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Wednesday, Oct. 1, 2008
Matsushita gives way to Panasonic
Trailing rival Sony in brand recognition worldwide, electronics maker drops name of founder
By REIJI YOSHIDA and KANAKO TAKAHARA
A famous corporate brand name will disappear Wednesday when Matsushita Electric Industrial Co. abandons the name of its founder in an attempt to evolve into a truly global corporation.
The company, named after its late founder Konosuke Matsushita, is changing its name to Panasonic Corp. and abandoning its much-loved National brand adopted by Matsushita himself in 1927.
Matsushita and its group companies have long suffered from weak brand appeal with overseas consumers by having three different names — Matsushita as the company name, the National brand for electrical appliances sold on the Japanese market and Panasonic for other products sold in both the domestic and overseas markets.
The price of keeping the founder's name has become too high for a company seeking to expand in the global market, experts say.
According to the Fortune 500 list, Matsushita is the fifth-largest electronics manufacturing company in the world, boasting revenues of $79.4 billion, ahead of rival Sony Corp., which is ranked sixth with $77.68 billion.
But the brand value of Panasonic is only 78th in the latest Best Global Brands ranking by research firm Interbrand Corp., whereas Sony is 25th on the list.
As the brand name National suggests, Matsushita's main market focus has long been Japan, unlike rivals such as Sony and Samsung Electronics of South Korea.
Now, about 50 percent of the Matsushita group's sales comes from overseas markets. This compares poorly with Sony, which raises some 75 percent of its sales from overseas markets.
"The domestic market will only keep shrinking because of the low birthrate and aging population. To maintain growth, advancement into overseas markets must be the top priority," said Osamu Kobayashi, a director at rating firm Standard & Poor's.
Consolidation of brands was "an inevitable choice for Matsushita, considering the future of the domestic market in 10 to 20 years," he said.
Still, abandoning the Matsushita name will stir various emotions among older Japanese who survived the turbulent postwar years.
Konosuke Matsushita was a charismatic leader who established the firm's predecessor, Matsushita Electric Housewares Manufacturing Works, in 1918, and led the group until his death in 1989 at age 94.
He was dubbed the "God of Business Management," and his thoughts and speeches have been published in a series of books that run to 45 volumes. The company still posts a Matsushita quote every day on its Web site.
The Matsushita group has long been considered a quintessentially Japanese company: A major electronics manufacturer built on a strong sense of community encompassing corporate managers, employees and tens of thousands of National-brand home appliance retailers across the country.
Konosuke Matsushita publicly stated the firm's top priority was the job security and happiness of its workers by guaranteeing life-time employment. He often referred to employees as "family members" of the company.
The company was indeed known for its strong ties with its workers and labor union.
When the postwar Occupation force removed Matsushita from the company in 1946, the labor union staged campaigns begging for the decision to be reversed and he was able to return to the firm the next year.
When the labor union celebrated its 40th anniversary in 1986, current and former members donated ¥25 million to build a 2.6-meter bronze statue of Matsushita and presented it to him, an act that impressed observers as symbolizing the company's good labor-management relations.
However, when the company was confronted by global competition from powerful rivals in the 1990s, the myth of the Matsushita corporate culture collapsed.
Seeking the survival of the group, then President Kunio Nakamura, who was at the firm's helm from 2000 to 2006, cut the workforce by about 26,000 by introducing early retirement programs. He also cut corporate pension benefits for retirees, a decision that shocked Matsushita workers and marked the end of the good old days under its founder.
Matsushita plunged into the red with a huge operating loss of ¥199 billion in the 2001 business year.
However, the drastic reforms led by Nakamura, who was dubbed the "destroyer," led the company to post an operating profit of ¥126.6 billion in fiscal 2002.
Operating profit has continued to increase, hitting ¥519.48 billion in fiscal 2007.
In consolidating the corporate and product brand names as Panasonic, the company will stage massive advertising campaigns.
TV commercials for Panasonic products will be aired about 100,000 times in Japan by the end of the year, up 43 percent from the same period last year, the company said.
Under a fiscal 2007 management plan, the group is trying to boost sales to ¥10 trillion by the end of fiscal 2009, up from ¥9 trillion in fiscal 2007.