Victor Company of Japan, Ltd.

4–8–14, Nihonbashi-Honcho
Chuo-ku
Tokyo 103
Japan
(03) 241–7811

Public Company
Incorporated: 1927
Employees: 19,560
Sales: ¥820.91 billion (US$6.57)
Stock Index: Tokyo Osaka

JVC is one of several Japanese companies that has evolved to dominate the international consumer-electronics market. The company has achieved its current position not only through effective marketing but also by consistently developing new products that establish standards within the industry. Like Matsushita and Sony, JVC was strongly influenced by a single dominant personality; as the man most responsible for the success of JVC, Kenjiro Takayanagi is also considered one of Japan’s most important inventors.

JVC was founded in 1927, as the wholly owned subsidiary of the Victor Talking Machine Company of the United States, to manufacture and market phonographs in Japan. Victor, however, was purchased in 1929 by the Radio Corporation of America and renamed RCA Victor. As part of an effort to enlist the marketing and sales expertise of well-established Japanese conglomerates, minority shares of the Japanese Victor Company (JVC) were sold to the Mitsubishi and Sumitomo financial groups. JVC was thereafter operated as an American-Japanese joint venture.

In 1930 JVC built a large phonograph-and-record plant in Yokohama, at the time the largest in Asia. Japan, however, soon came under the domination of ultra-right-wing militarists who in 1937 launched Japan into a war with China. The war soon led to hostility with other nations and caused many American interests to reassess their investments in Japan. RCA Victor sold a majority of its shares in JVC to Nihon Sangyo (later the Nissan Motor Company), which assumed managerial control of the company. In an unrelated moved, JVC shares held by Mitsubishi and Sumitomo were transferred to the Dai-Ichi Mutual Life Insurance Company.

RCA Victor sold its minority interest in JVC to Tokyo Shibaura Electric (now Toshiba) and Nihon Denko in 1938, making the company an entirely Japanese enterprise. The following year JVC successfully produced the first television set manufactured entirely from Japanese-made components. The television never entered mass production, but it did establish JVC’s reputation as a leading electronics company.

The television was developed by an electrical engineer named Kenjiro Takayanagi. Takayanagi began work on the first Japanese-made television at the Hamamatsu Technical College in 1924, and succeeded in projecting images two years later. Takayanagi developed improved designs and was later awarded a full professorship. He was appointed to a number of positions with the Japan Broadcasting Corporation, where he led the development of television technologies, often in cooperation with companies such as JVC.

World War II had a dramatic impact on JVC, as it did on nearly every Japanese company. In 1943, as part of a government-imposed industrial reorganization, JVC’s name was changed to Nippon Onkyo (Japan Acoustics), and in April, 1945 its Yokohama plant was destroyed by aerial bombings. The facility was rebuilt shortly after the war ended, when the company also returned to its former name.

Kenjiro Takayanagi joined JVC as head of the television-research department in July, 1946. The company resumed full production of radios, phonographs, and speakers in 1950, and introduced televisions in 1953, the year that Takayanagi was promoted to managing director of JVC.

As a result of the anti-monopoly laws imposed by the American military occupation authority, Tokyo Shibaura (the primary owner of JVC) was forced to sell its interest in the company. For the next several years JVC endured labor problems and persistent financial instability. Japan’s anti-monopoly legislation was relaxed in stages, so that by 1953 the Matsushita Electric Industrial Company was permitted to purchase a 50% interest in the nearly bankrupt JVC.

Konosuke Matsushita, who had founded Matsushita Electric in 1918, decided to maintain JVC’s operational autonomy, offering only managerial direction and capital infusions. Initially JVC was considered a good investment for Matsushita because the two companies competed in relatively few areas. But as it evolved, the relationship between JVC and Matsushita became one of competitive cooperation. Matsushita permitted JVC’s managers great latitude in making decisions about investments in research and development, joint production, and licensing agreements. One of the ideas JVC developed was a video tape recorder.

In the field of audio technology, JVC developed the 45–45 system, one of the first systems to enable phonographs to reproduce sound in stereo. In conventional monaural systems, a small needle runs through a V-shaped groove that varies in depth, and the vibration of the needle is amplified to produce sounds. The 45–45 system required that depths vary on both sides of the groove. Two separate mechanisms measured the vibration of the needle in perpendicular directions. These vibrations were then amplified independently to produce two sounds simultaneously, or in stereo.

JVC introduced 45–45-system stereo phonographs in 1957, and the following year developed a color video tape recorder. The company began commercial production of color television sets in 1960, at a new plant in Iwai. Color television broadcasting began that same year and greatly increased demand for JVC televisions. In order to take better advantage of the company’s growth, JVC shares were listed on the Tokyo and Osaka stock exchanges, and capital raised through subsequent share issues enabled the company to increase production capacity. Favorable economic conditions and low production costs allowed JVC to gain substantial markets shares in foreign countries, particularly in the United States. In 1968, in an ironic reversal of 1927, JVC established a wholly owned American subsidiary called JVC America, and three years later the company created a West German subsidiary called Nippon Victor (Europe) GmbH.

Kenjiro Takayanagi assumed a more influential role in the management of JVC during the 1960s, further diminishing the company’s system of consensus management. Trained as an engineer, however, Takayanagi was not able to avoid the prolonged drop in profits that lasted from 1970 to 1976. The management of Matsushita continued to provide the guidance and support necessary to keep JVC from encountering more serious financial difficulty.

During those six years, JVC devoted considerable resources to the development of a commercial video cassette system. As part of a reorganization program in 1973, the company’s management separated the music division from JVC and established it as a subsidiary called Victor Musical Industries. During the mid-1970s JVC established additional subsidiaries in Great Britain, Canada, and the United States.

A few months before his 76th birthday, in 1974, Kenjiro Takayanagi retired from JVC, but continued to serve the company as an advisor. The video division, which was largely his creation, introduced the video home system (VHS) format video cassette recorder in 1976. The system was introduced after Sony’s Betamax VCR, but was superior in several ways. Matsushita Electric, which had been independently developing a third format, was so impressed with the VHS that it abandoned its project and arranged for cross-licensing of the JVC technology.

Matsushita and its allied brands, Quasar and Panasonic, adopted the VHS format and, with JVC, worked diligently to establish VHS as the industry standard. Their efforts succeded and, despite a full year of monopoly, the Sony Betamax was superseded by the VHS; Sony’s market share rapidly diminished.

With the tremendous success of VHS, JVC’s profits had risen by a factor of ten by 1982. The video division, which had accounted for 6% of total sales in 1976, accounted for 69% in 1982. JVC established several additional subsidiaries, particularly in Europe, to handle sales of VHS video recorders and other products.

JVC engineers developed a laser-operated video-disc system in 1978. Although the technology gained favor among consumers, the product’s inability to record television broadcasts was such a drawback that it curtailed its further development. A subsequent compact disc (CD) format developed by Sony and Philips, however, has proven highly successful for audio reproduction. JVC applied certain video-disc technologies to the CD and developed a VHD videodisc system that is interchangeable with conventional CD players. JVC introduced the VHD to Japan in April, 1983, and has licensed VHD technology to 13 other Japanese manufacturers in addition to Thorn EMI, AEG-Telefunken, and America’s General Electric.

Although JVC introduced a line of personal computers and peripheral products in 1983, the company’s future product development will be directed toward improved audio and video systems.

While Kenjiro Takayanagi continued to advise the company from retirement, JVC returned to a more democratic form of management, greatly influenced by directors tenured at Matsushita. However, Ichiro Shinji, the first man in 25 years to gain promotion to the company presidency from within JVC ranks, has since been named chairman of JVC. The company’s relative autonomy within the Matsushita group continues, and its relationship of constructive competition with Matsushita has proven to be most profitable as well.

Principal Subsidiaries:

Victor Musical Industries, Inc.; Victor Family Club Co., Ltd.; Nippon AVC Co., Ltd.; Hokkaido Victor Co., Ltd.; Ou Victor Co., Ltd.; Tohoku Victor Co., Ltd.; Kanto Victor Co., Ltd.; Tokyo-Higashi Victor Co., Ltd.; Tokyo-Nishi Victor Co., Ltd.; Chiba Victor Co., Ltd.; Shinetsu Victor Co., Ltd.; Kanagawa Victor Co., Ltd.; Shizuoka Victor Co., Ltd.; Tokai Victor Co., Ltd.; Hokuriku Victor Co., Ltd.; Keiji Victor Co., Ltd.; Kobe Victor Co., Ltd.; Chugoku Victor Co., Ltd.; Shikoku Victor Co., Ltd.; Kyushu Victor Co., Ltd.; JVC Magnetics of Japan Co., Ltd.; Victor Service & Engineering Co., Ltd.; Sanin Victor Sales Co. Ltd.; Okinawa Victor Sales Co. Ltd.; Victor Finance Co., Ltd.; Nippon VMR Co. Ltd.; U.S. JVC Corp.; JVC Canada Inc.; JVC (U.K.) Ltd.; JVC Video France S.A.; JVC Magnetics Europe GmbH (West Germany); JVC America, Inc.; JVC Electronics Singapore Pte., Ltd.; JVC Deutschland GmbH; JVC Finance B.V.