Jan 16,2024
Adversity Creates Miracles: Inspiration from Japanese Companies Going Global
As China's economic growth slows down, the real estate market enters an adjustment cycle, and the population structure changes, many people begin to compare China with Japan in the 1990s.
During the "lost 30 years" after the collapse of the Japanese bubble economy, Japanese companies began to go global. Can we learn from this experience and turn danger into safety?
Faced with the opportunities and challenges of the new era, how should Chinese companies adjust their development strategies?
IAN will use the era of Japanese companies going global as a lead to analyze how Japanese companies have achieved a leap in internationalization under the background of multiple challenges.
First, the first major driver of Japanese companies going global: Japan's economic takeoff and Japan-US trade friction
After World War II, with the support of the US, the Japanese government adopted a highly administrative industrial policy, implemented "key production methods" (using limited resources for heavy industry and infrastructure building), and made good use of the "latecomer advantage". As a result, the Japanese economy achieved a "miraculous" high-speed development.
The period from 1950 to 1973 was a golden period of rapid economic growth in Japan. During this period, the average annual growth rate of Japan's GDP reached over 9%, and the goal of doubling national income was achieved in just 7 years.
However, with the upgrading of Japan's industrial structure, the Japan-US trade friction has spread from light industrial products to technology-intensive products such as color TVs and automobiles.
Although Japan has taken measures to deal with it, the trend of the widening trade deficit still cannot be stopped.
After the 1970s, with the appreciation of the yen, Japan's export scale continued to expand, and the trade balance expanded rapidly. The US successively launched multiple reports and agreements, and the trade friction between the two sides escalated into a trade war.
In 1986, Japan proposed in the "Maekawa Report" to promote foreign direct investment, respond to the trade imbalance between Japan and the United States by expanding domestic demand, adjusting structure, and opening up markets, promote enterprises to "go global", and achieve global layout.
Second, the second largest driver of Japanese companies going global: the bursting of the Japanese economic bubble, the decline in domestic demand, and the high cost of labor
In the 1990s, the "double bubble" of Japanese real estate and stocks burst, leading to a 30-year recession and deflation in the Japanese economy.
In this "lost thirty years", Japan's domestic demand has clearly weakened.
On the one hand, the consumption of the household sector continues to decline, due to the cumulative effect of asset shrinkage, deteriorating employment environment, and declining income; on the other hand, the investment of the corporate sector has also significantly shrunk, due to the Balance Sheet recession and sluggish demand.
At the same time, the aging of the Japanese population has also led to a tightening of labor supply, a continuous decline in labor participation rate, and further increased labor cost pressure on enterprises.
Under the combined impact of exchange rate appreciation, export enterprises face severe cost challenges.
In addition, the rise of emerging economies in Asia has also brought new competitive pressures to Japan's manufacturing industry.
Against this backdrop, Japanese companies have chosen to "go global" and invest in factories in Asian countries with relatively abundant labor resources and lower costs. This not only alleviates the cost pressure on companies domestically, but also helps them actively expand overseas markets and achieve industrial transfer.
The decline in domestic demand and high labor costs have jointly contributed to this new development pattern.
Third, the third major driver of Japanese companies going global: solid foundation of traditional advantage manufacturing industry + flexible adjustment strategy
Since the 1980s, the proportion of Japan's exports to European and American countries has begun to decline after reaching its peak, and exports have shifted to Asia.
Especially after 2000, China rose rapidly and became Japan's largest export market. At the same time, the structure of Japan's export products also changed.
For a long time, high-end manufacturing industries such as transportation equipment, machinery, and motors have been Japan's traditional export advantage industries, accounting for more than 70% of Japan's exports around the 1990s, which has accumulated a strong manufacturing foundation for Japanese companies. At the same time, the proportion of chemical and consumer goods exports continues to rise.
The advantage of traditional manufacturing industry has laid the industrial foundation for Japanese companies, and also enabled them to adapt to the situation, adjust their strategies, and continue to maintain export competitiveness in the context of the rise of emerging economies, providing important support for Japanese companies to go global.
IV. Experience and Enlightenment of Japanese Enterprises Going Global
1. Choose overseas destinations based on factor endowment advantages, taking into account the market potential of emerging economies
Japan is facing the challenge of an aging workforce and has chosen emerging Asian countries such as China and ASEAN, which have abundant labor forces. This reduces costs and also takes into account the vast domestic demand market potential of these countries.
2. Based on developed country markets, strengthen technological innovation and market-driven
Despite the increasing balance of Japanese companies going global, Japan's investment in developed countries in Europe and America still accounts for about half.
This reflects Japanese companies' emphasis on tapping into technological innovation in developed countries and the potential of huge domestic demand markets.
3. Give full play to the advantages of the manufacturing industry and meet the needs of industrial upgrading
Initially, Japanese companies relied on their advantages in traditional manufacturing industries such as electric motors and automobiles to go global in response to trade frictions.
Nowadays, Japanese companies have expanded their overseas expansion to high-end manufacturing, new materials, consumer goods, and even extended to the service industry and high-end R & D fields, reflecting their strategy of adapting to industrial upgrading, continuing to seek advantages in high value-added links such as front-end R & D design and back-end marketing channels.
Are you looking to:
Fill in the application form, and our team will reach out to you to help you with making the above happen.
• Sell 1 day post-production
• Scale worldwide with 3-10 days
• Slice your lead times
• Prevent inventory risk and overstocking
• Hide china due custom software and carrier agreements
• Work with a multilingual team in mainland China
• Decades of supply-chain experience.
