Japan Tech Firms Need Revamp To Topple Korea

Japan's top electronic firms have been told to change their business model, amid plunging share prices and booming competition from South Korea.

Shares in Sharp fell on Friday as worries about the TV and display maker's future deepened, a day after it warned of a £3.5bn net loss for the year and said it might not be able to survive on its own.

Panasonic's shares have steadied after a slide to their lowest in more than 30 years, while in August Sony reported a £202m first quarter loss as it pinned its hopes on new TV technology.

Sharp, which makes displays used in Apple's iPads and iPhones, has lost three-quarters of its share price since the start of the year.

Meanwhile, South Korea's Samsung has cemented its place as the world's leading smartphone seller after setting a record for the most units shipped in the third quarter.

Samsung sold 56 million smartphones between July and September, representing 31.3% of the global market - more than twice as much as rival Apple's 15% share.

Japan's giants have been urged to target high value goods, such as cars

"What it is telling us is that the Japanese should be focusing on a lot more on higher value goods – automobiles are going very fine, mechatronics and machinery," Mizuho International director Seijiro Takeshita told Sky News.

"The vertical integration model that the Japanese are very strong at, at least on commoditised products such as televisions, is wearing thin as far as competitiveness is concerned."

"The Koreans are doing a very good job following that model."

The strong yen and falling prices for gadgets are only partly to blame for the ill health for some of Japan's top consumer brands.

Increasingly, Japanese companies have toyed with the idea of strategic partnerships – once anathema to the consumer powerhouse.

"I think this is an alarm bell to many of these companies, so there should be some kind of diversify move or transformational move that is needed," Mr Takeshita said.

Panasonic has said it will lose £5.9bn this business year as it writes down goodwill and assets and plans more restructuring - taking its cumulative loss over five years to nearly £15.6bn.

Sony eeked out a small quarterly operating profit for Q3, helped by the sale of a non-core chemicals business.

"A lot of Japanese companies have not reorganised or refocused. It takes time and there are a lot of political motives not to make the changes," Mr Takeshita said.

"I think it is very clear for Panasonic or Sony that they do have to make these changes."

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