When the Athens Olympic champion stepped into a swimming-lane-like blue path in the Beijing Sony Gallery on October 28, he was welcomed by wild and enthusiastic cries from Chinese fans.

Ian Thorpe, the Australian swimming Gold medallist, who is believed to represent a perfect combination of human aspirations and achievements, was hired as Sony's pitchman for the Cyber-Shot digital and Handycam digital video cameras and WEGA TV sets.

The Beijing trip was only one stop of the Thorpedo's and Sony's Chinese roadshow.

Similar to Thorpe, the Japanese electronics giant also has high aspirations for its Chinese expansion plans and hiring the Olympic hero was just a step for Sony to try to achieve its goals.

Sony is like many Japanese companies targetting the world's most populous nation, and perhaps the one with the most potential in the personal electronics market.

Great expectations

Sony entered the market here a quarter century ago.

Jun Chizawa, vice-president of Sony China, said that present opportunities China offers test his company's reaction to the market demands. Sony is developing its business in China with a more balanced and comprehensive approach.

The electronics giant's sales in China grew by 70 per cent last year to US$1.7 billion in its last fiscal year ending on March 31 and the production output reached US$3.5 billion.

Chizawa said his company's business rose by 80 per cent over this year over the previous one.

Although there is still a gap for Sony China to achieve sales of US$5 billion as planned for 2005, the Sony executive said it will maintain its previous aims.

Sony's long-term goals call for sales in China to amount to US$8 billion by the end of 2008.

Chizawa believes that with the increase in income levels of the Chinese people, the development of more regional markets, and the country's economic growth, Sony can grasp opportunities and realize its goals.

For another Japanese big name NEC, which has a history in China as long as Sony, telecommunications has become a top priority.

Lu Lei, president of NEC Telecommunication China, is very confident in the growth of the Chinese market and the future of his company.

"We want to make NEC the most innovative and respected brand in mobile solutions in China in three years," said Lu.

Although China and Japan use two different second-generation mobile communications systems and their phones are different, Lu believes his company's some 40 years of radio and mobile communications will help NEC Telecom China win customers.

Last year, his company sold about one million handsets in the Chinese market and the aim for this year will be two to three million units.

The third generation (3G) mobile communications system will become another golden opportunity for NEC Telecom, which claims to be the biggest player in the major 3G standard wideband code division multiple access (WCDMA) equipment market with about one-third of the shares in the world.

As it is widely believed that China may release 3G licences next year, NEC Telecom will use every means to win in the competition, Lu said.

It has set up a 3G demonstration centre in Guangzhou to show off its technologies and products to Chinese telecom carriers.

NEC Telecom China also participated in the 3G field test organized by the Ministry of Information Industry in both equipment and handsets.

Besides Sony and NEC, along with many other Japanese firms, also have lofty goals and have placed additional resources in the Chinese market hoping for future growth.

Hitachi said in October that it aims to increase its sales over last year's US$4.5 billion to US$7 billion in 2006.

At the same time, it will invest US$1 billion in three years to realize the expansion goal.

Time to change

"It shows Japanese companies have begun to pay serious attention to the Chinese market," said Huang Yong, vice-president of the domestic market research house CCID Consulting CO Ltd and a senior information industry analyst.

It is believed by many Chinese analysts and ordinary people that most of Japanese firms only regard China as a manufacturing base for its cheap and rich labour resources and see China as a secondary market after their home market, as well as the United States and European markets.

At the same time, many of their competitors in the world have begun to focus on the Chinese market.

Although the South Korean giant Samsung Electronics set up its first production base in China in 1992, its sales in the market already grew to US$10 billion last year, and are expected to further increase to US$25 billion in 2010.

China also becomes Samsung's "second domestic market," many Samsung executives said.

The Dutch electronics giant Philips also sold US$7.5 billion worth of products and services last year here,and the market is expected to grow to US$10 billion in 2007.

Besides the phenomenal growth of their competitors, the huge potential of the Chinese consumer market has attracted the attention of Japanese firms.

CCID Consulting's Huang divides China's information industry into two parts: professional and consumer markets.

While the professional information industry sector in China only accounting for less than 5 per cent of the world's total, its consumer segment bears immense opportunities.

China has become the world's largest market in terms of handsets and TV sets, and the second largest personal computer market.

Huang pointed out that Japanese firms lag behind their American and European counterparts globally in professional services like second-generation mobile communications systems and information technology services, but they have strong competence in the consumer market, so China is a place that they can play to their strengths to full advantage.

Chizawa with Sony China also agreed that his company was not very aggressive in tapping the Chinese market before.

"Maybe we should make some changes," he said.

Huang with CCID Consulting suggested that besides giving high priority to the Chinese market, building a complete industrial chain from production to research and development, introduction of more products, localization of talents is a must.

He points out more aggressive marketing activities is also needed, either by themselves or through partnerships.

According to Chizawa, Sony has decided to invest US$200 million into the market this year.

The money will be mainly spent on augmenting the company's strengths in design and expanding its production facilities.

Sony's technology centre in Shanghai and its information system design centre in Dalian will work with production bases in East and Northeast China to design and create products for local markets.

The company also plans a similar design centre in Guangzhou to support production facilities in South China.

The US$200 million investment will mainly flow to Sony's production bases in Wuxi of East China's Jiangsu Province, Guangzhou and Huizhou of South China's Guangdong Province.

At the same time, NEC Telecom China is also making some revolutionary changes.

Lu Lei has led a restructuring of NEC's five telecommunications-related units and unified them into one organization.

The company also launched a brand image Get Personal to shorten the distance between the company's products and consumers.

It will release about 20 models, targeting five groups of people, in the second half of this year and set up 3,000 sales outlets in the country by early 2005.

Localization of research and talent is another major task for NEC Telecom China.

Lu said that from next year, the NEC phones sold in the Chinese market will be all developed in China.

However, CCID Consulting's Huang warned that although many Japanese companies have showed their attention and determination to expand their business in China, execution should get more attention.

He said a low degree of localization of talent may make Japanese firms unable to learn market demands quickly and respond to them, where a quick response is a crucial factor for the consumer electronics industry.

Centralized decision-making mechanisms in Japanese companies also require their Chinese operations to report often to headquarters before actions are taken, which is another area that needs improvement.