ASSIGNMENT 05

International Marketing

Prepared by:
Jobayed Bin Awal
2020-2-10-246
Section: 01

Prepared for:
Reaz Hafiz
Senior Lecturer
Department of Business Administration
Like many multinational companies, Panasonic once saw China as a place for cheap
manufacturing. But over time, they realized that China was not just a production hub—it was a
fast-growing consumer market with its own unique demands. For this reason, Panasonic rethinks
how it operates globally, especially how it balances standardization with local customization.
In the beginning, Panasonic set up factory in China to cut costs. Their Chinese factories produced
home appliances, like washing machines and microwaves, mostly for export. These products
were simplified versions of the ones sold in Japan. The Chinese market itself wasn’t a priority at
that time.
However, as China’s middle class grew and local companies like Haier took the lead in
innovation and market share, Panasonic realized they were falling behind. By 2002, Panasonic
reported its first annual loss, largely because of its weak performance in China. The management
understood that if they didn't connect better with Chinese consumers, they could fall behind
globally.
For that reason, Panasonic restructured its business. It cut costs, reduced management layers, and
created a new organization named Panasonic Corporation of China. This local arm would do
more than just manufacture products—it would lead marketing, R&D, and sales strategies based
on the Chinese market. China was no longer just a factory, it was a focus market.
A major turning point is when Panasonic opened the China Lifestyle Research Center in
Shanghai in 2005. This center mission was not just to collect data but to deeply understand the
lifestyle of Chinese people. They visited people’s homes, studied living conditions, and identified
people needs. In this research, they found that many Chinese homes had narrow kitchen spaces,
so standard Japanese refrigerators didn’t fit. In that response, Panasonic designed slimmer
models that became very popular, which led to an increase in sales in that segment.
Another discovery came from this research, which was peoples washing habits. The team found
that many Chinese families still hand-washed underwear due to concerns about bacteria. While
silver-ion washing machines existed, consumers didn’t trust local brands. Panasonic used this
insight to introduce a new sterilizing washing machine in 2007. This product boost their market
share in front-loading washers from 3% to 15% in just one year.
Local adaptation and global integration made this effort successful and linked two traditionally
conflicting strategies. The Shanghai team worked closely with Panasonic's engineers in Japan,
using their technology but applying it to local needs. This knowledge allowed Panasonic to act
both locally and globally at the same time.
As trust grew between the Chinese teams and headquarters in Japan, Panasonic gave more space
to its China division. By 2008, Chinese teams could make key decisions about new product
development. This level of independence was rare, especially for a Japanese firm, where
leadership is often centralized.
The success in China inspired Panasonic to use this approach in other markets. They opened
lifestyle research centers in Europe and India to learn more about regional preferences. These
centers didn't just inform product upgradation, they helped to innovate across different product
lines like TVs, air conditioners, and smart home solutions.
Panasonic also began to explore integrated home solutions—networked devices, smart
appliances, and solar energy systems—that also needed both strong local insight and
coordination across business units. The China Center now contributes to these in broader goals,
identifying how such technologies should be upgraded for Chinese homes.
To support these efforts globally, Panasonic created the Global Consumer Marketing unit in
2012. This team encourages regional teams to develop localized products using insights and
resources from Japan.
Despite challenges, Panasonic’s efforts are showing results. In China, it's now the top Japanese
brand in home appliances. Its foreign sales in this category grew from 30% in 2005 to 42% in
2012. Locally developed products are being sold in places like India and Vietnam, proving that
Panasonic can successfully blend global expertise with local insights.
The key lesson from Panasonic’s experience in China is simple but powerful. Companies that
learn to embrace the idea of being global and being local can find new growth opportunities.
Instead of seeing local needs as a challenge to their existing systems, they can treat them as a
source of innovation. This strategy doesn't just help in one market—it can make the whole
company smarter, faster, and more competitive worldwide.