More Changes In Japan

Long sustained very high growth meant very high levels of capacity increases to build critical market share, this high growth financed as it must be by low-cost debt, borrowed from supportive banks. With fund availability greatly increased by a tripling of the value of the yen followed by a massive increase in asset values in the ’80s, companies were able to engage in extensive diversification. Too much capacity; too many competitors in almost all industries; too much diversification; all this too dependent on borrowings–the elements for a wrenching and long period of deflation and restructuring were in place. The end to the bubble of the late ’80s provided the occasion and the tow growth of the economy from 1992 is the evidence.

Industry Reorganization and Company Restructuring

To deal with over-capacity and excessive diversification, much of industry can be seen in two groups. The first includes producers of cement, paper and pulp, chemicals, petrochemicals, …

Axis Losers: Comparing Germany And Japan

Despite suffering defeat in World War II, both Germany and Japan achieved postwar economic growth described as miraculous. Yet both nations now grapple with longstanding economic stagnation.

The bubble that had levitated the Japanese economy through the latter 1980s began deflating in 1991, with the ensuing economic stagnation dragging on now for over a decade. Since 1991, annual economic growth in Japan has limped along at just 1% year-over-year in real terms. In recent years, moreover, the nominal growth rate has been negative as the nation remains caught in a vortex of deflation.

Stressing that there can be no growth without reform and describing itself as the government “determined to push through reforms,” the administration of Koizumi Junichiro took office in April of 2001. Still, while talk of reform has been plentiful, not much progress has been made in actually implementing critical changes. Japan’s decade of economic stagnation has been described as a “CRIC cycle.” …

Japan: The Chubu Rocks!

The greatest corporate factor that supports the steady Chubu economy in Japan is the pyramid-shaped industrial accumulation centered on Toyota Motor Corporation, which recorded consolidated ordinary profit of almost 1,500 billion yen in the March 2003 term, its third consecutive year of record profits for a Japanese company. Toyota has concentrated 12 of its 15 main domestic plants in Toyota City and neighboring regions in Aichiken. Moreover, there is a broad range of subcontractor groups in the area. Among these are nine major keiretsu parts manufacturers including Denso Corporation, Aisin Seiki Co. and Toyota Industries Corporation, in addition to the Kyohokai group formed by about 200 parts suppliers with strong business relations.

Keiretsu has been criticized by overseas business as a factor for non-tariff barriers. Recently, Japanese business operators have also seen it as a factor underpinning Japan’s rigid and costly industrial structures, and have tried to break down or restructure some keiretsu groups. In …