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Japanese companies need to regain the animal spirit they lost over the past 20 years to lead innovation and sell products abroad. This is something that the government and business have to take more s

28 Comments

Masamichi Adachi, an economist at JPMorgan Chase & Co in Tokyo. (Bloomberg)

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Right!

Go on then, regain it!

0 ( +2 / -2 )

Right... spirit of the herbivore salaryman, release!

2 ( +2 / -0 )

Sorry, but that horse left the barn at least a decade ago. Japanese men have virtually no entrepeneurial spirit and the idea of "leading innovation and selling products abroad" is simply not even remotely part of their mindset. The majority just want to sit at their desk and pretend to be busy for the next 30 years or so, because actually leading would subject them to being ostracized by their peers, and to sell products overseas means you have to actually learn about foreign countries/cultures, and young Japanese men have zero interest in that.

3 ( +8 / -5 )

Sell products abroad with the almighty yen still around 100 to the dollar? Good luck!

-3 ( +0 / -3 )

"take more seriously"?? What planet is this guy on? there's bee nothing but handwringing over this issue in Japan.

Pointless, anyway, since globalization has scuppered such opportunities, not just in Japan but the West as well. The future is China, Vietnam, Brazil, etc., The rest of us here can expect a future of poverty and limited opportunity, as our multinationals sell us out to the third-world dictatorships.

-4 ( +3 / -7 )

Pointless, anyway, since globalization has scuppered such opportunities,

If it were not for globalization, what would Japan be like today? Were it not for globalization, there never would have been an "animal spirit" to manufacture, compete, and innovate, Japan would never have become a developed country without globalization. Globalization has created far more opportunities than it has destroyed. Japan owes every ounce of it's past success to globalization.

A century ago, Britain was the primary manufacturer, half a century ago it was America, now it is Asia. Trade and manufacturing are like the wind and the tide, they change direction on their own, and cannot be resisted, they can only be taken advantage of.

Why do multinationals move? Back when growth was strong in Britain, America, and Japan, the cost of doing business in these places was low. 100 years ago, tax was less than 15% of GDP. But as business grew, so did government and it's associated costs. Tax in Britain, America, and Japan is approaching 40% of GDP. Tax expenses are now more than payroll costs for most companies,a hd if they are to succeed and grow, they need to move.

The other option is to nationalize industry, as Britain did back in the 50's, 60's, and 70's. In 1979, 80% of industry was nationalized. This experiment was a disaster, and failed spectacularly. If Britain couldn't make it work, who can? Even socialist countries like China or Vietnam.

0 ( +2 / -2 )

"If it were not for globalization, what would Japan be like today?"

Similar to how it was in the pre-globalization years: growing steadily and stable. Japan's industrial success occurred behind high protective tariffs. As soon as those tariffs started to come down, Japan's economy started to tank, a process that continues.

"Why do multinationals move?"

Because they want cheap labor that can be exploited, a la Foxconn.

"The other option is to nationalize industry,"

No it isn't. Gov't needs to protect its strategic industries, as it used to do in Japan... when Japan was the envy of the world.

-5 ( +4 / -9 )

JeffLee -- your whole argument makes me laugh, because it is so blatantly hypocritical. You want Japan to be able to benefit from global trade, by selling their goods in other countries, but "protect its strategic industries" behind "high protective tariffs". And exactly how long would a country like the U.S. or the EU allow that kind of disparity to continue? And Japan hasn't been the "envy of the world" for over two decades, and its decline was of its own doing, not because of globalization.

3 ( +9 / -6 )

Sell products abroad with the almighty yen still around 100 to the dollar? Good luck!

Exchange rate seems irrelevant since Japan has no products no markets now.

-1 ( +1 / -2 )

A lot of innovative entrepreneurship occurs only with small start-up businesses that have nothing to lose but everything to gain. Every Japanese company from Toyota to Panasonic to Capcom originally began as something small sometimes something that broke off from something bigger. A meager band of men with dreams who made them happen. As companies get bigger they mainstream themselves and focus on profit over innovation, take less risks and try to please their shareholders. Everyone does it, that's democracy people vote to be safe but in many cases companies start to fragment and those people who leave form new companies like seeds falling from an aging tree. Very Shinto when you think about it. To some extent this is already happening. Tango Gameworks and Comcept started by legendary game makers Shinji Mikami and Keiji Inafune look an awful like emerging videogame companies in 80s. And then of course we have cybernics company Cyberdyne that are making robot suits and are gaining stock fast.

Another thing that should be noted is that manufacturing edges in the near and distant past have been due far more to technology than labor costs. A key aspect of Britain's success in the Victorian period was the steam engine, before it ships and cannons similarly with America with heavy industry and cars. That was Japan's big edge, it had quality as well as low costs. Now it only has quality but that's being trumped by prices and the fact that it's neighbors especially South Korea can more or less match them for lower costs. Japan needs a silver bullet as significant as the steam engine or the firearm. Something no one else has like fusion power or cybernetics. Of course in today's world of globalization chances are companies will just take all this tech and put them someplace cheaper, that's pretty much what they're doing today. About the only thing that can stop it is if the countries they're trying to move into are either really unstable or outright reject them. The problem with 1st world countries now is that corporations and governments are trying to hollow out the middle class. Basically to keep business in country while every pursuing the lofty goal of profit they're trying to recreate the foundation of coolies and cheap laborers they once had. Sooner or later I reckon the whole world will look like the movie Elysium with Matt Damon. Poor masses living and working on Earth for the sake of the rich living in space.

3 ( +3 / -0 )

Japanese men have virtually no entrepeneurial spirit

When Masayoshi Son opened his "academy" to cultivate leaders and entrepreneurs with 300 openings, over 4000 applied.

-1 ( +3 / -4 )

Similar to how it was in the pre-globalization years: growing steadily and stable. Japan's industrial success occurred behind high protective tariffs. As soon as those tariffs started to come down, Japan's economy started to tank, a process that continues.

Please tell me which tariffs came down. Name a single one, and don't use the recent example of Australia where the tariff is still double-digits in favor of Japan.

Since the end of the war, Japan's economy has been based on foreign trade. There were no "pre-globalization" years, because ithe demographics of Japan prevent the country from being self-sufficient. Japan has almost no raw manufacturing materials, little agriculture, and no energy resources. Without globalization, there would be no Japan.

Japan has the highest tariffs of any developed nation, don't you think this has something to do with Japan also having the highest birthrate decline, and largest national debt of all developed countries? The evidence points directly to the opposite of what you are trying to prove. The birthrate is declining primarily because of the high cost of living, the high cost of living is caused by tariffs which result in the Japanese having to pay twice to three times as much for food as people from Europe and America. It has caused the Japanese people to pay twice as much for clothing, energy, and other staples. Protecting the domestic manufacturers has made them uncompetitive with those of other countries, and right now 70% of Japanese companies are officially classified as "loss producing". High tariffs have been the main cause of all the economic problems Japan is suffering from.

1 ( +2 / -1 )

"(Japan's) decline was of its own doing, not because of globalization."

What did Japan do, exactly? Its policies in the 70^80s were held up as a model for others to follow. Now those same policies are being blamed for its downfall. Hello? Someone is being fickle or confused or just plain misinformed.

What changed? And in whose interests have the changes occurred? Not ours, that's for sure.

"Please tell me which tariffs came down. Name a single one"

Autos and auto parts. the tariffs were removed in 1978. In the postwar period, nearly every product entering Japan was subject to tariffs or quotes.

-5 ( +0 / -5 )

globaization is just an excuse. Japan once relied on an economic model that only benefited them, but times have changed. I agree with jersey, there is no reason for Japanese to change because their enviroment supports the continued apathy . Look around, all you see are drones in white shirts, who stare at foriegners as though they are inferior. When they overhear a conversation in English, they withdraw into their Iphone and squirm uncomfortably. They can only dream that the glory days of empire will return, and put faith into the old guard who promises such insanity. Abe has hit a rut, and I highly suspect that reforms will never take place, with the exception of defense spending and continued revision and rewording of the victor imposed constitution. It much easier to appeal to xenophobic oyaji than to accept the outside world.

1 ( +3 / -2 )

Koreans and Chinese are doing this now much better. most of the leading Japanese products (e.g. cars) are now primarily manufactured overseas, even if their parent companies still HQ in Japan.

0 ( +1 / -1 )

kickboard: "When Masayoshi Son opened his "academy" to cultivate leaders and entrepreneurs with 300 openings, over 4000 applied."

And what have these lucky 300 gone on to do, pres tel? All Mr. Son did was tap into the need for people here to do whatever their neighbor is doing a-la-cram school to achieve success, same as with Hashimoto and his 'Let's become a lawyer' school. Genuine creativity and leadership are stifled here in most fields due to the old boys at the top trying to hold on to a system that has collapsed. You could have a young person who is a born leader try do become such quickly but he'd be forced into the out-dated heirarchical system and/or made a pariah.

People have talked about regaining the 'animal' or 'samurai' spirit for ages, but until the government and companies allow for environments for such things to grow they're only addressing obvious problems with lip-service -- and using our tax money to form panels and studies to generate such lip-service.

0 ( +2 / -2 )

In addition to the herbivore issue, Japanese are, as a group, older than other countries, and really kind of tired. I can't imagine this situation changing in the future, which is why, though I love Japan to death, I would never invest my money in the place.

-1 ( +2 / -3 )

Autos and auto parts. the tariffs were removed in 1978.

The tariff was removed, but it was replaced by an even more expensive non-tariff barrier in the form of individual inspections. Each and every new car imported into Japan must go through the shakken inspection process, which is expensive in cost, and the amount of time wasted to individually inspect every car. This is why only 7% of cars in Japan are imports. In other countries, only one sample car is inspected, the rest are assumed to be built the same as the sample (which is true).

Parts are distributed in a limited manner, and minimum prices are set by the distributors, driving up the cost above domestic parts. This practice is strictly illegal everywhere but Japan. Japan has tried to fix prices among their American distributors, most of whom are now in federal prison, while Japanese distributors in China are now under investigation for doing the same thing.

If you need another example of how Japan defies treaties and agreements, you only need to look at "research whaling". Japan agreed to the moratorium on commercial whaling, and then found a way to get out of their agreement by redefining "commercial" as "research".

The above practices are why there is a provision in TPP for parties to file for legal action if other parties try to find a loophole to renege on their obligations. And this is why Japan will not join TPP.

1 ( +3 / -2 )

Japan must go through the shakken inspection process, which is expensive in cost, and the amount of time wasted to individually inspect every car. This is why only 7% of cars in Japan are imports.

The shakken inspection process apply to domestic made cars too.

0 ( +3 / -3 )

"Japan must go through the shakken inspection process..."

Which all cars must go thru. NIce try. You asked me for an example of a tariff lifting, I gave you one...and then you try to squirm out of it with a distraction that's off the point and wrong to boot. LOL.

The fact you pick up "good" ratings means people on this forum love the rhetoric but don't like to think rationally about issues.

-5 ( +0 / -5 )

Which all cars must go thru. NIce try. You asked me for an example of a tariff lifting,

The shakken inspection process apply to domestic made cars too.

Nope, Japanese cars are not required to be inspected before they are sold, they go through the process after 2 years. Imported cars must be individually inspected before they are delivered to the dealership. Brand new, imported cars must have their wheels removed and have their brake pad/shoes/rotors measured, tire tread depth must be checked, etc. Is this really necessary for a car which has never been driven? Only if it's a non-Japanese car sold in Japan. Japan has different rules for imports in regards to fuel efficiency and safety, the rules for imports are more stringent.

1 ( +3 / -2 )

When I read this news, I remember of Matsushita Konosuke, Morita Akio and Kakehashi Ikutaro. I think that Mr. Adachi meant Japan lacks men like them.

0 ( +0 / -0 )

I agree with jerseyboy. The decline of Japan, which will continue relentlessly, is mainly due to the mindset of the people. Cdr. Perry forced the country open, but minds are still rather closed, i.e. "mura ishiki" or "shima-guni konjo." So, the world-- globalization--is passing Japan by. It's politicians are hopeless; Abe's third arrow is failing; it cannot overcome vested interests. Sad to see since I love living here--42 years now. The high cost of living is my biggest complaint, and it need not be that high; it is the result of factors mentioned above.

1 ( +2 / -1 )

How about this: Force companies to abandon unpaid over work and encourage companies to make or keep workers happy/in high spirits/high morale.

Then encourage people to come up with ideas. You can't have innovation in a society where "The nail that sticks up must be pounded down".

Happy workers want their company to succeed and more readily try to think of ways to improve their job/product outside of work. Happy workers are excited to exchange ideas and try new things out (under guidance of an understanding manager).

Angry workers just wanna go home and drown their sorrows in beer or watch TV/games. And at work they're just trying to get by... thinking about what they're gonna do after work.

0 ( +0 / -0 )

globaization is just an excuse. Japan once relied on an economic model that only benefited them, but times have changed. I agree with jersey, there is no reason for Japanese to change because their enviroment supports the continued apathy . Look around, all you see are drones in white shirts, who stare at foriegners as though they are inferior. When they overhear a conversation in English, they withdraw into their Iphone and squirm uncomfortably. They can only dream that the glory days of empire will return, and put faith into the old guard who promises such insanity. Abe has hit a rut, and I highly suspect that reforms will never take place, with the exception of defense spending and continued revision and rewording of the victor imposed constitution. It much easier to appeal to xenophobic oyaji than to accept the outside world.

5pwtals -- spot on.

What did Japan do, exactly? Its policies in the 70^80s were held up as a model for others to follow. Now those same policies are being blamed for its downfall. Hello? Someone is being fickle or confused or just plain misinformed.

Jeff, again, thanks for the laugh. Citing policies from 40 years ago as being "the model for others to follow" is really hilarious. Because that answers your question -- It is not what Japan did, it is what it didn't do. Japan's island mentality, which you so glowingly praise, made it blind to the changes of the world economy of the 2000's, especially the rise of the Korean and Chinese brands. Arrogantly Japan thought consumers around the world would still keep buying out-dated/over-priced products from folks like Sony, just because the domestic market, which, again, you praise, has no competition, has folks lapping them up. And since Japanese management is so insular they never heard, or were willing to comprehend, the information they were getting from their foreign managers.

When Masayoshi Son opened his "academy" to cultivate leaders and entrepreneurs with 300 openings, over 4000 applied.

kickboard -- what percent of the professional workers between the ages of 22 and say 35 that 4,000 represent? My quess is that it is but a tiny fraction. For example, in 2010, there were 2.8 million students enrolled in Japan's 778 universities. The numbers of drones being produced is much higher than the number of go-getters.

-1 ( +2 / -3 )

...strictly illegal everywhere but Japan. Japan has tried to fix prices among their American distributors, most of whom are now in federal prison, while Japanese distributors in China are now under investigation for doing the same thing.

Being a bit selective with the data. What about Mercedes-Benz in China?

-1 ( +0 / -1 )

Clearly the problem is not enough calls to "ganbare".

0 ( +1 / -1 )

sangetsu03

"Imported cars must be individually inspected...."

Oh, really? The importer's association says only a sample is needed, not "individually" as you say, and this can be waived anyway if the importer does it.

Furthermore I can't find this being listed as a "trade barrier," since other countries have their own similar systems.

(importer's association) "The government has further simplified and streamlined the system in response to European and American demands, adopting such measures as dispatching examiners to overseas automobile manufacturers"

Source: http://www.jaia-jp.org/english/wp-content/uploads/pdf_data_2013icmj.pdf

0 ( +0 / -0 )

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