Panasonic-Sanyo merger : Japan’s new electric giant (Part 1 of 3)
Written by changthai11 on Sunday, November 9th, 2008
Panasonic-Sanyo merger: Japan’s new electric giant (Part 1 of 3)
OSAKA — Sanyo Electric Co. insiders have expressed mixed feelings about its agreement to be absorbed by Panasonic Corp.
“I’ll be all right with it if the company improves as a result, but still …” a former executive of Sanyo said.
An acquaintance of the former executive said Sanyo employees are feeling a sense of humiliation. “They are wondering why it chose to be absorbed by Matsushita Electric (the old name of Panasonic) of all electric makers.”
As a condition for being taken over by Panasonic, Sanyo demanded out of pride that its brand be maintained.
“We’re not a company known only for its batteries,” Sanyo President Seiichiro Sano said. Sanyo is a major manufacturer of solar cells and rechargeable batteries and has the largest global market share of lithium-ion batteries used in computers and mobile phones.
Electric industry insiders describe the relationship between Panasonic and Sanyo as “neighbors that are distant from each other.”
The late Sanyo founder Toshio Iue was the brother-in-law of the late Panasonic founder Konosuke Matsushita.
Before and during World War II, Iue, who was responsible for cultivating a market at then Matsushita Electric Industrial Co., helped the company grow.
He founded Sanyo after being forced to resign from Matsushita due to the allied forces’ post-war economic purge. Sanyo set up its headquarters in Moriguchi, Osaka Prefecture — only 15 minutes’ walk from the Matsushita Electric headquarters in Kadoma, Osaka Prefecture.
The two companies’ offices and factories are situated along the Keihan Railway and an Osaka Municipal Subway line. Many employees at the two companies also live near these train lines and their families are often friends.
However, the two firms have a strong rivalry with each other. In particular, Sanyo harbors a strong sense of rivalry with Panasonic.
“We have many original technologies, such as solar cell technology, but they (Panasonic) imitate other companies’ technologies,” a retired board member of Sanyo says.
Sanyo’s business practices reflect this rivalry. As if to chase Matsushita, Sanyo attempted to be a comprehensive electric appliance manufacture. It rode on the wave of popularity of three appliances — washing machines, television sets and refrigerators — during the rapid economic growth in the 1960s and the early 1970s, and grew rapidly.
Iue’s son, Satoshi, became president of the company in 1986, and diversified its business with the aim of making it Japan’s largest electric equipment manufacturer with an annual turnover of 10 trillion yen.
In the early 2000s, Sanyo rode the information technology wave and was labeled one of the “three successful S’s” along with Sony Corp. and Sharp Corp.
Following the bursting of the IT bubble, however, the performance of its semiconductor business began to decline from around 2002. Its factory in Niigata Prefecture sustained damage in the Niigata Chuetsu earthquake in 2004, and the slump of its financial and mobile phone businesses dealt a further blow to the company’s performance.
It continued to postpone disposing of its losses. In 2006, it was placed under the control of three financial institutions. The company faced crisis as inappropriate entries in its balance sheet surfaced in 2007.
In a desperate bid to rehabilitate itself, Sanyo appointed celebrity journalist Tomoyo Nonaka as its chairwoman, but its business performance did not improve.
In sharp contrast, Panasonic President Kunio Nakamura, who assumed the post in 2000, carried out drastic reform under the slogan, “Destruction and Creation,” and succeeded in drastically improving the company’s performance.
The fate of these two neighbors was determined by the reforms they undertook in the 2000s.
(Mainichi Japan) November 9, 2008
