What Panasonic Learned in China
hbr.org
The Globe
What Panasonic
Learned in China
PhotograPhy: Corbis
When your manufacturing base becomes your growth market, your strategy has to adjust. by Toshiro
Wakayama, Junjiro Shintaku, and Tomofumi Amano
M
ultinational companies tend to insulate their headquarters from operations in emerging markets.
Sure, they welcome the opportunity to save money by manufacturing in China or managing customer service out of India, and they’re especially pleased when they make profits selling to customers in such markets.
But regardless of their global footprints,
American, European, and Japanese companies remain fundamentally American, European, and Japanese. The home country’s executive offices too often have an “us” and
“them” mind-set and encourage a one-way flow of ideas and directives—from us in the home country to them in emerging mar-
kets. Local initiatives are expected to stay local. Companies do this to minimize cost and risk, and because they believe that their brands already hold enough cachet to woo emerging-market consumers. Multinationals may be in global markets, but they’re often not of them; therefore, they’re unable to expand their products’ appeal to broader audiences around the world.
It’s surprising, then, when an established giant goes to an emerging market seeking the usual benefits of cheap labor and low manufacturing costs and comes back a changed company. That’s what has happened to Panasonic in China over the past decade. After the Japanese company’s
December 2012 harvard business review 109
ThE GlobE
leaders saw growth slow in China, they realized that they needed to engage more deeply with customers there. Panasonic’s desire to do that was rather remarkable because of the historical animosity between
Japan and China, which can suddenly flare up. In October 2012, for instance, after Japan announced the purchase of the disputed Senkaku Islands, protests in China forced several
The Globe
What Panasonic
Learned in China
PhotograPhy: Corbis
When your manufacturing base becomes your growth market, your strategy has to adjust. by Toshiro
Wakayama, Junjiro Shintaku, and Tomofumi Amano
M
ultinational companies tend to insulate their headquarters from operations in emerging markets.
Sure, they welcome the opportunity to save money by manufacturing in China or managing customer service out of India, and they’re especially pleased when they make profits selling to customers in such markets.
But regardless of their global footprints,
American, European, and Japanese companies remain fundamentally American, European, and Japanese. The home country’s executive offices too often have an “us” and
“them” mind-set and encourage a one-way flow of ideas and directives—from us in the home country to them in emerging mar-
kets. Local initiatives are expected to stay local. Companies do this to minimize cost and risk, and because they believe that their brands already hold enough cachet to woo emerging-market consumers. Multinationals may be in global markets, but they’re often not of them; therefore, they’re unable to expand their products’ appeal to broader audiences around the world.
It’s surprising, then, when an established giant goes to an emerging market seeking the usual benefits of cheap labor and low manufacturing costs and comes back a changed company. That’s what has happened to Panasonic in China over the past decade. After the Japanese company’s
December 2012 harvard business review 109
ThE GlobE
leaders saw growth slow in China, they realized that they needed to engage more deeply with customers there. Panasonic’s desire to do that was rather remarkable because of the historical animosity between
Japan and China, which can suddenly flare up. In October 2012, for instance, after Japan announced the purchase of the disputed Senkaku Islands, protests in China forced several