China button pressed

Talk of slump means little to Fuji Xerox local chief, who sees urbanisation as a key sales driver as printer-copier giant boosts investment

PUBLISHED : Monday, 30 September, 2013, 12:00am
UPDATED : Monday, 30 September, 2013, 4:00am

Fuji Xerox, the printer and document-processing giant, plans to generate about US$1 billion of its total revenue annually from China in the next five years, as the company grows sales in more cities across the mainland.

"There is a very fast pace of urbanisation in China," Masataka Jo, the chairman of Fuji Xerox (China), told the South China Morning Post. "That's why we see a lot of opportunities and have kept investing in the market, despite the economic slowdown."

Tokyo-based Fuji Xerox, a joint venture between Fujifilm Holdings in Japan and Xerox in the United States, derives about 6 per cent of its overall business from the mainland, Hong Kong and Macau.

The company posted revenue of 1 trillion yen (HK$78.9 billion) in its fiscal year ended March, with Japan accounting for 57 per cent of total sales.

Jo, who is also president of Greater China operations at Fuji Xerox, said the "strong urbanisation initiative means that we can gain more customers" over the long term in the world's second-largest economy.

Fuji Xerox plans to add up to 25 per cent more staff in sales and marketing operations each year to address untapped market segments on the mainland and keep pace with the central government's urban development programme.

International consulting firm Frost & Sullivan has reported that urbanisation will bring about spatial changes to the mainland, resulting in the emergence of "13 megacities, four megaregions, and six megacorridors in 2025".

Those megacities are forecast to become the major hubs for commercial and business activity in the country, contributing nearly US$6.24 trillion to the mainland's gross domestic product in 2025.

Premier Li Keqiang has already made urbanisation the centrepiece of the government's economic policies in the hope of creating a fresh growth dynamic for the country.

Bernstein Research has estimated that there are about 50 cities in tiers one to three, about 60 in tiers four and five, and more than 500 smaller cities in tier six. It says there are thousands of still undeveloped townships and counties across the mainland.

Jo said the government's urbanisation drive could result in the creation of a new city the size of Tokyo, with a population of about nine million, each year on the mainland.

"This means we have more room to improve on the mainland, where we continue to record double-digit growth. As we make more investments, we can get more business in China," Jo said. He said Fuji Xerox had not built up a direct presence in Taiwan because it was focused on expanding on the mainland, where it has four manufacturing plants. About 90 per cent of all Fuji Xerox products are manufactured on the mainland.

Fuji Xerox sales in its Greater China operations reached a record high US$700 million in the 12 months ended March, with about 20 per cent of revenue from mainland government-related or state-owned enterprises.

Jo said the company had about 16,000 staff on the mainland, most of whom were involved in manufacturing. He said only 2,500 people were in sales and marketing, which means nationwide coverage remains small, with about 50 direct-service offices. Channel partners have been tasked to cover the mainland's lower-tier cities and remote areas.

"Fuji Xerox was the first company from the copier industry to invest in China," Jo said. The company has made total investments of about US$150 million in sales and marketing, manufacturing, research and development, software, so-called global services and leasing on the mainland since its started business in Shanghai in 1987.

Its recent capital injections on the mainland included US$8.5 million to establish Fuji Xerox Global Services China, an outsourcing operation, in April and US$7 million to set up Fuji Xerox of Shanghai in September last year. That firm oversees development and production of multi-function devices and toner cartridges.

The size of the mainland has led Fuji Xerox to engage customers in four business segments. The firm competes against mostly Japanese rivals, such as Canon and Ricoh, in office copier and printer products. In big production systems, used by large advertising agencies, it competes against the likes of Hewlett-Packard and Oce. Fuji Xerox encounters the most competition in small printers, which are also produced by the likes of Epson, HP and Lexmark.

Fuji Xerox plans to bolster its mainland operations with high-value solutions from its consultancy business, a segment where IBM, Accenture and local systems integrators also compete.