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Sony reviews China plans

By Ding Qingfen (China Daily)
Updated: 2008-12-11 07:58

Japanese electronics giant Sony Corp is reviewing its China operations amid a global layoff plan that will see 16,000 people lose jobs.

Sony China said it will "actively cooperate with the initiative" by its headquarters in Japan, the largest workforce reduction by a Japanese company since the start of the global economic crisis.

The global slump has also forced Sony to close at least five factories and curb worldwide investment.

Hou Li, an analyst at Essence Securities, said he believed that Sony layoffs in China are set to happen as the demand for consumer electronics products is slowing both in China and globally.

A pedestrian walks past a Sony billboard in Shanghai. [China Daily]

China is Sony's major manufacturing center and one of its key markets. The firm employs about 48,000 people in China, more than one quarter of its global headcount.

Amid the slowdown, consumers will be reluctant to buy consumer electronics gadgets, which are usually "not must-buy products", which could significantly hurt Sony, Hou said.

China's consumer electronics market has long been plagued by price wars, which have produced razor-thin margins for some products.

Despite the possible layoff wave, Sony said it remains committed to the China market.

In 2007, Sony China generated $5.1 billion in sales, recording 20 percent annual growth for the third consecutive year.

"Despite the slowing demand and intensifying competition, China is the company's largest growth potential market and also the most important part in the operation value chain," Sony China said in a statement.

Sony China said the company has implemented several measures to fend off the slowing economy, including adjusting portfolio, lowering inventory levels and reducing operational expenses.

If Sony decides to curb investment in China, it could also affect many of its partners, said Hou.

"Hundreds of small-sized local companies (along the supply chain) will also be forced to cut jobs," he said.