TOKYO: After nearly a century of existence, Matsushita Electric Industrial is ditching its founder's name to trade under one name globally - Panasonic, its best-known brand - hoping this and an $11 billion reserve of cash will increase its growth outside Japan and help the company compete with rivals like Samsung and Sony.
Expansion overseas is an urgent task for Matsushita, which earns half its revenue from its home base of Japan, where the population is aging. Sony earns more than three quarters of its sales outside Japan, helped in part by its strong brand name.
Matsushita markets its products outside Japan under the Panasonic brand, while in Japan it sells home appliances under the National brand.
"We will strive not to waste even one moment of our effort or one drop of our sweat, and focus everything on Panasonic," the company's president, Fumio Ohtsubo, said this month.
A shift in branding to Panasonic for home appliances in Japan will be completed by March 2010.
Matsushita's decision to change its name, effective Wednesday, comes half a century after a rival company, Tokyo Telecommunications Engineering, was renamed Sony.
The late Konosuke Matsushita started his company at the age of 23, when he turned part of his rented house into a workshop. The company reckons that now - its 90th anniversary - is a good time to make the name change, and it will promote Panasonic as a single worldwide brand.
As part of its drive to expand globally, Matsushita plans to introduce its washing machines and refrigerators in Europe by March, going head to head with brands like Electrolux of Sweden.
Matsushita, with available cash of 1.16 trillion yen, or $10.9 billion, may consider mergers and acquisitions as a way to take on bigger rivals and increase its sales of home appliances, said Kazuharu Miura, an analyst at the Daiwa Institute of Research.
"The white-goods market may appear mature, but it is also a market where profitability goes up as you expand your market share," Miura said. He added that the home appliances division of General Electric would be an "ideal" acquisition for Matsushita.
GE said in May that it might sell or spin off its appliances unit and identified several potential bidders, including Haier, of China; LG Electronics, of South Korea; Controladora Mabe, of Mexico; Arcelik, of Turkey; and Electrolux. But GE said later that it might sell its entire consumer and industrial goods business, instead of just the home-appliance arm.
Hitoshi Otsuki, managing director at Matsushita, told analysts last week that the company was open to overseas mergers and acquisitions, but only to strengthen its distribution networks, not to expand production capacity - a signal that potential targets could be small, unlisted companies, analysts said.
Matsushita's revenue of $85.1 billion is similar to the sales of Samsung and Sony, while its operating profit, at $4.9 billion, is slightly ahead of Sony's, at $4.5 billion, but below the $7.5 billion generated by Samsung.
In terms of brand awareness, a crucial element in the industries of consumer electronics and home appliances, Panasonic ranks 78th on Interbrand's most recent list of top global brands, well behind Samsung, at 21st, and Sony, ranked 25th.
Analysts say that Matsushita has a good record of improving the quality of existing products and selling them at affordable prices, but that it lacks innovative products like the Walkman from Sony or the iPod from Apple.
"Matsushita has traditionally had this strategy of letting others launch new products, and then stepping in and making them better and cheaper," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
"That's one way of doing business and it certainly incurs less risk," Akino said. "But I'm not sure if that should be the only way for Matsushita as it goes forward."
But Shunzo Ushimaru, an executive vice president at Matsushita who heads its corporate brand committee, insists that his company has come up with market-leading products, including self-cleaning air-conditioners and tilt-drum washer/dryer hybrids, which have been copied by competitors.
"Some media once called us 'Maneshita,"' Ushimaru said, using the Japanese word for copycat, "but it's our turn now to be copied by others."
On the audio-visual side of its electronics business, which include Viera flat-screen televisions, the company has said it will spend $2.8 billion to build an LCD panel plant in western Japan. It is also building a $2.6 billion plant to make plasma panels in Japan, part of a plan to make its own screens for its plasma and LCD televisions, instead of buying screens from other companies. Matsushita is already the world's largest maker of plasma TVs.
In-house panel production allows TV makers to maximize profit when sales go well, but recouping heavy investments can be tricky because of the fierce price competition within the industry, which makes self-production of both LCD and plasma panels a high-stakes bet.
"Risk is big when you do everything from panel production to TV sales," said Ryosuke Katsura, an analyst at Mizuho Securities.
Samsung had a 23.1 percent share of the global market for flat-screen televisions in the first half of 2008, followed by Sony, with a 14.7 percent share. LG Electronics had 10.6 percent of the market, while Matsushita had 8.6 percent, according to the research firm DisplaySearch.
Matsushita, aware of the risk associated with aggressively building up its production capacity, chose to build its LCD plant so it could avoid future hiccups like the one experienced last year, when it was unable to secure enough panels because of tight supplies and thus failed to increase market share.
"Matsushita is keen not only on stability but also on growth," analysts at Nomura Securities said in a recent research report. "We think the company is both big and nimble enough to weather a downturn in the macro environment."
Shares in Matsushita have fallen 18 percent so far this year, but they have outperformed the 45 percent slide for Sony's shares, and the benchmark Nikkei 225 share average, which has declined 23 percent.
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