OSAKA -- Zojirushi's earnings have plateaued as buying by foreign tourists has ebbed, forcing the Japanese kitchen appliance manufacturer to seek customers in new markets, particularly Southeast Asia.
The company said Monday that group sales edged down 0.6% to 89.2 billion yen ($761 million) for the fiscal year ended in November, and are expected to fall to 88.5 billion yen next fiscal year. "Sales at tax-free stores dropped by nearly half in fiscal 2016, from 3.6 billion yen to 1.9 billion yen," President Norio Ichikawa told reporters.
"'Explosive buying' has gone back to normal," he added, referring to buying sprees by Chinese tourists in Japan.
Zojirushi's earnings had grown in step with foreign visitors. Sales surged from 62.9 billion yen in fiscal 2012 to 89.7 billion yen in fiscal 2015. But this rise halted and then reversed as China's economic slowdown and a hike in import duties brought an end to the "explosive buying" phenomenon.
Zojirushi posted a record-high pretax profit this fiscal year, thanks partly to lower costs stemming from a stronger yen. But it forecasts a 17% drop in fiscal 2017 amid mounting depreciation costs from computer system upgrades.
The company is aiming for growth at a more reasonable pace that does not rely on foreign tourism. Overseas markets are to serve as the foundation.
Zojirushi plans to spend about 2.6 billion yen next year to boost a Thai affiliate's production capacity for stainless steel vacuum bottles by 20% to 18 million a year. "Vacuum bottles can be used in any country or region regardless of standards for electrical outlets," Ichikawa said. "They're well-suited for cultivating overseas markets."
Zojirushi products often cost more than equivalents from local manufacturers. The company aims to create more opportunities to show consumers that its offerings are worth the price, targeting Southeast Asia's burgeoning middle class. Events will be held at department stores and other venues to demonstrate how to use its rice cookers and let customers sample freshly made rice.
Demand for kitchen appliances is expected to rise in emerging markets as living standards improve. Ichikawa said he expects continued growth in Southeast Asian countries such as Vietnam, as well as in China.
Overseas operations accounted for 30.9% of Zojirushi's overall sales in fiscal 2016. Raising this figure will be crucial for the company to break out of stagnation.