Extraordinary times call for extraordinary measures. Early this year, the $60 billion Japanese camera and printer maker Canon did something unexpected. The Tokyo-based company said its president and chief operating officer Tsuneji Uchida will step down effective March 29, after the world?s largest camera maker forecast profit will increase by less than 1% for a second straight year. He will be replaced by the company veteran Fujio Mitarai, who served as president from 1995-2006 and has since held the post of chairman. A nephew of Takeshi Mitarai, among the first executives to head the company, the 76 year-old Mitarai joined in 1961 after graduating from law school. He stepped down as president when he was appointed head of Japan?s biggest business lobby, Nippon Keidanren, but he continued to play an active role.
Mitarai might not be the new face at Canon, but he is definitely young in his thinking and energetic in approach?a leader at the forefront, who is growing bigger and stronger, everyday. At the same time, he has his ear to the ground and is abreast of ground realities. Like other export-focused Japanese manufacturers, Canon, which makes 80% of its revenue overseas, has been hit by a strong yen and a weak economy, on top of last year?s floods in Thailand that closed a printer plant and ruptured supply lines.
The Canon veteran is also aware that the future remains increasingly uncertain; there is continuing business uncertainty as the pace of recovery shows no signs of improving in the United States and Europe. Eastman Kodak, the photography icon that invented the hand-held camera, has filed for bankruptcy protection and plans to shrink significantly. Kodak might be one of America?s best-known companies, but reality is that it failed to quickly embrace more modern technologies such as the digital camera ?ironically, a product it invented.
Remarkably, Mitarai is candid and honest to admit the challenging business environment. ?For the time being, we expect the harsh economic climate to continue and uncertainty to prevail. Canon will strive to meet new challenges, including the timely launch of innovative products and services, the enhancement of our sales system across Asian markets, the cultivation of new businesses, and the promotion of international diversification,? Mitarai said.
The Canon chairman is fully aware that emerging markets, such as China and India, have maintained a high rate of growth in the past few years. Therefore, it was not surprising for him to fly down to New Delhi last week and outline an ambitious plan to drive its growth over the next three years given the economic slowdown in developed markets.
?The India market is one that Canon has high hopes for in the future. The high potential of the domestic market is driven by an emerging middle class and rising disposable incomes are fueling demand for quality digital products,? Mitarai said. ?Our growth in India has been impressive, yet we want to set more ambitious targets. Canon expects India to play a larger role in its global scheme of things and in the process contribute more to its revenues.?
Canon India has achieved revenue of R1,525 crore during the calendar year 2011. In the current calendar year, the company expects to garner revenues of around R2,280 crore from India. Revenues in 2010 were R1,260 crore. Canon has been operational in India since 1997. In the first 10 years, Canon grew at a compounded annual growth rate of about 18% per annum and in the last three years, Canon India has touched an annual growth rate of over 30%. ?By 2015, we expect our India sales to touch $1 billion (R5,000 crore),? Mitarai said. ?We are actively exploring the possibility to set up a global call centre for Canon in India and hope that company?s Indian software team plays a key role for our R&D centre at Tokyo.?
Canon?s software operations comprise a technology and innovation centre in Noida and a design centre in Bangalore. The Noida centre is responsible for R&D of application independent software platform for Canon devices. The Bangalore design centre focuses on R&D in VLSI engineering domain and embedded software development. A centre of excellence offers integrated portfolio of services including software-led IT solutions like CRM, e-learning and knowledge management, client services and BPO.
?But marketing has been Canon?s key strengths in India and we want to grow this further,? Mitarai said. The company today has offices in 7 cities, warehouses in 13 cities across India and employs over 1,000 people. Canon has approximately 380 primary channel partners and over 5,000 secondary partners, 283 national retail chain stores and 34 Canon care centres across India.
Canon India senior vice-president Alok Bharadwaj has been instrumental in driving the company?s strong performance in India, which has been achieved on the basis of its marketing initiatives where it has expanded its retail presence substantially across the country. ?Canon India?s major success areas have been in leveraging partnerships and what I call it as 3Ps?performance, pride and passion. Most important highlight of Canon?s performance has been in the area of new domains that Canon launched like Canon image square which is our brand retail strategy and Canon managed document services which is complete outsourcing business on document sevices management. Besides this, new domains like production printing for applications like book publishing or transaction printing are important drivers for our business,? he said.
According to Bharadwaj, Canon?s product portfolio extends over a vast variety of copier multi-function devices, fax-machines, printers, scanners, all-in-ones, digital cameras, camcorders and multimedia projectors, cable ID printers, semiconductors and card printers.
2011 was a year in which Canon was severely tested by successive challenges, such as the Great East Japan Earthquake; a slowdown in the economic recovery, particularly in the US and Europe; the historically high valuation of the yen; and massive flooding in Thailand. Canon, which made its first camera in 1933 and now has its IXUS and PowerShot cameras competing against Nikon and Sony, aims to sell 22 million compact cameras and 9.2 million interchangeable lens cameras this year, up from 18.7 million and 7.2 million, respectively, last year. Canon also competes with Xerox in printers.
Although economic conditions are expected to continue to make it difficult to be optimistic about the future business environment, Mitarai is confident that emerging markets such as India will drive growth and he is revving up efforts to take advantage from such high growth markets.
