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Panasonic Shuts Beijing Battery Factory to Shift to High-margin Products

| Aug 28, 2015 07:16 AM EDT

Some 1,300 workers lost their jobs following the closure of the Panasonic factory in China.

Japanese electronics giant Panasonic Corp. has announced on Thursday, Aug. 27, that its Beijing factory will stop making lithium-ion batteries this month, with 1,300 workers losing their jobs, as part of a move to shift to more profitable products such as electric car batteries, Reuters reported.

According to the report, the batteries for simple mobile phones and digital cameras produced by the 15-year-old plant have been increasingly overtaken by smartphones in popularity.

"The global market for these products has been shrinking," Panasonic spokeswoman Yayoi Watanabe said. She added that global technology trends have more to do with the closure than the recent turmoil that has beset Chinese markets. She said that they have informed their employees of the closure in late July.

The Nikkei Business Daily said that the main customer of the plant in its early days was Finland's Nokia, which sold its mobile phone business to Microsoft in 2014.

In 2010, Panasonic acquired and took over the plant from Sanyo Electric, a leading maker of lithium-ion batteries and solar panels.

Analysts said that the Japanese firm has sold several Sanyo operations after the deal failed to bring in much growth due to competition from South Korean manufacturers.

The report said that the plant closure came as Panasonic restructures to focus on making electric car batteries and energy-saving home systems instead of consumer electronics such as plasma TVs and smartphones, where it faces tough competition from Asian rivals.

Panasonic said in June that it would invest about 60 billion yen ($499.83 million) in the fiscal year through March in its automotive business, which included making lithium-ion batteries for Tesla Motors Inc.

According to Reuters, the Japanese company is due to pay 30 to 40 percent of the cost of Tesla's $5-billion Gigafactory plant in Nevada, a key facility that will support the automaker's plans to increase its sales.

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