Steve Crane of Business Link Japan

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8 Feb 2011

Feb 8th - FT: Panasonic's Smart Fridges Light The Way

Panasonic's latest refrigerators, in addition to keeping food cool and making ice, use a light sensor to scan their owners' kitchens.

If these determine that it is night-time and no one is likely to open the doors for a few hours, they power down a bit to save on electricity.

Smart fridges are just one way that the Japanese electronics group is "greening" its business. In a corner of the same huge white-goods factory in which it makes its intelligent refrigerators, workers install circuitry into hydrogen fuel cells destined for Japanese homes.
The boxy machines will heat water and generate electricity with minimal emissions of carbon dioxide. At Y2.5m ($30,000) before government subsidies, they are far from cheap but Panasonic says that buyers can cut Y50,000-Y60,000 from annual utility bills as they help prevent global warming.
Toshiki Shimizu, the executive in charge, has big ambitions for what is still an experimental business. Panasonic has sold about 5,000 residential fuel cell systems since 2009 through local natural-gas utilities. But in a few years, he says, the company aims to expand the business to a scale "equal to refrigerators, air conditioners and other home appliances".
The fuel cells and smart-fridges illustrate a strategic shift among Japanese technology companies towards "green innovation".
It is a change driven in part by necessity, as lower-cost South Korean, Taiwanese and Chinese groups lure customers away from Japanese televisions and video players.
But companies also sense an opportunity, with rising energy prices and tougher pollution laws likely to increase demand for clean technology.
Japan's government has designated the sector as one of five strategic growth areas that it hopes will create 2.6m jobs and add Y149,000bn to manufacturing output by 2020.
Panasonic is aiming to more than triple revenues from clean technology to Y3,000bn by 2018.
Many other companies are also going green. Nissan and Mitsubishi Motors have begun selling battery-driven electric vehicles, building on a market for low-emission cars pioneered by Toyota's Prius petrol-electric hybrid.
Sharp and Kyocera are sharply expanding solar-panel production, while Sanyo, almost bankrupt a few years ago, has re-emerged as the world's largest maker of rechargeable batteries.
In all, three in 10 Japanese manufacturing companies are looking to enter the market for clean technology or increase their presence there, according to a survey by the industry ministry.
The bet on green technology is not a sure thing. Some analysts question whether returns will ever match those that are being lost in consumer electronics.
Much of the green sector depends on subsidies - a big risk, as rising government debt loads draw budget planners' attention from climate change to the risk of a bond market revolt.
And Japan is not the only country targeting the green market. China's solar-panel makers have soared past Japan's in production volumes since Beijing designated the technology a priority half a decade ago.
China is also investing heavily in wind power and encouraging its carmakers to develop their own electric vehicles.
Even so, Japanese executives are betting that, because many green technologies are still in their infancy, their companies have an advantage: there is plenty of scope for the kind of painstaking improvement in materials, design and manufacturing at which Japanese groups traditionally excel.
"If you look at solar panels, for example, energy conversion rates are still low," says Toshihiko Omote, deputy chief technology officer at Nitto Denko, a maker of filters, adhesives and optical films.
"It's important to look for 'no-limit' areas where it still matters when you set a world record for performance."

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