Xerox has fired the biggest salvo yet in the ongoing war with Fujifilm.
“Xerox does not currently plan to renew the Technology Agreement when it expires in 2021,” Visentin says. “To that end we are now moving to begin sourcing product from suppliers other than FujiXerox and we intend to do so more and more in the months and years ahead.”
Last week Fujifilm filed an action calling for $1 billion in compensation for Xerox’s failure to honour the agreed purchase agreement. Far from paying compensation, Visentin argues that accounting fraud at FujiXerox which amounted to mismanagement “have weighed heavily on our dealings and have cost us both a significant amount of time and money”.
Revenue from China has “never been formally investigated for the types of accounting fraud that are rampant throughout FujiXerox’s other territories despite clear indications of questionable accounting practices”, he says without providing details to support the allegations. This would make Fuji Xerox unable to comply with “laws and regulations applicable to US public companies”. And kicking hopes that a new offer will arise into the long grass, he says that such an idea is “simply delusional. It will not happen”.
Assuming that there will be no back tracking, Xerox will have to strike a distribution and replacement deal for the joint technology agreement with the likes of Canon, Konica Minolta or Ricoh, which seems unlikely. Sharp, Kyocera or Brother Industries might be able to cover part of the gap left by the absence of FujiXerox technolog, but not all. Closer to home for Visentin and others on the Xerox board is HP.
Fujifilm has argued that Xerox will find it difficult to thrive alone because of the reliance on its technology. However, Visentin stresses that “nothing could be further from the truth.”
“In fact its is actually Fuji Xerox that could potentially suffer ruinous consequences from the loss of over $1 billion of revenue from Xerox, its largest customer. And legally there is nothing Fujifilm can do to stop that happening.”
However, Komori-san has warned that Fujifilm will find it easier to compete against Xerox in the US and Europe where it has an existing infrastructure than for Xerox to build from the ground up in Asia and especially in China. "Accordingly, we believe it would be enormously costly and difficult for Xerox to gain business in Asia Pacific," he says.
There are also likely to be clashes over the rights to use the Xerox name in these countries. Negotiations are becoming more heated, focusing on what each might lose rather than what might be gained. And there is no sign of this stopping as yet.
There will be a massive shake up of the Xerox product portfolio if the company goes through with its intention to end the Technology Agreement with Fujifilm when it expires in 2021. Xerox has already been looking at alternative sources of supply for products that it receives from Fujifilm.
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