Despite its reputation as a technology and consumer electronics powerhouse, Japan has remained unsuccessful in penetrating the vast and lucrative market that is China.
In data provided by Chicago-based THT Research, four major Japanese mobile phone brands exited the China market in 2005 and 2006 alone (NEC withdrew in November 2006, Mitsubishi in February 2006, Toshiba in April 2005, and Panasonic in December 2005).
The withdrawal may have deprived the Japanese firms of huge revenues, considering that 132 million mobile phones (14% of the global total of 935 million) were sold in China in 2006.
By 2010, with still only 50% of Chinese owning a mobile phone, China's share of the market could rise to 17%, or 195 million mobile phones.
According to THT, most Japanese handset companies failed to address the similar problems they have encountered in China.
'They've relied too much on R&D and phone quality, and invested too little in branding, advertising, and developing sales channels,' said THT Research analyst Susan Myers.
'They've also failed to introduce enough models at a broad range of price points that appeal to cost-sensitive Chinese consumers. Also, the design preferences of Chinese consumers generally work to the advantage of South Korean brands, and to the disadvantage of Japanese brands.'
'These miscalculations can be explained by the fact that the Japanese companies have mainly staffed their China offices with Japanese managers who operate according to Japanese management styles,' Myers added.
THT also said there's the nationalist factor to take into account: when good quality and well-priced alternatives are available, Chinese consumers generally prefer, for all kinds of historical reasons, not to purchase from Japanese companies.
The bottom line, THT stressed, is that succeeding in China takes more than a good product that works on the global market.
'Products need to be customized for Chinese consumers, serious attention needs to be paid to sales channels and branding, and of course companies should hope that their governments' don't start fighting with China.'