DUBAI, 31 May 2005 — For four days, from last Tuesday through Friday, JVC Gulf FZE (JGF) played host first to its regional distributors and then to local consumers at the JVC Experience 2005. The event was billed as the largest standalone consumer exposition in the region by a consumer electronics company and it gave JVC an opportunity to show off its 2005 product line.
At a press conference held on the sidelines of the event, JGF, a wholly-own subsidiary of the Japanese consumer electronic major, Victor Company of Japan, announced that its regional revenues in 2004-2005 reached $250 million. Senior officials of the company, from Dubai and Japan, also outlined JGF’s future strategy, which is expected to see the company consolidate and grow its strong position regionally and within several key product categories.
Commenting on the company’s performance in 2004-2005 and placing them in perspective with global trends in the consumer electronics space, Yoshikazu Yamamoto, president, JGF, said: “We are proud to announce that despite increased competition and pressure on price lines, JVC has registered a growth of 20 percent in its revenues from the region. This is all the more significant given the fact that the consumer electronics industry, both in the region and globally, is experiencing a slow down.”
Yamamoto attributed this success to excellent overall performance and strong sales particularly in Flat Panel Displays, DVD and Digital Video Camera product categories. He also pointed out that another important factor in JGF’s growth has been the rapid expansion in its dealer and distributor network, especially in key markets. In 2004-2005, JGF’s distributor base grew from 51 to the current 60 across the region.
“We are confident of increasing our growth by as much as 25 percent in the next year,” said Yamamoto. “The Middle East has one of the highest per capita incomes in the world, which is further expected to increase due to the exponential growth that economies in the region are experiencing. We believe that a steep increase in disposable incomes will result in a larger inflow into the regional consumer electronics market. Also, given the growing propensity among consumers in the region for the latest innovations, it is only natural that consumer electronics companies that are in the forefront of offering greater technology and design attributes in their product ranges will benefit from higher growth levels.”
JVC recently announced its plan for a major thrust on its marketing effort in the region with the aim of capitalizing on the huge potential for growth and enhancing mindshare in the consumer electronics space in the region over the next year. JVC needs the revenues the Middle East can bring because elsewhere it is facing difficulties. In a report on financial results for the fiscal year ending March 2005, JVC’s consolidated total sales decreased nine percent to 840.5 billion yen and operating income decreased 59 percent to 10.3 billion yen during the period April 1, 2004-March 31, 2005 from the year before, due to postponement of new product developments, slow sales in overseas markets, under performance of the music software business and the steep decline in prices of digital appliances. Strong sales of domestic consumer electronics and cuts in purchasing costs and lower fixed costs were not enough to compensate for these negative factors.
In general, digitization has led to a rapid drop in prices and shorter product lifecycles, which have resulted in a more difficult environment than ever before. JVC has responded to these conditions by actively developing and introducing products as part of its “Only One” strategy aimed at achieving high added value and differentiation of JVC products.
Despite this new approach, the global fiscal outlook for JVC is gloomy. JVC predicts continued severity in the business environment as domestic and international competition gears up in digital products and foreign exchange rates move in unfavorable directions. One sign that JVC is reexamining all of its market strategies, is the disclosure that the company has chosen not to bring its notebooks to the Middle East. Nobuyuki Miyahara, GM, sales and marketing, JGF, was frank in stating that the reason for the decision was the extreme competition in the market. Notebooks aside, JGF is moving forward aggressively.
“With our new marketing focus for the entire region, coupled with the launch of our 2005 flagship product range, we expect to boost our regional market share substantially,” asserted Yamamoto.
Unveiling the JVC flagship products for this year at the JVC Experience 2005, Miyahara, stated that High Definition Rear Projection TVs, Flat Display Panels, New Concept Camcorders and audio products would be the key focus areas for JVC. In the camcorder market that has generally not been considered a star segment, JVC sees huge potential and plans to grow the market segment as a whole with the launch of the first ever five-mega pixel, 3 CCD, Hard Disk Camcorder — GZ-MC500. A multifunctional camera, GZ-MC500 features JVC’s exclusive chip technology (CODEC), which globally is the smallest chip in its category.
In the area of LCD C (color) TVs, where the global demand is expected to increase dramatically from 7.8 million units in 2004 to 13.5 million units in 2005, JVC has expanded its lineup from 17-inch to 37-inch, with introduction of seven new models.
Discussing JVC’s new LCD line-up, Yoshiki Matsushima, GM, Flat Panel Display Division, JVC Japan, said: “The most impressive and innovative among those new models is the new 37-inch LCD CTV, which incorporates JVC’s exclusive ‘Clear Motion Drive’ circuitry. This is JVC’s unique, high quality technology that increases the response speed of moving objects by doubling the frame rate from 50 to 100 per second and thus eliminates the blurring of objects moving across screen.”
Elaborating on the technicalities of the HD-ILA, JVC’s High Definition Rear Projection TV to be launched in the region later this year, Matsushima explained, “Under our flagship HD-ILA range of Rear Projection TV’s we are introducing two new 70-inch and 56-inch models. Both models incorporate the D-ILA (Direct-drive Image Light Amplifier), a JVC original high-definition micro-display device. These new models will not only enhance JVC’s already outstanding Flat Panel Display line-up, which includes plasma and LCD TVs but will also answer the rapidly growing need for higher definition in the upcoming wave of HD broadcasting.”
Other products from JVC’s new 2005 product line-up include High-Band Digital Video Cameras (GR-DF570/DF470/DF430 & GR-D290/D270/D250), Mini Digital Video camcorder (GR-X5 - 3-CCD), Mega Power DVD Compact Component System (DX T7 & DX T5), DVD Compact Component System (EX-D5, EX-D1 & EX-A5), Mega Power DVD Digital Cinema System (TH-C9), LCD TVs (LT-20A5, LT-17S2, LT-23S2, LT–Z26SX4, LT–Z32SX4, LT–Z26SX5, LT–Z32SX5 & KD-SHX855), CD/SD Car Audio Systems (KD-LHX555) and High-end DVD/CD car receiver systems (KD-AV7005, KD-AV7001 & KD-AVX1).
In Saudi Arabia, the new line-up will be delivered to local consumers courtesy of JVC’s Saudi distributor, Said Ahmed El-Ajou Trading. In remarks on JVC’s situation in the Kingdom, Yamamoto was quite complementary of El-Ajou.
“Even with Saudi Arabia’s coming accession to the WTO, we plan to continue with our distributor El-Ajou,” he said. “We have had a relationship with them for more than 25 years. They are doing a terrific job. They know the market and provide us with good feedback so we can create appropriate strategies to serve the Kingdom’s consumers effectively.”
JVC will continue its policy of providing spare parts for its products for seven to eight years after they come to market. “However,” Matsushima added, “for more and more digital items, once the warranty period is over, the servicing cost is high for the customer. In these cases they would rather buy something new rather than repair.” That’s definitely a word to the wise when it comes to making digital purchases!
For the future, Yamamoto said that the company will continue to bring out a variety of products from the high to low end.
“We will not cut out the low end until we face problems with profits,” he emphasized. “To penetrate certain markets we definitely need to have a product range that is affordably priced. That said, we are always trying to come up with something new and different and bring out cutting edge advanced technologies. Otherwise, there would be no reason for a manufacturer like JVC to survive in this industry.”
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