CANON TARGETS CHINA !

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CANON TARGETS CHINA !

 user 2006-03-21 at 10:26:00 am Views: 63
  • #15265

    Canon targets China
    BEIJING – Japanese consumer electronics giant Canon saw its annual revenue in China grow by 38% year-on-year last year, a company executive said.
    The set target for the world’s largest digital camera manufacturer was a 24% year-on-year increase. The firm’s annual revenues in China stood at US$450 million in 2004.
    The higher-than-expected sales growth was mainly attributed to aggressive expansion efforts in recent years by the firm, which entered China nine years ago.
    Hideki Ozawa, president and chief executive officer of Canon
    China, said the top priority for Canon now is to boost sales as it has finished “infrastructure construction”, known as the firm’s “first-phase plan”.
    “The second phase is from 2005 to 2010, in which we will focus on expanding our market share and increasing sales,” he said. “In 2006, Canon China hopes to grow [annual revenue] by 30%.”
    Ozawa, also president of Canon Asia Marketing Group, has set an ambitious goal to double the firm’s annual revenues in China to US$1 billion by 2008.
    Canon won approval from the Chinese government in 2004 to directly import and sell its products in China, which has given a major boost to sales.
    Previously, the company’s products had to be imported via Hong Kong, and its manufacturing facilities in China were solely focused on exports.
    China’s consumer electronics market, despite heated price wars, still offers a big opportunity for Canon. It boasts a wide portfolio of imaging products including cameras, camcorders, printers, copiers and scanners, noted Ozawa, adding: “The world of digital photography is growing with remarkable speed. The compact digital camera market in China is increasing by 50% every year. Demand for professional digital SLR [Single Lens Reflex] has never been so large, both in technology and in variety of needs.”
    According to US-based research firm IDC, China’s consumer electronics market was worth 61.60 billion yuan (US$7.7 billion) in 2004 and is expected to hit 159.64 billion yuan by 2009.
    A total of 5.3 million digital cameras were sold in China last year, showed statistics by data tracking firm GFK China.
    The figure is forecast to grow by 32% to 7 million units this year. Around 109,000 camcorders are projected to be sold this year.
    Sony and Canon dominate China’s digital imaging market.
    Ozawa said Canon will strengthen research and development (R&D) as well as its localization efforts in China to help it achieve the US$1 billion goal by 2008.
    Meanwhile in Tokyo, Canon Inc shares gained 150 yen to reach a record 7,410 yen at one point in Monday’s trading, buoyed by the yen’s depreciation against the dollar and purchases by foreign investors.
    Canon’s operating profit is said to jump 7.7 billion yen (US$66 million) for each 1 yen depreciation. Because the yen fell to 117 yen to the dollar Monday, this alone was a buying incentive for the company’s stock.
    But volume buy orders, which are believed to have come from European investors, created additional upward pressure on Canon’s share price.
    “Foreign investors are switching from semiconductor manufacturing equipment makers, whose stock prices have become slightly overvalued, [to Canon shares],” said Hirokazu Mitsuda, an analyst at Daiwa Institute of Research.
    As many analysts repeatedly noted, Canon’s stock has been undervalued. Even based on Monday’s high closing price of 7,400 yen, the firm’s projected price-earnings ratio (PER) stands at 16, well below the average 22-plus level forecast for shares listed on the Tokyo Stock Exchange’s first section.
    “Investors saw intensifying price competition in the printer market as a negative factor for Canon’s earnings, but the company’s competitive edge has in fact strengthened,” said Satomi Ushioda, an analyst at Nikko Citigroup Ltd.
    Canon’s net profit rose 12% to 384.1 billion yen in 2005 to mark its sixth consecutive year of record net profits. Its sales and profit are forecast to rise again in 2006.