Benjamin Browning
The history of the Aiwa company is somewhat vague. In June 1951, Love Xing founded AIKO Denki Sangyo Co., Ltd. with a specialization in the development and production of microphones. In June 1958, the company issued shares and distributed them to an over-the-counter network of securities dealers. In October, the company changes its name and becomes Aiwa Co., Ltd. The company’s new plant in Utsunomiya opens next year. In October 1961, the company placed shares of this enterprise on the second section of the Tokyo Stock Exchange.
An important moment in the history of Aiwa Co., Ltd. is 1964. In February of this year, the company released Japan’s first cassette recorder, the TP-707. Cassette recorders, players and decks became the company’s main products until the late 1970s. In February 1967, the new Aiwa plant in Iwate opens. And two years later (in 1969), another Japanese company Sony acquired a controlling stake in Aiwa Co., Ltd. After this, Aiwa becomes a subsidiary of Sony Corporation. But despite this, Aiwa continued to operate as an independent company and its shares continued to be traded on the Tokyo Stock Exchange.
The first tape recorder Aiwa TP-707 (1969)
In the 1970s Aiwa enters the international market. At the end of 1970, the company created a joint venture, Aiwa/Dransfield & Co., Ltd., in Hong Kong. After this, Aiwa’s target becomes the Middle East. In 1973, another Aiwa joint venture was created called Aiwa Sales & Service Co., located in Lebanon. This step was timely and far-sighted, since the oil crisis that began in the 1970s led to a recession in the economies of Europe and the United States, and the market in the Middle East began to rise. By the mid-1970s, about 30% of the tape recorder market in the Middle East was occupied by Aiwa products. The company’s development in the foreign arena continued with the opening of a new Aiwa plant in Singapore in 1974. And the following year, the company’s second plant was opened in Utsunomiya, called Northern (the previous plant was accordingly named Southern). Shares of this plant were placed on the first section of the Tokyo Stock Exchange.
Aiwa – 1970 Catalog
However, by the end of the 1970s. With increasing political instability in the Middle East, the attractiveness of this market began to decline and Aiwa decided to expand its presence in the markets of Europe and North America. From 1976 to 1979 Aiwa Co., Ltd. establishes its subsidiaries in the UK, Germany and the United States. By 1980, the share of exports to Europe and the USA increased to 65% of the total volume of exported products (at the beginning of 1970, exports in this direction were about 50%). In the second half of the 1970s, Aiwa significantly expanded its product line to include monoblock music centers with stereo systems that combine a radio, tape recorder, electric phone, amplifier and speakers, small in size, while maintaining high sound quality and power; The company is also beginning to install small digital displays in its equipment. For fiscal year 1979, Aiwa Co., Ltd. received a net profit of 244 million yen ($1 million), sales income amounted to 38.5 billion yen ($157.8 million). In the mid-1980s, Aiwa put up for sale the most modern tape recorder by the standards of that time, the TP-S30, which was a compact portable single-cassette player-dictaphone. To successfully promote new products in Europe and the USA, Aiwa decides to transfer part of its production to these regions. The first stage was the opening of the company’s plant in South Wales (UK) in September 1980.
Aiwa – 1970 Catalog
Aiwa began 1981 by entering the Japanese VCR market. But, unfortunately, the company used the Sony Betamax video cassette format in its technology. It is not entirely clear why Aiwa chose this format, since it lost out to the VHS format a year ago. By the mid-1980s, Aiwa began to experience compounding difficulties due to strong competition in all industries in the Japanese domestic market, and the rising yen exchange rate at the same time led to higher export prices. For the 1986 fiscal year ending in November, the company posted a loss of ¥5.17 billion on revenue of ¥54.7 billion, forcing Aiwa to stop paying dividends to shareholders for the first time in 14 years. Aiwa Co., Ltd. was on the verge of bankruptcy. The company was looking for new sources of income, but the innovative format of Digital audio tape (DAT) systems, launched after a long development in March 1987, turned out to be untenable. DAT was seen as an alternative and even a threat to the CD format, since in addition to high sound quality, it also provided the possibility of simple recording onto a medium. But DAT technology did not catch on.
Aiwa – 1970 Catalog
To overcome the current situation in the company, Sony Corporation appointed a new vice president of Aiwa Co., Ltd. Hajime Yunoki. Yunoki began restructuring the company. To achieve annual savings of 2 billion yen, Aiwa reduced its workforce from 3,100 people (1985) to 1,300 (1988), mainly by sending employees into retirement. The company also concentrated all its offices located in different areas of Tokyo into a single headquarters. The next step was the consolidation of the three Aiwa plants in Japan, and the Utsunomiya South plant was converted into a technical center in early 1989. However, the most important step for Aiwa Co., Ltd. began the transfer of most production outside Japan, which protected income from the influence of the yen exchange rate. The main expansion of production took place in South Wales and Singapore. In March 1989, a production line for the production of CD discs was launched in Wales. Two new plants were opened in Singapore: Jurong West (opened in February 1987) and Jurong South (opened in September 1988). These steps, together with a number of other decisions, allowed about 50% of the company’s total production to be transferred outside Japan, and after the opening of a plant in Johor Bahru (Malaysia) in the early 1990s, this figure increased to 80% and is currently the highest in history for the Japanese audio and video industry. Aiwa returned to profit and resumed paying dividends. The methods used by the company to reduce costs, reduce wages, and relocate production became the subject of imitation in the electrical industry of the Japanese economy. Much of the credit for the development of the company belonged to Hajime Yunoki, who was appointed president of Aiwa Co., Ltd. at the end of 1989.
Cassette deck Aiwa XK-S9000 (1991)
In the early 1990s, Aiwa continued to expand its product line. In mid-1993, Aiwa Co., Ltd gained control of Core International, Inc., one of the computer peripheral manufacturers in the United States. In addition, the company was successful in launching a line of combo televisions (TV-VCRs) onto the video equipment market, in which, in addition to VCRs, a number of models were equipped with satellite tuners and bilingual receivers. Although the pioneer in this area was Matsushita Electric Industrial Co., which introduced the first such product in 1983, Aiwa managed to capture the majority of the market share with its large lineup of combo TVs. In April 1994, Tokyo Business Today published an article about Aiwa’s market strategy: The secret of Aiwa’s success lies not so much in creating new technologies, but rather in improving existing products and moving them into a new price range that will satisfy the demands of today’s willing consumers. This approach stands in stark contrast to other manufacturers such as Sony, which have always stuck to the high price segments of the market, avoiding low cost and hype to build brand prestige.
Music center Aiwa D-10 (1987)
While numerous companies struggled to survive during Japan’s long economic downturn in the early 1990s, Aiwa remained profitable until the end of the decade. The company continued the trend of moving production outside of Japan and by the end of the decade, 90% of all production facilities were dispersed in other countries. The expansion of production occurred through the expansion of plants in Malaysia (in 1994) and South Wales (in 1995). The next step in Aiwa’s development was the opening of two subsidiaries in Indonesia: PT Aiwa Indonesia (in 1996) and PT Aiwa Dharmala (in 1997). By the late 1990s, Aiwa employed more Indonesians than Japanese. Given this fact, company president Hajime Yunoki gave an interview to Claire Leo of the Business Times, where he spoke about the changes in the company that occurred during his leadership: I don’t think that Aiwa will ever be a Japanese company. After all, the volume of foreign production in the branches is approaching 90%, 70-85% of sales occur outside of Japan and in the total employment of the company, 75% of the employees are not Japanese… The company should not belong to any country. She must earn money. Shareholders invest their money and expect a return in the form of dividends. Aiwa shareholders have indeed been rewarded, with returns on equity from 1994 to 1998 ranging between 11.7% and 20.9%.
Music center Aiwa NSX-430 (1996)
Aiwa entered the new millennium with success. The company’s most successful products were musical centers with various configurations. During the 1990s, they included a variety of amplifiers, tuners, CD players, and cassette decks. Aiwa was the global market leader in this category, capturing a 30 percent share; in the United States, the share of Aiwa products reached 50%. Although the audio sector was the most successful for the company, Aiwa management realized that in the long term this sector would not be able to ensure constant growth. There was a need for new products. New developments in the 1990s for the company included a line of modems, terminal adapters, 14- and 21-inch compact portable televisions, digital tuners for receiving satellite signals and minidiscs (MD). Aiwa’s tactics of low pricing and the widest possible functionality continued to apply to these products. For example, on almost all manufactured equipment, AV input connectors were installed on the front end. In 1995, Aiwa entered the nascent (in 1992) minidisc (MD) market, producing both optical media and portable MD players, and also added support for MD disks to existing music centers and equipped existing audio systems with MD drives. portable cassette radios.
In the mid-1990s, Aiwa ignored the “digital revolution” and continued to produce traditional equipment, not paying attention to modern technologies – DVD and the Internet. As a result, in 1999-2002, Aiwa suffered more than $500 million in losses. In January 2001, the company tried to recover from the crisis. The post of president of the company was taken by Masayoshi Morimoto, nominated to this post by the Sony corporation, which increased its share in the crisis enterprise from 61% to 100% (Sony became the main shareholder of Aiwa in 1969). He cut Aiwa’s workforce in half, closed all Japanese factories, and transferred production orders to China. In 2002, a new way to cut costs was discovered. Aiwa representative offices were closed, and the equipment began to be distributed through the Sony sales network. The parent company’s network is wider, and Aiwa’s sales seemed set to increase. However, this did not happen. Analysts consider the transfer of sales of the budget brand to Sony distributors a mistake. The company’s main brand unites too many product groups. Sony managers are unlikely to care about promoting a budget brand. In addition, Sony has not invested in marketing support for Aiwa for a long time, and without it it is impossible to resist Korean competitors Samsung and LG. Now Sony has decided to cut costs in the most radical way – completely remove Aiwa from secondary markets.
