Sharp Lcd Television – Knowledge Management
Throughout the four lectures in China Roots Seminar, I have learned a dynamics of Chinese economy as well as a general overview of China’s political and social system. By participating this course, I strongly realized that one of the most important factors we have to consider when doing business in China is its Political System and the influence of the Government in its social and economic system.
This paper is intended as an investigation of Future Strategy of Sharp’s LCD television business in Chinese market. This topic is especially closely related to the lecture of “Key to Success in China” by Prof. Bo Ji. In this paper, based on the knowledge acquired in China Roots Seminar, I would like to examine how Sharp would be able to success again in China market.
Sharp Corporation and its Challenges in Chinese Market
Sharp Corporation (Osaka, Japan) is a Japanese multinational corporation that designs and manufactures electronic product and now an integral part of Taiwan-based Hong Hai Technology Group. In high-competitive Japan market, it has been a long-time leader as LCD television manufacturer, followed by Sony, Panasonic, Toshiba, etc.
In China, however, Sharp has been struggling to penetrate the market for past 10 years. Although, in the early 2000s, Sharp LCD television once enjoyed very high brand awareness and boasted a high market share of approximately 25.0%, Sharp has been losing its market share in LCD television market from the late 2000s. In the latest survey of GfK in 2016, Sharp’s market share is estimated to 3.0% in Chinese LCD television market. In contrast, Chinese LCD manufacturers, such as Skyworth, Hisense, TCL and Korean manufacturer, like Sumsung, dominate the top ten list of LCD television shipments in China.
As a first step of analysis, hereafter, I will defines the three main reasons why Sharp has been struggling to promote sales in Chinese LCD television market, in comparison with other Chinese and Korean manufacturers.
In the first place, from the early 2000s, the manufacturing technology of LCD television became generalized and a LCD television was turned from a luxury good into a commodity. With such environment, manufacturers, including Sharp, has been challenged by severe price competition. Sharp, as a manufacturer based in Japan, has a high-cost structure, especially compared to Chinese manufacturer, and began to lost market share due to the lack of price competitiveness.
In the second place, Sharp has experienced a LCD television sales decrease in traditional retail stores, such as Guo Mei Electronics, Suning Commerce etc. This is because Sharp had no choice but to decrease promotional budget allocated to such traditional retail stores due to the lack of the margin. With severe price competition and following low sales margin, Sharp had to cut down most of the sales support previously allocated