The top student in AI among Japanese companies, Panasonic China "seeks change"
1. How can Panasonic, a 107-year-old company, catch up with the wave of large AI models?
During an interview with the media in Tokyo, Japan, Tetsuro Honma, the Global Vice President of Panasonic Holdings Corporation and the General Representative of the company's Northeast Asia region in China, elaborated on Panasonic's AI implementation practices.
"If foreign companies in China don't make good use of artificial intelligence technology, it will be difficult for them to survive in the future." Tetsuro Honma's words reveal Panasonic China's sense of urgency to increase its investment in AI.
In the past two years, Panasonic China has formulated a "dual-track parallel" plan around AI. On the one hand, it provides core components for AI servers. On the other hand, it integrates AI technology into terminal products and internal operations to build full-chain competitiveness.
Panasonic is almost "everywhere" in the supply chain of AI infrastructure. The copper-clad laminates produced by the Electronic Materials Division of Panasonic Electric Works Co., Ltd. are key materials for AI servers. The products of the Component Solutions Division are widely used in server power modules. The placement machines of Panasonic Connect Co., Ltd. are even a "standard configuration" for AI server production lines.
Zhang Jian, the head of the Industrial Automation System BU of Panasonic Electric Works (China) Co., Ltd., said that Panasonic provides many core components, including electronic materials, conductive capacitors, and polymer capacitors. Panasonic has three factories for electronic materials in China, and well-known customers are using our products.
At CES 2025, Panasonic announced "Panasonic Go", a global corporate growth plan to drive business transformation with AI.
To meet customer needs, the R & D team of Panasonic Electric Works in China has been expanding at a rate of 20% - 30% annually. In 2024, the number of R & D personnel was close to 400, and it will continue to increase in the next three years.
More forward-looking is that Panasonic China is laying out the R & D of "small models" (SLM) for AI terminal applications. At Panasonic Electric Works Software Development (Dalian) Co., Ltd. in Dalian, Panasonic has built its own generative AI server and focuses on developing small models suitable for household appliances and residential equipment.
"Many household appliances and residential equipment products are not necessarily connected to the Internet 24 hours a day. The AI functions in the offline state need to be supported by small models." Tetsuro Honma said.
At the internal operation level, Panasonic China has initially implemented "AI for all employees". By connecting to large models such as DeepSeek and Alibaba Tongyi Qianwen, employees can use AI to assist in making PPTs, and even conduct low-code software development and software verification.
"By holding AI application competitions within the company, we have not only promoted the technology but also cultivated a culture of AI application across the company." Tetsuro Honma revealed.
As an established Japanese company, Panasonic is extremely agile in responding to emerging technologies such as AI. Its business implementation is not only in Japan but also blooming in multiple global markets such as China, which is closely related to Panasonic's organizational changes in recent years.
2. Panasonic's localization model: Achieving "local decision-making"
"When I came to Beijing in 2019, I put forward three slogans: 'China cost, China speed, China model'. Now it has become the work guideline for 50,000 employees in China." Tetsuro Honma said.
Among the 64 companies in Panasonic's Northeast Asia region in China, more than half of the "top leaders" are Chinese, mainly young people. "Six years ago when I first came to China, there were only 1,000 software developers. Now the number has increased to 2,000. Among them, 1,200 are focused on product software development, and 800 are engaged in the development of IT tools used within the Panasonic Group." Tetsuro Honma said that these local talents are not only responsible for product R & D in the Chinese market but also starting to participate in global projects.
"For example, the FA (Industrial Automation) R & D team of Panasonic Electric Works currently supports the products sold by Panasonic in China. They have started to explore whether products for the European market can be developed in China. We hope that in the near future, the products we develop can be supplied to overseas markets."
Tetsuro Honma said, "Previously, any decision made by the Chinese subsidiary had to be reported to the Japanese headquarters for approval. Now, the Chinese team can make independent decisions." Zhang Jian deeply understands this. Now in charge of the FA China BU, he currently has the same authority as the head of the Japanese BU and can independently make decisions on the design, development, manufacturing, and sales of new products, achieving a closed-loop from 0 to 1.
The efficiency improvement brought about by this "local decision-making" is immediate. Taking servo motors as an example, after Panasonic transferred the R & D center for popular models from Osaka, Japan, to Suzhou, China, it fully utilized the local supply chain and launched competitive products.
"The Chinese market changes too fast. If we have to wait for the approval of the (Japanese) headquarters for everything, we will miss the opportunity long ago." Zhang Jian admitted.
The localization of the supply chain is the key support for "China cost". Currently, Panasonic China has more than 6,000 suppliers, accounting for about one-third of its global suppliers. To export the capabilities of these suppliers to the world, Panasonic established Panasonic Electric Works Global Procurement (China) Co., Ltd. in Shanghai. 350 employees specifically provide trade services and business opportunity matching for Panasonic's Chinese suppliers.
"Some of our Chinese suppliers don't have their own overseas sales networks or overseas service networks. We aim to build this bridge." According to Tetsuro Honma, many Chinese components have been supplied to Panasonic's sister companies around the world through this platform, and this initiative will continue to be promoted in the future to gradually achieve the goal put forward by Masanori Kusumi, the CEO of Panasonic Holdings Corporation, at the CIIE in 2023: "China cost is the world cost, and China speed is the world speed."
Tetsuro Honma, the Global Vice President of Panasonic Holdings Corporation and the General Representative of the company's Northeast Asia region in China
The reform of the personnel system is the core of the "China model". "Panasonic is a Japanese company, so many personnel policies in our group have strong Japanese characteristics, which may not be very suitable for today's young Chinese people. Therefore, we have also made major reforms in personnel management, trained many young leaders, and made quite a few reforms in the localization of talent development." Tetsuro Honma said, "There are significant differences between the 'China model' and the 'Japan model' in personnel policies, so we are constantly promoting the 'China model' to improve the enthusiasm of employees in the Panasonic China team."
To ensure the compliance of local operations, Panasonic China has also established three shared centers for finance, personnel, and taxation, concentrating the functional work of its Chinese subsidiaries in Panasonic Excellence Operations Northeast Asia China Company, achieving a balance between "centralized management + decentralized operation".
"When it comes to local operations, how to achieve IT-based or centralized management is also a prerequisite or a must. We have also discussed this topic with many Chinese companies." Tetsuro Honma said.
3. The next six years for Panasonic China
Since 2019, when Panasonic established Panasonic Electric Works China Northeast Asia Company (CNA) and Tetsuro Honma became the first head of CNA, six years have passed.
"The Chinese market is a very good training ground. Through the fierce competition here, our R & D capabilities, design capabilities, and software capabilities have been greatly improved." Tetsuro Honma's words reveal Panasonic China's profound experience in the past six years.
The advantages of delegating power to China and independent decision-making are directly reflected in Panasonic China's performance. In the fiscal year 2024 (from April of that year to March of the next year), Panasonic's performance in the Northeast Asia region in China maintained an upward trend, becoming one of the most stable parts of Panasonic's business layout.
According to Tetsuro Honma, in the fiscal year 2024, Panasonic's sales in the Northeast Asia region in China increased by 3% year-on-year, and the operating profit increased by 10% year-on-year. At the same time, the Northeast Asia region in China contributed 30% to Panasonic's global business profit. This trend also continued in the first quarter of 2025 (April - June), with sales increasing by 3% year-on-year and operating profit increasing by 26% year-on-year.
However, Panasonic China is still changing.
According to Arashi Kinoshita, the President and CEO of Panasonic Electric Works China Northeast Asia Company, the group launched a business reform. In April 2026, after the restructuring, Panasonic Corporation will be divided into three independent business companies. The main businesses of the consumer electronics company and the China Northeast Asia company will be taken over by Panasonic Entertainment & Interactive Co., Ltd., and a new "Panasonic Corporation" will be established.
In addition, the fresh air air conditioner company and the cold chain company will be reorganized into the "Panasonic Air Conditioning, Fresh Air & Cold Chain Group", and the electrical engineering company will be reorganized into "Panasonic Electrical Engineering Co., Ltd."
This sense of urgency for change first comes from the intensifying market competition. Chinese local brands have obvious advantages in terms of cost - performance ratio and channel layout, especially in emerging fields such as AI and smart home. The entry of Internet companies has made the competition even more intense.
"We don't intend to directly participate in the 'involution - style' competition. We don't think we can compete with Chinese manufacturers just by price competition. It's very important to always provide our unique value." Tetsuro Honma said. Panasonic China will continue to increase R & D investment and, through the "China for Global" model, replicate the successful experience in the Chinese market globally to form a scale effect.
Secondly, it is the stability of the supply chain. Although Panasonic China has more than 6,000 suppliers, the uncertainty of the global supply chain still brings risks.
Zhang Jian said, "The biggest change brought about by the global vice - president Tetsuro Honma when he came to China is the reconstruction of the supply chain. We hope to get closer to the Chinese supply chain and create the 'China cost' within it. If we can achieve the 'China cost' in China, we will be very competitive in global competition."
Not only in China, but Panasonic is also exploring to extend the continuous optimization of the organizational structure globally. "In the future, it is very likely that the global operation centers of several products will be moved from Japan to China." Tetsuro Honma revealed that the practical case of a multinational company in the industry moving its rail transit business headquarters from Japan to the UK has inspired Panasonic greatly.
"China is not only a major manufacturing country and a major consumer country but also a major innovation country and a major country of engineers." Regarding the future development blueprint in China, Tetsuro Honma has a clear plan: to continue to deepen local operations and upgrade from "in China, for China" to "in China, for the world". Tetsuro Honma's words are full of expectations.