Canon to shift focus, vows more investment in China

Japanese firm seeking growth in various sectors as camera biz shows downtrend

Japanese tech giant Canon Inc is doubling down on medical equipment, semiconductors, commercial printing, security surveillance and other emerging segments expected to become an important engine to drive the company's business growth.

Howard Ozawa, president and chief executive officer of Canon China, said the closure of its production lines in Zhuhai, Guangdong province, which mainly produces compact digital cameras or nonreplaceable lens cameras, does not mean Canon will exit the Chinese market. On the contrary, the company will continue to increase its investment in China.

Ozawa said all of the employees of Canon's Zhuhai factory have already signed termination of labor contracts, and the plant is expected to be officially shut down by the end of June.

He said the popularity of smartphones had an impact on the miniature digital camera market, and the COVID-19 pandemic has sharply reduced consumer demand for low-end cameras. Along with the global shortage of semiconductor chips, Canon had to close its factory in Zhuhai.

However, Canon's digital cameras with interchangeable lenses are gaining traction with consumers. "The shortage of chips will exist in the first half of this year, but the situation is likely to ease in the second half of 2022," Ozawa said.

Founded in 1990, the Zhuhai plant produced 12.29 million units of lenses, 1.03 million units of digital cameras and 94,000 units of video cameras by the end of 2020, and it had 1,317 employees, the company said.

Canon attaches great importance to the Chinese market and aims for it to become No 1 in terms of sales within the whole group by 2035, Ozawa said, adding the company will continue to expand its presence in the business-to-business or B2B segment and strengthen its cooperation with its Chinese partners.

It will also speed up its localization push and launch tailor-made products and solutions in accordance with the requirements of the Chinese market.

"We are hugely optimistic and confident in China's future potential and will continue to invest here, creating new jobs for the people of China and providing an increasing array of products and services to meet their needs," he added.

Canon has been seeking new business growth points. It announced in September it completed the acquisition of Canadian semiconductor manufacturer Redlen Technologies. In 2016, it bought Toshiba Corp's medical equipment unit for nearly $6 billion to enter the high-margin medical devices sector.

Zhang Jianfeng, deputy secretary-general of the China Household Electrical Appliances Association, said Canon's imaging business mainly concentrates on digital cameras and webcams, and it has ceased low-end activities business to reduce costs. The company intends to switch its camera production lines to Southeast Asia, he said.

Japan's Camera & Imaging Products Association said global shipments of digital cameras will reach 7.85 million units in 2022, down 6.1 percent on a yearly basis, and the shortage of semiconductors and other components will continue to affect camera production this year.

The Regional Comprehensive Economic Partnership agreement, which has been in effect since Jan 1, has created the world's largest free trade bloc. It reduced tariffs and prices of commodities, which is conducive to improving the sales of products and pushing up the market share of the company in China, Ozawa added.

"The entry into force of the RCEP agreement is inspiring to many countries and we are no exception," he stated. The RCEP agreement, which was signed by 15 Asia-Pacific countries in November 2020, has formed direct free trade relations between China and Japan for the first time.

It covers a market of 2.2 billion people, or almost 30 percent of the world's population, with a combined GDP of $26.2 trillion or about 30 percent of global GDP, accounting for nearly 28 percent of global trade.

Liang Zhenpeng, a consumer electronics analyst, said mid-range and low-end digital cameras could be fully replaced by smartphones, so it was an inevitable trend that the camera market was shrinking and traditional camera makers would seek new growth points, expand product chains and move toward diversified portfolios.