Japan news: Worries about weak digital demand from Olympics

May 5, 2008 – The 2008 Olympic Games in Beijing this summer have long been touted as a potential windfall for consumer electronics, but a pair of reports out of Japan suggest the numbers won’t add up as high as previously hoped.

Flat-panel TVs and DVD players are key benchmarks in terms of how events like the Olympics can trigger consumer interest in electronic devices, and this trend was seen spiking this year because of the Games being held in China, a hotbed for industry growth. China represents 10% of the world’s flat-panel TV market, notes the Nikkei daily, and demand has been expected to surge 70%-80% this year.

But wariness among firms, particularly Japanese, has now entered the picture because of worries about the US economic slowdown and “tepid” domestic consumption, the paper notes. Orders and shipments typically spike at the start of an Olympic year in anticipation of soaring sales of TVs and related products just before the Games, but such supply activity hasn’t happened this year. Global shipments of electronic parts fell 1% Y-Y in January, the first such slip in three years, according to Japan Electronics and Information Technology Industries Association. And the SIA’s data showed just a 3.8% increase in global chip sales in 1Q08 (though Japan saw growth of 8%-9% Y-Y in each of the first three months this year).

The Dai-ichi Life Research Institute has lowered its expectations of consumption of Japanese products this summer by about 25%, to ¥345.4B (US $3.27B), down from a forecast of ¥459.3B ($4.36B) back in December, notes the Nikkei daily. Consumption is lower than in previous Olympic years (e.g., the 2004 Athens Olympics saw a spending rise of ¥440B/$4.18B), partly because of rising prices and economic pressures on consumers.

“Corporate activity is slowing due to rising resource prices and worsening market conditions for information-technology-related goods,” said Yuji Shimanaka at Mitsubishi UFJ Securities Co., quoted by the paper. “There’s a possibility that special demand will strike out.”

And Japanese execs seem worried. “There has been no excitement about sales ahead of the Beijing Olympics,” according to Kyocera Corp. president Makoto Kawamura, quoted by the Nikkei. And related advertising has also been soft. “The rise in spot advertising in April and May was extremely poor,” added Masao Kimiwada, president of TV Asahi Corp.


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