HANGZHOU, China -- Japan's Panasonic will build its first consumer electronics plant in the country in 16 years, people familiar with the matter said Friday, bucking the trend of manufacturers leaving China to avoid the U.S.-China trade war.
The 4.5 billion yen ($41 million) plant will make kitchen appliances such as microwave ovens and rice cookers, and is scheduled to begin production in 2021. Panasonic decided to build the new factory in Jiaxing, Zhejiang Province, anticipating medium- to long-term growth in China.
It plans to sell products manufactured at the plant in both the domestic market and elsewhere in Asia. The company forecasts annual sales of 2 billion yuan ($280 million) once the plant begins full-scale production.
The consumer electronics plant in China will be its first since 2005, when it built a factory in the same province. It will set up a new company to operate the new plant, developing products that incorporate internet of things technology. Among such internet-enabled products will be cooking appliances that can maintain temperature using sensors and saute ingredients optimally.
Panasonic sells around $1.84 billion worth of home appliances in China annually. It makes kitchen appliances at plants in Shanghai, Hangzhou and Amoy, selling them at large retailers and online. But competition is intensifying from companies such as Xiaomi, a big Chinese smartphone maker, which is strengthening its lineup of attractively designed, affordably priced home appliances.
Panasonic is focusing its marketing efforts on married couples around age 30 who are relatively well off. Although the Chinese economy is slowing due to the trade war, Panasonic decided to build the new plant because demand for home appliances is expected to grow, backed by rising numbers of middle-income consumers.