It wasn’t too long ago that people were clamouring over the latest and greatest in Japanese products. Until the debut of Apple’s revolutionary iPhone and the “me – too” competitors that followed, Japanese cell phones were the pinnacle of mobile phone technology bar none. Cars manufactured by Toyota and Honda were held in the highest regard before last year’s blitz of seemingly consecutive recalls. Japan’s dominance over its two staple exports, cars and electronics, was clear as day.
Then it all came crashing down.
We all know the story that followed: lacking innovation and refusing to break the old ways of doing business, Japan Inc. continues to see its market share abroad being gradually eaten away by its much cheaper, more dynamic Asian (and sometimes American) rivals. One by one, the dominoes began to fall. Cornered by falling profits and the perennially strong yen, industry was forced to lay off workers in Japan as manufacturing processes shifted to developing countries. Some companies slashed their parts’ costs in an attempt to recoup their losses, oftentimes at the expense of quality (Toyota is a prime example). Some firms have been forced to extend product cycles so as to minimize the costs of ongoing research and development. What has resulted is an uncompetitive, overpriced and problem laden Japan Inc. abroad; one that has been suffering and continues to suffer if nothing is done to remedy the situation.
Though it is easy to quote active monetary intervention and innovative new products as solutions to Japan’s woes, rectifying the problem through either manner is easier said than done. Rounds of quantitative easing in the fall of last year, for instance, did little to stem the yen’s surge to the top. So what can Japan do to get its exports back into fighting shape?
The answer may lie in exporting products that Japan already has.
Confused? Here’s an example that I’m most familiar with: cars. Visit the Japan site of any Japanese automaker and compare it to their equivalent website in any other country. Though the automotive markets in developing countries like China and India have experienced explosive growth, Japanese automakers continue to offer vastly superior products, with line-ups triple the size of those in other countries, exclusively to those situated in Japan. The plastics found in the JDM (Japanese Domestic Market) Toyota Corolla, for instance, approach Lexus – like levels of refinement in comparison to the Rubbermaid material found in its North American brother. Nissan offers nearly thirty models to choose from in Japan, while those in China are limited to pick and choose from a measly nine. There is often a multitude of customization options open to Japanese customers unavailable to consumers anywhere else in the world. Though the Japanese domestic market remains an important market for any automaker, keeping such exceptional products and services exclusive to a market in decline makes little to no sense at all.
It isn’t only cars; after all, the same could be said for every other sector in Japan. Despite being a massive hit in Japan, Sanyo has yet to announce plans (if ever) to export its GOPAN rice-bread making machine. Cup Noodles, a dietary staple of the average college student, oftentimes taste better in their domestic iterations than their tasteless, plastic textured equivalents sold elsewhere in the world. Though the quality of their notebook computers is notably better than that of laptops offered by American hardware juggernauts Dell and HP, companies like Fujitsu and Panasonic have kept mobile computing solutions exclusively to business customers. And let’s not forget the host of offbeat Japanese items, which could potentially draw much revenue from consumers around the world.
As a country fuelled by and reliant on exports for much of its economic growth, Japan must realize that improving its game abroad is the only way its manufacturing industry will survive at home. The only way that Japan can do this is by offering the same, unique products (of superior quality) available locally to both emerging and developed markets across the globe. Whether Japanese companies decide to do so is another matter, but such is an inevitability that they will eventually have to come to accept.
Photo credit: Dmitry Valberg / Flickr