Sanyo's Challenge for the 21st Century

May 1, 2006


Tomoyo Nonaka, Executive Director & Chairman, Sanyo Electric Co.

Naomi Moriyama
, President, The Moriyama Group

Tomoyo Nonaka, Chairman of Sanyo Electric, spoke about Sanyo's plans for renewal and rebirth as a leader in environmental, energy and lifestyle technologies in the 21st century.

When Ms. Nonaka first joined Sanyo in 2002 as an outside director, she came from a 20-year career in broadcast journalism and service as a board member and advisor to several other corporations, noted presider Naomi Moriyama. "I fell in love with the techniques and technologies that Sanyo had to offer," Ms. Nonaka said. In 2005, she was named Chairman of Sanyo.

Sanyo was founded in 1947 as a small factory in Osaka that made bicycle lamps, Ms. Nonaka continued. Benefiting from the growth of Japan's overall economy, the company grew steadily to become one of the major electronics manufacturers in the world. During the past 10 years, however, Sanyo's operating results failed to keep pace with its sales growth. By 2004, half of Sanyo's sales were from overseas and the company had some 96,000 employees worldwide, but there was no global management to coordinate operations. The company was handicapped by an outdated accounting system; a recent earthquake in Niigata had devastated one of the company's semiconductor factories. Sanyo's 20 different business units were focused on building market share, at the expense of profitability, and had been encouraged to compete with one another with a view toward possible spinoffs. The company posted record losses. "When I took over in July 2005, I had to do something--whatever it takes to turn this company around," she said.

"What do we have to do to be recognized by the world?" Ms. Nonaka asked. Her answer: Sanyo must identify and build on existing core technologies in water and air purification, energy conservation and alternative power sources, and transform itself into a leading source of products to conserve and protect the earth's resources. The new program was named Think Gaia, drawing on British scientist Dr. James Lovelock's theory that the land, atmosphere, oceans and living creatures on earth function together as if the planet were a single living organism.

Publicity about the new plans generated cynical comments, Ms. Nonaka said: "What is she doing? She's just a woman. Is Sanyo all right? What will happen to Sanyo?"

"When you sort out the reports, however, you see that we've indeed been on the right track," she remarked. Sanyo has regrouped its 6,000 R&D staffers into three product development groups: the Blue Planet team, for environmental products, the Genesis III team, for energy solutions, and the Harmonious Society team, handling lifestyle technologies such as cellphones, cameras and camcorders among other products. The company has liquidated excess real estate, reduced high-interest debt, and set a three-year goal of eliminating 14,000 jobs; to date, it has cut some 4,800 jobs in Japan and another 5,600 abroad, Ms. Nonaka stated. Functional teams have been created to operate across all business units, with an international procurement center established in China. In January 2006, Sanyo entered into a joint development agreement with Volkswagen to create a new hybrid-vehicle battery; the company has also announced a joint venture with Nokia to sell some 30 million units of CDMA mobile phones, and an alliance with Taiwan's Quanta to make flatscreen TVs, she noted.
The first Think Gaia product is the eneloop battery, a rechargeable battery that holds its charge much longer than conventional rechargeables and is sold fully charged and ready to use, Ms. Nonaka said. The eneloop, which can be recharged 1,000 times, has sold very well in Japan and will be introduced in the U.S. this summer; Sanyo plans to introduce a range of other products that use the new battery, including a solar recharger that can be placed on the dashboard of a car, a recharger that uses biomass energy, and a nondisposable pocket handwarmer.

Another early Think Gaia product is the Aqua washer/dryer, which uses ozone technology to purify rinse water, saving some 30 liters of water per load of wash, she continued. The Aqua also has an Air Wash cycle that deodorizes and disinfects using ozone alone, without water. On a larger scale, Sanyo engineers have used the technology, dubbed Aqualoop, to create a water treatment system for swimming pools that uses no chlorine, as well as a mechanism that purifies water used in manufacturing semiconductor chips, filtering out and saving silicon particles from the wastewater for use in making solar panels and other products. In addition, the company is working on an ozone-based water treatment system tailored for use in developing countries; a system that decontaminates medical and clinical wastewater; and a highly portable air purification device that uses electrolysis technology to destroy airborne viruses, she observed.

Some critics have called the Think Gaia concept naïve, Ms. Nonaka acknowledged. In her view, however, "consumers are increasingly aware of the environmental impact of the products that they consume, and they know that money and material comforts alone will not necessarily make them happy." In using the Gaia theme, Sanyo seeks to position itself not only for a return to profitability in the near term, but also for leadership in the marketplace of the future. "Unless the fish and the blue sky are healthy, people are not going to be happy," she said. "If the air is not clean, no matter how much economic growth you have, you will never be happy. And as a manufacturer Sanyo would like to contribute to that process of preserving the beautiful planet so that we can pass this on to future generations."

What marketing activities are you undertaking to promote the new Sanyo?

Sanyo is running a limited number of TV commercials in Tokyo, but for budget reasons is relying to a large extent on word of mouth and on publicity generated by rising sales, Ms. Nonaka replied. Enthusiastic customers praised the eneloop battery in Internet postings, for example, and the company has had difficulty keeping up with the resulting demand, she added.

How quickly will you eliminate products that do not meet the Think Gaia standards?

Ultimately the new Think Gaia products will become the core of our activities, but Sanyo will continue to make other products as well, answered Ms. Nonaka.

--Katherine Hyde

Topics:  Business

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