Japanese manufacturing industry has become a yellow flower

2012 coincided with the 100th anniversary of the founding of Japan's Sharp Corporation, but Sharp, which is in the midst of delisting, suffered the greatest crisis in a hundred years. The huge loss led to the insolvency of the company's capital and it is currently expected that the operating profit loss for fiscal 2012 will be as high as 100 billion yen. Sharp's delisting and the rapid decline of Japanese companies such as Sony and Panasonic in recent years can not help but sigh that the once brilliant Japanese manufacturing industry has become a thing of the past.

First, the failed strategic plan After September 26 announced the submission of delisting applications to Japan's Sapporo, Nagoya and Fukuoka Stock Exchange, the uncertain future of Sharp has once again met with the bank's confidence crisis, its two major creditor banks Mizuho Financial and Mitsubishi UFJ stated that it is studying the dispatch of two director-level personnel to Sharp for full supervision.

Affected by this news, Sharp's share price continued to fall on October 15th, a drop of more than 3%. From the end of March this year, Sharp's share price has shrunk by more than three-quarters, and on October 12th, it has reached the lowest price since the beginning of 1971, 142 yen.

Li Chengzhu, the manager of the company’s management consultancy, told reporters: “Sharp’s current cash flow has serious problems and insolvency is the most direct cause of its delisting.”

Once, the world’s first liquid crystal display computer, LCD TV, and LCD video camcorder all came from Sharp, known as “the father of LCD”. Even if Sharp is one of the important suppliers of Apple’s display panel, why would such a crisis occur? ?

Li Junhua, a researcher at China Merchants Information Network, pointed out to reporters that from the analysis of the external environment, the business environment such as the appreciation of the yen, corporate tax rates, free trade agreements, labor restrictions, environmental restrictions, and power shortages has become increasingly complicated in recent years, which has caused serious impact on Sharp.

“In addition, Sharp faced the continuous attack of China and South Korea’s enterprises to cope with inadequate response capacity. Sharp has only focused on technology, specializing in high-end markets for a long time, and has not paid close attention to competitors’ pricing strategies. It also lacks long-term strategic plans for future products. Quotes deviating from the market," said Li Junhua.

Li Chengzhu, who had contacted Sharp for many years and personally cooperated with him, pointed out that the national nature of Japan and the “Plaza Agreement” are the underlying causes of the Sharp crisis.

"Sharp has the typical national character of Japanese companies and Yamato people, and has a very strong sense of cultural superiority. After the signing of the "Plaza Agreement" in 1985, the yen appreciated sharply. Sharp insists on keeping the best technology and products in Japan. It is also reluctant to put the most advanced product line into production overseas, resulting in high domestic production costs,” said Li Chengzhu.

He pointed out that after Sharp's strategic direction and brand building also appear to be biased, in Europe and the United States electronic market has saturated but do not attach importance to emerging markets such as Asia, and the judgment of market demand is too advanced. “Sharp has invested large amounts of funds and production lines in high-end technologies such as the Tenth Generation Line, but many factories in Japan have been shut down due to lack of market for high-end products, resulting in tight cash flow.”

Second, stranded cooperation with Hon Hai The 2011 financial report has shown that Sharp's fiscal year sales fell by 18.7% year-on-year, and net profit loss was 4.66 billion US dollars. At that time, it had already set a record for the company's biggest loss.

Li Junhua said: "Because of business difficulties and high debt, Sharp will shortly have huge short-term loans due in September this year. However, direct financing such as debt is difficult, making Sharp's capital chain very fragile."

In order to seek huge sums of money to pay for the debt, in March this year, Sharp and Gou Group signed an agreement with Gou Ming, agreed Hon Hai Group to share Sharp at a price of 550 yen per share, a total of 66.9 billion yen, the share of the share of 9.9%, will Has become Sharp's largest single shareholder. In addition, Hon Hai Group will also share a 37.6% stake in Sharp Tenth-Generation Line Factory for a total of 660 billion yen, and will receive half of the capacity of the Tenth Generation Line.

The transactions that were originally required for this round of events were unexpectedly changed due to sharp declines in Sharp's share price in August. The Hon Hai Group hopes to take a share of more than 10% by taking advantage of Sharp's low stock price to seek a place on the Sharp Board of Directors to achieve the goal of sharing Sharp's most proud IGZO technology. However, Sharp, who has fallen from the sun, is not willing to make concessions, resulting in a deadlock in the negotiations.

As the “last straw” that led Sharp’s delisting, Hon Hai’s share extension has brought irreversible losses to Sharp. Li Junhua said: "The Hon Hai Group's share extension, making Sharp finally made a delisting at the end of September this helpless choice. As IGZO technology is Sharp's core technology, the future Sharp accepted the Hon Hai Group to share the technical conditions of IGZO less likely to open ."

In this regard, Li Chengzhu also agreed: “Sharp will stick to its core technology, but the cooperation with Hon Hai Group may still be reached eventually. Both parties will not give up this cooperation. This is a difficult game process. Who is more capable of playing games."

3. Prospects It is difficult to expect that Sharp is obviously reluctant to hang on the tree of Hon Hai Group. After the negotiations ran aground, it has actively sought help from Japanese banks. It is reported that in mid-September Sharp has provided additional financing of 300 billion yen to Japanese Mizuho Corporate Bank and Mitsubishi Tokyo UFJ Bank, and has received support from the Bank of Japan.

Li Chengzhu said: "Now Sharp is trying to get out of the crisis and is playing two cards: One is a fund card and the other is a screen card."

The fund card is the financial support for Sharp from several major consortiums in Japan. Sharp is also actively developing bank-enterprise cooperation. The screen card is the focus of its strategic transformation. Sharp has applied the design of small and medium-sized LCD panels for smartphones and tablet computers. Manufacturing is positioned as the core pillar business of the future.

The competition between Apple and Samsung for the long-term and almost universal coverage of the lawsuit has given Sharp and other companies opportunities to expand their markets. Recently, it was reported that Apple will use IGZO panels from Sharp in the next generation of iPads, which laid the foundation for Sharp's future rejuvenation.

Li Junhua pointed out that if Sharp wants to weather the difficulties, he should focus on debt settlement and future industrial restructuring. "On the one hand, companies should reduce their investment in hardware, and on the other hand, they must actively seize external financing opportunities. In the adjustment of industrial structure, they must look for new excitement in their industrial structure, such as nurturing electronic components, mobile phones, and product design. New industries such as commodity planning, software development and solar energy."

In addition, Sharp is actively reducing its asset burden through cost reductions, layoffs, and asset stripping. Li Chengzhu said: "As far as I know, Sharp will lay off 20,000 people worldwide."

Analysts have different reactions to the future of Sharp. Li Junhua believes that Sharp wants to turn around very hard in the future and the road to recovery is full of uncertainties. Lee Seung-chu believes there is still a chance for Sharp Hill to make a comeback.

However, for the Japanese manufacturing industry represented by Sharp and Nishiboyama, analysts have said that it is very difficult to reproduce the splendor.

Since 2011, Japanese manufacturing companies have generally been in a sluggish state. Li Junhua believes that this is mainly due to the European debt crisis, exchange rates, electricity shortages caused by the tsunami, unfavorable taxation and trade policies, and the strong rise of China and South Korea.

“In recent days, the gradual shrinking of Japanese manufacturing companies in China has become an indisputable fact. As competition intensifies and the rapid development of alternatives provided by countries such as China and South Korea, Japan’s manufacturing industry will almost never return to its peak in the future. Maybe," said Li Junhua.