After Japan’s economic downturn many people had written off Japanese companies. But these views should take heed of the fact that Japanese companies had been busily working away in the background...


After Japan’s economic downturn many people had written off Japanese companies. But these views should take heed of the fact that Japanese companies had been busily working away in the background developing organisational innovations, very much in the fashion of Kaisen and lean manufacturing that left their Western counterparts reeling in previous eras. Many Japanese companies ‘very successfully’ pioneered a twin-track approach in shifting more production towards high-value niche products while doing more to build plants elsewhere in Asia where costs were lower. An important part of this strategy was greater investment in developing new product and manufacturing processes, following in the footsteps of leading exemplars such as Ricoh (an office-equipment company), Keyence (suppliers of automation equipment), and the electronic groups of Seiko, Sharp and Sanyo. While manufacturing accounted for 19.5 per cent of Japanese output, only slightly above the average for all the 30 nations in the Organisation of Economic Co-operation and Development, more than half Japan’s total was accounted for by high- and mid-technology goods 3 almost twice as high as the OECD norm. Such products included instruments, cars, electronic equipment and drugs. Also, the research intensity of Japanese industry, measured by the number of researchers compared with other workers, was growing faster than in almost any other OECD country. Japan had 10.2 researchers per 1000 industrial employees, against the OECD average of 6.5. Among those whose performance stood out were Toyota, Nissan and Honda, Japan’s biggest car producers. All earned operating profits of above 10 per cent of sales, much higher than for most manufacturers, and were increasing market shares in the US. Canon 3 manufacturer of cameras and semiconductor production machines 3 in 2002 recorded net income of ¥190bn (£1bn), six times more than in 1994. It spent highly on research and development and was estimated to own the seven most valuable patents of all time, all to do with ink-jet printing. These companies, like other Japanese manufacturers, were spreading their influence to the rest of Asia, which in 2002 received a quarter of Japan’s foreign direct investment, from 7 per cent in 2000. Minebea, the world’s biggest maker of miniature industrial bearings, also moved increasingly to high-technology products while building strength in Asia. The development centre was a small plant in Karuizawa, northern Japan, where ideas were worked out, and transferred to other Minebea plants in Thailand, Singapore and China that were responsible for most of the company’s production.

May 25, 2022
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