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Fuji Xerox Needs China’s Help to Boost Overall Sales
By CHUN HAN WONG
SINGAPORE—Fuji Xerox Co., the Japanese maker of printers and copiers, expects growing demand in China to drive its push into overseas markets and business-processing services, as ill effects from a sluggish Chinese economy and bilateral tensions wear off."China has to take the lead" in revenue growth so that the company, which earns about 60% of its revenue in Japan, can cut the domestic share of total revenue to 50% by the end of this fiscal year, President Tadahito Yamamoto said in an interview in Singapore Tuesday.
"The value of [printer and copier] technology is declining in Japan," Mr. Yamamoto said. "Most customers tend to want to become less paper-reliant."
Sales in China, the world’s second-largest economy, are expected to rise 20% in the current fiscal year ending March 2014, Mr. Yamamoto said. Sales in the Greater China region, including Hong Kong, contributed about 6% of the group’s fiscal 2011 revenue of ¥996 billion (US$10 billion), according to the latest available figures.
"China really needs business solutions and services, and low-end office devices. Even high-end machines sell better there than in Japan," the executive said.
The office-equipment maker’s ambitions were hampered somewhat last year, when Chinese consumers boycotted Japanese products following a diplomatic brawl between Beijing and Tokyo over disputed islands in the East China Sea.
Sales were affected but Fuji Xerox doesn’t expect any lasting impact, Mr. Yamamoto said. Instead, the company will seek more partnerships with Chinese dealers to distribute low-end devices, while its own staff focuses on selling high-end hardware and business services.
Fuji Xerox, 75%-owned by Fujifilm Holdings Corp., 4901.TO -0.99% has in recent years sought to diversify into services like document management and business-process outsourcing.
Given that Xerox Corp., which owns 25% of Fuji Xerox, earns more than half its revenues from services, "there is no reason why we can’t be the same," potentially getting there through acquisitions, Mr. Yamamoto said.
The company’s immediate target is to boost revenue contribution from its services segment to 30% by the end of this fiscal year, up from about 23% currently.
Fuji Xerox last year bought the business-processing arm of Australia’s Salmat Ltd. SLM.AU -1.69% for 375 million Australian dollars (US$388.6 million), but the company doesn’t have immediate plans for another deal, Mr. Yamamoto said.
Meanwhile, Fuji Xerox could see some indirect benefits from a weaker yen, chiefly from its clientele of Japanese exporters whose products would be selling cheaper in dollar terms.
A weaker yen is "quite good for our Japanese customers, who may then increase their needs [in office equipment and business processes]," Mr. Yamamoto said. "That gives us opportunities."
The Japanese currency has declined more than 15% since late last year amid a program of massive monetary easing that has stoked concerns of rival economies and drawn a warning from the U.S. about competitive devaluation. On Wednesday, the yen remained about 5.5% weaker against the dollar since the Bank of Japan’s policy announcement on April 4.
Fuji Xerox bases 90% of its manufacturing in China and books most of its production costs in dollars, which gives the company some hedges against currency swings.
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