JDI to Fall Under the Affiliation of China-Taiwan Consortium: Limits of the Government Led "All Japan Strategy"
On April 3, Japan Display Inc. (JDI), who had been trying to reconstruct their management under INCJ (Innovation Network Corporation of Japan), a public-private investment fund, entered an agreement to accept financial support as large as 80 billion yen from 3 companies from the China-Taiwan Consortium (According to news releases from JDI, the official agreement will be made the week of April 8 or later). On top of this, JDI is also conducting a “refinancing” by INCJ, increasing their total funds to over 110 billion yen. Due to this capital increase by the consortium, voting rights of INCJ has decreased by half from 25%, and in exchange the 3 companies from Taiwan and China have gained just under 50%, becoming the largest shareholder. With the support of the government in the background, JDI was once expected to recover as an “All Japan” corporation, but they will reconstruct its path from here on as a foreign-affiliated corporation.
At one point with over 50% of the global market share, Japan was once known as an “LCD Kingdom”, but once into the 2000s, the Korean and Taiwanese companies rose into the market, and Japan quickly lost its international competitiveness. In April, 2012, METI (Ministry of Economy, Trade and Industry) led the strategic integration of the small-med sized LCD display businesses of Sony, Toshiba, and Hitachi, investing 200 billion yen through INCJ to inaugurate JDI. Since then, despite being a company carried out by the government, or should we say, as expected of a company carried out by the government, JDI has continued poor management.
In 2014, they became listed on the TSE (Tokyo Stock Exchange), but their performance in a deficit became a thing of norm. Between 2016 and 2017, INCJ additionally invested 75 billion yen, and another 20 billion yen in 2018. Despite the financial support, JDI could not draw out a path for self-reconstruction of their business. For the fiscal year 2018 (ending in March, 2019), JDI announced that their sales will be “10% less than their previous year’s sales performance of 717.5 billion yen, and with over 20 billion yen deficit in operating income, the final closing for the full fiscal year to be in a surplus is difficult” (3Q financial statement, February 14, 2019).
The drastic changes in the competitive environment such as the sharp decrease in demands for smartphones, stagnation of Apple, shift towards OLED, etc. are some of the contributing factors to this change in the market Even so, the misjudgment of the change in the market structure and the delay in responding to the changes can all be put to the critical mistake and responsibility of the business owner. This being said, the strategy of “selection and concentration” led by those who wouldn’t have to hold any responsibility, lost to the international companies who took the initiatives and gained a competitive advantage by changing the market.
Takashi Mizukoshi, the President