Wednesday, October 13, 2004

Japanese firms hide technologies secrets at home

Japanese firms, which have increasingly been shifting
their production bases to China and other nations with
cheap labor costs, have started making a bit of a
homeward retreat when it comes to their cutting-edge

Japanese firms, like most companies, protect their
prowess in advanced technologies by keeping the
development and production process cloaked in secrecy.

So while popularized technologies can be easily
shipped to overseas plants, state-of-the art
technologies are better kept hidden away at home.

The moves are part of efforts "to attach greater
importance to home and choose the right crop for the
land," said Tadashi Okamura, president of Toshiba

"Even the president cannot easily enter into to this
plant," said an executive at Sharp Corp.'s Kameyama
plant in Mie Prefecture, which produces widescreen
liquid crystal displays and LCD televisions.

To maintain the position as the world's top producer
of LCD televisions, Sharp keeps these new technologies
safely hidden.

The Kameyama plant is the most important production
base for these products. Sharp is investing 150
billion yen in the plant in fiscal 2003-2004 to
concentrate on developing and manufacturing LCDs in
the Kansai area.

It also has a plant in Tenri, Nara Prefecture, to
produce LCDs for personal computers.

Business analysts say that Japanese companies focused
on manufacturing digital electric household appliances
are pursuing a "vertical integration" to cope with a
"horizontal division of labor" of U.S. enterprises, in
which cheap personal computers are produced and sold
in tie-ups with those in Taiwan and China.

According to the Cabinet Office, capital investment in
domestic plants decreased with the collapse of the
technology bubble but reached a record high of 94,338
billion yen in fiscal 2003 and has since continued to

Matsushita Electric Industrial Co. plans to construct
the world's biggest plasma TV set manufacturing plant
in Amagasaki, Hyogo Prefecture.

Canon Inc. will locate its production line for new
digital cameras in Oita Prefecture. "Let's make things
in Japan," said Canon President Fujio Mitarai.

In the automobile industry, Daihatsu Motor Co. has
begun operating a plant in Oita Prefecture whose
construction was suspended after the collapse of the
bubble economy. Mazda Motor Corp. has also resumed the
operations at once-shuttered plants.

Sumitomo Metal Industries Ltd. is investing in its
production division, including the repair of a blast
furnace in Ibaraki Prefecture.

Hideo Wakabayashi, chief analyst at Mizuho Securities
Co., said that although facilities and personnel are
being downsized, major electronics companies will not
be able to catch up with their record-high
performances achieved around 1990, even in the digital
boom of fiscal 2004.

A senior official at the Ministry of Economy, Trade
and Industry said that for Japanese firms to survive
they need an annual investment of 200 billion yen in
carefully chosen businesses, 70 percent of sales
overseas and a global share of 10 percent.

But few such companies exist and the foreign
competition is stiff.

South Korea's Samsung Electronics Co., which has begun
distinguishing itself in the semiconductor and
electronic household appliance market, invested 2
trillion yen in the LCD business alone by 2001.

Taiwanese enterprises are also trying to become the
top producers of semiconductors.

"Samsung decides on its investment policy in one week,
but three months are required for Japanese
enterprises," Wakabayashi said. "Positive and swift
decisions are needed.

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