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Day 6 - IFA International

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made in japan Regional

made in japan Regional Spotlight Breaking New Ground… Again! Pioneer back on track following major restructuring Interview by Richard Barnes SUSUMU KOTANI Susumu Kotani was appointed President and Representative Director of Pioneer Corporation in November 2008. Mr. Kotani has held various important posts at the Pioneer Group, including those at car electronics sales and marketing and General Manager of Pioneer’s Home Entertainment Business Group, as well as General Manager of International Business Group and presidents of overseas subsidiaries (including the USA). He has been working with Pioneer Corporation since 1975, having graduated from the Department of Economics of the Meiji Gakuin University the same year. PIONEERING WORLD FIRSTS 1962 The introduction of the world's first separate stereo system. Susumu Kotani President, Pioneer Corporation 1975 The launch of the world's first component car stereo. 1984 The introduction of the world's first LD combination player compatible with CDs and LDs, and the release of the world's first car CD player. 1990 The introduction the world's first GPS car-navigation system. 1997 The launch of the world's first DVD car-navigation systems and the world's first HD 50-inch plasma display for consumer use. 1999 The introduction of the world's first DVD recorder compatible with the DVD- RW format. After taking the difficult decision to halt plasma-TV production, Pioneer Corporation president Susumu Kotani has succeeded in transforming his company’s direction, s t r u c t u r e a n d fortunes… Pioneer has been through some difficult times in the last decade, mainly as a result of its focus on the plasma-TV business. We invested a lot of resources in producing high quality products, which were well received by the market, but which were slow and expensive to develop. Two years ago, we took the major decision to close our plasma business, which initiated a period of painful restructuring. We used to have 30 production facilities around the world, and we shut down nine of these and scaled back a further six, with the loss of more than 11,000 jobs. We spent 22 billion yen on the restructuring and, in addition, we sold a number of assets, including buildings and securities, to the value of 20 billion yen. We also raised six billion yen from our partners, such as Mitsubishi Electronics, Mitsubishi Chemical and Honda, and held an international offering on the financial markets, which raised 29.3 billion yen, mainly from Asia and Europe. But these were purely backward-looking measures. To run this company successfully, we needed to show forwardlooking vision. The message we have circulated among our employees is: ‘Spread the smiles, feel the vibes, share the passion: Pioneer engages you, anytime, anywhere’. In the wake of this grassroots restructuring, what is Pioneer’s growth strategy? We have changed a great deal. Not only have we radically reduced our production costs, but we have fundamentally changed our management policy from doing everything ourselves to forging strategic alliances. We now have six such alliances in place — with Honda, Mitsubishi Electronics and Mitsubishi Chemical, as well as joint ventures with Sharp for our optical-disc business, and Suning Appliance, the biggest electronic retailer in China, to sell our audio and video products. We have also teamed up with the Shanghai Automotive Industry Corporation, the biggest company in China, for whom we produce in-car navigation products. Are you considering forming other alliances? In fact, we already have a couple more in place. For our in-car systems, we are working with the Japanese t e l e c o m m u n i c a t i o n s operator NTT DOCOMO. We provide the navigation system for the company’s smartphones, which means that, when the phone is placed in a special cradle featuring extra sensors, it operates almost as effectively as a sat nav. 28

made in japan Regional Spotlight PRODUCT FOCUS Pioneer’s ultra-thin, HVT (Horizontal-Vertical Transforming) speakers, reduce unnecessary enclosure vibration and preserve bass sound. Featuring a double sided diaphragm, the Sound Wing offers omni-directional sound through 360 degrees. HVT technology has also allowed the coils within the speaker to be rearranged to reduce the wasted space found in traditional speakers. And in September 2011 we form a joint venture with the Asian Optical Group to establish a factory in Brazil to manufacture digital cameras and electronic parts. These parts will be used primarily by us, but we also intend to sell these parts to third parties. Although this year Brazil is our main focus, we also aim to expand into other emerging markets, such as China, India and the Middle East. How will Pioneer spread its future business? In-car electronics — and we are doing well. However, although the is the next milestone in speaker innovation. In addition, Pioneer has a great many OLED patents and, even though we will not be making OLED screens any longer, we have a great track record with this technology. We are already making an OLED sub-panel for cellular phones and car audio systems. How were your results for the last financial year? We are very happy to report that we made a net profit of 10.4 billion yen — the first time we have made a profit in seven years. Total net sales grew by 4% and to stall. The overall cost of the earthquake has been estimated at 4.2 billion yen in lost sales, and a drop of 1.6 billion yen in operating profit. But despite this, we have a very aggressive expansion plan in place and are aiming for double-digit sales growth for Car electronics this year. We already have new car manufacturer customers for our in-car systems, and our business is developing well in other areas too. So even though the first quarter was affected by the earthquake, we have seen a marked improvement in the second quarter — and we expect US market has risen to 29% — up from 18% one year ago. Our average US market share for the last year was 22%. This year, we are aiming for an average share of 27% for the US and 15% for Europe. Interestingly, the Russian market is also now starting to recover, and we are looking to grow there as well. What new products are you showcasing at IFA? We are showing our latest in-car systems, including navigation devices that feature real images of the road ahead, enabling the driver to spot hazards and “(...) we have a very aggressive expansion plan in place and are aiming for double-digit sales growth this year.” “Spread the smiles, feel the vibes, share the passion: Pioneer engages you, anytime, anywhere” business is growing, we are pushing for more market penetration. Our strategic alliances and the tie-up with NTT DOCOMO are a key part of this drive, but we are also very focused on developing new business areas, such as OLED-based light applications (Eds: as opposed to OLED screens). In this area, we have joined up with Mitsubishi Chemical. Pioneer has been making speakers since 1937 and we believe that HVT technology I’m delighted to say that much of that improvement came from the gross profit margin, which was a direct result of the restructuring and our ongoing costreduction programme. But the earthquake in March had a huge impact on all Japanese manufacturers. Thankfully, there were no fatalities at our facilities in the region, but car manufacturers temporarily stopped production, causing the domestic in-car market our third- and fourthquarter sales to be better than for the same period year-on-year. You mentioned targeting developing territories, but what about the mature markets? In the car-audio segment of the US and European markets, we are now starting to recover our share, thanks to the launch of several very competitive products. From last March, our share of the potential obstacles such as narrow streets — a feature that I think will be especially useful in European cities. We are also exhibiting our New Dancer Audio Player for street dancers and we are demonstrating the Dancer Audio Player in a fun way, with dancers performing on our stand. Hall 1.2 Stand 144 IFA International • Wednesday 7 th September 2011 29

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