Market Insight

The Japan Earthquake and the Consumer Electronics Market – One Year Later

March 01, 2012

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For several decades, Japan has been seen as the global leader in consumer electronics, as an innovator, manufacturer and trend-setting consumer. While other countries and regions are increasingly challenging for this title, Japan has continued to be a major force in all aspects of the CE world.

The horrific Japan earthquake of March 2010 threatened to change all of that.  The casualties and property damage have been well documented, and while any impact on the consumer market is insignificant in the face of such tragedy, the extent and timing of any effects on the consumer market were a concern as well.

The direct impact on consumer electronics equipment production was actually fairly minimal, at least when looking at the factories building televisions, video game players, Blu-ray drives and the like, a reflection of the continuing trend of electronics manufacturing moving to lower-cost regions such as China. Very little of the actual consumer systems manufacturing was directly impacted; with the exception of some high-end digital camera facilities most finished-good factories were unaffected.  It was farther back in the supply chain where the major concerns laid, and the earthquake’s effects on the factories building components or producing raw materials (and ever more fundamentally, the power grid supplying these factories) such as the raw silicon wafers, lithium ion batteries and Blu-ray pickups were of great uncertainty at the time.

Ultimately, however, the previously overfull inventories proved to be sufficient to carry the manufacturing of consumer goods and their constituent components through the rebuilding period, and the overall CE industry production capacity was little affected.

The affect on Japanese consumption was also a concern as the Japanese populace naturally shifted its focus on recovery and rebuilding rather than spending on consumer items. Some of this has been reflected in the Japanese Consumer Confidence metrics, which plummeted from 40.6 in February, 2011 to 33.4 in April following the earthquake. Despite the global financial crises, however, Japanese consumer confidence had completely recovered by the end of 2011.

The effect – or lack thereof – on Japanese consumer spending can be seen in looking at some key CE systems. Flat panel TV sales in Japan actually climbed in the second quarter, up 6.7% from the first quarter to 5.4 million sets. While totals for the year were lower, this is more likely due to the global economy, as it was in the fourth quarter where shipments declined from 2010’s numbers. The number of Blu-Ray households in Japan almost doubled in 2011, growing from approximately 9 million to over 17 million. Another metric are Blu-Ray Recorder shipments, which are overwhelmingly Japan-centric; shipments of these devices grew by 40% in 2011. Clearly, any impact of the Japan earthquake on CE spending was short-lived.

The effects of the earthquake on Japan and its people cannot be understated. The direct effects on the Consumer Electronics market, however, proved to be fairly minimal and short-lived, though the CE industry has been and continues to be pummeled by further crises affecting both demand (the global financial meltdown) and supply (the Thailand floods); like the earthquake, these too will be overcome.

Read More About Consumer Electronics > Financial Uncertainties Dampen Holiday Spirit 

Geography
Japan
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