Fuji Xerox Not to Leave China

In September, Japanese enterprise Fuji Xerox said via its official microblog that it would invest additional 7 million US dollars to expand its business in China.

This announcement directly disconfirmed the saying that Fuji Xerox will be the first Japanese company that withdraws its investment in China because of strike of its employees.

The announcement made in the microblog shows that Fuji Xerox still held onto its sustainable development strategy.

No Plan to Leave China

Previously, foreign media reported that Fuji Xerox’s subsidiary company in China Fuji Xerox Hi-Tech (Shenzhen) Co., Ltd planned to leave China because of the massive strike of its employees.

“It is utterly a rumor. We have never said that we plan to leave China,” said Nie Xiaoli, Director of the External Affairs at Fuji Xerox (China).

As for the additional 7-million-USD invest- ment plan, Nie Xiaoli said that relevant preparations had been made and now Fuji Xerox just waited for a proper time to announce it.

It is worthwhile to mention that this was not the first time for Fuji Xerox to be rumored to leave China. At the end of this August, Fuji Xerox announced that it would invest approximately 9 billion Japanese yen to build a new factory in Haiphong, Vietname. The new factory is going to be initiated in December 2012 and will be put into production in November 2013.

It is the first time that Fuji Xerox builds a new factory in the overseas market since 1995. The production capacity of the new factory will be equal to the factory in China.

Such a move made people wonder whether Fuji Xerox planned to leave China. An anonymous expert said that the competition in the printer market of China was getting more furious. In that situation, Fuji Xerox, which has advantages in high-end device market but falls behind HewlettPackard and Canon in the low-end market, has to endure more stress.

“Now the labor cost in coastal areas of China is increasing at a fast pace. Fuji Xerox, which found that the cost of its factory in Shenzhen is getting higher, has been planning to move the manufacturing base long before,” said the aforementioned expert.

Then, according to Nie Xiaoli, Fuji Xerox indeed began to review its project in Vietnam several years ago. She said that Vietnam was chosen because Fuji Xerox took a fancy to the massive market of the Southeast Asia.

Fuji Xerox is a joint venture founded by Japan-based Fuji Film and the US-based Xerox. Fuji Film held 75% shares and the company is headquartered in Tokyo, Japan. As a developer and supplier of color and black & white printers and digital multi-functional devices, its business covers Japan and the Asian-Pacific Area.

Fuji Xerox entered China in 1987 by founding Shanghai Fuji Xerox Co., Ltd. After that, Fuji Xerox established Fuji Xerox Hi-Tech (Shenzhen) Co., Ltd in 1995 and Fuji Xerox Eco-Manufacturing (Suzhou) Co., Ltd in 2006. Presently, 80% of Fuji Xerox’s products sold in the world are made in China.

Hard to Advance in the Low-end Market

China is not only the manufacturing base for Fuji Xerox, but also its most important overseas market. According to the plan of the company, the operating revenue of Fuji Xerox in China (including Hong Kong) will be increased from 60 bil- lion Japanese yen in 2010 to 100 billion Japanese yen in 2013.

But the current situation shows that realizing that goal is not that easy. A dealer of Fuji Xerox said: “Due to the influence of the Diaoyu Islands dispute, our business is much worse than before.”

According to this dealer, he has never seen any great boom in his business since he gained the dealership of Fuji Xerox. “The business is plain and suddenly got extremely bad in the recent two months.”

The expert mentioned above said that the political conflict between China and Japan was only one factor. Fuji Xerox was not met with great performance in the low-end market while struggling in the high-end market with many fewer customers is not a sustainable strategy.

“The devices in offices, like printers and copiers, could be used for at least 3-5 years and some good ones are durable for 10 years. Therefore, the high-end market has a very limited development potential,” said the expert.

Apart from the limitation brought by the market features, Fuji Xerox is also facing stronger opponents in the high-end market. In the productive printer market, Ricoh was highly enhanced after acquiring the relevant section of IBM. Then, in every segmented field of the high-end market, Fuji Xerox is also confronted with strong competitors.

The largest client group in the printer and copier market consists of the large quantity of small- and medium-sized enterprises. But this part of market has been dominated by HP and Canon.“It is a common case that an enterprise does not want to use other brands if they get used to the devices of a certain brand. In addition, it is very hard to take upper hand against competitors in technology. Therefore, Fuji Xerox has to overcome many difficulties if it wants to have good performance in the low-end market.”

In addition, Fuji Xerox, which focuses on printers and other devices of offices, has a lower brand awareness compared with its competitors like Canon and HP, whose names are known to the world because of their digital cameras and computers. The low brand awareness is another factor to affect its sales in China.

According to the Internet Consumption Research and Survey Center, the brand awareness of Fuji Xerox in the copier market of China vas 5% in 2011. In comparison, there were five brands whose brand awareness exceeded 10%. Among them, Sharp took the champion with the 20.4% brand awareness.

In the laser printer market, Fuji Xerox was ranked at the 5th place with the 5% brand awareness. Standing before it are HP, Canon, Lenovo and Samsung. HP’s brand awareness was 54.7% and Canon’s was 14.4%, making them the champion and runner-up in this list.