Fujitsu says China share of sales to triple

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June 27, 2008

Fujitsu says China share of sales to triple

BEIJING, June 26 (Reuters) - Japan's electronics group Fujitsu Ltd said on Thursday it is expecting China sales to triple as a portion of its global business within the next five years as its marketing focus shifts.

"China makes up three percent of our total sales now," Chairman Takashi Igarashi, Fujitsu (China) Co., told Reuters in an interview.

"We have a goal of making that 10 percent within the next five years," he said.

Fujitsu's sales in China have been growing at around 30 percent annually in recent years, compared to the 1.1 percent decline in global sales in its most recent quarter.

An important focus for that growth will be its technology solutions unit, which designs systems platforms for clients but only makes up a quarter of its business in China.

However, the unit contributes almost 60 percent of global sales, said Igarashi.

"There is a great deal of room to grow in the technology solutions area," he said.

Three quarters of Fujitsu's business in China comes from sales of hard disk drives, mobile phones, computers, logic chips and other electronic components.

In addition, the company will turn its focus toward Chinese clients such as China Mobile, the world's largest wireless carrier, in the future as mainland companies look to improve their IT systems, he said.

"China Mobile is an example of our future business focus," he said.

China announced last month the world's biggest industrial overhaul, a reorganisation of its telecoms industry that is hoped would open the door for its telecoms operators to foreign capital, technical expertise and marketing skills.

Fujitsu's consulting and outsourcing business has been lucrative, but has not yet been able to keep up with price falls in its loss-making chip and hard drive operations.

The firm had forecast earlier that its hard drive and chip operations will swing to a profit this fiscal year from a loss of several billion yen in the year ended March 31.

Igarashi said the company was aiming to build a data centre in China in the next two years at a cost of up to $93 million, but would need to first find a local partner as Chinese law does not allow foreign companies to own 100 percent of a data centre.

The company has only limited manufacturing facilities in China -- a printer factory and microchip packaging facility -- and has no immediate plans to expand that manufacturing presence to lower costs, he said.
Fujitsu reported last month a 40 percent fall in quarterly profit, hurt by restructuring in its microchip operations, but forecast annual profit would more than double this year to $967.3 million on its IT outsourcing operations.

Fujitsu, which competes with International Business Machines Corp and Electronic Data Systems Corp in IT services, is aiming to grow its consulting business overseas.

Shares of Fujitsu hit a three-year low in March after a system glitch at client Tokyo Stock Exchange dented confidence in Fujitsu's systems.

By Kirby Chien - Reuters, Thursday June 26 2008

($=6.87 yuan=107.7 yen) (Additional reporting by Michael Wei and Chen Min; editing by Elaine Hardcastle).

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