Japanese electronics firms struggle to survive

Some of the biggest names in Japanese electronics manufacturing are struggling to survive competition from low-cost consumer electronics manufacturers, according to media and analyst reports.

Pioneer Corporation and Sanyo Electric Company are facing sharply declining profits from former cash cows, and are looking to cutbacks and management changes for a solution.  

The president and the chairman of Pioneer resigned their posts yesterday evening to take responsibility for "the steep decline in Pioneer's financial performance due to the smaller than planned number of units sold of plasma displays and DVD recorders", a company statement said. 

A similar management reshuffle at Sanyo five months ago does not yet appear to have reversed its fortunes, however.

Credit rating agency Standard and Poor's today downgraded Sanyo's long-term corporate credit rating from BB+ to BBB-. Ratings below BBB are typically described as 'junk status' or 'below investment grade'. 

"We foresee a decrease of sales of our home electronics products such as plasma displays and DVD recorders in comparison to our previous projections in the second half of fiscal 2006," Pioneer warned in a statement last month, prior to the resignation of its senior executives. 

Facing low-cost competitors elsewhere in Asia, Japanese electronics giants are no longer able to profit from some of the innovative technology that they developed in the past, according to analysts.

"Pioneer released the world's first DVD recorder in 2000 and has been at the forefront of the market with its subsequent product launches," said Nomura Securities analyst Eiichi Katayama. 

"Ultimately, however, the company has also been afflicted by severe price competition in the DVD recorder market."