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Manufacturing News Center
Japan--February 03, 2004--Japan is back after 13 years of fiscal distress. The economy is picking up, consumer spending is up and the banking system finally seems to have stabilized. This may sound like an overdue recovery, but it has been a long process. Far more has been at play behind the scenes in Japan than meets the eye. The country’s culture of investing in your customers, something of an interesting concept in keeping everything inside the country’s political boundaries, has failed miserably in the outside world. The experiment is over. Plain and simple, it didn’t work. Japan’s success in the 1970s and 1980s was largely the result of better manufacturing processes. The country redefined manufacturing for the first time since Henry Ford invented the assembly line, adding a new level of quality controls that never existed in places like Detroit and slicing out costs that propped up companies like RCA and a slew of other TV and radio manufacturers. But Japan decided to keep its expertise in-house, or at least within its borders. So instead of looking for innovative ideas in the outside world, companies there cross-invested in one another and roped their domestic banks into the whole process. Instead of making things better, they created a giant Gordian knot that took more than a decade to untie. Add to that the entire Japanese concept of keiretsu, in which one company would provide shelter for a slew of start-ups that can all do business together and help each other grow. Instead of growing, the start-ups dragged down the established businesses, which kept funneling more and more money into them. It became a case of throwing good money after bad, and that never is a good idea in business. As a result of both practices, Japanese innovation came almost to a standstill. Mired in their own problems, it was easy for countries like Korea and China to far surpass Japan’s low-cost manufacturing model, chopping out costs that even the most efficient Japanese manufacturers couldn’t or were unwilling to do. Considering that Japan is the world’s second largest economy, this has been bad news for everyone in a global market. It closed off a huge consumer electronics market and it put a severe crimp in the world market for electronic component exports. With sales of EDA software on the rise in Japan, there are clear signs that things have changed, and for the better. In addition, most vertically integrated Japanese companies no longer sell exclusively within. Component divisions now sell the bulk of their wares to outside customers, a move that keeps pressure on quality and cost. Japan’s recovery can only mean good things for a global industry. And
given the fact that everyone counted out the country’s contributions,
it should provide additional fuel to the ongoing recovery. See more information on the Japanese Economy at http://www.meti.go.jp/english/
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Source: By Ed Sperling -- Electronic
News and METI
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