Hitachi Ltd. said Monday it will invest 1 trillion yen ($11 billion), or about 70% of its capital expenditure over the next three years, on its "social innovation" businesses, which include its information technology and infrastructure-related operations.

The plan underlines the Japanese electronics giant's strategy for long-term growth, as it looks to move its focus away from gadgets and appliances toward areas with stronger earnings potential such as power plants and railway systems.

"The current fiscal year is a major turning point for Hitachi," said President Hiroaki Nakanishi. "Having implemented various restructuring measures, we are now switching to offense from defense," he said.

The company plans a total capital investment of 1.4 trillion yen over the three fiscal years through March 2013. It will spend 1 trillion yen on "social innovation" partly to strengthen its competitiveness in nuclear power generating systems and to increase its presence in railways in the U.K., while also expanding its data centers for information and telecom services.

Hitachi President Hiroaki Nakanishi

Hitachi will also spend 600 billion yen over the same period on research and development for the "social innovation" segment, including for "smart grids," a next-generation system that allows more efficient and flexible distribution of electricity.

Hitachi's investment plans come as the company has successfully turned around two of its segments—consumer electronics and automotive systems—that made massive losses on the heels of the financial crisis.

"Our strategy is to distance ourselves from volatile businesses and focus on more promising social infrastructure businesses," Mr. Nakanishi said, noting that the company will continue to adjust its business portfolio according to this broad strategy.

Mr. Nakanishi said that global expansion will be key to Hitachi's "offensive" strategy, but the company will likely face strong competition from rivals such as General Electric and Siemens.

He said the company aims to generate more than half of its revenue abroad in the fiscal year through March 2013, compared with an overseas sales ratio of 41% in the last fiscal year.

As part of its effort to shift more resources outside of Japan over the next three years, the company plans to increase the number of overseas staff by about 24% to 161,000, while reducing its staff in Japan by 6% to 217,000.

The company also aims to raise its equity ratio to 20% in fiscal 2012 from 14.4% in the fiscal year ended March.

Mr. Nakanishi said that the company no intention to boost its capital through equity financing for now, and would instead seek to boost equity ratio by making its operations more profitable.

In December, Hitachi fueled share dilution concerns in by raising about 350 billion yen in a new share issue, its first in 27 years.

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved