"Toshiba, Toshiba, the Toshiba of the new era!" In the 1980s, this advertising slogan was once popular all over the country.

Since its founding in 1875, Toshiba has been a business card of Japanese industrial manufacturing. Japan's first electric fan, washing machine, refrigerator, radar, transistor, light bulb and other products, as well as the world's first portable computer, HD/DVD player, first NAND memory card, and first naked-eye 3D TV, are all produced by Toshiba.

It can be said that Toshiba has led the technological trend in Japan and the world.

Over the course of more than 140 years of development, Toshiba has built a business empire spanning home appliances, electrical appliances, semiconductors, energy, and infrastructure. In its heyday, Toshiba was one of the top five semiconductor manufacturers in the world, the top three medical device manufacturers in the world, the second largest comprehensive motor manufacturer in Japan, and one of 

the four major nuclear energy manufacturers in Japan. It ranked among the Fortune Global 500 in 2019. Ranked 371st.

However, Toshiba recently announced that the 2 trillion yen tender offer led by the private equity fund "Japan Industrial Partners (JIP)" has been successful. More than half of the shareholders participated in the acquisition, reaching the threshold for privatizing the company. Upon completion of the transaction, Toshiba Corporation will be officially delisted from the Tokyo Stock Exchange.

From leading global trends in the past and standing at the pinnacle of Japanese manufacturing to today's delisting, what kind of ups and downs has Toshiba had in the past century?

1. A successful transformation

At first, Toshiba was just an inconspicuous watch shop on the roadside. Its owner Tanaka Hisashige was like Dr. Agasa in "Detective Conan". In addition to doing manual work such as repairing clocks, he also made some small inventions to sell.

In 1880, with the acceleration of the Meiji Restoration Movement in Japan, opportunities were everywhere in Japan at that time. 76-year-old Tanaka Hisashige also expanded his watch store into the Tanaka Manufacturing Factory. Later, due to operating difficulties, the Tanaka Manufacturing Co., Ltd. was acquired by the Mitsui Zaibatsu and renamed "Shibaura Manufacturing Co., Ltd."

It was also during this period that Fujioka Ichisuke, who had learned how to make incandescent lamps from Edison, founded "Shirahese" in Tokyo and successfully invented Japan's first incandescent light bulb, which became an instant hit. Later it was renamed "Tokyo Electric".

In 1939, due to Japan's war of aggression against China, which required a large amount of military supplies, Tokyo Electric and Shibaura Manufacturing merged to form Tokyo Shibaura Electric Co., Ltd., which was also the predecessor of Toshiba. At this time, although Toshiba was manufacturing home appliances, its main products were still mainly military supplies. Before the end of World War II, Toshiba had 90 factories and more than 100,000 employees.

Success also comes with military resources, and failure also comes with military resources. After Japan's defeat in World War II, Toshiba's operations also suffered heavy losses. In pursuit of transformation and development, Toshiba set its sights on household appliances and generators. This transformation laid the foundation for Toshiba's subsequent growth.

In 1955, Japan's economy returned to pre-war levels and began a period of rapid growth that lasted nearly 20 years, during which Japan's average GDP growth rate was as high as 9.8%. While economic development has driven Japan's urbanization rate and residents' income growth, it has also driven the consumption of white home appliances represented by refrigerators and washing machines.

In addition to seizing the trend of the times, Toshiba's emphasis on product innovation and stringent quality requirements have allowed Toshiba's product sales to continue to increase, and it has also allowed Toshiba to gain a firm foothold in the market.

For example, Toshiba launched the world's first notebook computer in 1985. In 1991, it brought notebook computers into the color era. In 1993, it launched the first notebook computer using lithium batteries. Its forward-looking product design made Toshiba computers a leader in the 1990s. It has won the sales crown in the global notebook market for seven consecutive years.

The timely launch of the globalization strategy also further consolidated Toshiba's product leadership position. When Toshiba launched its globalization strategy in 1982, because many countries were just starting to industrialize, Toshiba encountered few competitors when promoting its products in these countries. A typical example is Toshiba notebook computers. This business entered the Chinese market in 1995, but at that time, the Chinese computer market had not yet formed scale and industrialization. Toshiba relied on Digital my country's exclusive agent promotion, which also allowed it to remain stable in the following four years. Ranking first in computer sales in my country.

However, Toshiba's rapid expansion has caused the company's internal management to seriously fail to keep up, and has also laid hidden dangers for Toshiba's subsequent development.

From an organizational structure perspective, a highly centralized organizational structure results in a lengthy decision-making chain, which will inevitably lead to a slow response to the end market.

Not only that, in this organizational structure, subordinates must be absolutely obedient to their superiors. This will not only cause dissatisfaction among employees, but also affect the speed of product innovation, eventually making this century-old company gradually become sluggish and outdated.

2. Serious losses due to internal and external troubles

Since the 1990s, Toshiba's transformation has mainly focused on energy and infrastructure, community solutions, medical care, electronic equipment and other businesses. However, it should be pointed out that these businesses are typical technology-fund-driven industries and require extremely high financial capabilities of enterprises.

After entering this century, with the rapid advancement of global science and technology and the intensification of market competition in various industries, if Toshiba wants to gain a foothold in these businesses, in addition to investing a large amount of R&D funds every year, it must also supplement its own position in certain areas through acquisitions. Some technical shortcomings.

When Toshiba acquired Westinghouse, an American nuclear power technology company, in 2006, it was rumored that the price Westinghouse would accept was US$1.8 billion. However, due to competition from companies such as General Electric of the United States and Mitsubishi of Japan, the acquisition was finally completed at a premium of US$5.4 billion, three times the price.

Toshiba pointed out in its announcement that year that there was a $2.9 billion difference between the acquisition price and the fair value of Westinghouse's business assets, which was recorded as goodwill in Toshiba's consolidated balance sheet. At the same time, Toshiba also stated: "The forecast results of Toshiba's financial condition have deteriorated significantly, which will change Toshiba's financing environment, including a downgrade of the rating." Therefore, Toshiba has conducted a review on the fair value of its nuclear business assets and debt (excluding goodwill). Re-evaluate.

It should be noted that the nuclear power field, which Toshiba invested heavily in, was facing a huge challenge at that time - the prospects for commercialization of nuclear power were unclear. Even today, the nuclear power industry still faces the characteristics of huge construction investment and high depreciation costs.

To make matters worse, the Fukushima nuclear power plant leak occurred in Japan in 2010. Affected by this, Toshiba also encountered orders from global customers.

At the same time, the huge losses caused by Westinghouse Electric in 2016 caused Toshiba's goodwill impairment to reach 6.1 billion yuan. That year, Toshiba's debt was as high as 552.9 billion yen.

The home appliance business, which Toshiba was once proud of, has also encountered a lot of trouble due to the intensified competition among brands since the beginning of this century.

Still taking Toshiba's PC business mentioned above as an example, after 2001, many computer brands including Lenovo, IBM, HP, Samsung, etc. emerged in my country's computer market. The shortcomings of Toshiba's PC business model that relied solely on agent promotion became increasingly prominent. In 2006, Toshiba's computer market share in my country had dropped to less than 5%.

In 2004, the newly appointed head of Toshiba's PC department, Atsushi Nishida, made Toshiba's computer business improve by shutting down factories, reorganizing production capacity, and extending agency rights to Digital China, Hanlinhui and Jiajie Technology. But after entering 2011, the number of personal PCs owned in my country increased rapidly, and the market soon reached saturation.

Take 2017 as an example. This year, Toshiba computer notebook sales plummeted to 1.4 million units, with a market share of less than 1%. According to the 2017 fiscal year report released by Toshiba, Toshiba's PC business unit sales that year were 146.68 billion yen, a year-on-year decrease of 11.1%, and the net loss reached 8.21 billion yen.

In addition to external troubles, Toshiba also has more serious internal worries. In 2015, Toshiba was exposed to have committed financial fraud for seven years from fiscal year 2008 to fiscal year 2014, involving Toshiba's four major business departments, and falsely reporting profits as high as 156.2 billion yen.

Among them, by using the completion percentage method to postpone the provision of losses; using the carry-forward mechanism to exaggerate current profits; manipulating inventory valuation to increase accounting profits, etc., the TV business and lifestyle products division inflated profits by 5.8 billion yen, PC The business department inflated profits by 3 billion yen, and mishandled parts transactions and inflated pre-tax profits by 59.1 billion yen.

As this incident continued to unfold, Toshiba's market value plummeted from 1.88 trillion yen in 2015 to 1.1 trillion yen at the end of 2016, a drop of nearly 40%. At the same time, consumers also have a crisis of trust in Toshiba's products, which in turn leads to a continued decline in Toshiba product sales.

Taking the TV business as an example, Toshiba TV has shut down overseas factories on a large scale, initiated large-scale layoffs, and sold trademark rights in Europe and Southeast Asia. According to Toshiba's 2016 fiscal year financial report, the company's TVS revenue and net profit were 2.702 billion yuan and 568 million yuan respectively. This figure has shrunk significantly compared to the annual sales of tens of millions during the period of disruption in Toshiba's TV business.

Disasters often come together. The above-mentioned problems have not been properly resolved, and Toshiba has begun to fall into equity infighting within the company. In 2022, Toshiba outside director Mariko Wataki pointed the finger at her colleague Raymond Zage, saying that Zage broke with the board's position in March and instead supported a shareholder proposal that the company seek a takeover offer from private equity firms.

This not only triggered external concerns about Toshiba's internal governance rights, but also aggravated Toshiba's internal friction.

3. Crazy sales, can Toshiba be saved?

Faced with huge losses, Toshiba has been selling a large number of its non-core assets since 2016.

In 2016, Toshiba sold 80.1% of its home appliance business subsidiary to Midea for 51.4 billion yen (approximately 3.32 billion yuan). In the same year, Toshiba sold its medical equipment business to Canon for 665.5 billion yen (about 40 billion yuan).

In 2017, Toshiba sold Westinghouse Electric to Canadian PE Brookfield for US$4.6 billion. This price represented a loss of US$800 million compared with the purchase price ten years ago. In 2018, Toshiba accelerated the pace of selling off assets, first selling its TV business to Hisense for US$12.9 billion, and then selling its PC business to Sharp for US$4 billion.

Toshiba's decline occurred in the context of "the fading halo of Japan's manufacturing industry." Toshiba's semiconductor, home appliance, nuclear power and other businesses actually have very good technologies. However, with the development of the entire industry wave, the advantages in these fields are no longer significant, and they have even been overtaken.

At present, Toshiba's only remaining businesses include nuclear power, hydropower, urban water supply, sewage treatment, high-speed rail, power chips, communication chips, hard drives, etc., and the overall profitability of these businesses is weak.

This has caused Toshiba's performance to fall again and again. In the third quarter of fiscal year 2022, the company's operating profit fell 87.5% to 5.3 billion yen, which was far lower than expected. Therefore, it is still debatable whether Toshiba's privatization can be a life-saving straw for Toshiba.

In fact, it is not just Toshiba. Many companies in our country are similar to Toshiba. After seizing the dividends given by the times and rapidly developing and growing, they often pursue diversified business of the group. However, due to the rapidly changing market environment and the continued advancement of policy adjustments, the diversification of many companies has not only failed to bring about growth in revenue and profits, but has also dragged down the development of the entire group due to continued losses.

Therefore, Chinese companies still need to think twice when pursuing diversified businesses, especially asset-heavy businesses.

The wheel of history rolls forward, and the pace of the times never stops. There is no constant strength or constant weakness. Now that Toshiba is about to delist, the story of tortuous development will become a sad case again.

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