Article 4 – Trade
By: Michael Blanton

My article is from December 2012 of the Harvard Business Review and is entitled What Panasonic Learned in China.

This article showcases the transformation that Japanese company Panasonic made by approaching China as a source of consumption for its products as opposed to just a manufacturing base for its products. Until recently, Panasonic had many of its products manufactured in emerging market countries and would then sell these products to developed markets such as America, Europe, and in their home country of Japan. Knowingly or unknowingly, this way of doing business fostered an “us” and “them” mentality, or the haves and the have-nots, where emerging economies were not viewed as a meaningful source of sales for developed countries’ products.

However, as evidenced by the success of Panasonic’s competitors, Panasonic recently acknowledged that it can no longer ignore China’s very rapidly growing middle class society and 1.3 billion people. The challenge for Panasonic was in determining how to assimilate their products into the Chinese local markets. In the past, the product design and manufacturing of Panasonic’s baseline products of washing machines, kitchen dishwashers, and refrigerators were only slightly altered for different geographic markets, almost all of which were developed economies/markets.

The obstacles that Panasonic faced were no different than those of other consumer products companies that compete worldwide: how does one balance the economic advantages of an integrated worldwide delivery model with trying to meet local consumers’ particular needs. In brief, this article focuses on this tug of war tension between these two objectives, which some would view as mutually exclusive, yet Panasonic has tried to view as equally important and mutually attainable.

In order to accomplish this endeavor,