JAPAN (Mini-articles) Index

It does not seem so long ago that western businessmen could not hear enough about Japanese management, with its "lean manufacturing", "just-in-time production" and "continuous improvement" (kaizen). Less than 20 years later, the Japanese are returning the compliment. They want to know how western companies are dealing with "middle management spread"; how they are using new technology to process information and improve communications; how they motivate people in far-flung factories; and how they weld those factories together into worldwide networks. Sophisticated Japanese managers are now littering their conversation with words like "downsizing", "delayering" -- and a particularly difficult one for them: "re-engineering".

A study published by the Japan Productivity Centre suggested that Japanese companies will have to sack 39 per cent of their staff to match the productivity of American firms.In particular, Japanese middle managers are rapidly becoming a burden rather than a strength, thanks to seniority-based pay, and rigid--thanks to their computer phobia. Western companies contract-out information-processing to sleekly managed specialists; Japanese ones still employ rows of deskworkers, some of them with abacuses.

Yet, until recently, the ranks of white collar workers have been growing. Between 1984 and 1992, the proportion of administrative and sales staff at 50 companies studied increased from 29.2 per cent to 33.5 per cent of the workforce.

From the Economist, 24 June 1995

Japan's economy is sliding back into a second recession, weaker-than-expected growtyh figures released by the government showed yesterday. GDP was almost stagnant in the first quarter of this year, up 0.1 per cent from the final quarter of 1994. The announcement intensifies political pressure on the coalition government to put together an economic stimulation package.

Most private-sector economists in Tokyo believe the economy will decline again in the current three months ending in June. Yesterday's figures bring growth for the fiscal year to March to 0.6 per cent, the same as the previous year. Japan's economy has now been on the slide, with two abortive pick-ups, for four-and-a-quarter years, the longest period of decline since the 1930s. Government officials put a brave face on the figures. These confirmed the economy was in moderate recovery, despite the weakness of personal consumption. A monthly report by the Bank of Japan said the recovery was "very moderate".

First-quarter growth came in lower than expected because economists had underestimated the cautiousness of Japanese consumers, nearly 60 per cent of the economy. Consumers were affected in the first quarter by short-term shocks such as the biggest earhquake for more than 70 years and terrorist attacks in Tokyo, as well as the long-term blow of a new peak in unemployment.

From the Financial Times, 21 June 1995

The recent Kobe earthquake has shown that Japanese construction technology is not all it has been cracked up to be. The same goes for the Japanese economy.

Outside manufacturing, on which the country's fearsome international reputation is based, the Japanese are horrendously inefficient. Self-service petrol stations are prohibited, for example. Four attendants fill each car--one serving petrol, one cleaning windows, one emptying ashtrays and one taking the money. They all bow as you drive off.

Japan has 1.6 million shops, more than the US, which has twice its population. These are served by nearly 500,000 wholesalers. Goods often pass through three layers of wholesalers before reaching the retailer.

Despite spending longer at the office or factory than we do, Japan's productivity is actually lower than Britain's. To those used to a diet of Japanese economic superiority, this is a surprising statistic. When making comparisons on converting GDP at real rather than current exchange rates (overvalued by 80% according to the OECD), this gives Japan's GDP per head a mere 20% higher than ours. But this also disappears on closer inspection. A higher proportion of Japanese are of working age, more are part of the labour force and fewer are unemployed. Thus, output per employee is marginally lower in Japan than in Britain.

From Japan: The Coming Collapse, by Brian Reading 1995

Europe stands to gain from a new wave of Japanese investment, but will face stiff Asian competition. After a period of nervous retrenchment. Japanese companies are again planniong to step up manufacturing investment in Europe. This time, however, Europe will find it hard to attract the amount of investment it managed to secure in the 1980s.

A recent Japanese government survey showed that one quarter of manufacturers intend to expand overseas production activities, but competition for the new wave of investment will increase. " But this time Asian markets are the most popular and profitable choice, " says Mr Tokio Katayama, director general of the Japan External Trade Association. "They are looking for opportunities throughout Asia, including China and Vietnam. Lower labour costs are a priority," he adds, even though wage bills represent a small and declining element of overall costs for many high-technology companies. Japanese companies appear as likely to choose West Java as south Wales. Sanyo Electric is to site its next semi-conductor plant in the Philippines, having already established operations in Korea, Taiwan, China and Thailand. Mitsibishi is among the big Japanese groups in China, while Honda is developing a new vehicle for production in Thailand, a country which aims to attract $8 billion of Japanese investment in the next three years.

The prime driving force behind the overseas investment upturn is the rise in the value of the yen, which is further undermining Japan's export competititveness. Even the best-run companies are hard pressed to cut domestic production costs further. Many Asian countries, however, are still seen by some western competitors as unable to supply the necessary skills or the compenent supply infrastructure required for large-scale manufacturing activity. But things are changing fast. Asian countries are moving very fast indeed towards technical competence as their wealth and spending power increases. Markets such as Thailand and the Philippines have a small but growing core of highly skilled people.

Mr Roger Monson, an associate director of Daiwa Bank in London concludes: "European countries like the UK have been boxing fast to attract Japanese manufacturers. If their share declines in the future, it is no disgrace; it just means more countries are now in the frame and fighting hard."

From an article in the Financial Times, 11 July 1995