In 1978 China began its reform and opening up. In the same year, Panasonic from Japan entered China. In thirty years’ time there has been an enormous boost of the Chinese economy and the prosperity of Panasonic.
In 1978, Panasonic began to launch its televisions, refrigerators and some other household appliances on the Chinese market. In 1987, Panasonic set its joint venture company in Beijing. Now Panasonic has 81 enterprises in Mainland China and Hong Kong, mainly undertaking research & development, manufacturing, sale and service.
Entry into China
In the memory of Zhang Zhongwen, Routine Consultant of Panasonic China Co. Ltd, the leaders of China at that time (1970s) talked with the initiator of Panasonic, Konosuke Matsushita, about many topics including the intellectual property. “The talk with Mr. Matsushita amplified the current Chinese leaders’ thought of taking the economic construction as a central task. Meanwhile, the Chinese leaders hoped that Mr. Matsushita could help with the Four Modernizations of China (the modernization of agriculture, industry, national defense and science and technology). Mr. Matsushita replied that the 21st century would be the age of prosperity of Japan, China and other Asian countries and that he was willing to help with the modernization of China from a broader perspective.
After that talk, Mr. Matsushita, who was invited by the Chinese leaders, visited China twice. In China, both sides came to an agreement about Panasonic’s entry into China. After returning to Japan, Mr. Matsushita immediately implemented the agreement by preparing for Panasonic’s entry into China actively.
Then a severe discussion about the location in China arose inside Panasonic. It was known that some people wanted to set the plant in Shenzhen while others preferred Shanghai. Nearly nobody agreed with setting the plant in Beijing. “Because they still were not sure whether the Chinese political system would stay stable or not,” said Zhang Zhongwen.
While the discussion went on, Mr. Matsushita sent people to the different places of China to make investigations. After seeing the report from the investigators, he decided to set the plant in Beijing. He believed that Beijing, as the capital of China, was undoubtedly the city benefiting most from the supporting policy since the Chinese leaders had shown their determination of developing the economy.
After choosing a place in Chaoyang District of Beijing as its location, Panasonic, with more than 100 million US dollars, entered China formally. In 1987 its first joint venture company in China was established. The name of this joint venture was Beijing Matsushita Color CRT Co. Ltd (BMCC).
The Trilogy
According to Zhang Zhongwen’s analysis, the development of Panasonic in China can be divided into three stages.
After the mutual visit mentioned above, Panasonic entered its first stage in China. The main characteristic of the Chinese economy was “buying technology and a period of technology introduction.” At that time there were about 170 to 180 sets of complete equipment, including televisions, washing machines, etc. Both sides signed two contracts: a contract of complete equipment and a contract of technology introduction. In 1979, Panasonic started a technological collaboration with Shanghai Bulb Plant on a project of 12-inch and 14-inch black and white CRTs. The success of this project contributed a lot to the popularization of the television in China. Meanwhile, it also established the foundation of the subsequent cooperative project of color CRTs.
In the second stage the cooperation between China and Panasonic turned into a joint venture. The first joint venture company of Panasonic in China was BBMC. In June 1989, the first color CRT of the joint venture company was rolled off the production line in Beijing, starting the consumption upsurge of the color CRT in China. In 1991, BBMC’s 21-inch FS color CRT took 53% of the market share in China. Meanwhile, the localization of the raw materials of its color CRT encouraged the development of the Chinese national industry, as well as the improvement of the specialized division and the technological level of the color TV industry. Till 1992 the important components and raw materials of the color CRT, such as fluorescent powder, low melting glass, bead glass and so on, have already realized the one-hundred-percent localization.
It was a strategic change from the collaboration on black and white CRTs in 1979 to the joint venture of color CRTs in 1987. It was also a great leap for the friendship between China and Panasonic. Driven by this joint venture company, the investment of Panasonic in China is just like the water in Yangtze River which never stops.
In that period, Panasonic experienced some important trials like the rise of Dalian Hualu from previous failure. Dalian Hualu was the joint venture company with the aim of becoming the base of video tape in China. However, one year after the establishment of the company, it met great challenges from VCD and suffered from great deficit. “Kunio Nakamura, President of Panasonic at that time, decided to retain the enterprise, take the former equipments back to Japan and get new ones.” After that, Dalian Hualu rose gradually. Zhang Zhongwen said: “This was a significant embodiment of an enterprise to assume the social responsibility.”
With the extension of China’s reform and opening up and the development of the market economy, it is not right to consider China as the “processing market with lower labor cost”. As China introduced its strategy of sustainable development, the economic development mode of China has begun to shift. The Chinese people are becoming more and more skillful in using the intellectual property. What course to follow is a problem of the international multinationals in China. Panasonic also has to face the examination of the opportunities and stress.
The biggest problem that needs to be solved at the moment is to realize Panasonic’s two visions: the star-studded cyber society and the coexistence with the world environment. The first one comes down to realizing the replacement of the old with the new smoothly; the second one is how to keep and improve the traditional advantageous industries. In this May the Chinese leaders visited Japan. During the visit the Chinese leaders said to Panasonic: “China is building an energy-saving and environment-friendly society. Panasonic has advanced technology and experience in that field. We hope that Panasonic can use its advantages to cooperate with China on energy-saving and environment protection.” According to Zhang Zhongwen, in the future, Panasonic will stick to its philosophy of creating things of value for their customers and giving them a reassuring, safe, comfortable and convenient feeling.
