By Matthew Campbell - Oct 12, 2010 Canon Inc., the world’s largest camera maker, may make acquisitions bigger than its $1 billion takeover of Oce NV as it starts a five-year plan to diversify into new countries and products. Deals larger than the acquisition of Dutch printer-maker Oce are “fine with me,” and could focus on printing, chemicals, or medical companies, Canon Chief Executive Officer Fujio Mitarai said in an interview in Paris yesterday. Mitarai yesterday unveiled a plan to raise revenue to 5 trillion yen ($61 billion) by 2015 and restructure operations with three global headquarters, in Japan, Europe and the U.S., and more “localized production” and research. Export-oriented Japanese companies are shifting output and innovation abroad as the yen climbs to record highs against the dollar and American, Taiwanese, and Korean companies develop stronger technology. Carmakers Toyota Motor Co. and Nissan Motor Co. have announced plans to move production outside of Japan. While Canon doesn’t have current plans to open factories abroad, apart from new facilities in Taiwan and Thailand, “we have to create value in the U.S. and in Europe as well,” with Oce as a base, Mitarai said. “Until now we have been centred on Japan, innovation came from Japan, and that sufficed.” Canon’s offer for Venlo, Netherlands-based Oce became unconditional in March and is Canon’s largest-ever acquisition. Increasing the proportion of research and development abroad is becoming essential for Japanese companies looking for a technological edge, Mark Manger, a professor of international relations at the London School of Economics, said by phone. Not ‘Dynamic’ “The Japanese market isn’t particularly dynamic, and due to demographic pressures they will have a shortage of qualified researchers and engineers in the next few years,” he said. Technology companies such as Google Inc. and International Business Machines Corp. “have R&D campuses in innovation centers around the world like Cambridge, Massachusetts, and that’s a strategy Japanese companies need to emulate,” he said. Doing more development work abroad may bring Canon’s research operations closer to customers, as 78 percent of sales came from outside Japan last year. Mitarai yesterday said he’s confident the Tokyo-based company can achieve its financial goals for 2010, which include reaching 3.75 trillion yen in sales, up from 3.2 trillion yen last year. The progress of the Japanese currency, which yesterday touched a 15-year high of 81.39 yen to the dollar, may hurt Canon’s results. Operating profit will shrink by 4.7 billion yen for every 1 yen the currency strengthens beyond 90 against the dollar in the second half of the year, Canon has said. While “the ideal would be to reflect the appreciation of the yen in the price” of Canon products, the company is focusing on cutting production costs rather than adjusting retail prices for now, Mitarai said. To contact the reporter on this story: Matthew Campbell in Paris at mcampbell39@bloomberg.net To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net.
October 17, 2010
Canon Looks Abroad for Growth, May Seek Deals Bigger Than Oce
