Sony is no longer an electronics company

 February 18, 2015

Sony announced last night that it's spinning off its audio and video divisions, much like it spun off its television division last year. That won't mean much right now; Sony still displayed interesting new Android-powered TVs at CES, and we're sure to see new crazy high-end Walkmans and camcorders with Sony branding from the newly independent AV division as well.

But the long-term reality is far more stark: after years of promising "One Sony," CEO Kaz Hirai appears to be systematically breaking the company up for sale. The VAIO PC division was sold last year and just announced its first hybrid laptops as an independent company, and Hirai told investors that he has to consider spinning off the smartphone business and possibly selling the TV business outright.

According to Hirai, that leaves Sony with three main businesses at its core :

Sony Pictures Entertainment, the hit-or-miss Hollywood studio that just fired Amy Pascal after being hacked to bits at the end of last year.

The PlayStation division, which has so far won the next-gen console race with the PS4 but yet to define a clear mobile strategy; PlayStation Mobile is all but ignored, and the Vita is a beautifully noble failure.

Selling image sensors to Apple for the iPhone.

You read that last one correctly: Sony's last closely held core electronics business is image sensors, and it's mostly because Apple uses them in the iPhone. (Sony also supplies sensors for various other high-end phones, but Samsung uses its own chips in the Galaxy S5, and no other company comes close to selling as many phones as Apple and Samsung.) If Apple decides to switch sensor suppliers — or, perhaps more likely, build its own — the third leg of that stool gets kicked right out.

If you're a PlayStation fan, this is kind of fun: after years of Sony neglecting gaming, former PlayStation head Hirai is ruthlessly eliminating every other division at the company. Revenge!

REVENGE!

For everyone else, this is kind of depressing — Sony was among the first great consumer electronics companies, and now it's falling apart because smartphones and software completely subsumed almost every device in its catalog. Sony's phones are generally excellent now, but haven't seen nearly the kind of traction Samsung's phones have seen. Sony also made the cardinal error of trying to foist garbage software and services on people. That error is slowly being corrected; most Sony devices now run basically clean versions of Android, and Sony just killed its in-house music streaming service in favor of Spotify. But it's too little, too late: the customers Sony needs have been buying Samsung products for too long now.

Brands Outlet the growth engine for Padini

SHAH ALAM: 

Apparel manufacturer Padini Holdings Bhd expects its Brands Outlet concept store to continue to be its growth driver given the lesser competition in the segment.

"Brands Outlet will have better growth prospects, that space is not so crowded," its executive director Chan Kwai Heng (pix) said in a recent interview with SunBiz.

He explained that with lesser competition in the local market, Brands Outlet is expected to register better growth in the future. Its direct competitors are Factory Outlet Store and The Reject Shop.

"If you look at Brands Outlet, it just looks like a pasar malam (night market)…I put in all merchandises whatever I want, the model is very flexible," he said, adding that the Brands Outlet is a reflection of how the company responds to the markets' needs.

However, Chan said the growth momentum for Padini Concept Store will not be as strong as Brands Outlet as it faces stiffer competition and is no longer "new" to customers.

"The Padini Concept Store has been here quite a long time, you can only drive the organic growth," he said.

Chan noted that the retail segment is fast changing, thus the group has to stay "relevant" in terms of pricing.

"The market doesn't stand and wait for you, you've got to move together with the market."

The reduction in pricing, he said, is a necessary move – even though it will bring down profit margins – as it will at least help to cover the fixed cost.

At pre-tax level, the company's profit margin is at the mid-teen level, ranging from 13% to 15%. Specifically, for Brands Outlet, its margin has been higher around 17% to 20% over the years.

Despite rising cost of living, Chan believes the way people spend money will not change easily, thus still foresees an optimistic outlook for the industry.

"Lifestyle is very hard to change…Maybe you spend less frequently and try to economize in other ways," he said.

Chan added the retail sector has always been very vibrant and dynamic, evidenced from new shopping malls built everywhere.

For the financial year ended June 30, Padini posted a net profit of RM90.91 million, an increase of 6.46% versus RM85.39 million in the previous corresponding period.

Currently Padini has 29 Padini Concept Stores and 27 Brands Outlets.

Brand Outlet, Chan said, contributes 30% to the group's domestic sales, while the balance is from Padini Concept Store.

For FY15, Chan said the group is looking to open four outlets each for Padini Concept Store and Brands Outlet, with some of them located in Putrajaya, Taiping, Kota Kinabalu and Bintulu.

According to him, Padini is not considering having an online platform as yet as he believes that Malaysians still prefer to shop at shopping malls and that online shopping is still not well-received.

"Not for Malaysia yet, even if we finally have (an online platform), it will be more to sell stuff overseas, because in Malaysia, we've found that there is not a great deal of online activities,"

Chan added that necessary infrastructure and resources have to be put in if the group wants to kick start its online platform.

"If that business is not big, it is not viable to have an online platform, that's why we don't have it yet," he said.

Chan believes it is yet to be a "good time" for Padini to further expand its business abroad as its main focus will still be on the local market.

On dividend payout, he said the group is committed to delivering at least 5% dividend yield for FY15. It paid 11.5 sen in dividends for FY14.

The cradle of Chinese mushroom growing

From 21st to 31st October a group of growers journeyed to China. The trip was organised by C point and Eco consult in close cooperation with the FujianAgriculturalUniversity in Fuzhou. The sheer size of the country and its mushroom industry, and the creative ways in which an astonishing amount of mushroom varieties is grown in Fujian, made a lasting impression on the travelers.

It’s common knowledge that China has the world's fastest growing economy with growth reaching no less than 9 % per year. The past two decades have seen incredible changes. Motorway networks now link all the major urban centres, and using your mobile phone is often easier there than in many places in Europe! And the sheer size is impressive. Shanghai for example houses no fewer than 18 million inhabitants, with a skyline to rival any major American city. As far as production goes, there are large volumes and the potential is huge, particularly concerning the massive variety in mushroom production. As well as culinary use of edible exotics, mushrooms are traditionally valued for their medicinal properties. Mushroom growing methods are generally quite primitive, but the 10,000 growers is China propel it into first place as the largest mushroom producing country in the world. More than enough reason to take a close look at this promising country.

Programme

The group first attended the 2nd International Mushroom congress in Fuzhou (see article Peter Oei). An alternative programme was arranged to visit temples and areas of natural beauty. The journey then continued to the heart of Fujian. This province in South East China is known as the cradle of Chinese mushroom growing. No less than 45 different varieties are grown here. We visited an exotic mushroom farm, a mushroom grower and an institute researching into spawn and varieties. The visit to South East China was concluded by a visit to the historic trading port of Xiamen. On the way back we visited Peking, and naturally saw the Chinese Wall and Tiananmen Square.

Chinese mushroom growing

Mushroom growing in China can in no way be compared to the farms we are familiar with in Europe, America and Australia. First of all, cultivation is very seasonal, particularly in the south of China. The mushrooms are grown in very primitive bamboo sheds without cooling and without any form of climate control. With outside daytime temperatures soaring above 30 degrees Celsius for six months of the year - reaching a sizzling 40 degrees in the summer, it’s obvious that without cooling there's absolutely no chance of good crops.

Well harmonised to this seasonal pattern of mushroom growing is however rice cultivation, which after the harvest at the end of the warm season provides ample stocks of rice straw. This straw is used as a raw material to prepare compost for mushroom growing. After the rice harvest, the temperature cools considerably so composting can start.

Growing in Fujian

In the province of Fujian are tens of thousands (!) of mushroom growers - arranged in a kind of winding ribbon development alongside the many roads. Kerkdriel in the Netherlands and

In the period we visited, the first compost heaps were being made at the farms. A chore still done by hand using straw baskets and compost forks and rakes. Machines have no role at all. Some growers were busy plaiting new bamboo extensions to the number of 'rooms' and even the shelving is made from bamboo (see photographs).

Cook out is not used here either, partly due to the rather bad hygiene conditions; open growing rooms, the absence of concrete floors and air filters means its just as well the Chinese are growing seasonal crops. As the season draws to a close, many growers face considerable problems with all kinds of pests and diseases in the crops. Namely wet bubble and cork foot are prevalent.

Research on going in China, at the University of Fuzhou, is investigating production of various mushrooms on grass. They are also studying if good results can be achieved with the production of Agaricus bisporus on grass compost. The grass concerned here is a variety similar to sugar cane grass.

The visual results of the incubated grass were amazingly good. One reason to look into this type of production is to find a way to use the surplus of this type of grass. Another reason is to source a longer-term supply of raw material so the production season can be lengthened. This will also reduce the reliance on rice straw.

Casing soil is primitively produced using local soil. Striking is the thin layer of compost applied, from 40 to 60 kg/m². The reason is the light load bearing capacity of the bamboo shelving, and a higher production per ton of compost. As the result is also less heat production per square metre, the system is well suited to production without cooling.

We did see some form of cooling in the experimental facility at FujianAgriculturalUniversity where huge blocks of ice were positioned underneath the shelving. A rather crude but highly creative solution.

Advantages and progress

In China, mushroom growing is effectively set up concerning measures to keep production costs low. This country - with its 1.3 billion inhabitants - has no shortage of cheap labour. The quality demanded of the final product is at a very low level, and (European) quality standards for Agaricus bisporis are totally unknown. Another big advantage for Chinese growers is that the domestic market is ready for a greater supply of fresh produce and rising quality standards will serve to stimulate consumer interest.

As far as environmental permits or other bureaucratic red tape, China is a country with much freedom and few obstacles. Farms are even found in residential areas, close to houses. The Chinese people are extremely tolerant and unphased by this practise. Assets that many foreign growers can only be envious of.

To summarise, although extensive in size, mushroom growing there is primitive and carried out at low cost. Developments, embracing the whole agricultural sector, are proceeding at a rapid pace and as far as mushrooms are concerned there are already numerous companies modelled on Western examples, with modern technology and equipment. Marketing is far ahead of the producers. This, coupled to an immense domestic market, creates the ideal foundation for vigorous development of the mushroom industry.

In more ways than one, ours was a never to be forgotten journey.

Kenneth Square

in Pennsylvania in the USA at their prime don't even stand the comparison!

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