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Panasonic opens research hub in Xi's signature smart city

China sales to reach $17bn by 2030, matching Japan, says President Tsuga

Passengers wait to board a self-driving bus created by Baidu's Apollo autonomous-vehicle program, for which Panasonic looks to develop technology.   © Reuters

BEIJING -- Panasonic President Kazuhiro Tsuga told reporters here on Thursday that the company has founded a research center in China's Xiongan New Area, a sprawling smart city under construction outside Beijing.

Noting that China will continue to be an area of growth for Panasonic, Tsuga said that the goal was to increase China sales to be on par with the company's home market of Japan by 2030.

The opening of the research center, which will advance Panasonic's adaptation of artificial intelligence for cars and houses, in President Xi Jinping's signature Xiongan project is meant to be proof of the company's commitment to China.

"The most room for growth is in China," Tsuga said, discussing Panasonic's management plan through 2030. "We will propel innovation in China by teaming with groundbreaking Chinese companies."

Panasonic aims to increase Chinese sales to over 2 trillion yen ($17.7 billion) in 2030 from 800 billion yen in fiscal 2017. The Japanese company set an interim sales goal of 1.2 trillion yen to 1.3 trillion yen for fiscal 2020.

"If you consider China's population, we must grow operations there to a similar level to Japan's," Tsuga said.

The Xiongan New Area, about 100 km southwest of the capital, is expected to receive a total investment of 2 trillion yuan ($288 billion) to shift toward high value-added industries. The smart city will rival Tokyo in area at 2,000 sq. km, with a population projected to surpass 2 million.

Panasonic's center is located in the Hebei Province city of Baoding, which contains Xiongan. It was formed through a tie-up with Beijing Songshengyuan Environment Technology, in which Panasonic is an investor, and the municipal government.

Panasonic will seek orders for residential products and systems that use AI to improve the energy efficiency or safety of homes. The company also will develop information systems for self-driving vehicles with Chinese online search leader Baidu, which houses its Apollo autonomous-driving program -- a national project with support from the Chinese government -- in Xiongan.

Tsuga also discussed Panasonic's electric-car battery business.

"We will prioritize expanding U.S. production first and China next," he said, revealing that a Jiangsu Province plant, which makes batteries for information technology devices, could be used for Tesla demand in China.

But Tesla CEO Elon Musk said on Twitter early this month that cell production for its so-called Gigafactory in Shanghai "will be sourced locally, most likely from several companies" including Panasonic, currently its sole supplier. Tsuga addressed the tweet, saying "Tesla might be considering procurement from other companies if supply does not keep up."

Tsuga discussed the U.S.-China trade war as well.

"China's domestic demand is large. I do not think of investment there as a risk," Tsuga said, but he added that "we must hedge against the impact that measures like tariffs will have on the global supply chain."

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