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News & Insight

Nikon Closes Chinese Factory & Rests Responsibility On SmartPhones | Expect More Bad News For Nikon In 6 Months

By Kishore Sawh on October 30th 2017

Nikon issued a statement today at the Board Of Directors’ meeting that the operations of Nikon Imaging (China) Co., Ltd will be discontinued. This effectively states the that location (once used for manufacturing digital cameras and lens units for them) will cease immediately. It’s a closing. But perhaps the most interesting part of the announcement isn’t so much that they made it, but the reasons they give for it, and what that may spell in the future.

In recent years, however, due to the rise of smartphones, the compact digital camera market has been shrinking rapidly, leading to a significant decrease in operating rate at NIC and creating a difficult business environment.

…As part of restructuring the Imaging Products Business, the Company will focus more on high value-add products. China’s position as one of the most important markets in the world will remain unchanged. Nikon Imaging (China) Sales Co., Ltd. (NICS), the Company’s sales subsidiary in Shanghai, continues in full operation as normal, contributes to photo and imaging culture development, and strengthens the sales effort of imaging products and the after-sale services in China that meet customers’ satisfaction.

Nikon has squarely placed the blame for the circumstances leading to the closure on consumer behavior via adoption of the smartphone camera, and while there’s some truth there, it’s low hanging fruit. The problem with low hanging fruit, however, is that it’s easy to spot a long way out, which begs the bigger question: Why didn’t Nikon adapt?

This is a recurring theme with Nikon, and this little nugget of news seems a microcosm of Nikon at large. It’s been years since it was ‘shocking’ that smartphone cameras were eating compact camera sales, and most other companies have adapted. It’s why we’ve seen the shift to higher-end compacts from Sony and Canon and Panasonic. These companies, especially Sony, have been vocal about their strategy to move to higher-end units, and frankly, even if they’d not said it, it’s out there for the world to see.

The ‘compact’ cameras that remain are the ones that offer something the camera phones just don’t yet have, and that’s typically high-end zoom optics and larger sensors.

Even Nikon’s top-end compacts like the P900 or A900 have a 1/2.3 inch sensor which, it may not be a stretch to assume, is probably the same throughout the range. Canon’s newest G1X may have a confusing and underwhelming lens choice to pair with a 1-inch type sensor but at least it’s got the sensor.

[REWIND: Canon’s Newest 85mm 1.4, Tilt-Shift Lenses, & Gx1 | Hands On]

“But what does it all mean, Basil?”

Well, while we aren’t clairvoyant and don’t pretend to be on the internet, there’s information enough here to assume that Nikon’s financials to be released in Q2 next year won’t be the glistening gem some may expect after having released the D850. Sony’s a7RIII is likely to pull some away from that crowd anyway, but even Nikon’s estimate is that the expenses from the NIC shuttering will be around $60 million USD, which is nothing to sneer at.

It also makes one wonder what Nikon has in mind for the mirrorless camera they have openly said they’re working on. Will it be what we’re all actually looking for or what Nikon thinks we should be?

[REWIND: Sony a7Riii | The Much Anticipated Successor Brings Some A9 Power With High Resolution & More]

About

Kishore is, among other things, the Editor-In-Chief at SLR Lounge. A photographer and writer based in Miami, he can often be found at dog parks, and airports in London and Toronto. He is also a tremendous fan of flossing and the happiest guy around when the company’s good.

Q&A Discussions

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  1. Randall Huleva

    Nikon may be making this claim in public as a reason for slower sales, but they are not blind to what is going on in the smartphone market.

    They may have underestimated the impact smartphones would have on sales, but they can’t be surprised by consumer choice!

    I don’t know that they, or anyone else outside of smartphone manufacturers, realized how quickly these devices would become a real player in the small camera market.

    Nikon has also been a bit slow to the interchangeable lens mirrorless market. If anything, I believe Fuji, Panasonic and Sony have slowed their DSLR sales more than expected.

    While pros are buying some of their new, high-end products, I don’t know if the percentage of advanced amateurs they forecast sales for is actually materializing!

    Time will tell, but I don’t think many can’t afford a new $3,000 body every couple of years 

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  2. Simon Hepworth

    Nikon will be around for along time yet everyone said Pentax was doomed and they are still  going and producing some decent cameras

    The low end market of compact cameras is dead  and there will be other areas like mirror less medium format that will gain popularity in the coming years . You will probably eventually have the same thing said about Canon and Sony .Company’s go through problems  have bad times and sometimes we judge them on what we expect not what is practical

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  3. Matthew Saville

    I think that WRT the MILC future for Nikon, the closure of this factory doesn’t necessarily spell disaster, even if it doesn’t look good either.

    Nikon gets a lot of stuff made in Thailand, and it’s decent quality stuff at an affordable price.

    Sony may be a freight train on a down grade, and Nikon may be a battleship that can only make slow lefts when it desperately needs to make a sharp right, …but once Nikon lines up the big guns, it’s game on.

    Believe it or not, Nikon still has a lot going for them. Hype on the internet may be swayed dramatically in favor of Sony, but sales figures don’t lie, and Canon / Nikon still own most markets.

    And while Sony must continue to fix minor niggles and major oversights alike on their learning curve journey of developing a camera system from scratch, Nikon (and Canon) have the advantage of decades of camera design experience, which will undoubtedly allow them to hit home-runs with things like ergonomics and custom functions within the very first or second generation of professional mirrorless cameras. Nikon and Canon are already figuring out things like 4K video, and Canon is already mastering on-sensor autofocus, so it’s getting less and less likely that either will screw up their premier MILC contender.

    In other words, all it will take is ONE competitive offering from Nikon, and the cries of ship-jumping, or head-in-sand doomsday-crying, will rapidly fade away, while Sony’s job gets 10X harder.

    Sony is wise to milk this head start for all it is worth, but they’re not stupid, they know that it’s literally the only way they CAN survive the inevitable entry of both Nikon and Canon into the professional MILC market.

    I mean, can you imagine if Nikon had offered a mirrorless FX camera with the robust build quality of the D800 / D810, in just a slightly lighter and smaller package, compared to the original Sony A7-series? The original A7’s were lightweight, yeah, but that’s because they were junk, barely cobbled together, they wouldn’t have stood a chance against even a mirrorless D750, let alone a mirrorless D810. The mk2’s of the 7-series would have stood a chance against a mirrorless D750, although they still had terrible battery life and no dual SD slots. Nikon is just now getting 4K video into its cameras, again imagine if they had done it just ~1 generation sooner; how much harder would Sony’s job be then?

    The A9 and A7R3 are literally the first cameras to truly give pro DSLRs a run for their money. And yet still, if Nikon makes a mirrorless D850, it could destroy the A7R3. If Nikon makes a mirrorless D5, it could destroy the A9. So, like I said. Sony desperately needs this head start. 

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    • Jacques du Toit

      Lol, love the freight trein vs battleship analogy. But I agree with that, and I am a Canon shooter, so not just trying to agree with a fanboy mind or something. Nikon and Canon have been around for ages, and I hope they stay around for long. Sony I do not have time for personally, but that is because they pulled their camera systems out of South Africa, so if I want any Sony camera parts, I have to import everything and that just won’t happen.

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  4. Matthew Saville

    I guess they’re just shifting all budget / consumer production to Thailand. I heard that Chinese labor wages have gone way up, like 4X, over the years.

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  5. adam sanford

    The biggest gap (IMHO) was Nikon’s ‘gamble on small’ with the N1 brand when everything else was moving upmarket to stay a clear 2-3 bumps better than cell phones. 

    If they Nikon had gone m43 or APS-C with that product line, it would be making steady money for them right now.

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    • Kishore Sawh

      Sure, but that’s ‘if’, and again Nikon has refused. That’s the thing, they just don’t seem to listen, or if they do they disagree with the market. They’re just not in a place to stay ‘historical’, and only Leica can do that because it’s what they’ve pushed forever. Even Leica though, they’re more diverse with a camera for pretty much every primary market segment. They’ve got pretty good mirrorless, a camera with USB-C, in-camera storage, brilliant menus and good touchscreens, and great EVFs. Nikon… I still need a card reader to transfer images from the XQD in my D850 to the computer…

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