APRIL 22, 2014 • After 23 years in operation Nintendo is closing down its Taiwan branch on May 31. Most employees of Nintendo Taiwan (Nintendo Phuten Co., Ltd.) in Taipei will exit the office by the end of April, however. Responsibility for the Taiwan market will be assumed by Nintendo’s Hong Kong branch. Nintendo says there will be no retrenchment from the Taiwan market with agents, dealers and service system in the country remaining unchanged after the switchover.
Impact: Nintendo is under a lot of financial pressure with the expectation of a ¥35 billion ($336 million) loss for the fiscal year ending March 31. The gamemaker will not release full fiscal year numbers until May 7, but it is no secret Nintendo is experiencing poor Wii U sales everywhere outside Japan. The 3DS family is profitable in its own right but not profitable enough to keep the company out of the red. We don’t know for certain if the continued financial bad news is the culprit in eliminating the Taiwan branch. When Nintendo breaks down geographic sales, Taiwan falls in the “Other” category. For the fiscal year that ended a year ago, that category contributed 3.2% of total sales. That compared to Japan at 32.9%, The Americas at 37.2%, and Europe at 26.7%. We can see the rationale for cutting back in the Korea/China/Taiwan region given the small overall sales, and the relative closeness of the Hong Kong office probably sealed the fate of the Taipei operation. We do know that the DS and 3DS handhelds have been popular enough in Taiwan to warrant market-specific models, but that probably wasn’t enough to save the day for Taiwan staffers. The other angle is that China is opening up to console sales, and keeping the base in Hong Kong makes strong strategic sense. What is lost, however, is closeness to major component suppliers such as Hsinchu-based Macronix, which produces flash memory. Then again, if the Wii U had more consumer appeal, closing down the Taipei office may not have come to pass.