Photo/Illutration Workers go about their tasks at Yamaha Corp.’s piano manufacturing plant in Kakegawa, Shizuoka Prefecture, in June 2023. (Kaname Ohira)

HAMAMATSU, Shizuoka Prefecture--Citing the weak yen and dwindling sales, musical instrument giant Yamaha Corp. said it is scaling back its investment in China to focus on domestic production, a sharp reversal in strategy.

The company had invested heavily in overseas plants on grounds of cost and efficiency.

As a first step, it will integrate Yamaha Music Manufacturing Japan Corp., a subsidiary based in Iwata, Shizuoka Prefecture, that manages its domestic plants, into its headquarters here in April. Doing so will allow it to serve as a production base for the world as a whole.

The move, officials said, is aimed at enhancing interactions between product development and frontline production activities. They said it will also strengthen its function as the main plant that provides technical guidance to overseas factories.

DOMESTIC CAPITAL INVESTMENT

“We want to raise the level of our plants to reconstruct techniques and skills,” President Takuya Nakata told reporters. “The way forward is to expand domestic investment.”

The company had been planning to increase production of key piano components in China to meet demand. But that will now be undertaken by its plant in Iwata.

Yamaha had pursued a strategy of selection and concentration at home and abroad with an eye to bringing domestic production to a halt at some point.

This latest corporate decision constitutes a major change in policy.

The company also plans to add another building to the premises of Sakuraba Mokuzai Co., its manufacturing subsidiary in charge of producing lumber and parts for piano manufacturing in Kita-Akita, Akita Prefecture.

The musical instrument maker has already announced plans to invest 35 billion yen ($232 million) in production equipment for three years through March 2025.

While stepping up domestic investment, the company intends to do the opposite in China.

SEMICONDUCTOR PROCUREMENT

Yamaha makes relatively high-end products at its plants in Japan for export. Aside from China, it also operates manufacturing plants in Indonesia and elsewhere.

Piano sales have plunged in China after years of rapid growth, due to the country’s economic slowdown and an educational policy aimed at regulating cram schools and other extracurricular activities.

In addition, labor costs and other expenses have risen.

Benefiting from a weak yen, Yamaha is pinning its hopes on being able to sell musical instruments in a flexible manner tailored to each market by exporting its products made in Japan.

It will also establish a semiconductor procurement company in Malaysia to combat a semiconductor shortage exacerbated by the COVID-19 pandemic.

The new subsidiary will start operations in July.

“I think we can develop strong bonds by narrowing down our procurement sources and making direct contracts with partners,” Nakata said, placing expectations for business expansion.

In other developments, Yamaha announced Feb. 6 that Nakata, 65, will step down as president and be replaced by Atsushi Yamaura, effective April 1.

Yamaura, 56, will be the first new president in about 11 years.

Nakata will assume the post of chairman, a position that has long been vacant.

20240311-Yamaha-2-L
Atsushi Yamaura, left, an executive officer of Yamaha Corp. who has been appointed as new president, with the current president, Takuya Nakata, during a news conference held in Hamamatsu’s Chuo Ward on Feb. 6 (Kaname Ohira)

Related News