Toilet maker Toto to close factories in Shanghai and Beijing

According to the maintenance bulletin...

TOTO, a large Japanese manufacturer of toilets, toilet seats and sanitary products, has announced that due to the slump in China's real estate market, coupled with extremely fierce price competition in the market, Toto's profitability is in difficulty. As a result, the company will close two of its ceramic sanitary ware production bases located in Shanghai and Beijing, resulting in the loss of jobs for thousands of workers.

An employee at TOTO's Shanghai production base said he had worked in the factory for 20 years, and now he is unemployed again, and will try to find a job tomorrow, he revealed the compensation N+9.

Toto President Noboru Tamura also said the company would concentrate production at its factories in Zhangzhou, Fujian province, and Dalian, Liaoning province, and that its overall production capacity on the mainland would probably be cut by 40 percent.

The report also argued that the recent downturn in mainland China's housing market has led to a sharp decline in sales of ceramic sanitary ware, and that due to increased competition from local Chinese companies, Toto needs to adjust its business structure in mainland China to "stop the bleeding."

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引用元　https://hosyusokuhou.jp/archives/48973049.html

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Everyone's comments

• There is no demand for toilets other than when buildings are built or renovated. If building construction stops, the market will generally disappear.
• Because it will be destroyed.
• Let's pull it up quickly.
• You're anti-Japanese, right? The hated Japanese companies are withdrawing, so throw your hands up in celebration lol
• People who poop on the street don't need toilet seats‼ ️🤣🤣🤣
• China is a developed country, right? It's an economic superpower where you can charge your smartphone for free anywhere, right? Even if you lose your job, the world-famous Communist government will take care of you, right? So don't leave China.
• Was the toilet too early for people who poop on the street instead of in the toilet?
• Before they can withdraw, the Chinese Communist Party will have to steal all of their technology, so it will be difficult to cut their losses, but I think it's a wise decision.
• Great! I hope other companies follow suit!
• China has no value to begin with. They were just using it. Idiots get cocky easily.
• So you're going to retreat?
• There is no concept of toilet in China. TOTO's decision is correct. Don't do pointless things.
• Will many Japanese companies follow suit?
• It's a miracle that it lasted for 20 years. They could have withdrawn sooner.
• Chinese people don't need toilets.
• Didn't the construction company default on their accounts receivable? The condominium bubble collapsed.
• I heard that even if they can make the plastic and mechanical parts, the craftsman who does the final check of the toilet must be Japanese... It's truly a master craftsman's skill.
• It's good that they finally realized this, but the people who learned the technology and the suppliers are still here. I guess it just left a "disaster" in countries where patent rights don't apply.
• He was still there... It was late but a wise decision
• The management made a wise decision.
• Eh, you just noticed that now?
• Everyone should leave China now
• People relieve themselves on the side of the road where there aren't even any holes to begin with, so when the economy is in a recession, they're no longer willing to spend money on toilets.
• There was nothing attractive about China other than the low labor costs. It was so cheap that people started using it. If it gets more expensive, it's inevitable that people will stop using it.
• I guess they withdrew because they were making a lot of cheap toilets that were a Chinese knockoff.
• They were mass-produced riding on the housing bubble, but after the bubble ended and houses stopped being built, they had to close down unnecessary factories. They are super high quality toilets though...

JapanNewsNavi Editorial Department A's Opinion

Toto's closure of its China factory marks a turning point for Japanese companies

When I saw the news that TOTO was closing its factories in Shanghai and Beijing, I thought to myself, "This time has finally come." The slowdown of the Chinese economy has been pointed out for some time, but I think that this latest move by a major Japanese company to directly withdraw is a symbolic event. In particular, the fact that the sluggish housing market is cited as the reason for this shows the seriousness of the current Chinese economy.

TOTO's decision was not just a temporary downsizing due to a decline in profits, but a major choice that will affect the direction of the entire business in the future. As the president clearly stated, consolidating production bases in Fujian Province and Dalian and reducing production capacity in mainland China by about 40% is not something that can be dismissed as simple restructuring. I feel that this is close to a "strategic withdrawal."

The reality of a shrinking market and price competition

Backed by its status as the "world's factory," many foreign companies have been operating in China and utilizing the local workforce to produce their products. TOTO is one such company, and with the boom in housing construction in China, demand for sanitary ware also grew rapidly, making it a time when operating a factory there made sense.

However, the Chinese market has changed dramatically in recent years. In addition to the slowdown in the domestic economy, the collapse of the real estate bubble, soaring material prices, and a cooling of consumer sentiment have all combined to cause a decline in construction demand. Furthermore, in the midst of fierce price competition with local companies, it seems that quality and brand alone are not enough to cover the costs. In this situation, TOTO probably decided that "there is nothing to be gained by staying here any longer."

Even on the Chinese Internet, there are voices saying things like "Is China worthless anymore?" and "The economy is so bad," which shows the anxiety that local people themselves have about their domestic economy. I was heartbroken to hear a worker who had worked for Toto for 20 years lament his sudden loss of his job, but the reality of capitalism is that tough decisions are required for a company to survive.

The need for structural transformation faced by Japanese companies

I think that TOTO's recent move is a major hint for other Japanese companies. For a long time, the business model of "going to China in search of cheap labor" has been successful, but it will no longer be the same. With China no longer a "cost-advantage" country, Japanese companies are being asked seriously about where to take their next move.

Furthermore, political risks cannot be ignored. With the intensification of the US-China conflict, the strengthening of regulations on foreign companies, and legal uncertainty, it is becoming increasingly difficult for Japanese companies to do business in China. TOTO's decision can be seen as part of an "exit strategy" that took into account these external factors.

I believe that the time has come to consider returning manufacturing to Japan and shifting to stable emerging countries such as those in Southeast Asia. Rather than simply moving production bases to cheap locations, we should deepen our relationships with countries that we can trust politically and with which we can build long-term partnerships.

Ready to face the future of employment and human resources

I was impressed by the comment made by an employee who had worked at the TOTO Shanghai factory for 20 years, who said, "I'm unemployed again." Even if the company's decision is correct, we must not forget that there were people who had been living there.

The most important thing for a company is not only the trust with its customers, but also with its employees. That is why I think that TOTO's "N+9" compensation system shows the company's sincerity. Even if firing employees seems cruel, the extent to which the company can maintain human consideration in the process determines the company's dignity.

It is expected that such severe business restructuring will become more common in Japan as well. What should companies protect when such restructuring occurs? We are now in an era where companies are being asked not only about profits, but also how to utilize their human resources, which are their greatest asset.

Where should Japanese companies go from here?

Finally, I do not think that TOTO's decision this time was a case of "running away". Rather, I think that it was the right withdrawal, taking a calm look at the track record they have built up so far and looking to the future. Rather than forcing themselves to stick to their local area, moving forward to the next strategy without fearing change is the way to increase the sustainability of a company.

In the future, for Japanese companies to survive, it will be increasingly important to have not only brand power and technological strength, but also a strategic perspective on "where, with whom, and how to interact." I believe that the TOTO case can serve as a model case and a lesson for the future.

Written by: Editorial Department A