Omron 2004 Annual Report Download - page 10

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8
BUSINESS DOMAIN STRUCTURAL REFORMS
—ESTABLISHMENT OF NEW PLATFORMS FOR
GROWTH
1. Basic Recognition:
Essential to raise the level of potential growth in
each business domain
We define business value as the present value of future
cash flows anticipated from the Group’s various busi-
ness domains. In order to realize increased business
value it is essential to improve the profitability of existing
businesses (operational structure reforms) and to
increase our sales in growth domains.
2. Basic Strategy:
Further development of high growth regions and
of value-added fields utilizing our technological
edge
Two main focuses mark our approach to raising the top
line. The first focus is to prioritize the development of
geographic regions (markets) with high growth potential.
That means placing primary emphasis on the Chinese
market. The second focus is to fully leverage and then
further strengthen our technological edges in order to
advance into new, high value-added business domains.
Through the second focus, in particular, we are confi-
dent that we can achieve top line growth even in mature
markets such as those in Japan, Europe and North
America.
1) Further development in high growth regions
—Emphasis on China
The Omron Group places China at the top of the list of
regional markets to be developed. Although business
contraction is anticipated in the short term in China due
to government tightening to bring economic overheating
under control, growth potential remains strong in the
medium to long term as China continues to serve as the
“world’s factory” while also emerging as one of the
world’s great consumer market. The Group chalked up
¥38.8 billion in sales during fiscal 2003 in the Chinese
market, and has already achieved a correspondingly
well-recognized presence there. By fiscal 2007, the
Group aims to roughly quadruple its sales in China to
¥150.0 billion.
At the center of our strategy in China are our
Industrial Automation Business (IAB), Electronic
Components Business (ECB), and Healthcare Business
(HCB). Major manufacturers from Japan, Europe and
North America are expanding their output in China, and
more sophisticated automation is being required along-
side expanding demand for leading-edge devices such
as micro lens arrays (MLAs). In addition, as the living
standard in China continues to climb rapidly, the growth
potential is increasing for various healthcare products.
Factors such as the spread of private car ownership
and development of the transportation infrastructure,
moreover, are expected to result in expanded needs
that positively affect the demand felt by the Automotive
Electronic Components Business (AEC) and the Social
Full-Fledged Growth in China
¥150.0 billion
Fiscal 2001 Actual Fiscal 2004 Plan
Net sales: ¥25.0 billion ¥50.0 billion
Investment: ¥8.5 billion
(FY2001–2003)
Fiscal 2003 Actual Fiscal 2007 Plan
Net sales: ¥38.8 billion ¥150.0 billion
Investment: ¥30.0 billion
(FY2004–2007) FY01 FY02 FY03 FY04 FY07
30
90
60
120
150
Sales in the China Region
(Billions of yen)
0FY05 FY06
GD2010 New Phase 2
4 times in 4 years