Japanese household appliances self-help mode? Toshiba intends to merge white with white

[PConline News] In recent years, with the rise of China's home appliance brands, the Japanese home appliance industry began to die. A large number of Sony, Sanyo, Toshiba and other companies have become smaller in home appliance stores and online stores. According to data released by Toshiba’s interim financial report, the operating profit of the company’s home appliance business unit has exceeded 2 billion yuan, and Toshiba’s performance has been deteriorating again. Masashi Muromachi, Toshiba’s president, recently announced that it is exploring a plan to merge the white goods business with Sharp, another Japanese company.

If Toshiba and Sharp implement mergers on white goods such as refrigerators and washing machines, this will be a historic change for the former. Toshiba developed Japan's first electric washing machine in 1930. Japanese electronics manufacturing companies that have been transferring production lines overseas have faced a lot of pressure due to the weakening of the yen, because exchange rate problems will affect the profitability of the company. Under this circumstance, the investment fund Japan Innovation Network Corporation of Japan, which was co-founded by the Japanese government and private industry funds, and a number of major Japanese banks envisaged the establishment of a corporate alliance to enhance Japan’s overseas competitiveness.

Industry analysts believe that the potential merger of Toshiba and Sharp may help reduce procurement and other costs. However, this merger plan must have a sufficient financial foundation in order to make the necessary investment on the basis of the original, so that Japanese companies have a technological advantage when competing with rising Chinese and Korean opponents.

Toshiba may receive funding and other forms of support from Japan Innovation Network, but at the same time, critics will also accuse the agency of using taxpayers’ money to save the struggling electronics manufacturer. Toshiba’s president Masao Muromachi has previously stated his attitude and will conduct bold business reorganization, which will rejuvenate the Japanese industrial giant.

However, it was not a good day for Sharp to “smell” and the company’s operating losses from April to September this year were 25.16 billion yen. Earlier this year, Toshiba's main department accounting fraud was exposed. In the past seven years, Toshiba falsified the profits of the company through “systematic” fraud. From April 2008 to December 2014, the profit before tax of the company’s financial statements totaled 224.8 billion yen.