Philips Electronics Japan
While he’s not the first CEO to describe the Japanese market as “testing”, Danny Risberg means the term in a slightly different way.
President and CEO of Philips Electronics Japan, Risberg says the changes that we can see today in Japan’s economy, society and lifestyles will be replicated in other advanced industrial societies. Which means it makes perfect sense to be testing future strategies and products in this market. Perhaps most importantly, in the area of care for Japan’s rapidly ageing population.
“The world is looking at Japan right now because pretty much every developed country will, in the next few years, be going through what is happening here in Japan today,” he says. “They are even feeling the effects of population imbalance in China already.
“We believe that if we can bring new products and services to market here and be successful, then the effective models that we set up in Japan can be applied elsewhere and the rest of the world can benefit,” he says. “How Japan addresses the problem of caring for an ageing population and paying for the cost of care is being watched very closely – and it is important that we get it right.”
Philips – the full name of the Dutch multinational is Royal Philips Electronics – invests a lot of time and resources in working with Japanese research institutions and local companies. Fully 70% of its business in this market is focused on the healthcare sector, with its lighting and consumer lifestyle products accounting for the rest. Those figures contrast with the company’s global business, which is evenly split among the three sectors.
“Philips first started out in business here in 1953, in the form of joint ventures and partnerships with Japanese companies, and clearly there have been some huge changes in that time,” says 47-year-old Risberg, who is originally from San Diego in southern California. He points out the window of the company’s headquarters in the Shinagawa district of Tokyo.
The company has occupied the same spot on the east side of the station for the past 30 years – but redevelopment since then has made its surroundings unrecognisable, he says.
1,500 staff in Japan
“Twenty years ago, people knew that Philips sold electrical appliances, but because we were a technology company we had to go head-to-head with Japanese competitors,” Risberg says. “Now, people know us for a far wider range of business activities and particularly the health and wellness sector.”
Two product lines that fit into that category have fared remarkably well in the Japanese market: its range of Sonicare electric toothbrushes and its selection of men’s grooming products, including body shavers.
“Those sorts of products have been a big part of our consumer business in Japan and this conscious shift away from white goods and more into health and well-being means we are focusing on what we can be successful in,” he says.
Philips is one of the largest electronics companies in the world, with sales of €23.18bn in 2009 and close to 124,000 employees in 60 countries, including 1,500 staff in Japan.
The company can trace its roots back to 1891, when Gerard Philips – a maternal cousin of Karl Marx – started producing light bulbs and other electrical equipment in Eindhoven, the Netherlands. In the early decades of the 20th century, Philips started to make vacuum tubes and in 1927 acquired British electronic valve manufacturer Mullard. In 1939, the company introduced its first electric razor, a product it remains synonymous with to this day.
In 1972, Philips was the first company in the world to release a home-use video cassette recorder – ironically, a move soon mimicked by Japanese electronics firms, who won the battle on standards with the VHS system. A decade later, Philips teamed up with Sony to launch compact discs, which were subsequently enhanced as DVDs and Blu-ray discs.
The company is also known for its specialist lighting technology, particularly LED lighting and, in the Japanese market, lighting solutions for the automobile industry.
During this summer’s World Cup in South Africa, six of the 10 stadiums benefited from Philips’ ArenaVision lighting, designed to provide the optimum visibility for the players while ensuring the best lighting for television cameras. That coincided with a major push by the company to provide outdoor lighting powered by solar panels to light up football pitches across the entire African continent.
The Philips philosophy
“The economic crisis was not something that was expected and not something any of us could have really planned for,” says Risberg, looking back at the last couple of years. “Like everyone, we were affected globally by the downturn and it was very difficult for a time there, but we were lucky in that we are spread across three sectors, meaning that we had a balanced portfolio.
“The Philips philosophy is that all our products are interconnected and we are able to share our research and development knowledge, ranging from medical devices to LED lights and toothbrushes,” he says. “That has also helped us in the last couple of years and we are becoming even better at that synergy in design and technology.”
That is not to say that the Japanese market is always an easy one, he admits, pointing to the high number of government-set product standards and regulations that do not mesh with global ones. And, he points out, when such barriers mean the latest medical devices take longer to come to Japan – the so-called “device lag” – it is the consumer who loses out, including Japan resident Risberg.
“We’re not just thinking of this in terms of sales and profits. I live in Japan and this device lag directly affects me and my family and our employees,” he says. “That makes solving this issue important to all of us.”