Fuji Xerox bets on rising investment
ZHU BORU,China Business Weekly staff
2004-11-09 06:34
SHANGHAI: Fuji Xerox, one of the world's leading manufacturers of copiers and printers, expects its increasing investment in China will pay off with substantial growth in revenues.
"Our estimation is that domestic revenues in China - including the Chinese mainland and Hong Kong, will reach 35 billion yen (US$318.7 million) this year," Toshio Arima, president of Fuji Xerox, told China Business Weekly last week.
Fuji Xerox, a joint venture between Japan-based Fuji Photo Film Co and US-based Xerox Corp, offers medium- and low-end machines, mainly copiers, multifunctional machines and printers, to the China market.
Arima did not comment on the year's growth rate.
But "the sales revenues in Asia-Pacific grew a significant 27 per cent last year. It proves that our efforts to focus more on the China market really make a difference," said Arima.
Fuji Xerox announced last October it would invest 36 billion yen (US$327.87 million) in China, as well as transferring 90 per cent of its production capacity from Japan to China by the end of 2005.
Ahead of the announcement, it moved its Asia-Pacific headquarters from Singapore to Shanghai.
Arima also forecast that the sales revenues from its China operation, including domestic sales and exports, will hit 50 billion yen (US$455.3 million) this year and 65 billion yen (US$591.9 million) in 2005.
His previous estimate for China revenues next year was 60 billion yen (US$550 million).
The growing sales revenues result from the increasing production capacity of Fuji Xerox's plant in Shanghai.
Fuji Xerox last week announced that the second plant of Fuji Xerox (Shanghai) Ltd has started operations, with a total investment of 1 billion yen (US$9.1 million).
This investment will help the Chinese subsidiary expand its annual production capacity from the current 90,000 units to 300,000 units by the end of 2005.
The production capacity in China will therefore account for 50 per cent of Fuji Xerox's total by the year's end and 90 per cent by the end of 2005, as scheduled, said Arima.
Fuji Xerox has two subsidiaries in China, Fuji Xerox (Shanghai) Ltd, and Fuji Xerox High-Tech (Shenzhen) Ltd. The latter mainly produces printers.
According to Arima, Fuji Xerox will leave the remaining 10 per cent of its production capacity in Japan, focusing on developing and producing high-end products.
The 36 billion yen (US$327.87 million) will be used in strengthening sales channels, professional training, and various promotions.
In particular, Fuji Xerox will devote itself to building its direct sales network in China, in an attempt to tap the high-end copier and/or printer markets featuring value-added services.
"Direct sales currently account for about 50 per cent of our revenues in China. We hope the proportion will reach 80 per cent in the coming years," Arima said.
According to Arima, Fuji Xerox now has set up 16 direct sales outlets across the nation, with 350 sales representatives.
Although the company has been offering low-end copiers and printers, it is targetting medium- and higher-end users, to harvest more revenue from value-added services, Arima noted.
Analysts say the move to establish a direct sales network is in line with Fuji Xerox's strategy to focus on large enterprise users.
Arima was quoted as saying that Fuji Xerox' competitive edge lies in its large enterprise users, with "mission-critical, large-scale, document management systems via the network."
Ricoh and Canon, the company's two major Japanese rivals, both have vowed to dominate China's copier market by investing 30 billion yen (US$249.5 million) and 20 billion yen (US$166.3 million) respectively, by the end of 2007.
And Ricoh said the sales revenues of its China operation will amount to 60 billion yen (US$550 million) in 2005.
Meanwhile, Japanese new comers in the copier market - including Sharp, Dimage and Toshiba - have all expanded aggressively in China.
Sharp said it will have 700 sales outlets by the year's end, commanding 22 per cent of China's copier market.
Dimage has shifted 80 per cent of its business to China. And Toshiba's copier business in the nation is registering an annual growth of 10 per cent.
Fuji Xerox now holds about 20 per cent of China's copier market and about 5 per cent of the nation's printer market, indicate statistics.
The Asia-Pacific region (excluding Japan) contributes about 10 per cent of Fuji Xerox's total revenues, with China dominating this portion.
This figure is expected to rise, reaching 20 per cent by the end of 2008, due to China's increasing demand, said Arima.
Analysts say China is expected to take over from Japan, becoming the world's second-largest copier market next only to the United States in ten years.
Industry statistics indicate China's copier market is growing at 17 per cent annually.
Original Post