Executive summary
The following report is aimed at analyzing current Panasonic localization strategies in China market. Through the fully discussion and comparison, we concentrate on finding whether these strategies are best suiting for generating continuous profits and expanding marketing share for the transnational enterprise in local market. Subsequently, based on investigation, providing insightful recommendations to increase effectiveness and efficiency of the company’s operation to achieve competitive advantage and sustainable competitive advantage.

There are three main sections involved in localization problems in Panasonic Company. Firstly, current customer localization strategy should be updated, as the improvement of Chinese peoples’ lives, nowadays there is a huge change of customer demands and preference, such as high quality and multifunctional requirement for TV design. Secondly, under strong influence of Japanese culture, current human resource management have some disadvantages, such as lacking of sufficient number of local staffs, complex hierarchical structure in the organization decreasing the efficiency of decision-making and local staff promotion and welfare issues. Thirdly, distribution channel should adapt to local market situation with Chinese characteristics, such as eliminate unnecessary direct selling all over the country, concentrate on collaboration with factories store and establish E-commence selling products through the online shop.

The most interesting finding through the report refers that, implementing web-based tools and technologies of supporting online payment will certain benefits Panasonic in distribution channel aspects especially for sales transaction carried out on the local famous online shop such as in Taobao, Jingdong.

Table of Content Executive summary i 1.Introduction 1 1.1Background of Panasonic & Panasonic China market 1 1.2 Panasonic Current Declines 1 1.3 Purpose Of the Report 2 2 Analyses of Localization Management of Panasonic in China 3 2.1 What’s localization? 3 2.2 Localization---Customer 3 2.3 Localization--- Employee 5 2.4 Localization--- Distribution channel 6 3.Recommendation 8 3.1 Customer 8 3.2 Employee 8 3.3 Distribution Channel 9 4.Conclusion 11 Reference 12

1.Introduction
1.1Background of Panasonic & Panasonic China market
Japanese giant--Panasonic is referring to one of the largest and leading electronic product manufacturers and outstanding performer in the world and recognized as world’s well-known brand. It stands for the depth and diversity of its research capabilities, which spending $5 billion annually on research and development. The company’s slogan is “Ideas for life”. What’s more Panasonic, is also famous for its manufacturing expertise, high quality and sophisticated products since 1918(Panasonic, 2014). Now it has more than 230 companies around the world with more than 250,000 employees. Among them there are as many as 54,000 employees in China. In the year 2006, the total annual sales reached more than $76 billion. It was initially called Matsushita Electric until year 2008, which then changed to Panasonic. Its products cover 14 areas of business compromising of digital network products, white domestic appliances, brown goods, components and parts, and industrial equipment (Panasonic, 2014).
In the year 1978，China went into the global economy at the same time attract tremendous influx of foreign capital, after Chinese leader Deng Xiaoping visited to Japan, he met with Konosuke Matsushita, the founder of Panasonic on that year, Panasonic began to entered into China market in 1987 with significant amount of investment.

1.2 Panasonic Current Declines
During the past two decades, Panasonic had enjoyed great benefits in emerging market such as lower cost of labor, higher demand from consumer, less barriers for setting up factories, lower cost for land renting and administering. However, nowadays as accelerated globalization as well as increased competition, there are more and more competitive electronic manufactures’ giants in the world, such as South Korea national brand Samsung, China famous brands Haier, Chang Hong, and the other Japanese giant Sony. Under this globally competition and inappropriately specify local customers’ demands and prefence, there is a significant decline on sales of Panasonic particularly in TV and air conditioners manufacturing in China market, which leading to significant loss in annual revenue. What's more, due to lacking of understanding local human resource management, there is a culture shock within the organization, which directly influence the effectiveness and efficiency of workface. For instance, Panasonic has nearly doubled its projected net loss to ¥780bn (£6.47bn) in the year 2011(Josh Halliday, 2012) due to the world’s financial crisis in 2008 dampens demand for Panasonic products, finding more profitable distribution channel in China market is essential now. So Panasonic are willing to expend business and performance in China market by improving localization strategies.

1.3 Purpose Of the Report
The objective of this report is aimed at creating and providing practical recommendations to enhance localization strategies that Panasonic have encountered on expending and managing Transnational Corporation in the China market. The report can be dividend into four main parts; firstly identified the core problems that Panasonic has been suffered in the introduction part, and then move on to analysis on the theoretical application to the problems with explaining rationale to selected problems. Thirdly, in the recommendation part giving appropriate business strategies and application based on current Panasonic’s situation in China market for generating competitive and sustainable competitive advantages in the future. Finally, come up with a conclusion of the report including of summary of the problems that Panasonic have been involved in as well as strategies in the coming future.

2 Analyses of Localization Management of Panasonic in China
2.1 What’s localization?
Localization can be referred to a business strategy that multination enterprises implemented in the current global business environment by adapted of a product and application to accommodate the requirements and criteria of a specific target market in terms of local language, culture, policy, customs and social believes. Companies could generate benefits from localization, for example, the availability of raw material, power, and water; share the local sufficient supply of skilled labor at cheap price; nearness to target market. However, there are still several serious issues that transnational corporation have to deal with, especially for local customer demand, local production preference and innovation, how to manage local employees as well as local distribution channels management. All these matters require Panasonic act under the direction of thought of “think global, act locally”(Li, 2005)

2.2 Localization---Customer
Generally, customers’ preferences and demand for electronic equipment such as TVs and air conditioners varies from countries to countries, mainly depend on level of income and disposal, living environment, local climate conditions and current technology development. In accordance to localization, transnational enterprise needs to clearly identify local customer demand and preference in order to produce and meet customers’ requirements. Just like McDonald’s serves vegetarian burger in India and spicy ones in Mexico.
In the past two decades, Chinese people normally treat color television, fridge, and washing machine as the biggest important necessaries in their life, particularly for the Japanese exported ones, which stand for high quality and technics. In today’s China market, with the improvement of people’s life, there is an increasing demand for entertainment and living environment, which has a positive impact on development of electrical appliances. Many Chinese now use their TVs to listen to music and divert themselves in singing; television is no more just for watching programs. There is increasing demand for multifunction such as 50inche or more LED screen, glasses-free 3D technology, built in WIFI function and with high quality of sound system.
By contrast, Panasonic used to be the experts and champions in plasma TV business for decades, which occupied most product-lines of the company. However the demand for plasma has declined significantly in the year 2013, most users changed to in favor of LED TV in China, which lead to Panasonic suffer huge losses. In addition to this, in recent years, for example, green environmental protection has been the centerpiece of home appliance industry. In the past, consumer would prefer those goods with fashionable and attractive appearance. By contrast, Chinese people now are more likely to consider healthy, environment friendly, power consumption, level of noise and advanced technology functions when they do decision-making.
Due to the China domestic home appliance market is saturated, and tends to be stable, there is a hierarchy of the industry. Medium and Low-end market basically occupied by domestic brands such as Haier, Changhong. Although there tends to be less Chinese local competitors in high-end market, however 65% market share is occupied by foreign brands such as Sony, Siemens, so there is a keen competition among several foreign competitors. What’s more, Chinese customers are not like Japanese customers, they are probably lacking of brand loyalty so purchasing behavior influenced by new trends significantly, furthermore Chinese people tend to have great confidence in foreign brands, believe foreign products are in good quality and superior than local products. In addition, rapid changing technology leads to buyers format the “wait-and-see” attitude. Many buyers holding the manner and awaiting further price cut or the next generation of products in order to prevent out too fast. These are typically most of Chinese customer behavior psychology and features. 2.3 Localization--- Employee
Localization requires Panasonic employ considerable large amounts of Chinese staff for daily operation in each business unit, because local staffs are more familiar with business environment and processes. Initially, staff localization is beneficial for transnational company by replacing expatriates with local staff, because Japanese expatriates are rather costly. However, under strong influence of traditional Japanese culture, loyalty has been treated extremely important to the company, generally one Japanese employee would like to work in one company for his or her whole professional career if possible and Japanese corporation at the same time appreciate this, which is provided the well-known lifetime employment by most of large companies including of Panasonic. So, in one’s resume, if there are recording someone has been worked for more than two companies in previous working experience, it does mean rich experiences for this employee in China, however, on the contrary, it means this person is not capable of loyalty to the company. To some extent, too much rely on loyalty as recognition criteria will decrease Panasonic select and attract the local talents through recruiting channels effectively. On the other hand, this explains why Japanese companies lack of confidence on local employees.
In addition, decision-making process within Panasonic works relatively slowly, because there is a complex hierarchical structure in the organization. It takes long time to achieve responsiveness for important marketing decision or strategies, considering there are few Chinese senior mangers in the important administrative posts in Panasonic. Based on Panasonic 2012 annual report, it has set up 35% of senior mangers should come from Chinese staffs, in fact, it is quite difficult to achieve this goal because of closed personnel mechanism and strict promotion system within the company. In China, people do care the close relationships with families, friends and workmates. Finding a way to offer value while humanizing the business is common and probably guarantee everything going smoothly. However, Japanese employees seem to be precise and strict in the workplace instead of acting as enthusiasm as Chinese staffs, which making negative impact on commutating and cooperating with each other, hence influencing the effectiveness and efficiency in the workplace. What's more it is far more difficult for talent to get promotion or a raise in a short term, because the company may spend a long period of time on observing performance in order to prove staff’s loyalty as well as ability.

2.4 Localization--- Distribution channel
Generally, transnational companies do not set up their own channel after enter into China directly, instead, they prepare to seek local agents as much as possible in order to reduce the cost of public relations, coordination costs and avoid failure of hasty investment risk. (Zhou, 2003). With becoming more familiar with China, transnational corporations gradually implementing the strategy of forward integration, for acquisitions or new way, gradually build up its sales channels.
With Chinese characteristics, there are three main distribution channels in local market for Panasonic, direct selling, regional agents and warehouse.
Direct selling refers to independent direct sales representatives of company conduct face to face introduction or presentation to fulfill sale of products, which usually at the home or office. The potential sales revenue depends both on products quality as well as on representatives’ sales ability. This distribution channel was very successful implemented by Panasonic in 1990th, as at that time, the brand was not as popular as today in China market. However, currently, Chinese economy has rapidly developed as well as people’s attitudes of life, they are more concerning and caring personal space, so people are not in favor of direct selling method, especially for face to face presentation. In addition, the drawbacks of direct sell in local market because it requires administrative support of company, once occurs customer complaints. What’s more, considering about vast territory of China, it is difficult and costly to arrange qualified sales representatives in every city. By contrast, nowadays Internet is so popular in Chinese people’s daily life so it is too common for people to purchase different kinds of products through the Internet. Online shopping is more convenient for people nowadays, because people could purchase what they want at home without shopping outside, and products will be delivered to their pointed location. Instead of cash transitions, online payments accepted credit card, master card and third party payment method to protect safety and security.
Panasonic established several key sales force regional agents in China, which has divided into location, such as Northeast region, Middle East region, Southeast region. Logistics adds value to the supply chain process when inventory is strategically positioned to achieve sales (Donald J. 2013), however in China market, Panasonic have to combine logistic issues with seasonal changes. As the vast territory in China lead to the distinguished climates in different regions, even extra hot or cold during particular months, such as in Northeast part of China, December, January and February will be the coldest months, the temperature could be below 40 centigrade or even more, however between July and August, South part of China will be extremely hot. In this circumstance, for example, air conditioner product will be in highly demand during those special periods for different regions. Then it is one of the biggest challenges for Panasonic to arrange sufficient inventory in case of running out of stock.
3.Recommendation
3.1 Customer
Firstly, Panasonic should pay more attention on R&D to investigate and specify the current demand of Chinese customers. It is known that, in Japan, Panasonic have its own detailed investigation and studies aimed at finding how individuals and households use their products for a long time. For instant, Panasonic’s Home Appliances Company even set up Lifestyle Research Center to help improve effectiveness and efficiency of their products. So in the China market, Panasonic should invested heavily in local R&D and staffed its operations with thousands of top-notch Chinese designers and engineers. Set up product innovation center, considering China is the world’s biggest population and third largest territory, there will be vast information and data need to be analyzed.
In addition, Panasonic should concentrate on innovation continuously. Back to the history, there is not any a competitive innovation remains unique for long. Leading companies are always looking for next- generation capabilities to develop new competitive advantage (Efraim Turban, 2013). So emphasis R&D on new technology for Panasonic seems to be essential and argent, because it is core competitive and sustainable competitive advantage for electronic corporation.
For example, Panasonic could introduce new models of LED TVs, which have LED not fluorescent illumination, wider viewing angles, better speakers as well as 240 Hz or 120 Hz refresh to reduce blurring. More have an upgradeable web browser with WIFI function, where users are able to directly jump to AOL, MySpace, YouTube, and weather.

3.2 Employee
For the next step, Panasonic should improve HR management within the organization. Firstly, relax recruiting policy, attracting more and more local fresh, innovative and qualified people especially for those full of enthusiasm young generations, which could help company generate more innovative ideas as well as optimize future market share in China. Secondly, increase total number of Chinese staffs in the important positions, particularly in middle level and senior positions. Those qualified senior managers play the core and significant role in this transnational enterprise because they get better understand of the local market with relative abundant previous business experiences and reliable relationship with both local government and other business. They are more capable of understanding current situation in China electronic product market, what’s more based on better and detailed analyzing the current policy and regulation, they are more likely to make the appropriate decision-making as well as quickly refection. Moreover, Chinese mangers could conduct better communication with local employees cause there are neither languages barrier nor culture difference, so it adds efficiency to get valuable feedbacks from junior staff so that improve the performance of the company. Thirdly, enhance the comprehensive welfare and basic salaries for Chinese employees. It will increase enthusiasm of masses once the gap of salary between Japanese staff and local staff will be reduced

3.3 Distribution Channel
For localization distribution channel strategy, it is well recommended to take advantage of using direct selling through the Internet, especially for setting up electronica business in local popular web-based platform such as Taobao and Jingdong. These large sizes online shop have been existed in China for several years and owned billions of users, when the sales period or special promotion events are coming, the trading volume could be greater than normal. According to the recent reporting, the “Double 11” event holding by Taobao, on 11th of November 2013, the transaction in a day hit 35 billion yuan (USD 5.7 billion). As for mobile end shopping, 2 million users entered into mobile Taobao in just 1 minute, what’s more one hour, mobile Taobao transaction mounted to 1 billion yuan (USD 163 million), more than the total mobile transaction on November 11 2012.(China Inter Watch, 2013). What’s more, third party will protect online payment transaction, which ensures the security and safety. In addition reducing direct selling proportion but increasing collaboration with factories store and warehouses such as GOME and Su-Ning, because large volume selling factory store will enjoy the benefits of economics scales thus lowers the cost of production, benefiting both sellers and buyers.

4.Conclusion
In conclusion, nowadays facing increasing numbers of competition in China market, upgraded localization strategies are essentially important to Panasonic. There are some issues highly need Panasonic to be taken into consideration in order to improve their current management and operation. Firstly, focus on R&D to refined target customers in China market, compromising of their preference and demand. Secondly, improve human resources within the company, recruiting more local employees, appointing local mangers in important positions and enhance local staff welfare and salaries. Thirdly, limit the direct selling distribution channel while expanding e-commerce channel with local electronic business giants. Adapting the localization strategies for Panasonic will help the transnational company expand its market share successfully in the near future.

Reference
China Inter Watch, 2013 Taobao Toal Sales Reached USD 5.7 Billion on One Single Day, viewed on 22th June 2014
< http://www.chinainternetwatch.com/4691/taobao-bachelors-day/>

Donald J. Bowersox, 2013, Supply Chain Logistics Management, Fourth Edition, Published by McGraw-Hill, ISBN 978-0-07-802405-4, PP29-70

Efraim Turban, 2013, Advancing Sustainable Profitable Business Growth, Information Technology For Management, Ninth Edition, Published byCourier Kendallville, pp161-162

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Josh Halliday, 2012, The Guradian, Panasonic and Sony mired in Japanese electronics <http://www.theguardian.com/business/2012/feb/03/panasonic-sony-japanese-electronics-slump slump, viewed on 14th June 2014>

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