Photo/Illutration A refrigerator being assembled in a Panasonic Corp. factory in Kusatsu, Shiga Prefecture, on May 28 (Ryuichiro Fukuoka)

Panasonic Corp. disclosed plans to produce low-priced private-label white goods appliances for retailers under contract as part of a survival strategy .

The electronics giant, once a byword in the industry, has seen its domestic market share nosedive in recent years due to competition from China.

Even so, the company said it decided to expand its shipments of low-priced appliances at the risk of increasing competition against its own brand.

“We are having meetings with retailers about private-label products and services,” said President Masahiro Shinada during a Tokyo news conference in June to explain the company’s mid-term strategy.

Panasonic has yet to unveil details, including which retailers it will partner with as well as when and what types of home appliances it will manufacture.

Chinese companies are rapidly making inroads in Japan. They include the Haier Group, which acquired Sanyo Electric Co.’s home appliance business, and Midea Group, which acquired Toshiba Corp’s unit.

This has given rise to many instances of Chinese companies being commissioned to manufacture private-label products for their partners, indicating their market shares have grown markedly in practical terms.

According to Panasonic, it held a roughly 50 percent market share in front-loading washing machines in the business year that ended in March 2022.

But two years later, its share had decreased by about 10 percent due to competition from Chinese rivals.

Similarly, its held less than a 30 percent market share in refrigerators with a capacity of 400 liters or more in the business year that ended in March 2022.

But the percentage continued to decline and was overtaken by Chinese companies two years later.

As things stands now, Panasonic is falling behind its rivals in terms of cost and product competitiveness. Lower production costs are key to its future.

The company has changed course to manufacture low-priced private-label products and target a premium market segment to increase shipments.

By focusing on its low-priced product range of its own brand, it will avoid overlapping with private-label merchandise.

Cost-cutting measures it implemented for its business operations in China allowed Panasonic to streamline product planning by removing unnecessary features.

It has also started using parts and materials used by major Chinese manufacturers.

“Despite our factories in China having faced fierce competition from the Haier and Midea groups, we have become our best example in terms of manufacturing speed and cost,” Shinada said.

Panasonic’s new strategy is beginning to yield results.

For instance, it managed to reduce material costs for its latest convection microwave oven released this business year by 20 percent from a year earlier.

While Panasonic aims to enrich its low-end product portfolio to increase shipments, it has adopted a different strategy for its high-end lineup.

In the business year ending in March 2021, it introduced a “designated price system” under which retailers are not allowed to sell Panasonic’s products at discount prices in exchange for the company accepting product returns.

The move is intended to change a long-standing practice that forced the company to accept a huge discount for old models when new ones were introduced.

The company said it saw its operating profits increase by 10 billion yen ($68 million) between 2022 and 2023.

About 38 percent of white goods, mainly beauty appliances and microwaves, sold in the business year ending in March 2024 were subject to the new system in terms of value.

It aims to increase the percentage to around 50 percent.

According to Atsushi Osanai, a professor at Waseda University’s Graduate School in Tokyo who is well-versed in the electronics industry, Panasonic performs poorly in the Western market.

Its shipment volume is smaller than that of South Korea’s Samsung Electronics Co. and other rivals.

“If it is also putting too much effort into low-priced merchandise, its strategy to increase shipments with private-label products seems reasonable,” he said.

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