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Japan losing its manufacturing edge to South Korea

210 Comments

"I got the feeling that Korea's Hyundai is clearly surging past Japanese models," automotive journalist Toshifumi Watanabe tells Shukan Bunshun (Jan 26), after returning home from the Detroit Motor Show. "I was particularly struck by their innovative and challenging designs. Japanese automakers, by contrast, are content to introduce their new ideas using concept car prototypes. That's a stance that makes them vulnerable."

It was about 30 years ago that U.S. politicians swung sledge hammers on Japan-built cars that appeared to threaten their domestic auto industry. This year, however, it was Hyundai's compact Elantra that took the honors as "North American Car of the Year."

"Among the three finalists in the passenger car category, there wasn't a single Japanese model," sighs an editor of an automotive magazine. "Since 2000, every year there was at least one, and sometimes even two models nominated. Since 2009, the Nissan Leaf electric vehicle was the only one to be picked."

How the mighty have fallen. In previous years, Japanese models had been selected in the passenger car and light truck categories, the latter of which includes SUVs. And in 2006, Honda Motor Co drove off with double prizes, taking two categories. But since 2009, when Hyundai won its first prize, the appeal of Japanese models has declined.

"By 2000, Hyundai had already passed Mitsubishi and Suzuki, and over the past five or six years has become a real competitor," says a journalist who covers the auto industry. "Now their Elantra and Sonata models are contending with Toyota's Corolla and Camry. In terms of price, I get the feeling the Korean cars are ranked above their own class. And Korean car designers are also working for European and American firms, which recognize their flair for design."

Pros in the industry still give Japanese models the nod for more robust stability, quieter operation and superior finish. But in terms of design and price, Korean brands are giving them a run for the money -- and the latter's 10-year warranty service has made them particularly appealing.

Meanwhile U.S.-built hybrid models like the Ford Fusion, with its claimed 42 kilometers to the liter fuel consumption, are mounting a strong challenge to another Japanese specialty, hybrid vehicles. In comparison, the Toyota Prius claims 37 kilometers to the liter.

Shukan Bunshun moves on to lament Japan's rapidly plummeting TV industry. It seems the inflated value of the yen is not the only threat to its continued existence.

At the Consumer Electronics show held recently in Las Vegas, two Korean companies -- Samsung and Lucky Goldstar, both introduced 55-inch organic EL TVs. In 2007, Japan's Sony had previously launched sales of an 11-inch model with similar electro-luminescence, considered by some to be the next-generation technology to succeed LCDs.

Sony also had hopes that organic EL technology would lead to a resurgence of its brand.

"Our efforts to master the manufacturing technology failed, and our yield rate was poor, wrecking efforts to reduce production costs," then-president Ryoji Chubachi had announced. "We also failed to develop large-screen technology. So Sony effectively decided to withdraw from organic EL TVs."

"Other Japanese firms made efforts to develop the technology, but any way they worked it, the results showed they would incur major losses, so their management gave up trying," a business reporter tells the magazine, adding "But Samsung pulled it off. They might lose money, but they've got the desire, and the financial resources, to persist. If they manage to boost the yield rate and achieve profitability, they will take another bite out of Japan."

"In the past, it was Japan's TV makers that drove foreign manufacturers out of business," observes Osamu Katayama, a business journalist. "Call it karma, but now it seems to be time for them to receive the same treatment at the hands of South Korea."

© Japan Today

©2019 GPlusMedia Inc.

210 Comments
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Japan is not losing its manufacturing edge, Japan basically has a monopoly on advanced, high end manufacturing, they have the world market cornerned on making the things that require the highest level of precision and ability and when they move onto even higher levels, they sell their older technology to South Korea. South Korea should thank Japan.

-21 ( +7 / -28 )

Japan is still very strong in Nuclear Technology.

6 ( +9 / -3 )

Why are the letters "R" and "L" almost in every car name in Japan?

If the Japanese cannot say the name of their own cars, how are they suppose to push them forward and sell them?

-9 ( +4 / -13 )

If the Japanese cannot say the name of their own cars, how are they suppose to push them forward and sell them?

But they do push them forward and they sell big time. It doesn't matter if the Japanese get the R and L mixed up.

-3 ( +7 / -10 )

Why are the letters "R" and "L" almost in every car name in Japan?

That's a legitimate question but it has nothing to do with pronunciation. Lots of trademarks and names are already registered by companies using other letters, but common words in Japanese with those two letters (and particularly L) tend to be very few in number, so it's easier to coin new ones to name cars. Camry happens to be a native Japanese word (kanmuri) meaning a crown.

4 ( +4 / -0 )

Losing? How about lost? Korea is what Japan was 40 years old with the fight and hunger to lead the pack. Now? Nothing. Blame the education system, society and the current business ethic and culture.

7 ( +14 / -6 )

I can only think of a handful of models that are fun to drive from Japan.

Most of the SUVs and minicars drive like pieces of jelly so.....

-1 ( +4 / -5 )

Losing? How about lost? Korea is what Japan was 40 years old with the fight and hunger to lead the pack. Now? Nothing. Blame the education system, society and the current business ethic and culture.

Except Japan hasn't lost its manufacturing industry, not by a long shot. South Korea is reliant on technology sold to them by the Japanese that the Japanese don't need anymore. Japan has MONOPOLISED high end, advanced manufacturing, South Korea is light years away from that.

-13 ( +8 / -21 )

Lucky Goldstar

Huh. Always wondered what that stood for.

6 ( +6 / -0 )

oginome: You're right and you're wrong. It's true Japan has had a very large lead in a good part of the field of technology and manufacturing, so it is only natural they would lose some, and does not necessarily mean that others are 'surging past' them. But you're wrong in making knee-jerk statements like "South Korea should thank Japan", unless you think Japan should thank the West for getting them on track after WWII. Or maybe Japan should thank Henry Ford?

Seriously, Japan has lead the automotive manufacturing field for quite a long time, so it's natural they lose some ground. And SK is growing, economically and in the field of Tech (Samsung also overtook some Japanese companies in sales recently, no?), so it's also natural they will threaten what has been dominance in the field by Japan.

6 ( +11 / -5 )

Ogi, sadly, your line of thinking is what is causing the destruction of the Japanese tech and business power worldwide. No one owes Japan anything. Japan took tech from the US and made it better, Korea took tech from Japan and made it better... Get a mitt and get in the game or be left behind. Japan is being left behind while Korea comes up.

And if anyone owes a thank you, Japan should be thanking the US for creating the business opportunities here in the first place.

4 ( +11 / -7 )

Ogi, sadly, your line of thinking is what is causing the destruction of the Japanese tech and business power worldwide. No one owes Japan anything. Japan took tech from the US and made it better, Korea took tech from Japan and made it better... Get a mitt and get in the game or be left behind. Japan is being left behind while Korea comes up.

Except Japan's power in tech and manufacturing hasn't been destroyed. Not even slightly.

And if anyone owes a thank you, Japan should be thanking the US for creating the business opportunities here in the first place.

Japan was an economic power before WW2.

-9 ( +5 / -15 )

Except Japan's power in tech and manufacturing hasn't been destroyed. Not even slightly.

Ogi, you really need to read about what is going on with Japanese electronics and car companies right at this moment. They are all ditching their domestic manufacturing operations for outsourced options in other Asian countries, and even the United States. CNN reported that Japan will lose about 75% of its domestic auto manufacturing to plants overseas in just the next 3 years. The electronics giants are all shedding manufacturing jobs as well, and buying more and more parts from abroad to lower costs. While gadgets used to be assembled in China using Japanese-made parts, those days are largely coming to an end. They will not be able to compete on price otherwise.

I think your opinion about Japan's power in tech and manufacturing was recently true, but is rapidly becoming outdated. A lot changes in just a couple of years, and Japan is about to succumb to the same market forces that hollowed out the manufacturing sector in America and other developed countries. This is capitalism, and it's an adapt-or-die game. Japan needs to recognize this rather than denying what is happening.

6 ( +10 / -4 )

Japan is not losing its manufacturing edge, Japan basically has a monopoly on advanced, high end manufacturing, they have the world market cornerned on making the things that require the highest level of precision ............................

complacency and one of the prime reasons why Japan is slowly but inevitably falling behind.

2 ( +5 / -3 )

Korean cars competing on price only not quality or reliability, like most things korean or in korea they are like cheap copies of Higher quality japanese products.

When in Korea I always had the feeling that korea and its goods were like japan' poor cousin.

Their cars dont have the durability or length of life that the japanese cars have.

2 ( +8 / -6 )

Ogi, you really need to read about what is going on with Japanese electronics and car companies right at this moment. They are all ditching their domestic manufacturing operations for outsourced options in other Asian countries, and even the United States. CNN reported that Japan will lose about 75% of its domestic auto manufacturing to plants overseas in just the next 3 years. The electronics giants are all shedding manufacturing jobs as well, and buying more and more parts from abroad to lower costs. While gadgets used to be assembled in China using Japanese-made parts, those days are largely coming to an end. They will not be able to compete on price otherwise. I think your opinion about Japan's power in tech and manufacturing was recently true, but is rapidly becoming outdated. A lot changes in just a couple of years, and Japan is about to succumb to the same market forces that hollowed out the manufacturing sector in America and other developed countries. This is capitalism, and it's an adapt-or-die game. Japan needs to recognize this rather than denying what is happening.

People on this site are not reading. The manufacturing that Japan is outsourcing is NOT the advanced, high end manufacturing that they have specialised in and gain global dominance in over the last 20 years. All the stories about Toyota outsourcing its plants to China or Mazda making its new car in Ohio doesn't take away from the massive dominace and monopoly Japan has in higher forms of manufacturing and will continue to have. Japan's manufacturing industry, is not 'hollowing out', far from it.

-11 ( +5 / -15 )

complacency and one of the prime reasons why Japan is slowly but inevitably falling behind.

Wow, people don't really get it. How can it be complacency when they are forever striving to further specialise and grow even more in the advanced manufacturing sectors they've already establised world dominance in? Like I said, outsourcing a Toyota plant to China is not evidence of hollowing out when you look at the whole industry. Japan has a stronghold, chokepoints on PRODUCER'S GOODS, they make the materials producers need to produce the products they have been hired by companies to make ! Are people going to understand this any time soon?

-11 ( +4 / -15 )

@oginome

Believe what you want, but the fact remains that Toyota's China plant will be producing Prius soon. What's left for Toyota is the hydrogen car that was in their drawing boards for many, many years now, but going nowhere near production status.

Up to a few years ago, Japan cellphones may have had the edge technology-wise, but lately, Samsung has overtaken many Japanese companies for home electronics and even smartphones. Just look in the electronics stores nowadays, there are a lot more imported items than local items, and cheaper as well.

Personally, I always believed that Japan products represent quality. But lately, it just means expensive.

Just ask anybody overseas about Japanese products. Many will even tell you that Samsung is a great brand.

Sad to say, but Japanese technology is getting left behind. And the so-called global dominance is fast being forgotten.

1 ( +5 / -4 )

Believe what you want, but the fact remains that Toyota's China plant will be producing Prius soon. What's left for Toyota is the hydrogen car that was in their drawing boards for many, many years now, but going nowhere near production status. Up to a few years ago, Japan cellphones may have had the edge technology-wise, but lately, Samsung has overtaken many Japanese companies for home electronics and even smartphones. Just look in the electronics stores nowadays, there are a lot more imported items than local items, and cheaper as well. Personally, I always believed that Japan products represent quality. But lately, it just means expensive. Just ask anybody overseas about Japanese products. Many will even tell you that Samsung is a great brand. Sad to say, but Japanese technology is getting left behind. And the so-called global dominance is fast being forgotten.

Did you read my above post? The Japanese have GRADUATED into making PRODUCER'S goods, the highest form of manufacturing. All those advances you hear of from Apple and South Korea's companies are reliant on Japanese technology to function. It's like banging your head against a brick wall. People are really not getting it.

-4 ( +6 / -10 )

Fine, so Japan will make CONSUMER goods ... WHEN? Until Japan can come up with a way to fix the economy, no one will buy CONSUMER goods that costs as much as the finished product.

And, if you will look at the business section of this forum, you will see that Japan's market is on very slippery grounds, the trade deficit, unemployment and many other things, how can you even say GRADUATED into making PRODUCER'S goods?

3 ( +5 / -2 )

All the stories about Toyota outsourcing its plants to China or Mazda making its new car in Ohio doesn't take away from the massive dominace and monopoly Japan has in higher forms of manufacturing and will continue to have. Japan's manufacturing industry, is not 'hollowing out', far from it.

Without the car and electronics manufacturers, the domestic industries that produce high-quality parts will suffer, and have a hollowing-out of their own. Sony and Panasonic are making big changes to their supply contracts, and outright ditching some domestic firms in favor of overseas ones. Panasonic has said they are going to import 57% of its parts from abroad by the end of this quarter. Toshiba is closing three semiconductor plants by September. Nippon Electric Glass just had contracts cancelled by Sony and Panasonic, who both said they will be buying their glass screens from overseas suppliers effective immediately. Doesn't sound to me like they have the market cornered anymore (or maybe no one wants to buy what they are selling). Quality or not, they can't compete on price and the "finished product" makers are looking for good-enough and cheap, while high-quality parts are just not worth the cost. At this point, there are huge costs to rebuild the plants destroyed in the tsunami/earthquake, increases in energy prices due to the stupid decision to close down all the nuclear power plants, and an impossibly strong yen. How is it possible for any of these manufacturing companies to produce their goods at a competitive price as overseas companies slowly gain on them in terms of quality?

0 ( +2 / -2 )

Fine, so Japan will make CONSUMER goods ... WHEN? Until Japan can come up with a way to fix the economy, no one will buy CONSUMER goods that costs as much as the finished product. And, if you will look at the business section of this forum, you will see that Japan's market is on very slippery grounds, the trade deficit, unemployment and many other things, how can you even say GRADUATED into making PRODUCER'S goods?

You don't get it, producers use the materials the Japanese give them to create their own materials that go into CONSUMER ITEMS, Japanese manufacturing stands at the very top of this chain. It's the most skilled, intensive, and intricate. And the Japanse HAVE graduted, it's been a process that started 20 years ago. The trade deficit was a 2011 once off, the Japanese trade SURPLUS has INCREASED year after year even though the bubble burst 20 years ago. Unemployment rate is low and has remained low. No one is denying Japan has its problems, but it's insane that people are trying to dispute its world dominance in advanced manufacturing.

-7 ( +4 / -11 )

Without the car and electronics manufacturers, the domestic industries that produce high-quality parts will suffer, and have a hollowing-out of their own. Sony and Panasonic are making big changes to their supply contracts, and outright ditching some domestic firms in favor of overseas ones. Panasonic has said they are going to import 57% of its parts from abroad by the end of this quarter. Toshiba is closing three semiconductor plants by September. Nippon Electric Glass just had contracts cancelled by Sony and Panasonic, who both said they will be buying their glass screens from overseas suppliers effective immediately. Doesn't sound to me like they have the market cornered anymore (or maybe no one wants to buy what they are selling). Quality or not, they can't compete on price and the "finished product" makers are looking for good-enough and cheap, while high-quality parts are just not worth the cost. At this point, there are huge costs to rebuild the plants destroyed in the tsunami/earthquake, increases in energy prices due to the stupid decision to close down all the nuclear power plants, and an impossibly strong yen. How is it possible for any of these manufacturing companies to produce their goods at a competitive price as overseas companies slowly gain on them in terms of quality?

This is not the high end manufacturing I am talking about. Toshiba is closing semiconductor plants? There are other companies too in the world which make semiconductors. The Japanese have monopolised the SEMICONDUCTOR GRADE SILICON that goes into making all of these semiconductors. Do you see what I'm talking about? They have monopolised producer chokeholds. You're getting that confused with the products these producers end up making.

-4 ( +4 / -8 )

Japan is being left behind while Korea comes up.

Absolutely untrue. Japan is still the unquestioned world leader in high tech manufacturing.

-15 ( +4 / -19 )

This is not the high end manufacturing I am talking about. Toshiba is closing semiconductor plants? There are other companies too in the world which make semiconductors. The Japanese have monopolised the SEMICONDUCTOR GRADE SILICON that goes into making all of these semiconductors. Do you see what I'm talking about? They have monopolised producer chokeholds. You're getting that confused with the products these producers end up making.

So, they don't make the finished products, they are totally losing ground on parts supply manufacturing, and all they are left with is a monopoly on the basic materials that compromise high-tech products? You're using this example to prove that Japan is not in trouble? Japan cannot build its future on being two steps down on the supply chain while China dominates the assembly and parts manufacturing for Korean and US tech companies that sell better products at lower prices. I'm sure that other countries would gladly allow such Japanese monopolies to continue while they sit up on their perches and collect the real money at the end of the rainbow.

2 ( +4 / -2 )

Oginome companies can continue to dominate only with the money to pour into their R and D...you'll find that Korea is cashed up and successfully head hunting,especially in electronics(LG and Samsung)and easily surpassed Japan now in quality and price...right now in this field the future looks very very bleak for Japans electronic industry

4 ( +6 / -2 )

Did you read my above post? The Japanese have GRADUATED into making PRODUCER'S goods, the highest form of manufacturing. All those advances you hear of from Apple and South Korea's companies are reliant on Japanese technology to function.

A good example of this I saw in the news after 3/11 last year, when factories and plants within the Tohoku region were affected by the tsunami. This caused some concern with Korean and Chinese companies who were using Japanese components in their vehicles and electronics; they were worried about the disruption in the supply chain and possible shortages of raw materials. This led to the other plants in unaffected regions to work double time to meet the demand. Same thing happened more recently with the flooding in Thailand, which shut down quite a few Japanese factories there, albeit temporarily.

1 ( +2 / -1 )

So, they don't make the finished products, they are totally losing ground on parts supply manufacturing, and all they are left with is a monopoly on the basic materials that compromise high-tech products? You're using this example to prove that Japan is not in trouble? Japan cannot build its future on being two steps down on the supply chain while China dominates the assembly and parts manufacturing for Korean and US tech companies that sell better products at lower prices. I'm sure that other countries would gladly allow such Japanese monopolies to continue while they sit up on their perches and collect the real money at the end of the rainbow.

The finished parts wouldn't even be able to be in the finished state that they are in if it wasn't for the Japanese. These are NOT 'basic materials', you're confused. They are the most high quailty, labour and capital intensive elements of manufacturing, requiring levels of skill and expertise that go beyond anything 'basic'. The monopolies the Japanese have attained in advances manufacturing leaves the rest of the world economy completely reliant on Japan, because ALL manufacturers in the world, no matter what country or company,or how rich or poor, are reliant on the Japanese for certain components, since only Japan makes them.

-5 ( +4 / -9 )

Oginome companies can continue to dominate only with the money to pour into their R and D...you'll find that Korea is cashed up and successfully head hunting,especially in electronics(LG and Samsung)and easily surpassed Japan now in quality and price...right now in this field the future looks very very bleak for Japans electronic industry

Another one not getting it.

-6 ( +4 / -10 )

The Japanese economy is, presently, partly a victim of its own success. The strong yen and weak won might have quite a lot to do with the present situation as well, with Samsung successfully playing game, flooding the US market with lower priced products and then gradually bringing them up to the same level as other manufacturers. LG has, essentially, piggy-backed on Samsung's success, using the new recognition of Korean products (Samsung) in the States. Hyundai is presently using the low price game to their advantage as well.

2 ( +2 / -0 )

I'm sure that other countries would gladly allow such Japanese monopolies to continue while they sit up on their perches and collect the real money at the end of the rainbow.

'Real money at the end of the rainbow'? Like the real money that comes when you've got your components in every electrical device in the world, no matter what company or country they're being made in?

-6 ( +4 / -10 )

Japan is in a very weak position in many areas but dont call the undertaker just yet, there is still some life left in this old gal yet, and when she recovers you'll see a bit more competition from the worlds leader.

Lots of companies were affected by the tsunami which had a knock on effect.

0 ( +3 / -3 )

I believe its both: It's only natural that a still developing country like South Korea catches up and surpasses Japan in many fields of industry.

However, at the same time, it is true that Japan lost its edge in many fields. As with its own dwindling population, the country is becoming an old, complacement man, who earned his money a long long time ago and now wants to live off from that old money. The younger generation of Japanese (whose number are also declining each year) have become complacent as well. Born in a rich developed country, with a comfortable social welfare system. There is no spirit, no will to succeed. There are no business entrepeneurs nor are their enough creative people who want to improve the situation. Instead, you got an army of bureaucratic Japanese workers, a lot of them also stuck in temp-contract jobs, who are just fine to live out their days with standard pay.

The only way for Japan to go is further down. Unless a dramatic changes occur (including in its corrupt and totally paralyzsed political system), Japan will experience a "slow death". Nothing spectular, just a year-on-year decline to nothingness, already surpassed by China, soon by South Korea and other countries who do have the will. Until one day the rest of world have pretty much forgotten about Japan's achievements in the past.

It's not a happy story and I wished it was otherwise, but I don't see any other scenario unfolding.

3 ( +6 / -3 )

Have to admit Japan still holds the cutting edge in entertainment robot that looks cute/sexy. ..............................

3 ( +5 / -2 )

'Real money at the end of the rainbow'? Like the real money that comes when you've got your components in every electrical device in the world, no matter what company or country they're being made in?

Nope. Real money like the $46 billion in revenue, $13.9 billion in profits Apple just posted for the quarter, plus the $97 billion already in the bank.

2 ( +3 / -1 )

Losing? How about lost? Korea is what Japan was 40 years old with the fight and hunger to lead the pack. Now? Nothing. Blame the education system, society and the current business ethic and culture

tmaire -- spot on. Japan became a victim of its own success and became arrogant and legendary for its inward focus. It's cars sold like hot-cakes in the states for years because they were reliable and had superb quality, while the U.S. companies were producing crap, and SK was not a factor yet. But now the U.S. companies are making excellent product, and, along with SK, designing exciting cars. Meanwhile, the Japanese cars, especially Toyota, look old and stoggy by comparison. Line up a Hyandai Elandra and Ford Focus next to a Toyota Corolla and Honda Civic and look for yourself. Unfortunately, the Japenese companies never really grasped the U.S. expression "You are what you drive", and people here will pick flashy over boring every thime, if the quality is comparable.

1 ( +6 / -5 )

The real battle is just beginning for the Koreans company.With Sony, out of the game, these copycat companies will have to invest massively in new technologies to compete with Chinese competitors that are not "good guys" as the Japanese.

Patent issues Often ignored by South Korean companies will not be tolerated by Chinese rivals.Will be interesting to see this dirty game between rivals little naive.

-2 ( +2 / -4 )

I get it. So do the Americans.

Moving plants overseas although hurts the market for jobs in Japan is just a part of the big picture. Americans, Japanese, British, Germans and sometimes French are dominant. The Israelis too by the way.

Industries do not hollow out, they move the grunt work overseas to those that have low labor and other costs. The tech remains here.

Back engineering...ok, but not effective. What have the Iranians done with the drone we delivered them?

Koreans are strong and that is good, but Japan is not losing out to them at all.

-3 ( +3 / -6 )

JapanGal -- Respectfully, Japan's economic and fiscal record for the past nearly three decades is nothing to brag about. It's real economic growth has been negligible and it has only kept the domestic economy moving with massive public spending that has now saddled it with huge public debt. Meanwhile, it has refused to re-structure many zombie companies, as well Japan Post and its agricultural sector. Korea, meanwhile, has had a sustained recovery since fixing its problems after the Asian currency crisis, and is much more nimble than Japan -- and thus better prepared for the 21st century. Japan is at a key cross-roads in its economic lifecyle, and, IMO, it does not appear it has the "big picture" view needed to face its issues.

1 ( +5 / -4 )

JapanGal -- same post on different threads? WEAK.

-1 ( +2 / -3 )

One can't deny that Hyundai is becoming a leader in car manufacturing. Their models are fairly well built, their prices are excellent and they have a 10 year warranty to boot.

If in fact Japan is selling its "old technology" to Korea and they are giving them a run for their money, what does this say about the state of Japanese industry?

2 ( +4 / -2 )

Nope. Real money like the $46 billion in revenue, $13.9 billion in profits Apple just posted for the quarter, plus the $97 billion already in the bank.

And every device Apple makes relies on intricate components made by the Japanese, along with every other device by every other company in the world, Japanese or Western. Without Japan's know how, none of these devices would even be able to exist.

-3 ( +5 / -8 )

@Ogi: fair enough but what are you defending here? You're lumping "Manufacturing Edge" into a be all end all thought that next year Korea is going to surge past Japan to take the no.3 economy spot. This article isn't mentioning advanced manufacturing or any other of the myriad of industries that comprise the Manufacturing sector at all, just a perception that Japan is losing its competitiveness in the Global Automotive Industry, to other companies or in this case, Hyundai, that have new designs, better quality, attractive costs, or the thought that a particular car is fun to drive.

and call me a layman...but what do you mean when you are referring to Advanced Manufacturing?

0 ( +1 / -1 )

is there not a verb tense problem in the heading? Should that not read 'lost'?

0 ( +1 / -1 )

@oginome I am afraid Japan is already loosing its 'Advanced Manufacturing' advantage. US, Taiwan and SK are fast catching up or have already caught up in supplying high tech solutions. Using your iPhone example, I have culled up this article which specify the potential list of iPhone 4S components and their respective manufacturers. http://9to5mac.com/2011/10/11/iphone-4s-manufacturing-bom-analysis/

just fyi.

1 ( +2 / -1 )

but what are you defending here? You're lumping "Manufacturing Edge" into a be all end all thought that next year Korea is going to surge past Japan to take the no.3 economy spot. This article isn't mentioning advanced manufacturing or any other of the myriad of industries that comprise the Manufacturing sector at all, just a perception that Japan is losing its competitiveness in the Global Automotive Industry, to other companies or in this case, Hyundai, that have new designs, better quality, attractive costs, or the thought that a particular car is fun to drive.

The title was 'Japan losing is manufacturing edge to South Korea', which is not true since Japan continues to specialise and gain an even larger part of the advanced manufacturing industry which is the most important, most skilled, capital and labour intensive area of manufacturing. Japan's current account surplus in 2010 was FIVE TIMES LARGER than it was in 1990, the last year of the bubble.

and call me a layman...but what do you mean when you are referring to Advanced Manufacturing?

The Japanese have gained a monopoly in the production of producer's goods, the most intricate, most advanced, most developed areas of manufacturing which producers need to create the products they have been hired to make. These companies, which compete with each other, all rely on these same components that the Japanese have gained a monopoly on, or in some cases, only the Japanese know how to make, such as Murata's capacitors, which are the size of a grain of salt.

is there not a verb tense problem in the heading? Should that not read 'lost'?

Not even slightly.

I am afraid Japan is already loosing its 'Advanced Manufacturing' advantage. US, Taiwan and SK are fast catching up or have already caught up in supplying high tech solutions. Using your iPhone example, I have culled up this article which specify the potential list of iPhone 4S components and their respective manufacturers. http://9to5mac.com/2011/10/11/iphone-4s-manufacturing-bom-analysis/ just fyi

I'm afraid you're another one who doesn't understand. The Japanese have monopolised the creation of the goods these producers need to create the components they have been hired by Apple to make.

Just fyi.

-4 ( +2 / -6 )

@oginome Do you mean the High Tech machine tools including robots used in the manufacturing of components or the assembly of consumer goods? Could you share any links to info or data on this pls. I think the point here is Japan needs to strive harder cause others are catching up very fast especially SK.

2 ( +3 / -1 )

Do you mean the High Tech machine tools including robots used in the manufacturing of components or the assembly of consumer goods? Could you share any links to info or data on this pls.

Japan has a monopoly on the most intricate, sophisticated and most advanced components that producers need in order to create their own components for companies. The Japanese have the lead in many fields, from Murata's capacitors, which only they make, to semiconductor grade silicon in which they have a near total monopoly. Of the 39 manufacturers which make the miniturised components required for all cell phones to function, 29 are Japanese. Japan also dominates advanced lens cutting. Gallium arsenide and epoxy cresol novolac resin. Charge coupled devices. Laser diodes, optical fibres. Disk drive motors. There are so many strongholds which show Japan's dominance in advanced manufacturing.

I think the point here is Japan needs to strive harder cause others are catching up very fast especially SK.

Japan is striving very hard. SK is nowhere near Japan's level.

-3 ( +4 / -7 )

The concentration and relative size of big business groups in Korea makes an interesting comparison with Japan’s experience. In Japan, the relative size of keiretsu is not gaining strength. In fact, industrial concentration in Japan has recently fallen as investment and output rose rapidly as a result of technology innovations in industries and companies that are not part of keiretsu, leading to sizable new entry and fast growth of small firms. Koreans believed that business efficiency can be enhanced by dispersing the ownership of large business groups. Strengthening the competitiveness of small and medium size companies is obviously a worthy goal, and much effort has been devoted to it.

1 ( +1 / -0 )

I am getting mad with this News....

I am Japanese

-3 ( +2 / -5 )

Twenty years ago in just about every electronice gadget category Japan was a world leader. Stereos, CD Players, VHS, Cameras, TV... you name it. Not to mention Japanese cars and motorcycles. The point is... this is currently not the case. Technology has moved forward. Elec gadgets no longer require a lot of small moving parts which Japan was a leader in. Take Blu-Ray, it is dead in the water already. I have not gone out to rent a movie in about 3 years. I can download them in about 10 minutes off of iTunes. Japanese companies put a lot of money into Blu-Ray but it will not pan out. Today's market is about seamless usage of media and data. The makers of hardware have been eclipsed by Software because elec parts have become commoditized. I think Samsung realizes this so they are trying to out price and out produce everybody out there until all their competitors go bankrupt and Samsung will be left almost standing alone and beholding to no one.

3 ( +3 / -0 )

"Korea took tech from Japan and made it better..."

better? not experienced that.

you mean adequate and cheaper? more important for a lot of consumers

-1 ( +2 / -4 )

Twenty years ago in just about every electronice gadget category Japan was a world leader. Stereos, CD Players, VHS, Cameras, TV... you name it.

That's lower end, less skill intensive manufacturing. The Koreans do that nowadays. And all the stereos, mp3 players, cameras, tvs made today still rely on Japanese technology to work, no matter where they are made or with which company. Japan today makes the most sophisticated, advanced parts of these devices.

The point is... this is currently not the case.

Japan is still a world leader in manufacturing.

Technology has moved forward. Elec gadgets no longer require a lot of small moving parts which Japan was a leader in. Take Blu-Ray, it is dead in the water already.

All electrical devices require many components. The Japanese have monopolised the production of the most complex, complicated components without which these devices would not work.

I have not gone out to rent a movie in about 3 years. I can download them in about 10 minutes off of iTunes. Japanese companies put a lot of money into Blu-Ray but it will not pan out. Today's market is about seamless usage of media and data. The makers of hardware have been eclipsed by Software because elec parts have become commoditized. I think Samsung realizes this so they are trying to out price and out produce everybody out there until all their competitors go bankrupt and Samsung will be left almost standing alone and beholding to no one.

But surely Samsung, as a manufacturing company, will have no use anyway if hardware is going to be 'eclipsed' like you say? Hardware will always remain vitally important and essential for the running of software. It doesn't matter how many songs you download off itunes, you can only access itunes on a computer or phone (hardware) anyway. Samsung 'beholding to no one'? But their products are reliant on advanced components that only the Japanese know how to make! Japan did the 'outprice everyone' thing back in the 80s too, but it's not as necessary anymore, because Japan has moved onto advanced manufacturing and has gained numerous strongholds in producer's goods.

"Korea took tech from Japan and made it better..." better? not experienced that. you mean adequate and cheaper? more important for a lot of consumers

I agree, Korean products are generally of lower quality than Japanese.

-7 ( +3 / -10 )

@Oginome: You are 100% correct... Japan has nothing to worry about because Japan still leads the world technologicaly. Why I ever doubted you I'll never know. You've won me over.

6 ( +8 / -2 )

And every device Apple makes relies on intricate components made by the Japanese, along with every other device by every other company in the world, Japanese or Western. Without Japan's know how, none of these devices would even be able to exist.

Ogi, No one is denying that Japan makes high-quality components for other companies, or that they are a vital part of the supply chain. You can post all day about this, but what percentage of Japanese manufacturing is fine chemicals/high-grade components? It's the major products and parts suppliers that are leaving (or going out of business) in droves. Are you trying to argue that the size of the major products manufacturing industry in Japan is dwarfed by the fine chemicals/high-grade components manufacturing industry? The companies you speak of are small to medium sized, and their markets are tiny compared to major products. A complete monopoly in silicon-wafers (which Japan does not have - they sit at about 80%) has a global market size of about $10 billion. Apple, a single company, made that in profits in a quarter. Other quality component markets are even smaller. These industries will not save Japan on their own, because they are simply not big enough to carry the country. The major products markets are enormous - more than 100-1000 times the size - so saying that Japan can afford to lose its major manufacturing on the backs of its high-grade components businesses is just wrong. The vast majority of Japan's business wealth (and potential growth) has always been in major products and their manufacturing, because those markets are huge. I highly doubt anyone in Japan is comforted by the fact that they still make the best batteries or silicon, including both the President of Toyota and the Prime Minister of Japan who have both said publicly that manufacturing in Japan is under enormous threat and has lost its edge to other countries. Neither of them reassured the country that "we will be alright because growth in our high-grade components manufacturing will make up for the losses." If they have monopolies or near monopolies in these areas, there is nowhere left to grow. These companies alone cannot make up for the losses in other areas, and it's not even close. In fact, China and Korea will gain on them because it's a security imperative at this point that they can produce their own quality components and fine chemicals lest they want to remain dependent on the Japanese for all eternity. America is not concerned that Japan will someday refuse shipment of these goods, but the other Asian countries are not so trusting. Within the next decade, I'm almost certain that Korea or China or both will catch up to Japan in these areas, if not sooner. Then what?

4 ( +6 / -2 )

The real question is how much of that Korean growth is truly innovation versus simple adoption of existing technologies? For Korea to sustain growth and be a leader in innovation, many will require substantial and fundamental economic and governmental change to support and sustain innovation growth. Short term growth is one thing, a sustained innovation culture is quite another. A long term innovation should also look at how innovation survives economic downturns and its sustainability. Some countries with explosive growth are now looking at their first economic downturn since starting their rapid growth. It will be interesting to see how they weather the economic change.

2 ( +2 / -0 )

@oginome Many other countries could produce these producers goods if they wanted to. The problem is that such products are not very profitable, requiring lots of labor, investment and time, for small returns.

Any Western country could produce what Japan does, IF they thought that doing so was worthwhile. Japan makes them because it doesn't know what else to do.

Instead Western countries make things like the Boeing 787, Swiss watches, Ferraris, spacecraft, etc, products whose technical sophistication far surpasses anything Japan can produce.

2 ( +5 / -3 )

Innovation going forward will of course play a major role on who survives: A link to 2010's leading innovators; http://www.iptoday.com/issues/2010/02/2010-patent-scorecard-leaders-by-industry.asp

1 ( +1 / -0 )

@ oginome

Semiconductor sales leaders by year

Rank

2011 2010 Company Country of origin

1 1 Intel Corporation(1) United States

2 2 Samsung Electronics South Korea

3 4 Texas Instruments(2) United States

4 3 Toshiba Semiconductor Japan

5 5 Renesas Electronics Japan

6 9 Qualcomm(3) United States

7 7 STMicroelectronics FranceItaly

8 6 Hynix South Korea

9 8 Micron Technology United States

10 10 Broadcom United States

In 1988, Japan exported US $1.5 billion of computer equipment, up more than twelvefold from the US$122 million in 1980. Japanese firms were not very successful in exporting mainframe computers, but they did very well in peripheral equipment, such as printers and tape drives. In the rapidly growing personal computer market, Japan achieved a major market share in the United States during the 1980s. Imports of computer equipment in 1988 came to US$3.2 billion (including parts).

Economic developments, namely outsourcing and globalization made these disputes obsolete by the 1990s. Japanese and U.S. influence in the computer market dwindled, with Taiwanese and mainland Chinese companies taking over component production and later research and development.

2 ( +4 / -2 )

nooo this is sad~ fight japan! i'll support u ^o^

-2 ( +0 / -2 )

It seems true. Chinese makers will also surpass Japan's ones in a couple of years. Business in Japan tends to be too conservative and they seem to think they could succeed with those obsolete ways. Conservation never allows manufactures to make innovation.

Today, priory is given to creating software rather than hardware. Japanese makers are poor at building software which is confortable and easy to use.

0 ( +2 / -2 )

There is no field where Japan and Korea compete where Japan isn't losing the lead or hasn't been surpassed by their Korean counterparts. IMO a lot of this has to do with the fact that Korean companies are supported by their government and wide national support where risks and admission of wrong course is more readily addressed. Hyundai made bad cars. They revamped their entire corporate strategy to address quality and made a huge transition into competing with Ford and Toyota and their quality shot through the roof without losing their low price edge. Same deal with economic policies. They revamped their corporate structure after being bailed out by IMF which is why they are sitting relatively pretty even with current worldwide market crapstorm.

-1 ( +4 / -5 )

One software company I like in Japan is Trend Micro. Mainly because the Japanese are extremely dilligent regarding PC security and Japanese corporations expect 100% accuracy. This has made Trend Micro a top notch software security company.

2 ( +2 / -0 )

Ogi, No one is denying that Japan makes high-quality components for other companies, or that they are a vital part of the supply chain. You can post all day about this, but what percentage of Japanese manufacturing is fine chemicals/high-grade components? It's the major products and parts suppliers that are leaving (or going out of business) in droves. Are you trying to argue that the size of the major products manufacturing industry in Japan is dwarfed by the fine chemicals/high-grade components manufacturing industry? The companies you speak of are small to medium sized, and their markets are tiny compared to major products. A complete monopoly in silicon-wafers (which Japan does not have - they sit at about 80%) has a global market size of about $10 billion. Apple, a single company, made that in profits in a quarter. Other quality component markets are even smaller. These industries will not save Japan on their own, because they are simply not big enough to carry the country. The major products markets are enormous - more than 100-1000 times the size - so saying that Japan can afford to lose its major manufacturing on the backs of its high-grade components businesses is just wrong. The vast majority of Japan's business wealth (and potential growth) has always been in major products and their manufacturing, because those markets are huge. I highly doubt anyone in Japan is comforted by the fact that they still make the best batteries or silicon, including both the President of Toyota and the Prime Minister of Japan who have both said publicly that manufacturing in Japan is under enormous threat and has lost its edge to other countries. Neither of them reassured the country that "we will be alright because growth in our high-grade components manufacturing will make up for the losses." If they have monopolies or near monopolies in these areas, there is nowhere left to grow. These companies alone cannot make up for the losses in other areas, and it's not even close. In fact, China and Korea will gain on them because it's a security imperative at this point that they can produce their own quality components and fine chemicals lest they want to remain dependent on the Japanese for all eternity. America is not concerned that Japan will someday refuse shipment of these goods, but the other Asian countries are not so trusting.

You don't get it, when a company manages to create a manufacturing chokehold, then that means all producers and manufacturing companies around the world become reliant on that company for its products. There is nowhere to go but maintain the stronghold and then look to further specialise and grow even more. The Japanese have created numerous chokeholds over the last twenty years, which tips the balance of the world manufacturing economy toward Japan hugely. And the Japanese really do have a complete monopoly on semiconductor grade silicon. No one but the Japanese produce purified semi conductor grade ingots, the non-Japanese companies (20%) engage in a lower form of production called 'wafering' to create their grade silicon, which is dependent on these ingots sourced from Japan. And the proof of the success in advanced manufacturing is the fact that Japan's trade surplus since 1990, when it began focus on higher end manufacturing, has grown FIVE TIMES BIGGER and also in the millions of highly skilled employees who work in advanced manufacturing today, earning among the highest salaries in the developed world.

Within the next decade, I'm almost certain that Korea or China or both will catch up to Japan in these areas, if not sooner. Then what?

South Korea is light years away from achieving the same dominance Japan enjoys in advanced manufacturing, never mind China, mired as it is in poverty and technological obscelence.

oginome Many other countries could produce these producers goods if they wanted to. The problem is that such products are not very profitable, requiring lots of labor, investment and time, for small returns. Any Western country could produce what Japan does, IF they thought that doing so was worthwhile. Japan makes them because it doesn't know what else to do. Instead Western countries make things like the Boeing 787, Swiss watches, Ferraris, spacecraft, etc, products whose technical sophistication far surpasses anything Japan can produce.

Are you serious? You do know that the Boeing 787 is 1/3 Japanese? Toray Industries supplied the carbon fibre and Mitsubishi the wing parts and engine combustion chambers. Not to mention the Japanese components sourced by American producers. The Japanese lead the world in manufacturing sophistication these days, it's sad that so many people don't recognise this. And it's not because they don't 'know what else to do', it's been a deliberate strategy that the self-satisfied, lazy West should pick up on. 'Any Western country could produce what Japan does'. I beg to differ, US decided to neglect advanced manufacturing decades ago to focus on 'finance' and 'spending', the UK too. Only Germany is near Japan's level.

@ Tyler Vandenburg: Another person not getting it. I was talking about semiconductor grade silicon, not semiconductors themselves, which are a lower, less intensive form of manufacturing. I have to keep saying this.

That is one very specialized area of manufacturing and is at the high end, but is also an example of why Japan is now losing market share.

But Japan's chips are in now in every product of every company, as a result of their dominance in advanced manufacturing. All these companies are reliant on Japan, it goes beyond Samsung fighting for dominance against Sony, when they both rely on Japan's advanced manufacturing industries for their products to even work.

-9 ( +3 / -12 )

The ONLY person who gets it is Oginome......LOL

5 ( +7 / -2 )

Ogi@

South Korea is light years away from achieving the same dominance Japan enjoys in advanced manufacturing

Pssst, a small reminder from middle school physical sci class, a light year is distance over time. S Korea might be years away from catching up with this technology, but I assure you Korea is still just across the Sea of Japan

6 ( +7 / -1 )

FWIW, my ex-employer (Japanese) manufactures very high performance machine parts, arguably the best in the world for their application. But we could never compete with cheap garbage that a lot of the unscrupulous customers settle for, knowing full well the end-consumer will buy a new product when the first one breaks. And it will break, because it's designed to break (planned obsolescence at it's best or worst, depending on how you view it).

Going back to Australia in 2007 was a big shock. The locals are quite content with poor quality control and will fork out good money for garbage. I never gave quality the same thought in Japan because I never needed to. Recently when I return to Japan, I have noticed a drop in quality - foreign-made items that is. For comparison, I wanted to purchase a good quality backpack. The shops in Australia generally sell low grade rubbish so I was happy to wait until I went back to Japan. When I went, I found the well known American brand that I used to buy previously now sold items with very poor stitching and had to look through the stores entire stock before I found one that was acceptable. The local Japanese brand was not only better quality but had much better functionality and I would have bought it had I wanted to use it solely for outdoors. (My current bag is still a good design but it doubles as a highly durable commuting bag. Loses out as purely hiking bag though)

If I want quality and innovation, I go shopping in Japan.

-1 ( +4 / -5 )

Pssst, a small reminder from middle school physical sci class, a light year is distance over time. S Korea might be years away from catching up with this technology, but I assure you Korea is still just across the Sea of Japan

Thanks for the geography lesson.

-3 ( +4 / -7 )

South Korea is light years away from achieving the same dominance Japan enjoys in advanced manufacturing, never mind China, mired as it is in poverty and technological obscelence.

Right, because the Japanese are culturally and intellectually superior than the lesser East Asians of Korea and China. Just like British manufacturing could never possibly be upended by those inferior Americans. Just like American manufacturing could never be unseated by the backwards Japanese. I see your point, and agree that we should disregard history completely and assume that the Japanese are just naturally suited for this type of industry and everyone else suffers from a mental and monetary deficiency that will never be able to produce silicon wafers and lithium-ion batteries even close to same price point and quality. You should seriously petition the Japanese government to make you head of their 21st century propaganda machine. They need someone to tell the people how special they are compared to the Koreans and Chinese, and that there is nothing to worry about. By the way, Japan mines its own silicon and rare earths metals, right? I mean, its not like they are at the mercy of anyone else in the supply chain.

0 ( +4 / -4 )

What Oginome is saying is right. You could check the facts by yourself if you look at the import data of Korea. South Korean technologies are heavily dependent on Japan high tech and their import/export data proves that.

-3 ( +2 / -5 )

What Oginome is saying is right. You could check the facts by yourself if you look at the import data of Korea. South Korean technologies are heavily dependent on Japan high tech and their import/export data proves that.

Most of us are not disagreeing that Japan has control over vital parts of the supply chain. I'm saying those areas are not huge windfall industries that will sustain Japanese manufacturing as a whole. And, since Japan has a monopoly on something like silicon wafers for electronics, or lithium-ion batteries for electric cars, Korea and China will not just sit by and let Japan control these vital points in the supply chain. Their growth and security depends on being able to produce these things themselves, making it just a matter of time before Japan has some competition. I concede that 'how long it will take' is debatable, but who would have thought 10 years ago that Korea would come to steal the semiconductor industry from Japan? In 1999, who would have guessed that Apple would be worth more than all the Japanese electronics companies combined? Are we to believe that Japan will remain the leader in these component industries forever while they get crushed at both ends of the supply chain? His argument is that they are and always will be in control of these industries, and that these industries can support the Japanese manufacturing sector as a whole. Being wrong about the overall picture, he keeps the focus of the conversation on Japan's success in just a small part of the supply chain. Again, these component markets are dwarfed by the major products markets that Japan is getting owned in. Japan will feel the pain of Sony, Panasonic, Toyota, Honda, Toshiba, Hitachi, and Nissan moving their factories abroad - no doubt about it. No one has said that Japan's components are not vital. They are saying it does not matter for the manufacturing industry as a whole, and electronics or auto companies who can't afford to keep their operations in Japan.

1 ( +3 / -2 )

@Tyler Vandenberg

Toshiba supplies more than a third of the NAND memory chips used worldwide in devices such as Apple's iPhone and iPad.

0 ( +1 / -1 )

Right, because the Japanese are culturally and intellectually superior than the lesser East Asians of Korea and China. Just like British manufacturing could never possibly be upended by those inferior Americans. Just like American manufacturing could never be unseated by the backwards Japanese. I see your point, and agree that we should disregard history completely and assume that the Japanese are just naturally suited for this type of industry and everyone else suffers from a mental and monetary deficiency that will never be able to produce silicon wafers and lithium-ion batteries even close to same price point and quality. You should seriously petition the Japanese government to make you head of their 21st century propaganda machine. They need someone to tell the people how special they are compared to the Koreans and Chinese, and that there is nothing to worry about. By the way, Japan mines its own silicon and rare earths metals, right? I mean, its not like they are at the mercy of anyone else in the supply chain.

Wow, what a twister. No one is insinuating any ugly claims of racial superiority towards any group. The facts are that Japan has been a developed, first world country for decades, South Korea gained first world country status in 2008 but Japan's GDP per capita still remains twice as large. China remains third world. And rare earth metals are natural products and not components... not until they get into the hands of engineers anyway. China's dominance in rare earth metals is not the result of skill, but luck, for that fact that most of the earths are found in China. Japan's dominance of advanced manufacturing is the result of skill, precision and massive labour and capital intensive targeting. Where did I say the Koreans or Chinese were backward PEOPLE? I stated that they simply don't have the same technological know how as the Japanese, which is the truth. Stop putting words in other people's mouths.

-2 ( +4 / -6 )

Global companies from semiconductor makers to shipbuilders are Japanese high tech reliant and faced disruptions to operations after the 3.11 earthquake and tsunami destroyed vital infrastructure and knocked out factories producing everything from high-tech components to steel.

South Korean shipbuilders are also reliant on Japanese steels and faced supply constraints or higher prices due to disruptions caused by the 3.11 quake and its aftermath. By the way South Korea houses the world's top three shipbuilders -- Hyundai Heavy Industries , Daewoo Shipbuilding and Marine and Samsung Heavy Industries.

1 ( +3 / -2 )

And every device Apple makes relies on intricate components made by the Japanese, along with every other device by every other company in the world, Japanese or Western. Without Japan's know how, none of these devices would even be able to exist.

....................................

If that is true then why is I-phone, I-pad not conceived by Japanese companies ? Last I heard Apple is still an American company. Without " inovation " , how can Japan claim the throne of king of the hill ? Where is that cutting edge ( besides the dancing robot ) ?

1 ( +3 / -2 )

South Korea companies were one of the most affected by the 3.11 earthquake that hit last year. They depend heavily on Japanese supplies such as LCD glass, chip equipment, silicon wafers and other products to produce semiconductors.

0 ( +2 / -2 )

Ahhh... but for all of Japan's technological advantages the core technology came from elsewhere. Nanotech was born at IBM, the CCD at Bell Labs, Transistors at Bell Labs and Texas Instruments. The Integrated Circuit at Siemens and IBM. The list does go on. What major technological advance has come out of Japan other than their great toilet seats?

2 ( +4 / -2 )

China's dominance in rare earth metals is not the result of skill, but luck, for that fact that most of the earths are found in China.

Not true. It is by cunning market moves that china has come to dominate the rare earths sector. By originally offering rare earths at cheaper prices that lead to mines being shut down all over the world such as in Australia, US, Canada and places in africa. Make no mistake those countries will have rare earths available when china exhausts hers, but it did not come about by "luck".

oginome It is clear you are extremely insecure and you seem to tie your own self worth to that of japan`s perceived tech prowess. Despite mouting evidence you still desperately need to argue in favour of japan being some super awesome "high tech" paradise that can never fail, or be touched by anyone on the planet."

-8 ( +1 / -9 )

Ahhh... but for all of Japan's technological advantages the core technology came from elsewhere. Nanotech was born at IBM, the CCD at Bell Labs, Transistors at Bell Labs and Texas Instruments. The Integrated Circuit at Siemens and IBM. The list does go on. What major technological advance has come out of Japan other than their great toilet seats?

Nothing you say about the core technology coming from anywhere else changes the facts. Transistors were invented in 1947. No one is disputing the innovations the West has made in technology. We're talking about the increased Japanese dominance of advanced manufacturing over the last twenty years. The fact is, heated toilet seats or no, electric devices in the world today depend on Japan for the most intricate components to even run.

Not true. It is by cunning market moves that china has come to dominate the rare earths sector. By originally offering rare earths at cheaper prices that lead to mines being shut down all over the world such as in Australia, US, Canada and places in africa. Make no mistake those countries will have rare earths available when china exhausts hers, but it did not come about by "luck".

Most of the world's supply of available rare earth today comes from China, price fixing or no. The fact that they have such a large supply of it is an environmental advantage and it's a completely different situation from Japan gaining dominance and monopolies in advanced manufacturing.

oginome It is clear you are extremely insecure and you seem to tie your own self worth to that of japan`s perceived tech prowess. Despite mouting evidence you still desperately need to argue in favour of japan being some super awesome "high tech" paradise that can never fail, or be touched by anyone on the planet."

Except I really don't, I'm not even Japanese. When did I even claim Japan was a paradise? I criticise it like everyone else, but people's comments on the manufacturing industry dying are wrong. Nice attempt at psychoanalysis though, but a big failure unfortunately.

0 ( +2 / -2 )

@Oginome: Question then... do you think Japans dominance will continue to grow over the next 10 years or wane?

1 ( +3 / -2 )

All they have is a weaker currency, cheaper labor costs and a burning desire BEAT Japan. Come to think of it, that's a hefty handicap. Oh yeah, they do need a handicap...dream on Korea...

-1 ( +1 / -2 )

Question then... do you think Japans dominance will continue to grow over the next 10 years or wane?

It will stay dominant. Advanced manufacturing of the kind the Japanese specialise in isn't something you can outsource, no matter how attractive lower labour costs look elsewhere. It is heavily capital intensive and requires extremely high levels of precision and skill but gives Japan an advantage by having the rest of the world's manufacturing economy remain so hugely dependant on it even though the big car and electronic factories have been moved to China. Germany is the only one country which really compares to Japan in the advanced manufacturing stakes. Both these countries invested in advanced manufacturing, unlike the UK and US, who neglected their industries to focus on 'finance', and are in complete messes today.

-3 ( +2 / -5 )

Good answer but I would suggest you take a look at a list of the S&P 500 companies. Many of them are the envy of the world. Companies like GE, Cat, IBM, Boeing, Dupont, the list goes on and on. I think you underestimate U.S.' companies and overestimate Japanese. Just my opinion... as you have yours.

1 ( +2 / -1 )

Good answer but I would suggest you take a look at a list of the S&P 500 companies. Many of them are the envy of the world. Companies like GE, Cat, IBM, Boeing, Dupont, the list goes on and on. I think you underestimate U.S.' companies and overestimate Japanese. Just my opinion... as you have yours.

The S&P 500 Companies and their list doesn't change the fact that the Japanese have mostly monopolised production of the most intricate and sophisticated components required for electrical devices to function, devices of many companies in the 500 make.

-4 ( +2 / -6 )

I am living in Japan and I hope Japan can stay in good shape economically. But I suggest Japan should never ever under estimate SK and China. SK is really small country compare to Japan and they are doing amazing thing with their country. And China only 20 years ago most of them are farmers and today are number 2 in term of GDP. Technologically China cannot compare to Japan atm but 10-20 years down the road, things could be very different.

My mother in law always told me in Japan when she was young everyone was very poor. She was born in 1950 and within her life time Japan had grown from ashes to this super power... If Japan can do it, what makes you thing SK and China can't? Japan isnt the only country that is hard working and has the ambition to grow... You can see China grow so much over 20 years..

I remember 10 years ago looking at Samsung cell phone... They are cheap and unreliable... Most people prefer to use either Nokia or Motorola... Look at Samsung now... Yes alot of the parts inside make happen by Japan technological know how.... But somehow they could reach that top spot along with apple....

Oginome kept pointing out the semi conductor know how.. But you have to remember China is making it affordable for the masses... And because companies like Apple and Samsung could use those product inside their phone, demand kept rolling into those companies and those companies could keep on making it better... In the end, price does matter! I dont care if my phone have 10gig inside.. But I do care how much I have to pay...

Also, Japan semi conductor alone cannot carry the whole nation GDP... Its not ok for Toyota, Mazda, Honda, Sony, Panasonic to go... Those companies hire tens of thousands of worker in Japan...

2 ( +3 / -1 )

oginome: "You just don't get it..."

You've said this a number of times, and I find it amusing. This is indeed a Features article, but it is reporting facts, and a lot of these facts have been reported in Japanese media recently as well. A woman I was talking to earlier today had a similar attitude on the issue as you did -- she basically said successful Korean companies or entertainment are simply 'mimicking' Kei Matsushita's business methods. Well, here's a newsflash: while the man's genius and approach towards staff and customers was genius, much of his methodology was based on Western principles, and it's not like the guy walked around in kimono all the time or get carried around in a rick-shaw, he drove cars (American invention), used electricity (American invention), and wore Western clothes. So people have to stop with this 'without Japan these things wouldn't exist' notion, because EVERY NATION ON THE PLANET works on the ideas of their own or of other nations -- who wants to reinvent the wheel?

Aside from that, I agree with a lot of points, but while Japan has AMAZING potential for growth and invention things are get mucked up in obscene amounts of red-tape and extremely strict patent processes, whereas it's a lot easier for people who come up with and develop ideas on their own in other places (and get paid for it without suing). And despite your comments on outsourcing, it IS a big problem at the moment, and will get worse if things don't improve here soon (and it doesn't look like they will).

ExportExpert: "like most things korean or in korea they are like cheap copies of Higher quality japanese products."

I think that's a bit extreme, and certainly not the case with a lot of things, and you're also forgetting Japan copies just as much Korean as Korea does Japanese (it just never gets reported here, save some variety shows comparing junk food products -- from Lotte, the Korean company, in particular. These shows are amusing). I agree in a lot of cases, and personally I much prefer Japanese cars, but Korean cars are improving and becoming less bulky (like American cars) and more high-tech. Samsung in particular are putting out a lot of good products which are sometimes better than Japanese counter parts. And you're right about a lot of companies taking a major hit with the earthquake and subsequent effects.

Where Japan can REALLY get back in the game is by applying some of the R&D they've been working on for better hybrid and even hydrogen fuel cars and getting them on the road before anyone else officially does. Then when other companies get their butts in gear, Japan can roll out the second generation and keep the edge.

-1 ( +4 / -5 )

Finish product is the one that will get to consumer.. If there is no company that know how to make use of those semi conductor "monopoly by Japanese" to make attractive product for consumer to buy, then what is the semi conductor good for then? Its just another radio shack chip sitting in the vault...

Take out China and India for manufacturing equation. How much do you think those ipad cost if they were made in USA or Japan? Do you think they can sell as many ipad as the news reported today? I doubt Apple can sell those ipad for USD5-600 bucks... If they go for thousands, not many people will buy and those record sales wont even happen...

Everyone do contribute something in here... Japan make those chips, Apple make the product, China manufacture lower the price = Great affordable product... Everyone goes home happy...

1 ( +2 / -1 )

Japan China relation ship will be complementary one for foreseeable future... Just like England and France in 19th century... England choose to go mass production and France concentrate in producing high quality product in smaller scale. But 10-20 years up, the game could change... A friend of mine is selling alot chips and most of them coming from USA.. He sell alot of them to Sony and panasonic.. Alot of this chips can only be made in USA... He said this chips selling business wont last until his children cause Taiwan and China is catching up too fast.. Sooner or later those companies will stop buying from him but instead from China..

I really want to see Japan to maintain its wealth... This is still the best country for me... Safe, clean, polite.. It has all the ingredient to make a really good country... I think Japan should open up immigration to really smart people or really rich people only.. Just like what Singapore does...

-1 ( +1 / -2 )

That dude will never get it... Its deep down in his roots... Tunnel vision

0 ( +1 / -1 )

I think oginome's point is well made. The manufacturing processes that make all these wonderful technological innovations possible are not glamorous so they rarely make the news. If you look behind the scenes at the suppliers for these parts, and more importantly, the components, know-how, and manufacturing to make these parts, you'll see a tremendous Japanese presence.

On the other hand, there has been a notable decline in the Japanese presence in the CE arena and in other "finished product" markets. However, I wouldn't attribute this to something as ephemeral and subjective as "wanting it more" or a fire in the belly as some have characterized it here. First, the challengers always have the disruptive advantage. Most importantly, I believe there's far too much segmentation in Japan. This was ideal in that very special period in the 1950s-1980s when Japan was the only wealthy state in Asia but now with the emergence of so many smart and powerful, and most importantly, tightly organized competitors, Japan needs to see some corporate consolidation to better pool resources and ideas. Note that the prowess of South Korea is being driven almost exclusively by just the three super massive brands mentioned in this article. Market pressures will make it so that Japan will also have a tightly organized corporate presence; this is already happening if you're paying attention to the news. The Sumitomo steel merger and the establishment of the Japan Display Corporation and the overseas acquisitions made possible by the strong yen herald the coming corporate trend in Japan for the rest of this decade. If Japan cannot recover its edge even after this seismic shift, then perhaps some of the portents of doom are prescient but its a bit hasty to declare an inevitable death and/or decline until this restructuring has a chance to fully take root in my opinion. I firmly believe that the edge Japan has lost is not in innovation or product quality; in the TV market for example, Panasonic, Sharp and Sony are still rated top contenders by reviewers. Rather, innovative companies like Pioneer were ousted by their size which rendered them unable to manufacture as cheap or absorb financial shocks as well as their larger rivals. Note that in 2011, that of the top ten patent registering companies, 7 or 8 were still Japanese.

1 ( +1 / -0 )

Most of the world's supply of available rare earth today comes from China, price fixing or no. The fact that they have such a large supply of it is an environmental advantage and it's a completely different situation from Japan gaining dominance and monopolies in advanced manufacturing.

What you dont seem to understand is that the chinese have the resources the desire AND the brain power to topple japan. People are attacking your comments because your arguments clearly state that japan can do no wrong and cannot fail because no one else can match them. But you conveniently seem to forget countries like Germany, israel and the USA who produce high precision equipment for all sorts of industries. Ill let you think about those industries i am refering to before I post them.

But seriously you use the feeble argument that the korean`s have to rely on japanese tech in order to produce their own products, that might have been true in the past but if you read the article the koreans are now the only country pursuing OLED with the japanese ADMITTING they cannot compete because their yields are crap and are bowing out.

Except I really don't, I'm not even Japanese. When did I even claim Japan was a paradise? I criticise it like everyone else, but people's comments on the manufacturing industry dying are wrong. Nice attempt at psychoanalysis though, but a big failure unfortunately

Not really, you are the only one whos posts are clearly not grounded with facts and are delusional. Only you dont see it and instead continue to spout more mindless banter with nothing to back it up. So yeah my original assessment of your insecurities still stands.

-5 ( +3 / -8 )

When you rest on your laurels, the competition is guaranteed to walk right past you. Japan needs to get "hungry" again for global market share for their products - not domestic dominance. Don't get me wrong, most of their products are very good (quality wise) - it's just that they haven't been very innovative in what has been built for at least a couple of decades (if not more). Customers get tires of the same old thing quickly. Look at Apple as an example, it seems like every five years they come up with a completely new design or concept when developing new information based systems for customers - why hasn't this level of ingenuity made it into most major Japanese products?

1 ( +1 / -0 )

Samsung just anounced today that they posted record sales this year of $140BILLION!!!. and who do you think is losing sales to them. Japanese electronic makers. Japan can have all the techology in the world but if they dont make products that people want to buy "AT AFFORDABLE PRICES" then they will continue to lose sales to companies that do eg Samsung LG. you can have all the patents in the world but if your not making enough or relying on them for your income your doomed, KODAK did and now there bankrupt.

2 ( +3 / -1 )

at the end of the day, being specialized in silicon wafers, LCD screens or what have you is not going to sustain or grow an economy by itself. Japan of 20-30 years ago was massive because of all the products they made and exported, cars, heavy machinery, tv's, stereos, electronics, vcr's, the list goes on and on.. the amount of money (and jobs) that this created for the economy was tremendous. Fast forward to today and they are clearly losing their competitive edge to China, South Korea et all where the products may not be of the highest quality, but are cheaper and thus more attractive to consumers.

So Japan has transitioned to being a creator of components but I can't see this as being the driving force behind the economy nor being able to employ the millions of people like the automotive or construction industry. It's all great and dandy having this so-called monopoly in component production... but so what? While these firms may have steady business (until a chinese firm has the means to do it cheaper) but Its all about consumer goods (and natural resources if the country is lucky and unfortunately Japan is not) and that's what drives the economy forward.

Toyota isn't going out of business tomorrow, next month or even next year but if they don't innovate and/or match consumers expectations then they will be in a world of hurt. Japanese car companies stormed into North America to take advantage of the oil embargo in the 1970s with their smaller, more fuel efficient cars and American companies suffered. Today, every car maker has or will have fuel efficient models, hybrids, electric engines.. so what is Toyota, Honda, Nissan, etc.. doing to bring something new to the table to remain competitive?

So what do we have here besides the fact that this discussion has veered so far off topic? Japan is losing its manufacturing edge in one sector while maintaining it in another.

0 ( +0 / -0 )

and actually, I'm somewhat intrigued.. can someone provide a list/source as to which components are only made in Japan that the rest of world relies so heavily on?

3 ( +3 / -0 )

"Japan losing its manufacturing edge to South Korea"

Unless you're a diehard cheerleader for Japan (and there's no shortage of such people among English-speaking Westerners, that's for sure; Japan is a seductive, alluring country that does well at cultivating pro-Japanese sentiment in the Anglo-American sphere), the title of this article has to be viewed as essentially true. Relatively speaking, of course Japan has lost its manufacturing edge to S. Korea. The latter country was, not too long ago, one of the sorriest, most broken-down countries on earth, overwhelmingly agrarian, with virtually no industry to speak of. Nobody in America owned a Hyundai car 25 years ago.

The big question is whether or not Japan, out of feelings of neo-colonial nobless oblige or something like that, has voluntarily ceded its advantage in automobile and other manufacturing to South Korea (some posters here seem convinced of that). Nobody can answer that question for sure, except Japanese and Korean government officials.

"South Korea gained first world country status in 2008 but Japan's GDP per capita still remains twice as large"

This is such a bizarre, arbitrary claim. Did you (Oginome) ever travel to South Korea in the years before 2008? Whether a country is 1st, 2nd, or 3rd world is subjective and can't be determined with mathematical precision. Per capita GDP figures vary widely, too. More than a few sources (IMF, CIA, World Bank) list per capita GDP in South Korea as being far higher than 50% of per capita GDP in Japan (in fact almost even).

0 ( +2 / -2 )

I can remember when Brits thought British cars were superior to the cheaper Japanese imports. That was in the days when people thought British Leyland (Anyone remember them?) was a strong company. Think of the famous British names like Lotus (now Malaysian), Rolls-Royce, Bentley, Mini (now German) and Jaguar (Indian). Complacency led to the fall of the British car industry. Is the Japanese car industry going to suffer in the same way from Korean and maybe later Chinese and Indian imports?

0 ( +1 / -1 )

Someone forgot the great Japanese proverb....................it goes something like this " after you beat the cr$%# out of your enemies, tighten your helmet cords ". Attributed to Tokugawa Ieyasu ??

1 ( +1 / -0 )

Good article JT, keep them coming

0 ( +0 / -0 )

Samsung Galaxy S2 phones are actually quite good http://www.samsung.com/jp/galaxys2lte/

1 ( +1 / -0 )

Oginome kept pointing out the semi conductor know how.. But you have to remember China is making it affordable for the masses...

China can't make semi conducor grade silicon.

You've said this a number of times, and I find it amusing. This is indeed a Features article, but it is reporting facts, and a lot of these facts have been reported in Japanese media recently as well. A woman I was talking to earlier today had a similar attitude on the issue as you did -- she basically said successful Korean companies or entertainment are simply 'mimicking' Kei Matsushita's business methods. Well, here's a newsflash: while the man's genius and approach towards staff and customers was genius, much of his methodology was based on Western principles, and it's not like the guy walked around in kimono all the time or get carried around in a rick-shaw, he drove cars (American invention), used electricity (American invention), and wore Western clothes. So people have to stop with this 'without Japan these things wouldn't exist' notion, because EVERY NATION ON THE PLANET works on the ideas of their own or of other nations -- who wants to reinvent the wheel?

And I'll keep saying it because it looks like people prefer to live in denial. Nothing here tells me anything new. Like I had to say to someone else, I never questioned the West's history of innovation, the subject is Japan's dominance in advanced manufacturing over the last 20 years, which goes against the death of Japan's manufacturing story preferred by some posters.

What you dont seem to understand is that the chinese have the resources the desire AND the brain power to topple japan. People are attacking your comments because your arguments clearly state that japan can do no wrong and cannot fail because no one else can match them. But you conveniently seem to forget countries like Germany, israel and the USA who produce high precision equipment for all sorts of industries. Ill let you think about those industries i am refering to before I post them.

And what you don't get is that China has the natural resources, but not the tech.

But seriously you use the feeble argument that the korean`s have to rely on japanese tech in order to produce their own products, that might have been true in the past but if you read the article the koreans are now the only country pursuing OLED with the japanese ADMITTING they cannot compete because their yields are crap and are bowing out.

South Korean companies are hugely reliant on Japanese technology. Sony dropped out of OLED in 2010, but Japanese manufacturers started pursuing it again in 2011.

Not really, you are the only one whos posts are clearly not grounded with facts and are delusional. Only you dont see it and instead continue to spout more mindless banter with nothing to back it up. So yeah my original assessment of your insecurities still stands.

Not grounded in facts? Are you telling me the Japanese haven't moved onto advanced manufacturing? You're the delusional one.

Samsung just anounced today that they posted record sales this year of $140BILLION!!!. and who do you think is losing sales to them. Japanese electronic makers. Japan can have all the techology in the world but if they dont make products that people want to buy "AT AFFORDABLE PRICES" then they will continue to lose sales to companies that do eg Samsung LG. you can have all the patents in the world but if your not making enough or relying on them for your income your doomed, KODAK did and now there bankrupt.

You do know that all Samsung products are heavily reliant on Japanese technology to even work? And $140 billion? I'd hope so, considering that 20% of all exports from South Korea are from Samsung. Samsung's success doesn't make me sick by the way, I don't know what kind of person you are if the financial fortunes of companies make you ill. Weird. Oh and I love South Korea :)

So what do we have here besides the fact that this discussion has veered so far off topic? Japan is losing its manufacturing edge in one sector while maintaining it in another.

Except that's not the case, Japan's advanced manufacturing dominance is something which has grown over the last 20 years, it's not something that was there at the same level in the 80s and is now being 'maintained'.

-2 ( +2 / -4 )

This is such a bizarre, arbitrary claim. Did you (Oginome) ever travel to South Korea in the years before 2008? Whether a country is 1st, 2nd, or 3rd world is subjective and can't be determined with mathematical precision. Per capita GDP figures vary widely, too. More than a few sources (IMF, CIA, World Bank) list per capita GDP in South Korea as being far higher than 50% of per capita GDP in Japan (in fact almost even).

Not bizarre or arbitrary at all, the IMF in 2011 listed nominal GDP per capita for South Korea to be $23,000 while Japan's level is at $45,000.

-1 ( +2 / -3 )

Oginome: Oh yes, of course, you prefer nominal GDP measures as opposed to PPP levels. I wonder why that is. Your stated love for South Korea notwithstanding, there are reasons to doubt you've even visited that country. Spend a weekend in Seoul after spending a weekend in Tokyo, and bold-faced declarations that per capita GDP in Japan is twice that of South Korea ring hollow.

Look, you're a cheerleader for Japan, and a pretty tireless one, it seems. That's understandable, and you're hardly alone. Just come out and admit it, rather than hiding behind your own set of "facts."

1 ( +4 / -3 )

but GDP per Capita based on PPP (purchasing power parity, which takes into account costs of living and inflation rates unlike nominal figures) has Japan at $34k and S.Korea at $31k according to 2011 IMF numbers.. Can't say which one is more "correct"

0 ( +0 / -0 )

Just have to write one more thing here about Oginome's running commentary, which has kept this thread going. So, after posting more than a dozen comments in which Oginome repeatedly insisted that South Koreans couldn't manufacture a pair of chopsticks, let alone a car, without the input of Japan-made components and Japanese technical know-how, Oginome then writes "I love South Korea." I'm sorry, but you're fooling nobody.

I actually like Japan and its people, but I can't understand why others with pro-Japan sentiments feel the need to downplay and minimize the extraordinary achievements and economic gains of South Korea and China in recent years (all the while pretending to be objective evaluators of the facts). Is it just because of the reputation that Koreans and Chinese have for being anti-Japanese?

0 ( +2 / -2 )

MASSWIPE

Oginome repeatedly insisted that South Koreans couldn't manufacture a pair of chopsticks, let alone a car, without the input of Japan-made components and Japanese technical know-how

I think the point that Oginome was trying to convey was not an arbitrary nonsensical idea that the Chinese or Koreans are inferior to the Japanese but just merely stating the current fact on how global high tech industries are reliant on Japanese high tech parts to produce end user goods as iPhones, PCs , smartphones and etc.

The facts are facts and are judgement free. It's an analysis of current market and nothing more.

4 ( +4 / -0 )

the article is about Car designs and how Japanese manufacturers are losing their competitiveness.. not building silcon wafers, molecule sized transistors or whatever Advanced Manufacturing really means... Oginome is interpreting this headline as encompassing ALL manufacturing when the point of the article is far from this and doesn't mention any of the topics he is bringing up.

There is no denying that a lot of parts that are made by japanese firms are important to end user goods such as phones, computers, vehicles, etc.. but to say that it is ONLY japanese parts that are the reason why these items work is a gross misrepresentation. For example, Apple is reliant on the inputs from firms in China, Japan, Taiwan, America, Thailand, etc. Could be something like hard drives from Thailand, labour from China, the microchips from Japan, the design from America as an example.

These firms are one aspect of the supply chain for these products, monopoly or not.

0 ( +0 / -0 )

Spend a weekend in Seoul after spending a weekend in Tokyo, and bold-faced declarations that per capita GDP in Japan is twice that of South Korea ring hollow.

What? But the same can be said for Tokyo. Aren't we always told to what a mistake it is to judge Japan's economic situation based purely on what we see in Tokyo, the economic heart of the country? The exact same can be said for Seoul and South Korea. Korean salaries are far from Japanese levels.

Look, you're a cheerleader for Japan, and a pretty tireless one, it seems. That's understandable, and you're hardly alone. Just come out and admit it, rather than hiding behind your own set of "facts."

No tireless cheerleading, and yes, FACTS, no need for the quotation marks.

Just have to write one more thing here about Oginome's running commentary, which has kept this thread going. So, after posting more than a dozen comments in which Oginome repeatedly insisted that South Koreans couldn't manufacture a pair of chopsticks, let alone a car, without the input of Japan-made components and Japanese technical know-how, Oginome then writes "I love South Korea." I'm sorry, but you're fooling nobody.

South Korean manufacturers are reliant on high tech from Japan, that's the truth. Why are you running away from it? And how arrogant are you to assume what I think? You know nothing about what I feel about Korea.

I actually like Japan and its people, but I can't understand why others with pro-Japan sentiments feel the need to downplay and minimize the extraordinary achievements and economic gains of South Korea and China in recent years (all the while pretending to be objective evaluators of the facts). Is it just because of the reputation that Koreans and Chinese have for being anti-Japanese?

No one is trying to minimise South Korea. It's clear what an enormous success story Korea has been, how their economy has expanded so hugely and living standards have leaped due to diligence and hard work, how they successfully made the transition from having a military dictatorship to a robust democracy. It's other posters who are trying to minimise Japan's massive success in advanced manufacturing over the last twenty years.

I think the point that Oginome was trying to convey was not an arbitrary nonsensical idea that the Chinese or Koreans are inferior to the Japanese but just merely stating the current fact on how global high tech industries are reliant on Japanese high tech parts to produce end user goods as iPhones, PCs , smartphones and etc. The facts are facts and are judgement free. It's an analysis of current market and nothing more.

Thanks rexmaxtime, but people here have their minds made up no matter what.

-5 ( +0 / -5 )

the article is about Car designs and how Japanese manufacturers are losing their competitiveness.. not building silcon wafers, molecule sized transistors or whatever Advanced Manufacturing really means... Oginome is interpreting this headline as encompassing ALL manufacturing when the point of the article is far from this and doesn't mention any of the topics he is bringing up.

No, the article was about Japan losing its manufacturing edge to Korea when it really isn't, more lower level manufacturing is done these days in Korea, but the Japanese still dominate advanced manufacturing.

-4 ( +0 / -4 )

I don't think oginome is making that point at all MASSWIPE. I sympathize with his position because there's truth to what he says. I don't think it demeans South Korean accomplishments, just as pointing out Japan's need for imports, or that the source of its economic glory days comes from western inspiration, does not diminish Japanese achievements. Even if you think it's a bit overstated, the conclusion made by the posters who think Japan has completely lost, will completely lose, and will never recover a manufacturing aptitude because of a phantom social or moral or economic malaise is a million times more parroted and obnoxious.

For what it's worth, I have nothing but the utmost respect for South Korean and Chinese ingenuity and I think that if Japan wishes to emerge from these doldrums, it needs to learn from these neighbors' corporations and governments.

3 ( +3 / -0 )

Oginome... Are reading the same article as me? Because I can't seem to find the part in it where it talks about Japan dominating advanced manufacturing with low level stuff done in Korea. I call shenanigans on you

2 ( +2 / -0 )

i forgot a "you" in there

1 ( +1 / -0 )

There is no denying that a lot of parts that are made by japanese firms are important to end user goods such as phones, computers, vehicles, etc.. but to say that it is ONLY japanese parts that are the reason why these items work is a gross misrepresentation. For example, Apple is reliant on the inputs from firms in China, Japan, Taiwan, America, Thailand, etc. Could be something like hard drives from Thailand, labour from China, the microchips from Japan, the design from America as an example.

Not a gross misrepresentation. None of these products would work without Japanese technology.The Japanese still have the technological know how to make all the hardware that comes from Thailand and China, but those countries do the majority of that work nowadays because labour costs are cheaper. It is the Japanese who have grown to dominate large swathes of advanced manufacturing and they're the ones who have gained monopolies on the highly sophisticated chips and components that only they know how to make. So yes, these non-Japanese companies are totally reliant on Japan. Japan has the technological know how to make products all the way from top to bottom. But other countries still rely on the Japanese for the highest end parts. So the balance of power in world manufacturing is still massively weighed toward Japan.

-4 ( +0 / -4 )

Oginome... Are reading the same article as me? Because I can't seem to find the part in it where it talks about Japan dominating advanced manufacturing with low level stuff done in Korea. I call shenanigans on you

I never said the article talks about Japan in advanced manufacturing. Read what I wrote again. I call shenanigans on you.

-4 ( +0 / -4 )

"South Korean manufacturers are reliant on high tech from Japan, that's the truth. Why are you running away from it? And how arrogant are you to assume what I think? You know nothing about what I feel about Korea."

Oginome: After reading through all your comments here, I think I can write that I have some idea of what you feel about Korea. This is less about my "running away from it" than it is about you rubbing it in over and over again, and for what purpose? Your writing on this topic is redolent of a pro-American type who wishes to remind the Japanese that they are dependent on the US Armed Forces for their national security. I don't like it when pro-American types make such comments, and I'm sure you don't either. And yet you write in the exact same way they do, except on the issue of Japan's manufacturing prowess compared to South Korea. Why?

It's quite a stretch to claim that Japan is as far ahead of South Korea in manufacturing today as it was 20-30 years ago, as you insist. This is all about relative gains, and even most Japanese (I would venture to guess) will readily acknowledge that South Korea has closed the gap in the same way that Japan closed the gap with the US over the course of the 1960s and 1970s.

But please, feel free to travel to Seoul and tell Koreans repeatedly that they wouldn't be able to manufacture cars without Japanese components. Your reception there will be as warm as it is when an American tells a Japanese in Tokyo that his/her country would be a Chinese province by now if not for the US Armed Forces.

1 ( +1 / -0 )

So yes, these non-Japanese companies are totally reliant on Japan. Japan has the technological know how to make products all the way from top to bottom. But other countries still rely on the Japanese for the highest end parts. So the balance of power in world manufacturing is still massively weighed toward Japan.

Yeah I don't know about that.. I'd think most companies are just as reliant on China for its labour as they are for the Japanese parts. How do you keep costs down and maximize profits? pay workers a few dollars a day and sell your product for high $$$. There's a reason why Apple (and lots and lots of companies) assembles its products in China and not Japan, even thought they buy some of the components from Japan (and other countries as well mind you!). An iPhone costs $400 because its made in China... if it was made in the US or Japan? Maybe it would be like $800 or more, just speculation. In the end, all that really matters is the bottom line on a company's income statement and nothing else.

And really... the article is talking about car designs and how foreign makers are becoming more competitive compared to Japanese firms. Not about how reliant foreign manufacturers are on Japanese firms who produce the components or if these tech firms are losing a manufacturing edge. These Japanese firms you are speaking about are one part of the supply chain. Just one cog in the wheel of the global economy.

0 ( +0 / -0 )

After reading through all your comments here, I think I can write that I have some idea of what you feel about Korea. This is less about my "running away from it" than it is about you rubbing it in over and over again, and for what purpose? Your writing on this topic is redolent of a pro-American type who wishes to remind the Japanese that they are dependent on the US Armed Forces for their national security. I don't like it when pro-American types make such comments, and I'm sure you don't either. And yet you write in the exact same way they do, except on the issue of Japan's manufacturing prowess compared to South Korea. Why?

I'm not trying to prove some pro-Japanese point, people are saying that Japan's manufacturing industry is dead, when it's not.

It's quite a stretch to claim that Japan is as far ahead of South Korea in manufacturing today as it was 20-30 years ago, as you insist.

Japan dominates advanced manufacturing.

This is all about relative gains, and even most Japanese (I would venture to guess) will readily acknowledge that South Korea has closed the gap in the same way that Japan closed the gap with the US over the course of the 1960s and 1970s.

But the Japanese anticipated this gain and decided to target and focus in on advanced manufacturing which they dominate now, unlike America which largely surrendered its lower level manufacturing industries and didn't put the same effort as the Japanese did into advanced manufacturing to counteract this loss.

But please, feel free to travel to Seoul and tell Koreans repeatedly that they wouldn't be able to manufacture cars without Japanese components. Your reception there will be as warm as it is when an American tells a Japanese in Tokyo that his/her country would be a Chinese province by now if not for the US Armed Forces.

Doesn't change anything I said. And I don't go around telling Koreans their cars are made up Japanese components when I meet them, sorry.

Yeah I don't know about that.. I'd think most companies are just as reliant on China for its labour as they are for the Japanese parts. How do you keep costs down and maximize profits? pay workers a few dollars a day and sell your product for high $$$. There's a reason why Apple (and lots and lots of companies) assembles its products in China and not Japan, even thought they buy some of the components from Japan (and other countries as well mind you!). An iPhone costs $400 because its made in China... if it was made in the US or Japan? Maybe it would be like $800 or more, just speculation. In the end, all that really matters is the bottom line on a company's income statement and nothing else.

But labour costs constantly change. When China becomes a higher wage economy, the kind of lower end manufacturing they do will be outsourced to even poorer countries. The Japanese will still have their dominance in advanced manufacturing and their numerous stronghold on producer's goods, which is immune to lower labour costs in other countries and the threat of this lower end manufacturing being outsourced.

And really... the article is talking about car designs and how foreign makers are becoming more competitive compared to Japanese firms. Not about how reliant foreign manufacturers are on Japanese firms who produce the components or if these tech firms are losing a manufacturing edge. These Japanese firms you are speaking about are one part of the supply chain.

Did you not read what I wrote? Let me post my comment again

No, the article was about Japan losing its manufacturing edge to Korea when it really isn't, This is what the article was about

more lower level manufacturing is done these days in Korea, but the Japanese still dominate advanced manufacturing.

And this is what I said wasn't in the article.

Just one cog in the wheel of the global economy.

By far the most important, capital and labour intensive part, which the rest of the manufacturing industry around the world relies on totally. Other industries and countries which compete ferociously in lower end manufacturing all still completely rely on the kind of high tech Japan has monopolised to even run their products.

-3 ( +0 / -3 )

"And I don't go around telling Koreans their cars are made up Japanese components when I meet them, sorry."

Don't worry, I was being sarcastic. I wasn't assuming that you actually had the courage to tell Koreans to their faces that they couldn't manufacture cars or electronics without made-in-Japan components. I'm sure you'll stick to anonymous internet sites.

0 ( +0 / -0 )

Don't worry, I was being sarcastic. I wasn't assuming that you actually had the courage to tell Koreans to their faces that they couldn't manufacture cars or electronics without made-in-Japan components. I'm sure you'll stick to anonymous internet sites.

I don't need to tell Koreans to their face, they know it's the truth.

-3 ( +0 / -3 )

"I don't need to tell Koreans to their face, they know it's the truth."

OK, but it sounds like you REALLY want to tell them anyway. This thread has revealed that you are totally, utterly obsessed with and consumed by this issue.

1 ( +1 / -0 )

haha, me too

If you want some iPhone4 fun, check this out.. details about the supply chain. Its not just Japanese companies that put parts into it.

http://9to5mac.com/2011/10/11/iphone-4s-manufacturing-bom-analysis/

0 ( +0 / -0 )

OK, but it sounds like you REALLY want to tell them anyway. This thread has revealed that you are totally, utterly obsessed with and consumed by this issue.

You're assuming again. I have no urge to tell them, it's the people on this site who think Japan's manufacturing industry is dead who need to be told.

If you want some iPhone4 fun, check this out.. details about the supply chain. Its not just Japanese companies that put parts into it. http://9to5mac.com/2011/10/11/iphone-4s-manufacturing-bom-analysis/

Someone linked this already. The Japanese have monopolised the the production of PRODUCER'S GOODS, the most sophisticated, precision requiring materials, they provide the tech these companies you listed need to make the components they have been hired by Apple to make, Japanese and non-Japanese companies alike.

-2 ( +1 / -3 )

ah yes, there it is.

But are you arguing that Japanese firms have monopolized the creation of the EQUIPMENT that a company like Skyworks, Qualcomm, et all uses to make the components or are you arguing that Japanese firms have monopolized the components themselves and are simply outsourcing the production to companies like Skyworks, Qualcomm, etc etc etc

0 ( +0 / -0 )

But are you arguing that Japanese firms have monopolized the creation of the EQUIPMENT that a company like Skyworks, Qualcomm, et all uses to make the components or are you arguing that Japanese firms have monopolized the components themselves and are simply outsourcing the production to companies like Skyworks, Qualcomm, etc etc etc

Japan has gained monopolies in components, the production of which constitute the highest end, most skill and capital intensive area of manufacturing, components which all these equipment companies, Japanese and non-Japanese rely on for their products. Of course Japan continues to remain a world leader in the production of equipment also.

-1 ( +1 / -2 )

Having these monopolies would imply that Japanese firms have cornered the market in all components and we would expect to see such firms supply all the parts for an iPhone. However, we know that this isn`t the case

One such supplier of iPhone components, Laird technologies, an American company, had this to say on their website:

Laird Technologies is the world’s leading designer and manufacturer of electromagnetic interference (EMI) shielding, telematics, thermal management and antenna solutions for the telecom, datacom, computer, electronics, aerospace, defense, automotive, industrial & instrumentation, medical equipment, mining and railroad industries

Its a bold statement indeed, claiming to be the world's leading designer and manufacturer... a little, Monopolistic, don't ya think?

0 ( +1 / -1 )

Having these monopolies would imply that Japanese firms have cornered the market in all components and we would expect to see such firms supply all the parts for an iPhone. However, we know that this isn`t the case One such supplier of iPhone components, Laird technologies, an American company, had this to say on their website:

I think you need to re-read my post again. The Japanese have cornered the market on producer's goods. The components you see listed in the I-Phone suppliers, including Laird's, are reliant on Japanese high tech to create their components in the first place. In other words, your first line,

But are you arguing that Japanese firms have monopolized the creation of the EQUIPMENT that a company like Skyworks, Qualcomm, et all uses to make the components

is the correct one.

-1 ( +2 / -3 )

so the crux of your argument is Japanese firms build the equipment that builds the parts that go into an iPhone?

so.. what does this all have to do with the Hyundai design and 10 year warranty?

-1 ( +0 / -1 )

so the crux of your argument is Japanese firms build the equipment that builds the parts that go into an iPhone?

The Japanese have achieved near dominance in advanced manufacturing, and as a result, have gained numerous strongholds and monopolies in the areas of producer goods, which count as the most skill and capital intensive areas of manufacturing. These components they create are the most complex and sophisticated elements of all devices and every supplier needs them to create their own lower end components in return, whether these suppliers be Japanese, Korean or American. Japanese investment in advanced manufacturing has resulted in increased specialision in numerous fields, from fibre optics to composite materials to advanced lens cutting to many more. Just look at the Boeing 787 for example. 1/3 of it is officially Japanese, and the other parts which aren't are still reliant on the the kind of producer goods which Japan has monopolised. Japan's output of advanced manufacturing is five times America's. Advanced manufacturing is not simply 'assembling',either, like what people like to think. It is extremely high paying and lends itself to even more capital and skill intensive production employing millions of workers.The proof of the success in Japan's targeting of advanced manufacturing is in the fact that Japan's trade surplus increased FIVE TIMES IN SIZE between 1990-2010.

so.. what does this all have to do with the Hyundai design and 10 year warranty?

Every Hyundai product is totally reliant on Japanese technology.

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ExportExpert: "like most things korean or in korea they are like cheap copies of Higher quality japanese products."

There's a truth to this, and it's not without any historical precedent. Japan has a history of innovation and creativity in technology, electronics, automobiles, etc. and has built a worldwide reputation in these fields. Even though economically Japan's next-door neighbor have made big strides with cheaper products, it's well known that Korea in the past has copied Japanese products, oftentimes even shamelessly to the packaging. You can judge for yourself:

http://youtu.be/ah2i-H_hHQ0

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If you look at M/B, PSU and other miscellaneous PC parts they will boast that they use Japanese made capacitors due to it 's resistance to heat. If you check Toray, Teijin and other Japanese chemical companies you'll find that 70% of carbon fiber is made in Japan. If you check companies like Kyocera you'll find Japan dominates the fine ceramics industry. The list goes on and they are completely essential in developing CE parts, cars and planes. Japan is also a major player in creating high temperature super conductive material. There is a reason why both Airbus and Boeing wants to maintain good relationship with Japanese subcontractors even if they cost more then their lower costing competitors.

Oginome is correct in his statements about Japan holding chockpoints in various manufacturing industry.

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oginome,

What percentage of business in Japan do you think this hi-tech manufacturing represents?

I dont know but my guess is less than 5%, so with so much of the REST of the economy in Japan declining how on earth is Japan to prevail, surely there is no way these hi-tech industries can keep Japan afloat.

At the pace things are going its only a matter of time before J-companies of this hi-tech either whither & die or leave Japan, my bet is on the later, wish it werent so but I dont think they are going to have any other options unless Japan make HUGE radical changes in how a lot of things are done here

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Not really, most high tech material production is low labor intensive with highly technological skills requirement so moving production doesn't work. 5%? more like 25% and if you add the sales staff and R&D staff it will probably go up to 50%.

By the way did you know that some of Samsung's R&D facility is also located in Japan hiring many Japanese staffs?

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Guys, I lived 3 years in Japan and nowadays I live in Brazil. I am writing this comment because I deeply admire Japan.

I agree with oginome and share the same vision of quadrangulum.

But I also tend to agree that japanese are loosing too much ground in the area of assembly in general. For example, what happened to giant Sony?

Today, if you want a Smart Phone, you buy an iPhone or a Samsung SII. If you want an MP3 player, you go with the iPod. If you want a TV or computer Monitor, you choose Samsung, because it is they are the best available in the market.

If you want a Video-game, you choose the XBOX 360, because it is funnier than Playstation 3. You want a nootebook, if you have money you get an Apple MacBook Pro, if you don't have, you just buy Dell or HP.

You want a printer, you choose HP (and not japanese Epson).

Here in Brazil, Mitsubishi Heavy Industries could be boosting up the recent economy growth, but do you know who is here helping us? Hiunday Heavy Industries is the answer.

In the last 2 years, when you turn on TV, you only see Hiunday car advertisements (or Volks, GM, Ford). Where are the japanese Toyota, Honda and Suzuki?

Brazil is investing in Trains and Bullet Trains nowadays. And do you know who assembled the last trains of newly inaugurated Yellow-Line? The answer is Korea. Currently, there is a bid for who is going to build the Bullet Train and the Bullet Train Line connecting Rio de Janeiro and São Paulo. It seems the japanese will not win this bid because they think "there is too much risk involved".

So, my answer is. What is happening with you japanese? You have the best technology, but even though you can't assemble anymore? It is time to wake up, to change. Lets to it.

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SBlue,

Sorry there NO WAY the kind of hi-tech stuff that Oginome is talking about is 25 or 50% of the J-economy no matter how you wanted to measure it!!

But I wud agree most isnt going to be labour intensive, which also leads me to believe there is no way in hell the cutting edge stuff can keep Japan as a whole a float.

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wow.. we got a nice running battle here.

I do recall reading an article in the Economist which does talk about Japanese firms dominance in certain high tech industries http://www.economist.com/node/14793432 These firms are called chuken kigyo (strong, medium-sized firms) but this was written back in 2009 so things probably have been changing, especially with firms from China, South Korea, Taiwan getting into the industry.

And I thought that this article may be prudent to the discussion http://www.economist.com/node/17527225 As great as advanced manufacturing is, that alone will not sustain an economy as you still need the production centers and factories, the "low level manufacturing" that has been mentioned, to employ the masses. The trend in Japan (like most countries) has been to send these factories to places like China, Thailand, India, etc to take advantage of lower wages and taxes. So while some Japanese firms have competitive advantages in certain components, if they are losing manufacturing jobs to overseas locations, then it does nothing good for the economy as a whole.

Oginome, you seem to feel pretty strongly about this topic of advanced manufacturing, but after reading the article itself it doesn't discuss this concept of advanced manufacturing such as microchips and capacitors etc, nor provide any insight into what technology actually goes into a Hyundai and if its of Japanese origin or not. The original point of the article was discussing how Korean Automakers are becoming more competitive through their designs and innovations. I do think the article is incorrectly titled however.. for shock value?

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I think this article will help to us appreciate oginome's position on South Korea's dependance on Japan's components and exactly what he meant by advanced manufacturing or producer goods. Clear and specific examples are provided in this article.

http://www.digitimes.com/print/a20110322VL203.html

Just fyi.

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Here's another one

http://www.globalsources.com/NEWS/Quake-shakes-up-Chinas-components-supply.html

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Japan does supply a lot components to other industries but that's beside the point. It doesn't explain why Japanese Automakers are seeing their designs become less competitve or why Hyundai is moving forward.. at least according to this article

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@chiisaishima Good articles. They reiterate my previous points above about Japan's critical role in the IT supply chain. Let me repost them as clickable links:

http://www.digitimes.com/print/a20110322VL203.html

http://www.globalsources.com/NEWS/Quake-shakes-up-Chinas-components-supply.html

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What percentage of business in Japan do you think this hi-tech manufacturing represents? I dont know but my guess is less than 5%, so with so much of the REST of the economy in Japan declining how on earth is Japan to prevail, surely there is no way these hi-tech industries can keep Japan afloat.

Manufacturing as a whole today accounts for over 20% of Japan's economy, despite the fact that the last 20 years have been marked by outsourcing of lower end, assembly line manufacturing to other countries. Increased investment and government targeting in advanced manufacturing in this same time period resulted in the Japanese monopolising production in the most sophisticated, skill intensive areas of manufacturing. R&D spending ensures that Japan will continue to maintain its strongholds and chokepoints and develop even further.

Sorry there NO WAY the kind of hi-tech stuff that Oginome is talking about is 25 or 50% of the J-economy no matter how you wanted to measure it!! But I wud agree most isnt going to be labour intensive, which also leads me to believe there is no way in hell the cutting edge stuff can keep Japan as a whole a float.

Increased investment in advanced manufacturing begets more advanced manufacturing. Advanced manufacturing is just as labour intensive as lower forms of manufacturing but it comes through differently. People think the targeting of high tech, more niche-centered manufacturing means Japan's industry become miniscule. Not true, the few large assembly line companies simply get replaced by much more numerous smaller firms which engage in much higher, more skill intensive forms of manufacturing, targeting specific areas and monopolising various high end fields which the rest of the world relies totally on. 99.7% of all manufacturing companies in Japan today are classified as 'small or medium' firms, employing less than 300 people each. They employ over 70% of the workforce.

So, my answer is. What is happening with you japanese? You have the best technology, but even though you can't assemble anymore? It is time to wake up, to change. Lets to it.

The Japanese can assemble, but they've moved onto higher end manufacturing, which is more skill intensive.

And I thought that this article may be prudent to the discussion http://www.economist.com/node/17527225 As great as advanced manufacturing is, that alone will not sustain an economy as you still need the production centers and factories, the "low level manufacturing" that has been mentioned, to employ the masses. The trend in Japan (like most countries) has been to send these factories to places like China, Thailand, India, etc to take advantage of lower wages and taxes. So while some Japanese firms have competitive advantages in certain components, if they are losing manufacturing jobs to overseas locations, then it does nothing good for the economy as a whole.

Except it does, because all this lower end assembly line manufacturing, no matter what company does it, which country it is currently being done in, or which new third world market it is in the process of being outsourced to, remains totally reliant on the Japan for the most sophisticated, important components for their devices, components which only the Japanese know how to make.

Oginome, you seem to feel pretty strongly about this topic of advanced manufacturing, but after reading the article itself it doesn't discuss this concept of advanced manufacturing such as microchips and capacitors etc, nor provide any insight into what technology actually goes into a Hyundai and if its of Japanese origin or not. The original point of the article was discussing how Korean Automakers are becoming more competitive through their designs and innovations. I do think the article is incorrectly titled however.. for shock value?

The title was incorrect and the article painted a gross distortion.

Japan does supply a lot components to other industries but that's beside the point. It doesn't explain why Japanese Automakers are seeing their designs become less competitve or why Hyundai is moving forward.. at least according to this article

It isn't besides the point. All these Hyundais are reliant on Japan for the most sophisticated, complex components to even work. The article was about Japan 'losting manufacturing edge to South Korea' when it really, really isn't.

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Step one: Japan creates technology and figures out a way to mass produce it. Step two: Korea and China copy this technology and are able to make it at a lower cost. End of Story.

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“I got the feeling that Korea’s Hyundai is clearly surging past Japanese models,” automotive journalist Toshifumi Watanabe tells ..............

I'll bet he doesn't drive one though.

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@oginome While you've provided a lot of data and asserted several times over Japan's expertise and edge in higher end manufacturing, leaving the lower end to other countries with lesser skill and knowhow, e.g. Korea, China, etc. can you explain how that eventually translates to profit to Japan's bottom line? Or more importantly, how can Japan maintain its lead and continue to turn a profit in this kind of scenario. Manufacturing is still a large component of any companies' revenue, whether they be low or high end. If more and more of these are being outsourced or farmed out to other countries, and they in turn start to develop high end components (which is definitely possible), wouldn't that in the end hurt the Japanese manufacturing industry overall in the long run? I'm wondering how this current state of the industry that you've described would pan out long term and if it's sustainable.

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Guess who is the “Microsoft” of global factory automation and controls over 60 % of the CNC market (the operating system of factory machines)?

Fanuc, and they are laughing all the way to the bank.

http://www.businessweek.com/magazine/content/10_49/b4206044280596.htm

http://www.bloomberg.com/news/2011-01-14/fanuc-to-build-robot-factory-count-on-cranes-with-brains-to-fuel-growth.html

And from an anecdotal perspective, I was in China a few months ago and noticed that the sleek skyscraper I was staying in had elevators from Mitsubishi Electric. I also noticed the profusion of construction equipments from Komatsu, Hitachi and Kobelco on the construction sites in Beijing. Even the Starbucks where I sipped overpriced lattes couldn’t escape the influence of Japan Inc -- industrial strength air conditioners from Daikin kept me cool from the blistering Beijing heat.

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oginome,

yr post at 0640am has gone from just talking about the highest tech to ALL manufacturing, bit disingenious, of yr 20% as a whole my guess is the very hi-tech stuff you have been talking about since the start of this thread wud account for a few percent of Japans economy.

Bottom line is this overall manufacturing in on the decline & unless Japan can devalue its YEN to 3rd world levels this is unlikely to change, all this hi-tech stuff is great, I mean it, but its not going to sustain Japan at all, and if things continue I bet some of this primary research etc will even start leaving Japan, companies dont have much alternative sadly

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@oginome While you've provided a lot of data and asserted several times over Japan's expertise and edge in higher end manufacturing, leaving the lower end to other countries with lesser skill and knowhow, e.g. Korea, China, etc. can you explain how that eventually translates to profit to Japan's bottom line? Or more importantly, how can Japan maintain its lead and continue to turn a profit in this kind of scenario. Manufacturing is still a large component of any companies' revenue, whether they be low or high end. If more and more of these are being outsourced or farmed out to other countries, and they in turn start to develop high end components (which is definitely possible), wouldn't that in the end hurt the Japanese manufacturing industry overall in the long run? I'm wondering how this current state of the industry that you've described would pan out long term and if it's sustainable.

It can be sustained, because advanced manufacturing is highly skill and capital intensive and does not get outsourced to other countries. It's definitely able to turn a proft, considering the focus on advanced manufacturing over the last twenty years led to Japan's trade surplus increasing five times in size between 1990-2010, even as low end manufacturing was being outsourced to other countries. Japan's strategic decision to focus and focus ever more on producer's goods has given them supremacy in advanced high tech manufacturing. This manufacturing continues to lend itself to even tougher challenges and increased improvement as long as the government support remains there, which it does. R&D in Japan is used to build competitive advantages in export industries. This spending means that Japan continues to innovate and develop, which shows, for just one example, in Japan dominating world rankings for patent applications today. Japan continues to constantly strive to specialise in and improve even further in the advanced manufacturing sector it already dominates. It is certainly not resting on its laurels. Despite what misgivings people may have about other aspects of Japan's economy and society, the one area Japan continues to remain in a class apart from everyone else in is manufacturing. Japanese manufacturing has morphed over the last twenty years to an extremely high level and is constantly being invested in to improve even further, which reveals the priority with which it is afforded by the state.

yr post at 0640am has gone from just talking about the highest tech to ALL manufacturing, bit disingenious, of yr 20% as a whole my guess is the very hi-tech stuff you have been talking about since the start of this thread wud account for a few percent of Japans economy. Bottom line is this overall manufacturing in on the decline & unless Japan can devalue its YEN to 3rd world levels this is unlikely to change, all this hi-tech stuff is great, I mean it, but its not going to sustain Japan at all, and if things continue I bet some of this primary research etc will even start leaving Japan, companies dont have much alternative sadly

How was it disingenous when I explicitly stated 'manufacturing as whole', explaining it's proportion of the economy was 20% even though lower end manufacturing was being outsourced and advanced manufacturing being pursued and monopolised in those 20 years? I already stated that 99.7% of Japanese manufacturing companies are 'small to medium' sized firms, each employing less than 300 people. Japan has already made the leap into specialistion and niche production. It does not need massive low end assembling companies to sustain its manufacturing economy. Since Japan decided to pursue advanced manufacturing, its trade surplus increased five times in size between 1990-2010, that's five times more than back in the days when it was making all the things Korea does now.

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It can be sustained, because advanced manufacturing is highly skill and capital intensive and does not get outsourced to other countries

This seems to be the trend with companies in Japan. Manufacturing is sent overseas while the high-tech stuff stays in-country. That being said, manufacturing sectors like automotive, steel, construction employs(ed) millions of people in Japan since the end of the War. The economist article I posted earlier stated that Japan lost 1 million manufacturing jobs in 2008 alone.. I would think it to be hard pressed for the semiconductor, capacitor, LCD firms etc to employ the same numbers of Toyota, Honda, Mitsubishi, etc, but if someone has access to the figures then its greatly appreciated.

Since Japan decided to pursue advanced manufacturing, its trade surplus increased five times in size between 1990-2010, that's five times more than back in the days when it was making all the things Korea does now.

During this time though, Japanese firms didn't decide to stop exporting cars, or bulldozers or trucks or consumer electronics, etc and decide to solely focus on the semiconductors and capacitor business, so to say that this advanced manufacturing is the reason for an increased trade surplus isn't telling the whole story. And trade surplus just means the value of a country's exports is more than it spends on the imports.. but having continuous trade surpluses year after year after year is not a good thing in and of itself. The outcome is that this country's currency will start to appreciate making it more expensive in the future for foreign countries to buy their goods (since they would need to buy domestic currency using their own), the flipside is that in turn it will make imports cheaper, since the domestic currency will buy more foreign currency. In any free market economy we'll see these ebbs and flows.

I think to get a better idea of the growth of the Japanese economy, look at their GDP between 1990-2010.. but then you'd have to break down which portion of the GDP can be attributed to the component industry vs other manufacturing to see if there really is a connection.

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This seems to be the trend with companies in Japan. Manufacturing is sent overseas while the high-tech stuff stays in-country. That being said, manufacturing sectors like automotive, steel, construction employs(ed) millions of people in Japan since the end of the War. The economist article I posted earlier stated that Japan lost 1 million manufacturing jobs in 2008 alone.. I would think it to be hard pressed for the semiconductor, capacitor, LCD firms etc to employ the same numbers of Toyota, Honda, Mitsubishi, etc, but if someone has access to the figures then its greatly appreciated.

When focus is increased on advanced manufacturing, then the lower end kind will inevitably be outsourced which is what happened here when these big companies left Japan. But like I have to keep saying, 99.7% of Japanese manufacturing companies are small or medium sized firms (SMEs), each employing less than 300 people. These small firms employ over 70% of Japan's workforce. The likes of Toyota, Honda, Mitsubishi are the exception in the manufacturing industry, not the norm. Overall unemployment remains low in Japan. And anyway, when these big companies outsource, they still remain completely dependant on Japan's higher end producer goods and components to still make their products.

During this time though, Japanese firms didn't decide to stop exporting cars, or bulldozers or trucks or consumer electronics, etc and decide to solely focus on the semiconductors and capacitor business, so to say that this advanced manufacturing is the reason for an increased trade surplus isn't telling the whole story. And trade surplus just means the value of a country's exports is more than it spends on the imports.. but having continuous trade surpluses year after year after year is not a good thing in and of itself. The outcome is that this country's currency will start to appreciate making it more expensive in the future for foreign countries to buy their goods (since they would need to buy domestic currency using their own), the flipside is that in turn it will make imports cheaper, since the domestic currency will buy more foreign currency. In any free market economy we'll see these ebbs and flows. I think to get a better idea of the growth of the Japanese economy, look at their GDP between 1990-2010.. but then you'd have to break down which portion of the GDP can be attributed to the component industry vs other manufacturing to see if there really is a connection.

Actually it tells everything. Japan still exports the same kind of lower end stuff it exported in 1990 (with Korean competition these days of course), but the difference between 1990 and 2010 was the growth of the advanced manufacturing industry and THAT'S what led to the fivefold increase in trade surplus. Oh and Japan wants to maintain trade surpluses. Japan's tariffs discourage imports so that surpluses will build up instead. Bigger surpluses equals bigger investment. Bigger investment means more investment towards advanced manufacturing. Advanced manufacturing begets even more advanced manufacturing. The Japanese then continue to increase domination in ever larger areas of this high tech field and gain even more monopolies. It was the West's fear of these ever growing trade surpluses that led to the infamous anti-Japanese paranoia in the West in the 80s and early 90s. Yet when the paranoia subsided after Japan's financial bubble burst, the trade surpluses still kept growing and growing. Oh and don't believe what laissez faire enthusiasts tells you either. Trade deficits are certainly not a sigh of strength, consistent and growing trade deficits like the kind America has shown since the 80s show an astonishing lack of production capability, and have exposed the total weakness in America's industrial base. America is now the world's greatest debtor nation, while Japan is the world's second largest creditor nation. Japan has its own brand of capitalism that is completely different from America's.

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Actually it tells everything. Japan still exports the same kind of lower end stuff it exported in 1990 (with Korean competition these days of course), but the difference between 1990 and 2010 was the growth of the advanced manufacturing industry and THAT'S what led to the fivefold increase in trade surplus

alright, then you are going to have to provide some data or sources to back you up on this. The balance of trade is not the be all and end all of economic growth.

Trade deficits are certainly not a sigh of strength, consistent and growing trade deficits like the kind America has shown since the 80s show an astonishing lack of production capability, and have exposed the total weakness in America's industrial base. America is now the world's greatest debtor nation, while Japan is the world's second largest creditor nation. Japan has its own brand of capitalism that is completely different from America's

nor is running continuous surpluses. Both come with their own set of problems if continued for years and years. Economists around the world don't even agree on this so there is no right or wrong to this.

Yes, its a cold hard fact that the US is the largest debtor nation, their debt stands at about 101% of GDP.. Japan's debt stands at about 200% of GDP, is increasing and is now the second largest debtor nation in the world behind the US. And while much of this debt is held domestically which has allowed them to finance at ridiculously low rates, if bond yields were to spike there would be a lot of trouble.

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alright, then you are going to have to provide some data or sources to back you up on this. The balance of trade is not the be all and end all of economic growth.

But the data is there. Balance of trade reflects exports. Japan today is still exporting the same kind of low end stuff it exported in 1990 except now it has heavy competition from Korea, but yet it still managed to increased its trade surplus fivefold between 1990 and 2010.

nor is running continuous surpluses. Both come with their own set of problems if continued for years and years. Economists around the world don't even agree on this so there is no right or wrong to this.

Running surpluses is preferable to deficits, despite what laissez faire economists say. American's consistent and growing trade deficits since the 80s reveal the total and continuing decline in America's industrial base. And whatever your opinion on surpluses and deficits are, Japan's ever increasing trade surpluses between 1990-2010 show for a FACT that Japan's export sector was growing stronger and stronger during that time. Japan was certainly not hollowing out in manufacturing, as many people like to think. The story of decline doesn't tally with the evidence.

Yes, its a cold hard fact that the US is the largest debtor nation, their debt stands at about 101% of GDP.. Japan's debt stands at about 200% of GDP, is increasing and is now the second largest debtor nation in the world behind the US. And while much of this debt is held domestically which has allowed them to finance at ridiculously low rates, if bond yields were to spike there would be a lot of trouble.

You correctly stated most of Japan's debt is internal, which is less problematic and puts it in a different situation than America. And internal debt or no, it's a fact that USA is the world's LARGEST debtor nation while Japan continues to remain the world's second largest creditor nation.

The fundamental, inescapable facts are, that even with the emergence of Korean competition during the past 20 years, Japan's export sector increased multiple times in size and strength between 1990 (the last year of the bubble) and 2010 ('Koreans have taken over!'). There is something severly wrong with the picture being painted here and people need to research instead of just blindly accepting these kind of articles.

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Japan’s net assets:

At the end of 1989: 42,543 billion yen (554 billion dollars)

At the end of 2010: 251,495 billion yen (3.3 trillion dollars)

After the bubble burst and two "lost decades", Japan’s total net worth increased more than 490%!

http://www.mof.go.jp/english/international_policy/reference/iip/e2010.htm

http://www.reuters.com/article/2010/05/24/japan-economy-assets-idUSTOE64N07320100524

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@Oginome:

Actually, Japan is the world's largest creditor nation (by a very wide margin):

http://www.financialsense.com/contributors/leslie-cuadra/2011/08/31/list-of-worlds-largest-creditor-and-debtor-nations

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South Korea's chronic annual trade deficit with Japan in 2011, shrank by 30%. What's interesting is not that the trade deficit shrank, but it's that Korea's exports at the same time, had increased by 20%. So the old Japanese nationalist acronym "the more Korea sells, the more deficit with Japan", has been finally broken. To me, I think this is a mile stone achievement for Korea, and I think this pattern will continue to hold, as many Japanese component makers go bankrupt or move out of Japan to setup elsewhere, while at the same time, Korean component makers have finally been given a big huge lift, with many new orders not just from domestic companies, but also from Europe and America. Hyundai, for instance, when the earthquake in Japan struck, despite concerns outside and inside Korea about availability of Japanese components, did very well with their exports at the expense of their Japanese rivals. This flew right in front of those who claimed this was going to be disaster for Korea - but on the contrary. It turned out that the dependence by Hyundai on Japan was very minor. Hyundai only bought one Japanese component, the alternators from Dentso. This was the similar story with other Korean conglomerates who did very well at the expense of Japan who were down and out with the earthquake crisis. If the claim that Korea can't make anything without Japan was true, then it doesn't make any sense that Korea's manufacturing and exports did a rip roaring business, just at the time when Japan was having problems with their supplies.

Sure, I'm not saying Korea doesn't still rely on Japan for components. What I'm saying is the dependence on Japan won't last forever, as it's dependence is gradually waning, and the speed has taken up fast in the last year. You have to understand how Korean conglomerates operate. They don't buy from Japanese parts makers because they can't make those parts themselves. They buy from suppliers that will give them the maximum return on investment. Did Hyundai buy their alternators from Dentso because they couldn't make their own alternators? Of course not. Unfortunately for Japan, much of their advantages that they held over upstart Korean parts suppliers, are dwindling - giving a new chance to Korean domestic parts makers who couldn't even get a foot in the door before.

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iPhone suppliers

http://www.shimto.com/data/geditor/1201/2011952689_f29d42ed_EC9584EC9DB4ED8FB04+EBB680ED9288+EAB080EAB2A9.jpg

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@1standgoal: It just gets weirder and weirder, doesn't it?

South Korea's chronic annual trade deficit with Japan in 2011, shrank by 30%. What's interesting is not that the trade deficit shrank, but it's that Korea's exports at the same time, had increased by 20%. So the old Japanese nationalist acronym "the more Korea sells, the more deficit with Japan", has been finally broken. To me, I think this is a mile stone achievement for Korea, and I think this pattern will continue to hold, as many Japanese component makers go bankrupt or move out of Japan to setup elsewhere, while at the same time, Korean component makers have finally been given a big huge lift, with many new orders not just from domestic companies, but also from Europe and America. Hyundai, for instance, when the earthquake in Japan struck, despite concerns outside and inside Korea about availability of Japanese components, did very well with their exports at the expense of their Japanese rivals. This flew right in front of those who claimed this was going to be disaster for Korea - but on the contrary. It turned out that the dependence by Hyundai on Japan was very minor. Hyundai only bought one Japanese component, the alternators from Dentso. This was the similar story with other Korean conglomerates who did very well at the expense of Japan who were down and out with the earthquake crisis. If the claim that Korea can't make anything without Japan was true, then it doesn't make any sense that Korea's manufacturing and exports did a rip roaring business, just at the time when Japan was having problems with their supplies.

Sure, I'm not saying Korea doesn't still rely on Japan for components. What I'm saying is the dependence on Japan won't last forever, as it's dependence is gradually waning, and the speed has taken up fast in the last year. You have to understand how Korean conglomerates operate. They don't buy from Japanese parts makers because they can't make those parts themselves. They buy from suppliers that will give them the maximum return on investment. Did Hyundai buy their alternators from Dentso because they couldn't make their own alternators? Of course not. Unfortunately for Japan, much of their advantages that they held over upstart Korean parts suppliers, are dwindling - giving a new chance to Korean domestic parts makers who couldn't even get a foot in the door before.

The shrinkage in South Korea's trade deficit with Japan was related to Japan's own problems in 2011 with the tsunami and nuclear disaster. It was a 'normal year' and does not reperesent a miletone. South Korea will continue to have a chronic trade deficit with Japan, just like it did in 2011 even if it shrank slightly. The number of Korea's exports increased because of the stronger yen. The fact remains that Korea remains totally dependant on Japanese high tech. Korean companies such as Hyundai managed to not fall apart, because the tech from Japan was stll largely delivered to them. The Japanese supplies still came through in the end. Dentso supplies components for the Hyundai. But ALL the components in the Hyundai, Dentso and non-Japanese are still dependent on even more sophisticated components, the producer's goods, which Japan monopolises. You just revealed the amount Korea depends on Japan, when even in 2011, Japan's worst year in post war history, the year it posted its first overall trade deficit in 1980, it STILL had a trade surplus with Korea. Japan's high tech remains vital for all Korean industry and Japan continues to invest in advanced manufacturing so it can maintain its competitive export advantage.

http://www.shimto.com/data/geditor/1201/2011952689f29d42edEC9584EC9DB4ED8FB04+EBB680ED9288+EAB080EAB2A9.jpg

This is how many times the iPhone suppliers have been posted now? All those suppliers are dependant on Japanese high tech to create those components.

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But the data is there. Balance of trade reflects exports. Japan today is still exporting the same kind of low end stuff it exported in 1990 except now it has heavy competition from Korea, but yet it still managed to increased its trade surplus fivefold between 1990 and 2010

Yes, but the Balance of Trade only reflects the value of goods and services exported and imported. Not the actual products itself. Looking at trade balances by themselves is useless. You need to put it into context by looking at other economic indicators such as GDP, unemployment, inflation, etc etc. This may explain it a bit better http://www.investopedia.com/terms/b/bot.asp#axzz1kukILn4F

Actually, Japan is the world's largest creditor nation (by a very wide margin):

There is a reason for this. Japanese hold swathes of foreign bonds while foreign entities hold comparatively little Japanese bonds. Yields in Japan are low, almost 0%. Institutional Investors in Japan such as insurance companies, pension funds, etc are looking to overseas yields because they can actually get a decent return and be able to fund their programs and this mainly means the buying of US treasuries. US debt is still an attractive investment because: the economy over there is stable and growing (albeit slowly) and they are at a very very small risk of actually defaulting. So yes, Japan is lending the US money, i.e Buying bonds. But again, only looking at this figure reveals very little of what is actually going on.

And of all places, Google Public Data, I found some nice charts compiled by the World Bank under World Development Indicators.. you can look at all sorts of stuff from country to country (even be able to compare several together) such as GDP, imports, exports and a lot of others. There is even a chart, under "States and Markets" that shows High Technology exports as a percentage of Manufacturing exports. Check it out

http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_

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@oginome

South Korea gained first world country status in 2008 but Japan's GDP per capita still remains twice as large.

Are you kidding me? South Korea and Japan have roughly the same GDP (PPP) per capita, between France and Israel, based on IMF data (2011).

Standard of living in both countries is relatively similar, but SK is on ascending trend, while Japan has been on a descending trend for 20 years (and it is just the beginning unfortunately).

The point of this paper is that Japan is progressively loosing its industrial edge and becomes less relevant year after year. The question now is whether the elites will understand a paradigm change is needed for Japan to stay in a leading position: more flexibility, less government intervention (let the creative destruction process bring in more innovative companies instead of keeping afloat a largely inefficient domestic private sector), etc...

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I read some comments written out of uneducated guess, ignorance and biases. Those Japanese commentators who feel that they are somehow superior and looking down their nose on their next door neighbor of South Korea should remember that they still have flat nose just like their counter part Asians and should be thanking the USA and Europe for bringing the enlightenment and technology to their shore in first place.

Tokyo's Nikkei recently said that Japan's automotive industry's various car companies must learn from (A) Germany & (B)South Korea. For what though? The Nikkei was advising its own Japanese companies to learn the (1) quality (2) design (3) price from Germany and S.Korea's car companies. The USA was not even included in the mentioning of those 2 countries in the Nikkei's. You can not downplay the South Korean cars which are said to be now competing and even surpassing Japanese companies according to Canada's elite business newspaper, the Globe & Mail.

What is more, even the prestigious J.D.Powers' annual ranking in the United States on all the domestic as well as the imported cars nowadays normally ranks the South Korean car companies' initial qualities ahead of the many Japanese car companies. Only Lexus, Toyota and Honda fare better than Korean car companies, but when comparing model by model, even Toyota sometimes can not outdo the South Korean counterparts. If I were you, I would not buy Mitsubishi, Suzuki, Mazda or even Toyota. When you live in the U.S. or Canada, you are able to recognize very easily how Japanese cars have become so dull and uninteresting in appearance whereas Korean cars now seem to be exuberant on design and even in quality! Did you know that even Toyota's U.S. design division has the team of about at least 8 Korean designers one of whom is a Korean American manager! I do not quite understand why many Korean young talents are hired by many car companies in Great Britain and the U.S as well as Japan, but certainly this is an indicative of the fact that South Koreans are able to fare competitively on the same level as their Japanese counterparts. Mind you also, some biggest Japanese firms send their emissaries to South Korea's universities, and in some cases even to Korean high school graduates, to scout potential young Korean talents after graduating from universities for good career positions in Japan; due to cultural and linguistic similarities, the recruitment has been sought by some of the well known firms in Japan.

The Economist magazine had reported that the country Japan feels the most pressure with is, interestingly not China, but South Korea. Some Japanese think tank is worried that there would be fierce competition even in the world's smart grid energy market with S.Korea in future and this concern was made after they were quite alarmed when S.Korea recently won the bid to build nuclear energy reactor in the Middle-Eastern country striking down the bid efforts by France and Japan. Japan is said to be the world's #1 in robotics, but South Korea is closing gap with Japan on robotics that some of the Japanese robotic firms were threatened to make alliance of themselves to brace for South Korean juggernauts. Also South Korea had surpassed Japan already very long time ago on high-tech ship building industry (it was also featured on the Discovery channel's documentary on South Korea's high-tech ship builders) and now S.Korea (not Japan) dominates the world's ship building market. South Korea is one of the very handful of countries that is able to build supersonic jets, aegis destroyers, military robots etc. because of which Israelis were recently considering to purchase the supersonic jets to be used in the Israeli Defense Force's airforce. Did you also know that robotic surgeries at medical facilities in South Korea has become so prevalent that British as well as Japanese doctors go to S.Korea to learn the robotic surgery?

Some commentators seem to be very much downplaying the South Korean people as though they are just copying everything from their next door neighbor of Japan. But why is it that then while Japanese cell phones are now becoming almost extinct in North America, South Korean smart phone sales are soaring up and that now, south Korean smart phones outsell Apple's I-phones world wide?

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Yes, but the Balance of Trade only reflects the value of goods and services exported and imported. Not the actual products itself. Looking at trade balances by themselves is useless. You need to put it into context by looking at other economic indicators such as GDP, unemployment, inflation, etc etc. This may explain it a bit better http://www.investopedia.com/terms/b/bot.asp#axzz1kukILn4F

The definition of balance of trade from the site you linked,

The difference between a country's imports and its exports. Balance of trade is the largest component of a country's balance of payments.

The surplus difference between Japan's imports and exports increased fivefold between1990 and 2010, the same time period its industry was supposedly hollowing out and losing ground to Koreans.

And of all places, Google Public Data, I found some nice charts compiled by the World Bank under World Development Indicators.. you can look at all sorts of stuff from country to country (even be able to compare several together) such as GDP, imports, exports and a lot of others. There is even a chart, under "States and Markets" that shows High Technology exports as a percentage of Manufacturing exports. Check it out

http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_

High technology as a blanket term doesn't distinguish between medium high technology (cars, electronics) and higher, more skill intensive forms (advanced manufacturing), which Japan dominates and monopolises.

Are you kidding me? South Korea and Japan have roughly the same GDP (PPP) per capita, between France and Israel, based on IMF data (2011).

Standard of living in both countries is relatively similar, but SK is on ascending trend, while Japan has been on a descending trend for 20 years (and it is just the beginning unfortunately).

The point of this paper is that Japan is progressively loosing its industrial edge and becomes less relevant year after year. The question now is whether the elites will understand a paradigm change is needed for Japan to stay in a leading position: more flexibility, less government intervention (let the creative destruction process bring in more innovative companies instead of keeping afloat a largely inefficient domestic private sector), etc...

Japan's standard of living and Japanese salaries are higher than in South Korea's. And once again, someone is ignoring the facts. Japan is not 'progressively losing is industrial edge', when its export sector multiplied numerous times in size and strength between 1990-2010, resulting in Japan's trade surplus increasing fivefold. South Korea on the other hand, runs yearly trade deficits with Japan as it is reliant on Japanese advanced manufacturing to create every product it makes. Japan absolutely dominates the field and continues to do so. To show one example, in the 80s, Japan was making 15 percent of the Boeing 767, but in 2011 Japan officially makes 33% of the Boeing 787 and even the non Japanese parts are reliant on the producer goods Japan has monopolised. This is NOT losing any kind of industrial edge, but continually gaining it in the highest fields.

@ whosbetternobody: There have been no ignorant gueses, but simply facts, which other posters choose to ignore because they go against the 'Japan in decline' narrative that people just take it for granted. No one's 'looking down their nose on anyone', we know South Korea is improving, but the fact is that it remains far, far behind Japan when it comes to advanced manufacturing. Every South Korean car, robot, destroyer you described is reliant on Japanese technology for the most sophisticated parts, every one. You're talking about design and rankings and price, but that doesn' take away from that indisputable fact. And ship building is in the lower reaches of medium high technology, the Japanese have largely moved on to dominate higher fields. Japan's increasing trade surpluses (2011 nonwithstanding) reveal continued investment and strength in advanced manufacturing. Japanese cell phones are not 'becoming extinct in America' when they never even moved into that market to begin with. South Korea smartphones, as well as Apple's iPhones are all reliant on Japan's super high tech. I have to keep repeating these basic facts over and over again.

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Please do not keep repeating the same thing over and over again. You have already posted more than enough messages on this thread. From here on, repetitive posts will be removed.

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So oginome, so then how come Japan can't come up with their own big OLED screen TV of their own after trying so much? They gave up because they couldn't make it work (read the article). Why can't Elpida beat Samsung with faster chips? If Japan is so much more technologically superior, Koreans are just copying Japan products, these shouldn't happen at all.

"Japan's standard of living and Japanese salaries are higher than in South Korea's."

I think Japan has a higher standard of living, but the gap is narrower than you think it is. By measuring nominal GDP, you are right, largely due to the highly inflated and bubble Japanese Yen, and overly deflated Korean Won. But currency rates in dollar terms can change in matter of over night. I wouldn't take that as a measurement of how well you're doing.

"South Korea will continue to have a chronic trade deficit with Japan, just like it did in 2011 even if it shrank slightly."

It didn't shrink slightly, it shrank by almost a third. And more importantly, the exports rose by twenty percent - cracking numbers. At the same time, Japan's industrial output went into a toilet, and companies like Honda in Canada were cutting back severely due to lack of parts and components. While Hyundai ramped up the production and had the best year ever at the expense of the Japanese. Which tells me either Koreans simply switched their supplier routes domestically and continued to make their products, or they weren't depended on Japan's suppliers as much as we thought. Probably the latter. Furthermore, you still don't understand how Korean conglomerates behave. They may buy from small business Japanese (or whatever country you can name) component makers as long as the dollar numbers make sense to them. But as soon as the numbers don't, they (Korean conglomerates) will either buy those sm businesses out, raid their talent, and/or they will start producing their own. You are way overestimating Japan's position. It can't be comfortable for Japanese industry experts to see their component makers having to rely more and more on Korea, while big Japanese and now Korean corporations are cutting back their purchases from them.

This is my last post on this, since I don't think this is going anywhere, but Japan can rest easy since Japan is the only country that Korean makers can't sell anything because nobody buys them because their products are inherently cheap and nasty, and they can't make anything without Japan.

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High technology as a blanket term doesn't distinguish between medium high technology (cars, electronics) and higher, more skill intensive forms (advanced manufacturing), which Japan dominates and monopolises

The world bank categorizes High Technology products as those with high R&D intensity such as aerospace, pharmaceuticals, computers, scientific instruments and electrical machinery, just gotta click the "?" at the top of the charts. I think we can classify advanced manufacturing such as capacitors, LCD screens, microchips into this category. Anyways, according to those charts, high technology exports roughly account for between 19% to 23% of Exported Manufacturing through the last 20 years. So yes, while some Japanese firms may be the only suppliers of some components (i'm certainly not disputing this, i've read the articles), the production of high tech products is not the largest subgroup of exports from Japan, the other 80% is more than likely comprised of automobiles, construction equipment, consumer electronics, etc etc etc.

The definition of balance of trade from the site you linked,

The difference between a country's imports and its exports. Balance of trade is the largest component of a country's balance of payments.

The surplus difference between Japan's imports and exports increased fivefold between1990 and 2010, the same time period its industry was supposedly hollowing out and losing ground to Koreans.

Yes, I know what Balance of Trade means, Japan exports more than it imports. It's been this way for 40 years and its not new news. Balance of trade doesn't reports volumes of exports/imports, its a monetary value.

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So oginome, so then how come Japan can't come up with their own big OLED screen TV of their own after trying so much? They gave up because they couldn't make it work (read the article). Why can't Elpida beat Samsung with faster chips? If Japan is so much more technologically superior, Koreans are just copying Japan products, these shouldn't happen at all.

Japan started pursuing OLED again in 2011. And Elpida and Samsung are both reliant on more sophisticated Japanese producer goods.

I think Japan has a higher standard of living, but the gap is narrower than you think it is. By measuring nominal GDP, you are right, largely due to the highly inflated and bubble Japanese Yen, and overly deflated Korean Won. But currency rates in dollar terms can change in matter of over night. I wouldn't take that as a measurement of how well you're doing.

These are both facts, and the Yen itself was artifically kept low for many years. Japanese salaries were higher then too.

It didn't shrink slightly, it shrank by almost a third. And more importantly, the exports rose by twenty percent - cracking numbers. At the same time, Japan's industrial output went into a toilet, and companies like Honda in Canada were cutting back severely due to lack of parts and components. While Hyundai ramped up the production and had the best year ever at the expense of the Japanese. Which tells me either Koreans simply switched their supplier routes domestically and continued to make their products, or they weren't depended on Japan's suppliers as much as we thought. Probably the latter. Furthermore, you still don't understand how Korean conglomerates behave. They may buy from small business Japanese (or whatever country you can name) component makers as long as the dollar numbers make sense to them. But as soon as the numbers don't, they (Korean conglomerates) will either buy those sm businesses out, raid their talent, and/or they will start producing their own. You are way overestimating Japan's position. It can't be comfortable for Japanese industry experts to see their component makers having to rely more and more on Korea, while big Japanese and now Korean corporations are cutting back their purchases from them.

But the shrinking wasn't a natural development, it was related to Japan's disasters in 2011. And it still remained a DEFICIT. Exports increased because the value of the yen soared. And it takes many years to build up advanced manufacturing know how, it's not something you just aquire when the costs of purchasing components from companies no longer makes economic sense. Japanese advanced manufacturing remains many years ahead of Korea and Japan invests huge amount of money every year to ensure these monopolies are maintained and to build new ones. Even if all the suppliers in Hyundai were Korean, each of them is still reliant on producer's goods Japan has monopolised.

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napoleancomplex

Balance of trade doesn't reports volumes of exports/imports, its a monetary value.

Here is the biggest point IF volume of export had shrunk while trade surplus had increased then the plain simple truth is that Japan had constantly exported product with more value. Applying the simple economic law of supply and demand to the above fact it means Japan is the only supplier for products with high demand. Don't know what is going to happen in the mid-term future but I believe it is safe to say that Japan's economic future is still bright for a while.

As for not pursuing OLED is more of a business decision then a technological one since Sony did announce a 21" OLED monitor a few years ago but was not able to bring down the cost. At the moment Japanese manufacturers are more interested in 4k monitors which many Japanese companies had announced their version while I believe SK still have not entered the race.

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Japanese netizen comments laughing it up at the Koreans and Korean cars.

http://headlines.yahoo.co.jp/cm/main?d=20120130-00000009-scn-kr&s=points&o=desc

It's OK though if Japanese think poor quality Hyundai's engine and technology comes from Mitsubishi. Amusing, but I think this just about perfectly illustrates why Japan is going Galapasgos Island in a sea of global changes.

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The world bank categorizes High Technology products as those with high R&D intensity such as aerospace, pharmaceuticals, computers, scientific instruments and electrical machinery, just gotta click the "?" at the top of the charts. I think we can classify advanced manufacturing such as capacitors, LCD screens, microchips into this category. Anyways, according to those charts, high technology exports roughly account for between 19% to 23% of Exported Manufacturing through the last 20 years. So yes, while some Japanese firms may be the only suppliers of some components (i'm certainly not disputing this, i've read the articles), the production of high tech products is not the largest subgroup of exports from Japan, the other 80% is more than likely comprised of automobiles, construction equipment, consumer electronics, etc etc etc.

But high technology doesn't distinguish between the likes of semiconductors (which Japan largely monopolised 20 years ago) and the more sophisticated producer's goods such as semiconductor grade silicon (which Japan monopolises now). Japan's trade surplus grew fivefold between 1990-2010, even though Japan still exports the same amount in electronics, automobiles etc as it did 20 years ago. Increased investment and targeting towards advanced manufacturing in this time led to monopolies in the highest end, most expensive and high value areas in both production and selling and that's why the trade surplus continued to multiply hugely.

Yes, I know what Balance of Trade means, Japan exports more than it imports. It's been this way for 40 years and its not new news. Balance of trade doesn't reports volumes of exports/imports, its a monetary value.

A monetary value that reflects on the volume of exports. The balance of trade shows Japan's export sector increased markedly in size and strength in the years the media was saying it was hollowing out.

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After two “lost decades” of “stagnation” and “decline”, Japan is so beleaguered economically that:

Its major corporations are sitting on a cash pile of more than 2.4 trillion dollars (an all time record)

http://www.bloomberg.com/news/2011-05-30/sony-leads-japan-inc-circling-takeovers-with-2-4-trillion-cash-real-m-a.html

Its household is sitting on 19 trillion dollars worth of financial assets (also an all time record) http://www.bloomberg.com/news/2011-09-20/japan-household-assets-rise-for-first-quarter-in-five-boj-says.html

Its post office is sitting on the world’s largest cash pile: -Kampo, its insurance arm, is the world’s largest insurer by assets -Yucho, its banking arm, is the world’s bank by deposits http://www.japanpost.jp/en/group/disclosure/2011/pdf/05.pdf

What Japan is doing is analogous to an extremely wealth person (with a lot of offshore assets) living a moderate lifestyle and pretending to be a lot less wealthy. It makes a lot of strategic sense from a Sun Tzuian point of view – always provide your competitors misinformation to maximize your own strategic advantage.

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@oginome:

In 2010, China had a deficit of $50 billion with Japan and $40 billion with Germany on capital goods.

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to oginome:

if Japan is not losing its manufacturing edge like you say. then what is this article about?

do you care to explain? why do you think your opinions are more correct than the automotive journalist Toshifumi Watanabe's opinions?

are you an expert in this field?

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@1standgoal: more evidence the world has been hugely misled.

if Japan is not losing its manufacturing edge like you say. then what is this article about?

The article paints a gross distortion.

do you care to explain? why do you think your opinions are more correct than the automotive journalist Toshifumi Watanabe's opinions? are you an expert in this field?

Nope, no opinions here, just FACTS, which are available for everyone to search and see. Toshifumi Watanabe feeling anxious about Hyundai's designs doesn't change anything. Japan's current account balance in 2010 was $194 billion, compared to $36 billion in 1990.

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Japan's current account surplus down by 86% in November, ninth straight months of deficits due to falling exports.

http://www.marketwatch.com/story/japans-current-account-surplus-falls-86-2012-01-11

Don't get me wrong, Japan is still a rich country. But if I were the Japanese, I would definitely worry about the pattern that's going the wrong way, and the alarm bells should be going. But no.

With things going the way it is, Japan will have to start borrowing more from foreigners soon.

http://www.actionforex.com/analysis/daily-forex-fundamentals/the-japanese-current-account-surplus-unexpectedly-shrinks-20120112157200/

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@ chucky, 2011 was a year marked by nuclear disaster, tsunami, rising oil prices, and 1/3 of the rest of Japan's nuclear plants being shut down, causing much greater dependance on foreign energy. Japan will regain its monunmental current account surplus.

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Could you correct my previous post mods : Japan's current account surplus in 2010 was $194 billion, compared to $36 billion in 1990.

The current account surplus is defined 'as the difference between the value of exports of goods and services and the value of imports of goods and services.'

http://www.imf.org/external/pubs/ft/fandd/2006/12/basics.htm

So no, malfupete, it has certainly not deviated from what we were discussing originally.

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So, my answer is. What is happening with you japanese? You have the best technology, but even though you can't assemble anymore? It is time to wake up, to change. Lets to it.

Japan has advanced to where large assembly factories are no longer profitable. Those are reserved for developing countries where competetitive advantage can be utilized due to low labor costs.

And oginome is correct. Korea has a LARGEST trade deficit with Japan. This is simple because Korea relies heavily on parts/compenents derived from advanced manufacturing of Japan.

http://headlines.yahoo.co.jp/hl?a=20111221-00000049-yonh-kr

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I'm going by your logic when you stated that suppliers around the world are totally reliant on Japanese advanced manufacturing or tech. From what you are saying, I think it looks like this: raw materials --> Japanese "advanced manufacturing" firms (and only Japanese firms) produce an intermediate good --> intermediate good is processed into a component --> component bought buy manufacturer (american, korean, chinese, japanese, whoever) --> parts assembled in China --> Apple rules the world --> Apple couldn't have become the worlds most valuable company with those Japanese parts, therefore Japanese Advanced Manufacturing rules the world. QED

and lets take a look at those paragraphs in the article where those terms "the mighty have fallen" and "rapidly plummeting" appear in. It's not fair to post those phrases without looking at the context they are in.

How the mighty have fallen. In previous years, Japanese models had been selected in the passenger car and light truck categories, the latter of which includes SUVs. And in 2006, Honda Motor Co drove off with double prizes, taking two categories. But since 2009, when Hyundai won its first prize, the appeal of Japanese models has declined.

Now call me foolish, but I'm pretty sure they are referring to the fact that Japanese cars used to dominate these car award shows, which basically looks at designs and features, but in recent years, foreign models have been taking center stage. Hmmm..Can't seem to find any mention of anything else except Cars and awards, not production numbers, not supply chain components, nothing who provides the world's electronic grade silicon, not even if all the parts in a Hyundai come from Japanese sources... moving on.

Shukan Bunshun moves on to lament Japan's rapidly plummeting TV industry. It seems the inflated value of the yen is not the only threat to its continued existence

Shukan Bunshun is a japanese magazine if I'm not mistaken, if you have problem with their reporting go complain to them. Since there isn't any actual sales numbers it's difficult to say what is happening. But again, on face value... can't seem to find any mention of advanced electronics, nothing about trade surpluses, manufacturing numbers. The following paragraphs do mention that Sony did try to make an EL TV but pulled out because it wasn't going to be profitable but Samsung and Lucky Goldstar managed to put together a model and bring it to the CES but there is no guarantee that this will be a profitable either.

And hey wait a minute, didn't you say making TVs is "low tech" since Japan has only concentrated on this "High tech manufacturing" Yes you did, here is your response to a poster named Wurthington:

Twenty years ago in just about every electronice gadget category Japan was a world leader. Stereos, CD Players, VHS, Cameras, TV... you name it.

That's lower end, less skill intensive manufacturing. The Koreans do that nowadays. And all the stereos, mp3 players, cameras, tvs made today still rely on Japanese technology to work, no matter where they are made or with which company. Japan today makes the most sophisticated, advanced parts of these devices.

So really, the statement that Japan's TV industry is "rapidly plummeting" shouldn't bother you since its low tech stuff anyways and of no concern to Japanese industry.

And again with the current account/trade balance stuff? You've continuously stated that advanced manufacturing is the reason for the surplus and its five-fold increase over the last 20 years yet you haven't provided any data to back this up. That's a very strong statement to make, but with no data... the credibility is lacking at the moment.

and I think the last paragraph from that link basically sums it up

So, are deficits bad?

A common complaint about economics is that the answer to any question is, "It all depends." It is true that economic theory tells us that whether a deficit is good or bad depends on the factors giving rise to that deficit, but economic theory also tells us what to look for in assessing the desirability of a deficit.

If the deficit reflects an excess of imports over exports, it may be indicative of competitiveness problems, but because the current account deficit also implies an excess of investment over savings, it could equally be pointing to a highly productive, growing economy. If the deficit reflects low savings rather than high investment, it could be caused by reckless fiscal policy or a consumption binge. Or it could reflect perfectly sensible intertemporal trade, perhaps because of a temporary shock or shifting demographics. Without knowing which of these is at play, it makes little sense to talk of a deficit being "good" or "bad": deficits reflect underlying economic trends, which may be desirable or undesirable for a country at a particular point in time.

It all depends...

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malfupeteJan. 31, 2012 - 09:35AM JST. So really, the statement that Japan's TV industry is "rapidly plummeting" shouldn't bother you since its low tech stuff anyways and of no concern to Japanese industry.

It does concern major Japanese industry. In 2011, Sony and Panasonic poured new money into their businesses long after many analysts warned it was futile. They will now pay a price for their over-investment. Panasonic is to take a Y265bn restructuring charge on its TV business this year, including write-offs of plant and equipment. That, combined with a separate reorganization of its semiconductor business, will drive it into a forecast Y420bn net loss. Point is Sony and Panasonic made big mistake.

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Oh, no doubt that it shouldn't, I agree. Panasonic and Sony are institutions in Japan and it is definitely in their best interests to remain competitive in the TV market. If anything, this competition from foreign firms should spur them on to do bigger and better things. Only time will tell

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@oginome:

Moreover, Japan’s debt figure is vastly exaggerated.

Case in point: the Japanese government have over 1 trillion $ in FX reserves – mostly from interventions to stem the yen’s relentless rise. However, these FX reserves are classified as both assets and liabilities, because after a FX intervention, the money supply in both the foreign currency (mostly dollar) and Yen increases, resulting in increase in inflation. To prevent the increase in the Yen money supply, BOJ “sterilizes” this new money with matching new issues in JGBs, thus removing this new money from circulation. This paradoxically results in increase in the official Debt to GDP figure. The idea that Japan will suffer a crisis of debt denominated in its own currency is literally impossible – BOJ can issue its own sovereign currency at will by creating money out of thin air – nowadays by entering a few zeros on its excel spreadsheet. Issuing debt in your own currency is a privilege enjoyed by few, and Japan is one such nation.

The lesson: LIES, DAMMED LIES, and STATISTICS.

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To provide some historical context:

After WW2, Japanese industry always graduated to the next level, and leave the lower end work to other Asian nations. In the 1950s and 60s, Japan exported toys/shoes/garments; in the 70s and 80s, cheap cars and electronics. In every one of these circumstances, Japan upgraded to the next level of manufacturing sophistry and outsourced the lower end jobs to lower-cost nations in Southeast/East Asia.

Japan now produces capital goods, advanced components, luxury cars (a Lexus LFA costs over 300,000 $!), and high-end electronics (for example, most of the DSLR cameras used by pros in the London Olympics will be from Canon and Nikon).

Some people like claim that Japan's manufacturing might decreased and cite the evidence of its lost of market share in TVs/refrigerators/washers/DVD players. But these products are now mostly commodities differentiated almost solely by price, and Japan cannot outcompete with China, and to a lesser extent, Korea, on price. Japan's specialty is in high-end manufacturing, which is highly- automated and employs few workers because its highly-authomated.

This in-depth article from bweek illustrates Japan's dominance in capital goods:

http://www.businessweek.com/magazine/content/10_49/b4206044280596.htm

The most amazing fact I got from this article is that Fanuc ( the dominant player in robotics and CNC) manufacture robots using robots. Whenever you buy an iphone or take a flight in a Boeing airplane, Fanuc probably took a (very lucrative) cut -- their operating margin is over 44%.

This is how Japan (and Germany) rolls -- they make the most advanced machinery that no one else can make but every manufacture requires to manufacture high quality products. Barriers to entry is extremely high because of R&D costs and technical expertise are accumulated over decades. South Korea, without a doubt an extremely successful economy, currently occupies the medium level in terms of the overall production chain. I'm not saying that South Korea and China cannot graduate to this level eventually, but it takes time.

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and lets take a look at those paragraphs in the article where those terms "the mighty have fallen" and "rapidly plummeting" appear in. It's not fair to post those phrases without looking at the context they are in. Now call me foolish, but I'm pretty sure they are referring to the fact that Japanese cars used to dominate these car award shows, which basically looks at designs and features, but in recent years, foreign models have been taking center stage. Hmmm..Can't seem to find any mention of anything else except Cars and awards, not production numbers, not supply chain components, nothing who provides the world's electronic grade silicon, not even if all the parts in a Hyundai come from Japanese sources... moving on. Shukan Bunshun is a japanese magazine if I'm not mistaken, if you have problem with their reporting go complain to them. Since there isn't any actual sales numbers it's difficult to say what is happening. But again, on face value... can't seem to find any mention of advanced electronics, nothing about trade surpluses, manufacturing numbers. The following paragraphs do mention that Sony did try to make an EL TV but pulled out because it wasn't going to be profitable but Samsung and Lucky Goldstar managed to put together a model and bring it to the CES but there is no guarantee that this will be a profitable either.

But the article was about Japanese manufacturing and how it is being threatened by Korean competition in the fields of cars and electronics today. In the last 20 years, during the same time period Korea's industry grew and started providing competition in the medium high tech sector, Japan graduated onto advanced manufacturing, which is the most lucrative and skill intensive sector and gained numerous monopolies and strongholds. Not stating this was a huge distortion. Manufacturing encompasses ALL aspects of production and not just the final Hyundai or Toyota product. And the title is also a part of the article. Maybe you should read it a 12th time.

And hey wait a minute, didn't you say making TVs is "low tech" since Japan has only concentrated on this "High tech manufacturing" Yes you did, here is your response to a poster named Wurthington. So really, the statement that Japan's TV industry is "rapidly plummeting" shouldn't bother you since its low tech stuff anyways and of no concern to Japanese industry.

Japan is still a leader in medium high tech, but Korean competition in this sector in no way spells disaster, considering the graduation Japan has made to advanced manufacturing sector whereas Korea is many years away from doing the same. That's what I was saying. That quote you pulled doesn't contradict anything I've said.

And again with the current account/trade balance stuff? You've continuously stated that advanced manufacturing is the reason for the surplus and its five-fold increase over the last 20 years yet you haven't provided any data to back this up. That's a very strong statement to make, but with no data... the credibility is lacking at the moment.

The producer goods Japan has monopolised are the most expensive, high value parts of devices. Japan still exports roughly the same level of medium high tech it did in the 80s, but yet its surpluses have risen into the stratosphere, much higher than back in the bubble days.

It all depends...

Continuing trade deficits are an absolute disaster, despite what laissez faire economists like to say. America can't produce anymore, it relies on China for assembly, South Korea and Japan for medium high tech, and Japan and Germany for advanced high tech. Its industrial base has collapsed.

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hahaha, sure thing Ogi. You realize the title is there to attract viewership it doesn't even have to make sense to the context of the article, so they are going to select something with Shock Value. I can see that you are shocked and it was your moral responsibility to right this wrong and remind the rest of us how great Japan is and why we should thank them for providing us with everything. You could have stopped at your first post with your opinion but you felt the need to respond to each poster who had a different viewpoint than you, whether or not it was right or backed up by data.

Articles like these are not there to show both sides of the argument you know, whatever they may be. Pick up any newspaper or watch any newscast, that's the way it is done. They have a story about Hyundai designs winning some awards at a car show and how Japanese models recently are lagging behind and smaller piece about EL TVs and how Sony tried to build them but couldn't do it cost effectively.. where do you think talking about advanced manufacturing fits into this? It doesn't, unless this article was directly talking about Korean Semiconductor production then by all means, chime in with Japanese firms specializing in this.

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hahaha, sure thing Ogi. You realize the title is there to attract viewership it doesn't even have to make sense to the context of the article, so they are going to select something with Shock Value. I can see that you are shocked and it was your moral responsibility to right this wrong and remind the rest of us how great Japan is and why we should thank them for providing us with everything. You could have stopped at your first post with your opinion but you felt the need to respond to each poster who had a different viewpoint than you, whether or not it was right or backed up by data.

The title is part of the article, sorry, attracting viewers or not. And it was inaccurate. Responding to people who have a 'different view point to me?' Nope, there are no viewpoints here, just facts, facts that people are desperately trying to run away from.

Articles like these are not there to show both sides of the argument you know, whatever they may be. Pick up any newspaper or watch any newscast, that's the way it is done. They have a story about Hyundai designs winning some awards at a car show and how Japanese models recently are lagging behind and smaller piece about EL TVs and how Sony tried to build them but couldn't do it cost effectively.. where do you think talking about advanced manufacturing fits into this? It doesn't, unless this article was directly talking about Korean Semiconductor production then by all means, chime in with Japanese firms specializing in this.

But that's the thing, this article didn't show both sides of the argument, like a good article should have done. Where does 'advanced manufacturing fit into this'? Um, you are aware than Hyundais are dependant on advanced manufacturing even to exist, right?

I think the rest of us really want to know why you are going so hard on this issue, you are employed by a japanese tech firm? you were fired from a korean one? you hate to see people talk ill of japan? You bought a hyundai and all the doors fell off? You can respond if you want, I know you will.. but I am personally done with this thread. Time to move on to the next issue.

None of the above. And clearly you were going 'hard on this issue' as well, considering you admitted to reading the article ten times. Oops.

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I think what malfupete is getting at is that the article is designed to get the viewer tor ead the story, it doesn't even have to relate to what is being presented. Why do you think most news stories have some dramatic title but once you get into the meat and potatoes of it.. it's a lot less severe. Fear sells. Do you think the article should have been titled differently? Something like "Japan losing its Car manufacturing edge to South Korea" or "Korean designs surge ahead of Japanese models"? Journalists will use whatever tricks are necessary to bring in viewership first and foremost. Half the stories I see on CNN or CNBC tell me the world is gonna end next week! So I must click and read..   Who cares if the article doesn't show both sides, this isn't an essay or editorial or commentary piece in the first place. Newspapers/News websites aren't in the business of presenting facts, they are in the business of selling stories. In this case, If I were to read the title, and only the title I would naturally think that Japan's manufacturing sector is hitting a rough patch.. but going through it, I'm presented with a piece about car designs from hyundai with some automotive journalist that was interviewed thinking Japanese models are lacking in design features while models from Hyundai are going forward, and a small piece about EL TVs, which I think was added as an afterthought.   After reading it through, I realize the title is erroneous but it got me to click on the story so their job is done. I don't see where "advanced manufacturing" fits into the context of the article of car design awards. I keep hearing how Hyundai is totally reliant on Japanese components and "exists" only because of them but I would argue the Hyundai exists because of the internal combustion engine, but that doesn't further the discussion either. Every piece of technology is derived from something previously created.. so while there are obviously japanese parts in a Hyundai, they are derived from something beforehand which was derived from something before that and so on and so on... One can even argue that without Alessandro Volta's crude invention of the battery in the 1700's or any other of the early inventors then we wouldn't have the ability today to be able to build or power these cars today. But then this line of thought could go and on and on back until the beginning of time.. Hyundai exists because of the big bang?   Put this current account surplus talk into context, what was the growth rate of GDP during this time, what was the rate of inflation, what were yields on government bonds, what was the unemployment rate, etc etc etc? You still need to look at the underlying situation of the economy to be able to put this figure to use.   And why all the aggression against those posters who post something that you disagree with? Pretty much everyone who had a dissenting view, you came back with a post. Because I have too much time on my hands right now, I just did a ctrl+f, typed in 'oginome' to see how many times you came in with posts, I stopped counting after 40. If that's not going hard on the issue on the issue then I don't know what is.   and just to be perfectly clear for everyone: Hey Mods! What's the story of this article? Has this gone way to far off topic because I think at this point we’ve moved on to berating each other’s opinions.

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@ oginome:

The above poster can't argue with your logical reasoning, so he/she resorts to an ad hominem attack.

Obviously, intelligence is not his or her forte.

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South Korean trade deficit with Japan shrinks in 2011 http://www.chinapost.com.tw/business/asia/korea/2012/01/18/329274/South-Korean.htm

“There was an upsurge in demand for Korean goods from Japanese firms, which were slowly shifting to outsourcing but suddenly faced the double whammy of the earthquake and a strong currency,” Park Ki-im, a senior researcher of the Institute For International Trade, a think tank affiliated with the trade body, said in the report.

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http://english.donga.com/srv/service.php3?biid=2011112209598

The shrinkage in the deficit is due to Korean exports to Japan rising faster than imports. Between January and September, exports to Japan climbed 45.6 percent year-on-year to 29.2 billion dollars, whereas imports rose just 8.9 percent to 51.7 billion dollars.

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America's industrial base, the envy of the world in the 60s and 70s, is dead, dead and buried

Oginome, you lose credibility with statements like this. I completely agree with you that Japan is still a leader in advanced manufacturing. However, by your standard, so is the US. Whereas Japan has specialized in parts, miniaturization and whatnot, US firms have specialized in defense/aerospace, and IT infrastructure. To deny that the US is a, if not the, leader in these areas of manufacturing is simply ridiculous.

What is happening to Japan's industry is similar (but not the same), as what happened in the US. Both countries have lost (US) or are losing (Japan) out on consumer-centric manufactured goods, and have replaced that with the manufacture of more specialized (and higher margin) goods.

The automotive and consumer electronics industries are just highly symbolic, thus we see articles like this trying to rile us up. Successfully, I might add, judging by the 200+ comments.

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Simply blown away by the alternative reality that Oginome has constructed of the "lost 20 years" from 1990 to 2010. So Japan is actually living through a golden age of manufacturing, immune to the tides and turns of the global economy owing to its monopolization of the high end (by the way, when exactly did the assembling of an automobile or television become "low end" manufacturing?). Can anybody confirm that actual living, breathing Japanese working in the manufacturing sector feel this way? Is this the objective truth, as Oginome insists, or do people actually working in Japan's manufacturing sector beg to differ?

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@oginome You really put a lot of effort into your post. Took this one to heart I see. With that said, I don't think I'm going to try to dispute your claims. I'd just like to add a little info that I got first hand.

I went back to the States just over a year ago. You know, Christmas vacation. Anyway, one of the things I was looking forward to the most was a good sit-down with my father. Like most sons I have total respect for my father and his word is good with me. Given his relatively high position in society where he is, I love to hear what he has to say.

My question was simply this - What's going on in America? I had just touched down at O'Hare International. We went through the city. I got to see my home again. I was a bit shocked by the welfare lines and conditions in the city in general.

What's going on Dad? I've got friends who have their Bachelors and Masters who can't find jobs. Have we lost our edge? His reply as usual was a no hold's barred non sugar coated reply. America made a transition and left the middle class out of the loop. We've moved to the technology sector and said goodbye to the industrial age. There are millions of Americans who need to be retrained.

That's just a brief summary. Don't go after it word for word. It was one of those living room conversations. We were drinking Egg Nog that had a little kick to it.

Anyway, my point is this. Markets change, societies have to adapt to current demands. Although America appears to have faltered the thing we must remember is this....it was America's decision to do so. It is not a defeat or a victory on the part of Japan's or China's industry.

Furthermore, I don't think South Korean is dominating Japan's automotive industry. The only threat to Japan is itself. When you are unwilling to change or elevate your thinking and sense of purpose to new levels you choose to lag. I'm not talking about cosmetic change. I'm talking about internal change.

As far as South Korea goes I wouldn't worry too much about them. It's a flash in the pan at best. If Japan can get past it's political crisis (corruption) and restore public confidence then Japan will be on the road to recovery. Seriously Japan has an EPIC management problem and consumer confidence is at an all time low. It has been a sledgehammer wake up call.

I'll be the first to admit that in the past I've dissed Japanese made vehicles. That's fact. However if I had to choose between a Korean car and a Japanese car. That's a no brainer. I still remember when my friends Hyundai caught on fire on the Las Vegas Strip. The most embarrassing thing I've ever seen. Half a block from the Mirage there was a real eruption. Bloody motor had electrical problems through and through. We ended up taking Trailways home.

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Simply blown away by the alternative reality that Oginome has constructed of the "lost 20 years" from 1990 to 2010. So Japan is actually living through a golden age of manufacturing, immune to the tides and turns of the global economy owing to its monopolization of the high end (by the way, when exactly did the assembling of an automobile or television become "low end" manufacturing?). Can anybody confirm that actual living, breathing Japanese working in the manufacturing sector feel this way? Is this the objective truth, as Oginome insists, or do people actually working in Japan's manufacturing sector beg to differ?

The surpluses speak for themselves. Can't get any more objective than that. And I was speaking relatively, automboile and televison are low end compared to advanced manufacturing.

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hey, didn't that post get deleted??

The article was inaccurate, it painted a disortion

What was inaccurate about it? The Hyundai Elantra didn't actually win the 2012 North American Car of the year award??

The surpluses speak for themselves. Can't get any more objective than that. And I was speaking relatively, automboile and televison are low end compared to advanced manufacturing

again with the surpluses.. this is just a number, it doesn't tell us what is being traded, just values. The World Bank tells me that Japan's Current Account balance in 2010 was $195 billion (US). But what does this really tell us? Keeping everything constant and just looking at imports vs exports.. A cynical person could reasonably assume that perhaps Japan exported $196 billion worth of goods and only imported $1 billion, which leaves us with a surplus of $195 billion. Its a large surplus for sure but Japan is a $5 trillion economy and I would be concerned if this is all they could muster. This is an extreme example but you can see how unless you know exactly know what goes into trade... looking at a surplus is meaningless.

Why don't you compare something like GDP growth or an actual value for exports and imports which shows just how much business is being done between Japan and the rest of the world. It's all grand to say Japan dominates advanced manufacturing (which frankly, I'm not really sure what this is.. examples please) but if the underlying economy isn't performing as expected, there is a bigger problem at hand.

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It's a fact that America's industry is dead. The US has run continuous and increasingly alarming deficit levels since the 80s. America's current account deficit in 1990 was already disastrous at $78 million. In 2010, the deficit was even more shocking - $470 million. America was a world leader in advanced manufacturing in the 70s, but it decided to move away from this vital industry and go into finance. We can see how that turned out. An artificial economy which crumbled like a house of cards. If America wanted to make manufacturing a priority today, it would still take many many years to reach the level of expertise reached by the Japanese and Germans. It's just been too long and the gap has widened.

Wait, are we talking about advanced manufacturing now or trade deficits? Anyone with a basic knowledge of the global economy would know that the relationship between the two is not so simple as that. Regardless, advanced manufacturing alone is unlikely to maintain Japan's former trade surplus.

Anyway, by stating that American industry is dead, you are actually disproving your point about Japanese industry. America lost its consumer-centric product manufacturing jobs, Japan is now losing those jobs as well. Japan has specialized in parts (or producer's goods as you put it), and the US has specialized in aerospace/defense. Stating that the manufacture of parts is more advanced than that of aerospace is simply your own value judgement, and a completely ridiculous one at that. Your other comment about how Boeing's 787 is 1/3 Japanese as a sign of the weakness of US industry is also patently false, as Boeing outsources as a way to help secure large orders in other countries (Boeing has a near monopoly among Japanese airlines). Many of the most advanced aspects of the 787 (avionics and composite fuselage) were in fact manufactured in the US.

Had you read any Japanese business newspaper or magazine in the past year, you would notice the Japan desperately wants to get in to the aerospace industry, but it way behind the US, Russia, and the EU. I am not saying this to shame Japan. Their heavy industry are world class and do supply vital parts (generally the wings) aircraft. I am merely bringing this up to illustrate that "advanced manufacturing" is a much broader category than you think, and there are many international leaders, including Japan, that have chosen to go down different paths.

Will specializing in parts keep Japan at the forefront and lead them to further economic success? Who knows.

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When did anyone deny Hyundai won Car of the Year? It's disingenous to paint a picture of Japan's medium high tech industry being hit with Korea competition but yet not make any mention the more advanced, skill intensive and lucrative advanced manufacturing Japan went on to dominate during the same time period. All this in an article titled 'Japan losing its manufacturing edge to South Korea.' Distortion

Why should they mention it? Thats not the story behind the article.. its been pointed out numerous times by other posters that the title of the article is meant to draw readers in, say something shocking to get their attention.

I had my friend, Johnny Jumpstoconclusions, read the article. This is what he had to say: "Japan is losing its manufacturing edge to Korea?! Scandalous!!! Impossible!!! I must click on this story and read more...reading hey wait a minute, they are talking about how the design of Hyundai cars are becoming more appealing, The Elantra won the car of the year award? thats interesting. Oh I see, perhaps they were refering to car designs and not a commentary on the current state of all manufacturing in Japan. Oh those crazy cats at JapanToday! really had me going there for a second!"

2 ( +2 / -0 )

Manufcturing has a massive impact on trade balance (exports versus imports). Boeing counts towards America's export revenue.

You are correct in that what you consider low-level manufacturing has an enormous impact on trade surpluses and deficits. And it is precisely this manufacturing that Japan is beginning to lose ground in. Advanced manufacturing alone will not maintain Japan's balance. You are certainly correct in your assessment that Japan is a leader in advanced technology, but that advanced manufacturing is no guarantee for future surpluses.

America's continuing industrial decline in is represented in the Boeing which continually loses its manufacturing autonomy with each model.

You could point to a lot of American companies as a sign of US industrial decline, but Boeing is simply not one of them. Of Japan's high-tech manufacturers, only Toshiba and Hitachi have higher revenues, and they are certainly more diversified companies. Boeing is one of two or three elite aerospace manufacturers out there, none of them currently Japanese. While Boeing tried outsourcing more 787 components to save money and to grease the wheels on international orders, that is hardly a sign of industrial decline. There is a reason why Boeing remains a world leader and Mitsubishi has had consistent problems getting its MRJ (which has a US-manufactured engine) off of the ground.

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Your concerned that's all they could muster? But America's trade DEFICIT was $470 million that same year, and this in a $15 trillion dollar economy! Japan's surplus is many times higher than it was back in the bubble days, back when those same surpluses were sending America into a paranoid panic. Surplus measures the value of exports versus imports, correct. But Japan's import restrictions and tariffs are still the same as they were 20 yeas ago. The multiplying surplus reflects Japan's increasing domination in the production of higher value producer goods which cost more. And we've already discussed what advanced manufacturing is

You missed my point, which was that the surplus/deficit number doesn't take into consideration the quantity of traded goods or even what is actually being sent overseas. We know the surplus numbers but it only tells us the final sum ... We need to know how much was exported and imported, and what goods were exported and imported to get a better appreciation for the value.

and a question for your last sentence, do you mean that intermediate (producer) goods cost more than a finished product?

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I was driving just outside Tokyo one evening and saw this big white sedan with those number plates with the green back-lit numbers. It was huge. The design was unfamiliar. When I got up close it said Hyundai in big bold letters across the back. It looked like a large Lexus, Audi or Mercedes - really nice. Right-side driver like in Japan. I did not know they sold any Korean cars in Japan!! Samsung is selling TVs like crazy in the USA. In Japan I could only find Sharp TVs who offered optional menus in English. I understand Korean homes are larger, insulated and have central heat and air - (no kerosene) is this true? Hmmm, I'd be worried if Japan has or will lose the edge...

1 ( +1 / -0 )

"Shoddy, biased journalism."

This is an English rendering of an article written in Japanese by Japanese journalists for Shukan Bunshun, I presume. You're accusing professional Japanese journalists of being biased against their own country and publishing information that is flat-out wrong. Why should anybody believe your anonymous postings more than the published writings of Japanese trade journalists?

2 ( +2 / -0 )

This is an English rendering of an article written in Japanese by Japanese journalists for Shukan Bunshun, I presume. You're accusing professional Japanese journalists of being biased against their own country and publishing information that is flat-out wrong. Why should anybody believe your anonymous postings more than the published writings of Japanese trade journalists?

Why wouldn't they be biased? Every person has their own agenda, not everyone is raving nationalist. And Shukan Bunshun is a tabloid.

-2 ( +0 / -2 )

S. Korea's economic and soft power miracle is surpassing a fading Japan. Sorry, but the truth hurts.

0 ( +1 / -1 )

This has been a very interesting thread.

I think we should say thanks to oginome for his very well-informed contributions.

It's good to know that Japanese manufacturing is alive and well, although it seems in a less visible role.

If we are honest, a lot of us are dependent on the health of of the Japanese economy for our livelihoods. If it sinks we are more than likely going down with it!

I for one am rooting for the Japanese manufacturing sector.

But one thing I wonder about is the amount of employment the advanced manufacturing that oginome has informatively described can provide Japan...

I am sure it can provide very good jobs, but my gut-feeling is that there wouldn't be huge numbers of jobs in this sector, because it uses lots of robots, is very specialized, etc.

The data I have seen has shown a steady decrease in the percentage of people employed in manufacturing in Japan over the timescale oginome is referring to.

So could it be that is sector is providing very good jobs but for a relatively small number of workers?

If oginome or anyone else has any data and/or links to the data about the employment figures and trends for advanced manufacturing in Japan then I would be very interested to hear about them.

0 ( +1 / -1 )

"Why wouldn't they be biased? Every person has their own agenda"

Good point--and a good reason to doubt your own objectivity regarding this matter, Oginome, no matter how many times you write that you are just providing facts. You are not just providing facts, you are including your own biases in every comment you upload.

1 ( +1 / -0 )

The surpluses speak for themselves.

No it doesn't. All it tells us is that Japan hardly buys anything relative to its GDP size, from other countries other then oil and timber due to its extremely nationalistic consumer base.

It is true that, despite its shrinking trade surplus in recent years, Japan has continued to enjoy a surplus in its current account balance, which includes not only trade but also financial flows.

Each year, over 10 trillion yen in dividends and other earnings from foreign assets flow into Japan. These provide the funds needed to buy up national bonds that allow Japan to manage its colossal fiscal debt without foreign borrowing.

But if Japan's trade deficit continues to widen, at some point the current account balance could go into the red.

When that happens, Japan will have to look to foreign investors to help shore up its fiscal debt.

Doing so will subject Japan's fiscal situation to harsh scrutiny. It has the worst fiscal record among industrialised nations, with long-term national and local debt amounting to almost twice the country's gross domestic product (GDP). Japan is the worst indebted nation in the world.

It's anybody's guess as to when Japan's current account too will tip into a deficit. Some predict it will come within the next 10 years unless measures are taken to maintain the surplus. But unfortunately for Japan, we see no encouragements that these measures are being taken.

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After all, if you can't admit you have a problem, that you won't be able to fix the problem.

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No it's America that has the best technology in the world.Not Germany or Japan.Period!!!

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God bore after reading like 10 coments, and really this article kinda make me laughs, so beacause korean brands are cheaper and people buys them that makes Korea better than Japan? bitch please, and for your information Japan's car brands dominate the sells in the US, and sure when it comes to smartphones Samsung has gain big popularity, while Japan's representant was lead by Sony Ericsson who wasn't even a 100% japanese brand now that it has become Sony Mobile things are different and they are lil by lil starting to regain recognition again, but is technology just that? what about the game industry Japan has Sony and Nintendo, Korea has nothing only competition is Xbox, and what about Japan's daily life i mean like the fact that they have like the best train system in the world? or all the achievement technologyu in Japan has made like for example in medicine? like for example Oki Electric Industry has develop a device that detects cardiovascular and respiratory problems in old people and sends the signal to the hospital or all the robotic adbvances? and i can go on and on Korea is really far behind Japan in terms of technology

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IMHO, & based on my experience, i can summarized which industry that Japan has lose out to or starting to lose influence & which are the ones that Japan is STILL among the top leader or more dominant.

Electronic industry (consumer appliances)

I think this is very obvious to everyone. Japan industry is pretty much stagnant (with many news on yearly losses, help@rescue from peers/government, plant closing down & acquisition by foreign companies, however in 2013 there are some improvements after abenomics). Example are Sony, Panasonic, Toshiba, Sharp & a few others. Maybe electronic producers for other segment (energy & auto for instance) are still going strong, but the ones that are directly competing with South Korean & Taiwan rival had felt the greatest impact. (losing a big slice of pie from the world market share)

Shipbuilding

Japan (together with the European & USA) were once the major players in the industry. But that is not the case for already more than a few decades. South Korean are the leader, closely followed by the relatively inexpensive Chinese-make.

Robotic. (industrial robot & consumer robot)

Japan is pretty much still the leader (with Euro?) in this area, no doubt about it. But the south korean is in this field too, progressing rapidly.

Machine Tools

This is the most (arguably) critical & vital industrial area where Japan (with Germany) is the indisputable leader (innovation etc). The machine that makes other machine. Up until last year, Japan has produced the most in term of value, followed closely by Germany (if im not mistaken, the report is from --> https://www.gardnerweb.com/cdn/cms/.../2013wmtocs_SURVEY.pdf‎) while China is producing most of machine tools in the world (they're also the largest consumer, unsurprisingly given its size & growth rate). Machine tools in hi-tech & advance engine manufacturing, aerospace, precision component & other, are dominated by the Japanese (& German). But Nippon should not rest on its laurel, because the south korean is also fast catching up in this sector.

Automotive

Not much comment, except that the Japan & Germany are also the more dominant (in overall terms). But then again, the Koreans are also in this field (push by Hyundai & KIA)

<>

-1 ( +0 / -1 )

South Korea copy Japan at every single things.Kpop copy Jpop.Kdrama copy Jdrama.Korean cars they copy the model of Japanese cars.Samsung always copy Sony.Korea is a copy master they always copy Japan. Japan is much better than Korea.

0 ( +0 / -0 )

Japanese still make really good products. Here in where I live, I still see a lot people drive Japanese cars (Toyota, Honda, Suzuki, Mitsubishi, Nissan, etc.) more than American or Korean or European cars. Japanese heavy equipments (Komatsu, Mitsubishi, Hitachi, etc.) are still used for construction projects. Japanese household appliances still exist in the market (although nowhere as abundant as when I was younger). Japanese stationeries (Pentel, Sakura Color Corporation, Pilot, etc.) are still in high demand. Japanese cameras (Nikon, Canon, Sony, etc.) still sell well. Japanese food items and snacks still sell well (although Korean food items and snacks are abundant too nowadays). Japanese machineries are still in demand (alongside with German machineries, although Chinese machineries are also getting more demands lately).

1 ( +1 / -0 )

So, after 5 years since this article came out, has South Korea really surpassed (in overall terms) Japan in Manufacturing (or in advanced / high tech manufacturing for that matter)?

The clear answer is no. Not in the past five years, not now, not in the next decade. Maybe, just maybe after that.

0 ( +0 / -0 )

It's funny to see how insecure and scared people are. If you stay blinded because you want Japan to be the best you'll only end up falling and it'll just be better for Koreans.

First of all Ogi, I think by 'producer's goods' the correct economic term is capital goods; which by no means Japan owns a monopoly in. Japan is ONE of the worlds major exporters of capital goods but the actual world leaders come from Europe and the USA. In fact most of Korea's capital goods and non-produced goods (e.g. patents) come from Germany, France and the US. For example, although the Japanese like to think Korea copied their bullet train system, the Korean system was actually designed in France (TGV) and most of the manufacturing plants are designed and produced in Germany or by Hyundai (just like the rest of the world). It's time for the Japanese to get their heads out and realise nobody quite cares about you anymore.

In terms of manufacturing components, hardly any of the things produced by Korea have components that come from Japan. Kore has its own precision steel technology and mostly collaborates with Europe and the US thus, is the worlds largest producer of microchips and chipsets. SK Hynix and Samsung own 70% of the world market share.

Also, to say Koreans steal Japanese ideas is like saying the Japanese stole their ideas from the US and the west. Koreans used to purchase a lot of patents from Japan but now they DON'T because they have their own. KAIST is one of the foremost institutes in the world and South Korea is rated as having the most research and development than any other country in the world.

It makes sense, Japanese people are scared - sony died to Samsung and LG, the Japanese shipbuilding industry flopped thanks to Hyundai, Samsung and Daewoo, your cultural industry died thanks to Korea, and you lost your image of being the 'cool' country to Korean cosmetics, fashion and culture. It's right to be scared - it's called competition.

Japanese talk proudly about how they're a nationalistic nation and they have strong domestic consumption. Korea was split in half by the Japanese and yet they still do this well, imagine when they reunite with the resources of the North. They're a hard working, patriotic people thus why Japanese brands mostly flop in Korea... Please know the facts before you walk yourselves into a ditch.

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