The Hindu Business Line : Sharp sees the bigger picture

If the mention of a factory has you visualising a cavernous, noisy, grubby place with workers bustling to and fro, Sharp Corporation’s Kameyama plant in Japan will disabuse you of these notions. Just a couple of masked technicians, clad in white from head to toe, move silently between chambers full of equipment and from behind the viewing gallery, one can only gauge absolute silence.

For the $27-billion Sharp, the Kameyama facility is its current poster child. Between the two units in this factory, Sharp makes its large-size LCD TVs, branded Aquos. With this plant, Sharp aims to create a business model that is the last word in cost effectiveness and environmental conservation.

The 108-inch concept TV

The company’s target for this year is 20-million LCD TV panels (of 32-inch). The Kameyama plant, and an upcoming plant in Sakai, near Osaka, have the capability to make larger and more panels from eighth and tenth generation glass substrates with minimum wastage. Sharp’s executives say they will drive the trend towards larger screen sizes in LCD TVs to counter price erosion. Worldwide, its focus is on its 40-inch and larger screen sizes, and it has even produced a 108-inch concept TV.

Sharp (the Indian arm’s turnover was Rs 141.17 crore for the year ended March 2007 ) is optimistic about its future in India as incomes are projected to grow and consumers are aware of sophisticated products. Officials told a group of mediapersons visiting its facilities in Japan that these factors fuelled their optimism that LCD TVs too would take off in a big way. Globally, Sharp has a 12 per cent market share of the 96 million-unit LCD TV market. In Japan, its share of the market is y closer to 50 per cent, its officials say.

However, Sharp, which has been present in India for over 18 years, is not a very visible brand, and its executives are aware of this. It is going back to the drawing board to draft a strategy for its consumer durables, mainly the Aquos. It also markets refrigerators, washing machines, air-conditioners and DVD players in India.

Doug Koshima, Corporate Director and Group General Manager, International Business Group, Sharp, says, “The strategy would focus on the specialities of Sharp’s products versus other companies’ brands, expanding distribution to cover the entire country and increasing advertising, bringing electronic media into the marketing mix for greater visibility.”

Koshima says the lack of a nationwide presence for retail chains specialising in consumer durables is a hindrance. The company will take advantage of the emerging retail brands in consumer durables which promise a national presence (such as Croma and Reliance).

However, this argument about the lack of a national-level retail chain is not acceptable to B. A. Srinivasa, Director of the Chennai-based consumer durables retailer Vivek’s. Sharp has “fantastic products”, he says, but makes the point that “a product has to aspire to the consumer too.” To succeed in the Indian market, one has to understand “it’s like planting a coconut sapling; you have to be patient, take care of it and it will yield fruit only after five or seven years.” Translated into business, this means that Sharp will have to “give confidence to the retailers, give a value proposition to the customers” and be prepared to spend a lot of money on building the brand and shoring up its distribution. “The company needs to take a 180-degree turn from where it is now,” he remarks. Vivek’s earlier dealt in Sharp products but as its sales languished and shelf space shrank, it decided to halt stocking the brand, says Srinivasa.

Koshima says Sharp will select strategic locations to start building up its business, maybe the West and the South. “Cultural differences and diverse duty structures among the States are the main difficulties Japanese companies face in doing business in India,” says Koshima. However, he said Sharp was not considering cheaper products for India at this stage. His colleague, Hiroshi Kusao, Division General Manager, LCD Digital Systems Division IV, Audio-Visual Systems Group, says lowering prices for specific markets could affect the brand image.

The company hopes its plans for the Indian LCD TV market (which absorbed an estimated six lakh units in 2007, and is expected to consume 26-, 36- and 42-inch TVs like “hot cakes” ) will yield results between 2011 and 2015. Queries about engineering a product for India has Kusao saying it would need consideration. Sharp’s Aquos are all meant for high-definition viewing, but there is no HD broadcast in India yet. To this, Kusao counters, saying that the TV could be used for DVD viewing, gaming and Blu-Ray discs.

In fact, the company is hoping for significant sales in China, which is hosting the Olympics this year. Its research shows that the demand for LCD TVs will rise to 98 million units this year, 116 million next year, 133 million in 2010 and 148 million in 2011. Most of this growth is expected from Asia.

Sharp has a big presence in the US and European markets but as these markets are getting saturated and demand is falling, it’s training its sights on China, India and West Asia. Research made available by Sharp says that by 2011 China will account for 20.5 per cent market share in LCD TVs from 13 per cent in 2007 and Asia Pacific 14.9 per cent.

Can celebrities guarantee at least a measure of visibility? Sharp seems to think so. At a reception held for the visiting mediapersons, Takayuki Yamazaki, Director/General Manager, Asia Regional Marketing, told BrandLine the company will have to consider signing on a brand ambassador to publicise its products. “We need a brand ambassador, maybe a lady brand ambassador,” Yamazaki, who had earlier worked in India, says with a laugh. So who will it be?

“We don’t know yet. We will have to discuss with our Indian colleagues and decide on somebody,” says Yamazaki, who is himself familiar only with actors Aishwarya Rai and Amitabh Bachchan. Pointing to the Indian head of Sharp India’s business systems operations, who’s also attending the reception, Yamazaki says he’s the only Indian to occupy such a position in Sharp, the other countries all make do with Japanese heads. But why is India an exception in this respect? “The culture’s very different … the other Asian countries, at least we can understand them because there’s quite a bit of Chinese in the culture, you know,” he says.

That they have not tried to understand what India really wants is a charge often levelled at the Japanese companies. Comparisons are made with Korean chaebols LG and Samsung which, while not originally renowned for their technology, made a killing with some sharp market savvy. Francis Xavier, Managing Director of Chennai-based market research firm Francis Kanoi, says the Japanese came in with a limited range of products, high prices and modest marketing budgets. It took some years for Sony to understand the Indian market and the others are still stuck in their old ways, he adds.

“Sharp, has simply offered a small part of its fantastic range with sporadic advertising decided from Japan. The market now is mature and is hard to break into. The LCD segment is small, but has more than doubled in size. It will continue to grow rapidly. Sharp, internationally, is a major in the LCD field. But, in India, it will face the same problems as it did with the regular TVs,” says Xavier.

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