Japanese camera makers shift focus in China as demand falls

With more shares taken up by phones, companies look elsewhere for growth

Japanese camera makers have accelerated steps to shift their focus to medical equipment, commercial printing, semiconductors and other emerging segments due to shrinking demand for miniature digital cameras and impact from the COVID-19 pandemic.

The popularity of smartphones with built-in cameras has eaten into the market share of traditional camera manufacturers, experts said. Japan's Camera and Imaging Products Association said shipments of digital cameras reached 8.89 million units in 2020, down 41.6 percent on a yearly basis.

Japanese tech giant Canon Inc recently said it plans to shut down some of its production lines in Zhuhai, Guangdong province, which mainly produce compact digital cameras.

An announcement with the official seal of Canon Zhuhai Co Ltd circulated on the internet, saying it had decided to reduce the company's production due to the sharp decline in the global camera market in recent years along with the impact of COVID-19.

Founded in 1990, the Zhuhai plant produced 12.29 million units of lenses, 1.03 million units of digital cameras and 94,000 units of video cameras in 2020, the company said. With smartphones becoming popular, the global digital camera market has shrunk dramatically in recent years. Canon is not the first Japanese company to close its camera factory in China.

In 2017, Japanese image and video equipment company Nikon Corp shut down its digital camera factory in Wuxi, Jiangsu province. Olympus suspended operations at its Shenzhen factory in 2018, which mainly produced digital cameras and lenses.

Canon has been seeking new business growth points and stepped up efforts to expand into digital printing, video surveillance and the medical equipment sector in China.

It announced in 2016 that it had bought Toshiba Corp's medical equipment unit for nearly $6 billion to enter the high-margin medical devices sector. It also made a $2.83 billion cash bid to acquire Swedish network video solutions provider Axis Communications AB in 2015 to expand into video surveillance.

Canon sees huge development opportunities in the medical equipment market under the guidance of the Healthy China 2030 Initiative, which aims to boost the market for healthcare services to 16 trillion yuan ($2.52 trillion) by 2030.

Zhang Jianfeng, deputy secretary-general of China Household Electrical Appliances Association, said Canon's imaging business is mainly focused on the interchangeable lens digital camera and webcam, and it has ceased the low-end business to reduce costs. The company intends to switch its camera production lines to Southeast Asian countries, he added.

Howard Ozawa, president and CEO of Canon China, said in an earlier interview the company is banking on the business-to-business or B2B segment and will continue to increase its investment in the Chinese market.

Canon is also actively seeking change as the company is expanding its B2B business through cooperation with many Chinese companies. This will provide a huge boost to the company's global business and revenue, he said.

Nikon has tapped into the imaging, semiconductors, medical diagnosis and industrial equipment segment. It acquired majority ownership of Morf3D, which is mainly engaged in 3D printing, as part of its drive for the industrialization of digital manufacturing in 2021.

Olympus said it will ramp up efforts in China's medical field such as related research and development and high-end manufacturing. The company will tap the huge local demand for medical equipment, including endoscopes, microscopes, and solutions for minimally invasive surgeries.

"Compact digital cameras have been replaced by smartphones, while the demand for single-lens reflex cameras is not rigid. So the era of medium and low-end camera products has come to an end," said Liang Zhenpeng, a consumer electronics analyst.

Liang said it was an inevitable trend that the camera market was shrinking and camera makers had to seek new growth points, expand product chains and move towards diversified portfolios.