Panasonic to outsource mobile phones production

Electronics giant to become first Japanese company to make all handsets abroad even as it plans to boost flagging sales by re-entering overseas markets this April, report states.

Panasonic is expected to shift the production of its mobile handsets out of Japan as early as this summer, as it seeks to become more cost competitive and boost sales by re-entering overseas markets.

A Reuters report on Sunday stated that Panasonic still manufactured more than half of its mobile phones in Japan currently, but this is set to change. Production from its Shizuoka factory, which accounts for more than half the company's output, will be moved to Beijing and Malaysia, while some will be contracted to overseas manufacturers, it stated.

Once the outsourcing is complete, the electronics company will be the first Japanese company to produce all of its handsets abroad, the report added. There is the possibility that manufacturing of certain models may remain on local shores, though.

Panasonic sold five million handsets globally in its last fiscal year, making it the No. 3 domestic manufacturer behind Sharp and Fujitsu, it stated. However, it is projecting to triple that figure to 15 million by fiscal year 2016 by re-entering overseas markets--which it hoped will contribute 9 million unit sales. The company had exited these markets in 2005, the report stated.

The new production and sales initatives come after Panasonic named the head of its TV business, Kazuhiro Tsuga, as its new president in February. The firm had earlier announced that it expected to post a 780 billion yen (US$10 billion) net loss for the fiscal year of 2012.

Ben Cavender, an associate principal at China Market Research (CMR) Group, had previously noted that Panasonic was an example of a Japanese firm that failed to adapt to evolving international markets. Despite leading products and technology in its portfolio, the electronics giant lacked effective marketing, distribution and production planning, he explained in an earlier ZDNet Asia report. He also pointed out that the expensive manufacturing costs in Japan had led to reduced margins and higher consumer prices.

When contacted by ZDNet Asia for clarification, a Panasonic spokesperson said, "With regard to the strategic relocation of Panasonic's mobile phone business, [the company is] considering various options but details are still being worked out."