Hitachi Sets US$12b Target for Revenue from Mainland

Hitachi, the largest Japanese electronics manufacturer, aims to boost annual revenues in the mainland to more than US$12 billion over the next three years by claiming top market share in the key segments of financial systems, information technology and construction and building systems.

"We're seeing increasingly robust growth, so we expect China to contribute 10 per cent to overall group revenues before 2010," said Minoru Tsukada, Hitachi's chief executive for mainland operations.

Hitachi, which has about 140 offices and factories in the mainland, also plans to generate around US$1 billion of export revenue from its mainland operations by 2010.

For its financial year ended March 31, Hitachi reported that the mainland accounted for about 8.7 per cent - or about 889 billion yen (HK$58.66 billion) - of its total revenue of 10.25 trillion yen.

Mr Tsukada said continued investments were planned for the mainland but declined to give details.

However, for the 2004-2006 period Hitachi estimated its total new investment in the mainland reached more than US$1 billion.

The group has more than 60,000 staff in the mainland and has targeted further facility expansion and spending on research and development.

Hitachi's optimism over its mainland business operations is closely tied to the group's determined bid to return to profitability this year. It posted a one-off 32.8 billion yen loss in the year to March due to depressed electronics prices and repairs made on faulty power turbines in Japan. It recorded a net profit of 37.8 billion yen the previous year.

Mr Tsukada said the group intended to be the top supplier of automated teller machines in the mainland by 2010. It commands a 50 per cent market share as it is estimated to have about 10,000 units installed in most of the country's leading banks as of this month.

Its strongest competitors in the mainland's ATM market include NCR and Diebold.

ATM unit sales on the mainland should grow at an annual rate of 8 per cent over the next four years, according to Retail Banking Research.

Hitachi is poised to jump to No1 in three years in the mainland's highly competitive elevator and escalator market, Mr Tsukada said. The top brands in the country are Mitsubishi, Hitachi, Otis, Kone and Schindler.

He said Hitachi was building an elevator factory in Shanghai to increase output and cope with growing demand from commercial and residential building developments nationwide.

The US$60 million plant is to be completed next year and will grow Hitachi's output to more than 35,000 units by 2010.

Hitachi is eyeing the No1 spot in the mainland by 2010 for its fast-growing construction and resource development systems, which include construction equipment.

According to a report by analyst Tsutomu Kijima of Lehman Brothers Equity Research, Hitachi construction equipment sales in the mainland were up 50 per cent year on year during the first six months of the year, thanks to infrastructure work in Shanghai and elsewhere across the mainland.

Hitachi is also aiming for top market share in the mainland for advanced materials and components used in semiconductors, information technology hardware such as personal computers and digital consumer electronics products.

The group is already one of the world's leading hard disk drive manufacturers, second worldwide to market leader Seagate Technologies.

A US$500 million investment has been committed to build up Hitachi Global Storage Technologies' complex inside the Futian Free Trade Zone in Shenzhen. The site will eventually manufacture 50 per cent of Hitachi's total hard disk drive output worldwide.

Hitachi also supplies liquid crystal displays used in televisions, mobile phones and PC monitors produced by manufacturers in the mainland and it supplies semiconductor components and materials at joint ventures with NEC Corp and Mitsubishi Electric Corp in the mainland.