Matsushita Electrical puts focus on China

One of many Japanese companies that are increasingly dependent on China, Matsushita Electrical Industrial is seeking to increase mainland sales by nearly 80 per cent next year from last year's level.

A company official said the target for sales next year, including imported goods and those made by its plants in China, was 70 billion yuan, up from 28.5 billion yuan in 2002 and an estimated 45 billion yuan last year.

Japan was the third biggest foreign investor in China last year, after Hong Kong and the Virgin Islands.

In the first six months of last year, contracted investment from Japan was US$3.74 billion, an increase of 40.5 per cent over the same period in 2002.

Last year, trade between China and Japan grew 31.1 per cent to US$133 billion. It was the 11th successive year that Japan was China's biggest trading partner.

Zhao Jingping, an economist in the company research division of the State Council's Development and Research Centre, said there had been a clear change of policy by Japanese companies towards China since 2002.

'Before 2002, they invested in labour-intensive products as part of a global manufacturing strategy aimed at markets in Japan, Europe and North America,' he said.

'Now they see China as vital for their own survival and growth and produce here for both the export and Chinese markets or exclusively for the Chinese market.'

This change means not only a bigger average investment size but also more transfer of technology and the establishment of head offices in China.

By next year, Matsushita expects sales overseas to account for 60 per cent of the total, with China accounting for one-third of foreign sales, triple the 11 per cent level of 2002, when overseas sales exceeded those in Japan for the first time.