Toshiba 2004 Annual Report Download - page 12

10
Chinese Strategy
In the review of its current mid-term business plan,
Toshiba set itself the target of raising overseas sales to 50% by the end of fiscal 2006.
Overseas operations are already a long-established and essential part of the Company’s business, accounting for
39% of overall sales in fiscal 2003. In recent years, consistently high growth rates have established China as a
particularly important market for Toshiba, a situation that shows every sign of continuing in coming years. China will
host the Beijing Olympics in 2008 and the Shanghai World’s Fair in 2010, major events that will spur further
growth—and Toshiba’s expectations.
Since establishing Toshiba Dalian Co., Ltd. in September
1991, Toshiba has cultivated a presence in China that spans
its business lines, from home appliances to social infra-
structure. Today, 49 Toshiba Group companies in China
develop, manufacture and sell products. The scale of this
commitment is testimony to China’s increasing strategic
importance, a position that received powerful reinforcement
from China’s accession to the WTO. That move swept away
numerous regulations, and allowed China to create an envi-
ronment allowing economic development beyond production
for the world market. As a result, Toshiba sees China not
just as a manufacturing base, but also as an emerging busi-
ness base offering numerous opportunities in everything from
R&D to sales and marketing.
Figures from China’s National Bureau of Statistics re-
veal that China’s GDP recorded year-on-year growth of 9.1%
in 2003, an astonishing rate of growth. Long aware of this
inherent potential, Toshiba Group has promoted positive
involvement in China since the government’s first steps to-
ward reform and market opening. As a result, Toshiba’s fiscal
2003 sales in China climbed to ¥500 billion, including
sales by local subsidiaries and exports targeting the Chi-
nese market, a healthy 35% increase compared with the
previous year.
In coming years, Toshiba will respond to the Chinese
government’s continued moves for market liberalization by
strengthening its sales networks in China. We will also pro-
mote further tie-ups with large-scale volume retailers and
build up business bases in China. In this age of megacom-
petition, cost competitiveness is also a crucial concern. China
will continue to provide a powerful production base that
supports Toshiba’s concerted efforts to reinforce cost com-
petitiveness. The accelerated transfer of production to
overseas bases, particularly those in China, will bring sharp
relief from fluctuations in the U.S. dollar exchange risk.
Another area where we look for progress in China is in
technology and product development. Toshiba took early steps
in this area with the establishment of the Toshiba China Re-
search and Development Center in October 2001. Through
R&D in such areas as Chinese voice-recognition and synthe-
sis technology, Chinese machine-translation technology and
next-generation IT platforms, at a location at the heart of the
local market, we will expand Toshiba’s IT business in China.
China’s portable PC market in 2003 amounted to 1.8
million units. The forecast for 2004 is 2.6 million units,
rising to 3.4 million in 2005. The projected CAGR (com-
pound average growth rate) for 2003 to 2006 is an
impressive 25.2%. Toshiba currently holds third place in
the portable PC market, with a 13% market share. We in-
tend to increase this. In October 2003, a new sales and
marketing headquarters was established in Shanghai to re-
inforce the marketing function. In April 2003, Toshiba
GLOBAL EXPANSION
SCALE OF TOSHIBA’S BUSINESS IN CHINA GDP, CAGR (01-04), POPULATION BY COUNTRY/REGION
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