Japan, China firms deepening relations

Jiji Press

17:12 JST, September 29, 2022

TOKYO (Jiji Press) — The 1972 normalization of diplomatic ties between Japan and China offered an opportunity to develop their economic relations, prompting over 10,000 Japanese companies to launch operations in China.

During the 50 years, some Chinese companies have overtaken Japanese rivals in the home appliance and electronic device sectors.

“You are said to be the god of management. Would you help us modernize China?” then Chinese Vice Premier Deng Xiaoping asked Konosuke Matsushita, founder of Matsushita Electric Industrial Co., now called Panasonic Corp., during a visit to the Japanese manufacturer in October 1978.

“The 21st century will be an era of prosperity in Asia. Let’s work together,” Matsushita told Deng.

Matsushita initially planned to establish a joint venture in China involving the whole Japanese electronics industry. But he faced difficulties doing this due to differences in the economic systems of the two countries, resulting in Matsushita Electric acting alone.

In 1987, Matsushita Electric formed a joint venture in China to manufacture cathode-ray tubes for color television sets, inviting 250 Chinese employees to Japan for technical training for six to 12 months.

The joint venture rolled out its first product on June 3, 1989, the day before Beijing’s crackdown on pro-democracy demonstrators. The Matsushita founder died shortly before this, but it is said that he smiled when he saw pictures of the completed joint venture plant on his sickbed.

“The joint venture was the last work of the founder,” said Shunichiro Aoki, 82, who was involved in Chinese operations at the time as a Matsushita Electric employee. He apparently wished to enrich the general public in China, Aoki recalled.

Thanks to support from Matsushita Electric and the Chinese government, China succeeded in modernizing its industries. Since the 1990s, China has been known as the world’s factory thanks to its abundant workforce, attracting a flood of companies from all over the world.

By contrast, Japanese manufacturers started rapidly losing their competitiveness, facing tough challenges from South Korean and Taiwanese rivals.

In recent years, Chinese companies have taken the lead in the home appliance and electronics device fields.

China’s Haier Group acquired the refrigerator and washing machine operations of Sanyo Electric Co., now a Panasonic unit. China’s Lenovo Group Ltd. purchased the personal computer operations of Japanese electronics makers NEC Corp. and Fujitsu Ltd.

In 2018, Hisense Group of China acquired Toshiba Corp.’s Regza brand TV business. Starting as a radio factory some 50 years ago, Hisense expanded into TV and home appliance operations. It now has a worldwide sales network.

Initially, the Hisense brand had no recognition at all, said Li Wenli, president of Hisense Japan Corp., which was established in 2010.

The company utilized Regza’s know-how for its products. It also created three service centers in Japan to improve its customer support, increasing its share of the Japanese TV market to over 10%, excluding Regza TVs.

The Hisense group’s annual TV production totals 20 million units, making it one of the world’s largest TV manufacturers. Hisense can offer good products at prices that benefit consumers by taking advantage of the group’s production and procurement capabilities, Li said.

Japan is facing a falling population and a long-term economic decline. But Li said that the country remains a world leader in terms of technology, quality and service. Noting that these advantages will not change in a short period, Li said that Hisense will continue investments in Japan.

There have been signs of change in economic relations between Japan and China that have continued to develop over the past half century.

The number of Japanese companies operating in China declined to 12,706 in June this year from 14,394 in 2012, according to Japanese credit research company Teikoku Databank Ltd.

“Rising labor costs have lowered China’s advantage as an export base, prompting Japanese companies to move to Southeast Asia and other regions,” a Teikoku Databank official said.