August 23, 2006 1:15 pm

China to surpass Japan for Sony sales

China is likely to become a bigger country market for Sony than Japan by 2009, the Japanese electronics company said on Wednesday.

“The probability is high that China will surpass Japan as the company’s second-biggest electronics market by sales in two to three years,’’ said Shizuo Takashino, head of electronics for Sony in China.

Sony said it would invest $200m this year to expand production of TVs and digital cameras in China, which currently trails the US, Europe and Japan in terms of the company’s global sales map.

Sony has already invested $1bn in China, where it most recently set up a design centre to develop products tailored to the Chinese market, a representative said. The first such product, a Network Walkman, was launched this spring.

The group’s expansion in China is supported by strong sales of its TVs, digital cameras and camcorders, which are among its best-selling products worldwide. Demand for consumer electronics goods is expected to surge in the run-up to the Beijing Olympics in 2008.

However, the group’s growing ambitions in China follow a series of setbacks to its expansion in that country.

Late last year, Sony was forced to suspend sales of six digital camera models, after they failed a quality inspection by the regulators in Zhejiang.

The cameras, which are among the group’s best selling products and have high market shares in Japan and other leading markets, were found to have problems with image uniformity, automatic exposure, white balance and brightness of the liquid crystal display. They were all made in China but sold in Japan as well.

Sony said on Wednesday it would continue to replace those models brought in by their owners. But it said that the digital camera problem was more or less over, and it had started selling new models, which met the local authorities’ approval.

Sony has also faced problems with sales of its immensely popular PlayStation video consoles in China. The group began selling PS2 hardware in China in 2004, but having sold the entire allocated lot, has been unable to bring more to the market.

Sony said it was still in discussion with the Chinese authorities who have not given their approval to sales of new PS2 consoles. However, Sony does sell PS2 software in that market. The group will launch its next generation video console PS3 in November.

Sony does not provide a breakdown of its sales by region. But last year, Japan accounted for 20 per cent of overall sales of Y7,159bn, while North America accounted for 23 per cent and European countries 26 per cent. Other market, including China, accounted for 31 per cent.

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