see how we can leverage for growth in this attractive and growing region. 

We have also been busy with streamlining our back-offices and in this respect we will study the shared service centres that we have today and what we need to do in the future. 

 

Datuk Seri Abdullah Badawi has taken over as Malaysia’s fifth Prime Minister. In your view, what should be his priorities for (1) the country; and (2) the industry you are in? 

The Prime Minister has already talked about strengthening the domestic economy, having the right attitude, working hard, and increasing productivity and delivering the right kind of service as priorities. They are very comprehensive, crucial and well orchestrated. This will help the country to push forward. 

Malaysia is a young country and is attractive to businesses now and in the future. The focus on education and teaching of English is an excellent step to prepare for the knowledge world and knowledge economy. 

For the electronics industry, most of what we mentioned above are applicable, like keeping the market vibrant, interests low, currency stable, increasing productivity, right work attitude and good education. For competitiveness, cost will continue to be a major factor. We not only talk about labour but also utilities, transportation, etc. 

Quality of labour and the continuous upgradability of the workforce are the challenges many countries face. In this respect, the private sector will have to closely co-operate with the government in making a joint approach. Promoting Asean as an integrated market is very attractive to companies. 

Views from CEOs of port operators: Tan Sri G. Gnanalingam of Westport Malaysia, Basheer Hassan Abdul Kader of Northport (M) Bhd, Datuk Mohd Sidik Shaik Osman of Pelabuhan Tanjong Pelepas, and Datuk Ahmad Ibnihajar of Penang Port Sdn Bhd.

Views from scions of prominent families: Datuk Nazir Razak of CIMB, Datuk Lee Oi Han of Kuala Lumpur Kepong Bhd (KLK) and Carl Bek-Nielsen of United Plantations Bhd.

Views from property CEOs: Tan Sri Mustapha Kamal of MK Land Bhd, Datuk Seri Liew Kee Sin of S.P. Setia Bhd and Datuk Jeffrey Ng of Asia Pacific.

Views from banking CEOs: Tan Sri Teh Hong Piow, chairman of Public Bank Bhd, Datuk Amirsham A. Aziz, president and CEO of Maybank group, and Piyush Gupta, head of Citigroup in Malaysia.

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