HBR 1 What Panasonic learned in China 1

Introduction to
International Business
Harvard Business review reflection “What Panasonic learned in China”

Tutor: Sanne Ponsioen
Date of submission: 16th of September
Group number: 6 reviewed article: “What Panasonic learned in China” By: Wakayama, Toshiro; Shintaku, Junjiro; Amano, Tomofumi. Harvard Business Review. Dec2012, Vol. 90 Issue 12, p109-113. 5p. 1 Color Photograph

2716194 Aardema, F.
2543699 Ammerlaan, L.E.
2706180 Urban, J.

The authors T. Wakayama, J. Shintaku and T. Aamano, professors of Japanese universities, of the Havard Business Review article “What Panasonic learned in China” published in December 2012 aim at encouraging multinational companies to take the risk of acting internationally in upcoming markets and becoming a real part of them by giving the example of Panasonic’s joint venture.

In the introduction of their article they explain that in many cases multinational companies do operate in global markets, but often they are not really part of them, what results in their incapability to expand their products to consumers around the world. At that point, the case example of Panasonic is been introduced. Realizing a growth slow in China, the Japanese company Panasonic used this emerging market in order to benefit of cheap labour and low manufacturing costs. Despite the previous amity between the countries, Panasonic wanted to concentrate more on the Chinese customers. After establishing the first joint venture in 1987, more than 40 China-based manufacturing operations were established and China evolved into Panasonic’s manufacturing hub. However, Chinese customers weren’t recognized as an important market yet. Only when the middle class began to aspire, the defect in the strategy became evident. Suddenly, Panasonic’s existence in all markets and countries depended on the performance in China. Using effectively the Japan-based central resources like marketing and R&D expertise, recognizing and remodelling, , creating a China Lifestyle Research Centre and developing a deeper comprehension of consumer lifestyles, focusing on Global Consumer Marketing and expanding the production to new segments, the company experienced a dramatic change.According to the authors, the Japanese company accomplished two conflictive ambitions and became a global powerhouse: Not only worldwide integration through cooperation and uniformity, but also local adaption that values independence and diversity at the same time.
Taking the strengths and benefits of the HBR article to close scrutiny, it becomes apparent that the authors give the readers a lot of complete and detailed information about the topic in order to convince them of their view. On top of that, they even provide us with interesting background information like on page 110 line 3 ff: “Panasonic’s desire to engage more deeply with Japanese customers was rather remarkable because of the historical animosity between Japan and China, which can suddenly flare up. In 2012, for instance, after Japan announced the purchase of the disputed Senkaku Islands, protests in China forced several Japanese companies to suspend their China operations temporarily.” Apart from this concrete and clearly explained example, there are some more in the text which make the authors appear like reliable experts and the people believing their message of taking risks and acting internationally in upcoming markets. As the given data and statistics, “Panasonic’s growth in China stayed flat, while the home appliance market in China grew at 20% to 30%annually” (p. 110, 8th paragraph), result in the sensation of a good research of the authors, they support this aspect. In addition to that, the authors make an impression of being honest by using expression like “ sure” (p. 109 l. 4), “It’s surprising” (p.109 line 26) or “probably” (p.110 l.14) and responding to the critics: “Some of the changes have been subtle- and it could be argued that they aren’t as deep as they need to be-but they are real” (p. 110 l.43).
Finally also the coherent structure, the development of Panasonic as a company , beginning with the visit to Japan in 1978 and the ask for help modernizing China’s industries and finishing with Panasonic’s recent created organisation “Global Consumer Marketing”, underlines the seriousness and reliability of the authors.
Analysing the weaknesses and the limitations afterwards, there is one aspect especially remarkable. Within the course of the article some challenges and difficulties about becoming an active part of the global market are mentioned, “Miyoshi searched hard for local talent” (p. 111 4th) paragraph, anyway the authors don’t go into their detail. Of course, this is logically related to their objective, however it would enhance the quality of this article.
Thinking about the question what we as new International Business students have learned from this article is that there is no denying the fact that….

It is beyond the question that this Harvard Business Review article can turn out beneficial for all kind of managers. Because it shows that it is necessary to anticipate on the local market to attract local consumers. This is important for making the globalization effective. As shown in the article this kind of thinking can also have effect on other parts of the company.
Nevertheless it is also of a high importance to relate this article and the findings to our course. For example the advantage in forms of Panasonic’s own marketing and R&D skills. The company’s China operations knew that this was needed to benefit from this advantage quickly. So Panasonic reorganized and improved the efficiency by lowering the number of employees and cutting out layers of structure and by unifying business units to encourage cross-unit innovation.
After Panasonic found out that things had to change, Tetsu Miyoshi came along. He encouraged employers to learn about the newest technologies. These Japanese technologies in combination with new and thorough market research led to more global integration of knowledge.

=>balance between local bound FSA’s and transferable ones
Efficiency seeking, market seeking (new products) bounded reliability: imperfect effort ( study local preferences in China, but still most pr. Development in Japan)

In conclusion, it is obvious that the authors of this HBR article succeed in convincing managers of multinational companies to act globally with the firms and becoming a real part of the global markets by providing detailed information, concrete examples and statistics and being honest to the readers. Nevertheless the article’s quality would be even higher with giving a deeper inside into the challenges and difficulties of the proposed action.
Here are the three questions we would like to ask the authors after reading their article and writing this reflection: ….