Problems are deepening for Japanese electronics companies suffering from a global economic slowdown. Matsushita and NEC are the latest firms to feel the sting of dropping demand.

Matsushita, the world's biggest consumer electronics maker, announced a sharp loss of more than $300 million in the second quarter. The company blames a slowdown in sales on plunging worldwide demand. In response, Matsushita will expand an early retirement plan, so that it can trim its workforce.

Rival NEC also announced plans to restructure. It will slash 4,000 jobs, and close some production lines. The head of the company's semiconductor division says the current business climate is the worst the company has ever experienced.

Alan Bell covers Japanese equities for Credit Suisse First Boston. He says that it is vital for electronics makers to adjust to the global slowdown, because, in his view, it will last for several years. "What we are going through now is a process of rationalization. The capacity that has been built has to be brought in line with the likely level of demand we will see over the next few years or so. These are going to be somewhat lower than what we have enjoyed during the year 2000 and 2001," Bell said. Meanwhile, Japan's top carmaker, Toyota, and Universal Studios of the United States have unveiled a global marketing alliance. Under the deal, Toyota will sponsor Universal movies and theme park attractions around the world. It will pay Universal $100 million to link its name with the entertainment company. The carmaker will also be able to use characters from Universal movies in its advertisements.

While temperatures in Japan have been soaring, so have sales of beer and malt liquor. Brewers such as Sapporo and Asahi are reporting record sales. Japanese electricity companies are also experiencing a similar boost, as people use more air conditioning.