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April 11, 2012

Chinese and South Korean Competition Varnish the Floor with Japanese Tech Companies

By Jack Grauer, TMCnet Contributing Writer

Sharp (News - Alert) Corporation accidentally overstocked themselves with LCD screens they couldn’t sell in its biggest plant, located in Sakai. The mistake could not have occurred at a less opportune moment.



Sharks smelled the blood and moved in immediately. Hon Hai Precision Company, a Taiwan-based group, paid $822 million for an 11 percent cut on the floundering company’s shareholdings. With this one among other buy offs, Sharp will lose about 40 percent of the hand it had in LCD screen production. The Sharp Corporation (News - Alert) is the last of the large Japanese companies that makes television displays from liquid crystal. Sharp reported almost $5 billion in losses during the month of March: an even more severe hit than the one they took in February.

Japanese electronics continue to lose ground on the market to both South Korean and Chinese competitors. Sony, another Japanese company, finished at a loss of 520 billion yen this previous year. This number exceeded predictions by a margin of 200 percent. Why the shift?

In eras past, China happily squashed out products that used dated technology like cathode ray tube-based TVs. Next door, Japan made it their business to do all the high tech stuff like LCD and plasma. Everyone was happy until China woke up and asked itself, “What gives Japan the special privilege to make the fancy toys? We have everything they have, and we can probably do it better and for less money.”

“We could do something better and for less money than the people currently doing it” is not the type of epiphany that businesses tend to take lightly.

Now, as Bloomberg (News - Alert) reported, Japan isn’t the only country on the Chinese hit list of technology producers. China’s TCL recently made an unsuccessful bid on RCA, which has been under ownership of the French since 1988. China has big plans for the auto industry as well.

If you were born with absolutely no capacity to perceive or appreciate irony, here’s the cheat sheet: A communist country takes all challengers on the high tech commodity fetish market.






Edited by Jennifer Russell
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