business‎ > ‎

Sony And Its China Problem

posted 12 Nov 2013, 03:28 by Mpelembe Admin   [ updated 12 Nov 2013, 03:29 ]

 

Reuters Business  Report - In 2013, you can't really run a global consumer electronics company without selling to China.

For Sony, though, that's not too far from reality.

Revenues from the world's number two economy accounted for just seven percent of Sony's global total for the last fiscal year.

And that's part of the reason CEO Kazuo Hirai is in Shanghai today.

 SONY CEO, KAZUO HIRAI, SAYING:

"The continued and rapid development of China's urban and network infrastructure, burgeoning middle class and a vibrant young generation all point to enormous growth potential for Sony."

Globally Hirai's strategy is to revive the firm's consumer tech units. But that is looking increasingly shaky.

After teasing us with two quarters back in the black, Sony relapsed with another brutal loss, stung especially by its TV unit.

Its new high end 4K TVs now sell for around 4,000 bucks. But in China, local producers are pumping out similar ultra-high def sets for just a quarter of that price.

So what about the rest of Sony's gear?

Well, cameras aren't looking great. Segment competitor Canon has had to repeatedly cut back its own global DSLR sales forecasts on weak Chinese demand.

Plus, a long-standing ban on gaming consoles in China remains in place.

But even if it does get lifted or softened, it's not clear how much that will boost sales, since it's already super easy to buy unofficial, imported versions at your friendly local gadget shop.

For smartphones - a segment with serious growth potential - Sony wants to compete at the high end.

That's a game that's long been dominated by Samsung and Apple, both of whom are actually now facing serious pricing pressure from local competition.

Analysts in China aren't betting on a revival just yet, calling Sony's electronics marketing strategy rigid and their response time slow.

 REUTERS REPORTER, JON GORDON, SAYING:

"Outside of consumer electronics, its Sony's insurance and entertainment units that make most of the money. Now Hirai has some Chinese film plans, but neither business is really geared up for the mainland."

Investors are taking note of Sony's global struggle with its impressive run in the first half of 2013, now clearly in reverse.

Hirai's visit to China is a positive sign. But don't count on a bright new dawn for the company just yet.


Comments