Title
Decline of Japan's Predominance in Asia
Abstract
Until around 1980 Japanese companies occupied a predominant
position in Asia. In terms of the scale of operation, level of
technology and international competitiveness, they surpassed local
Asian companies. They enjoyed number one position.
International business of Japanese companies in Asia
had two characteristics. The first is so-called flying geese pattern of
investment.@Japanese companies invested first in relatively well developed
countries like Taiwan, Hong Kong, Singapore and Korea. Then, they shifted
their investment to Thailand, Malaysia, Indonesia and Philippines. Lastly,
their investment extended to China and Vietnam.
The second characteristic is that their Asian operations
are managed by Japanese persons using the Japanese language. CEOs and other
top management at most Asian subsidiaries are Japanese expatriates. And
they manage their companies having constant communication with their Japanese
head offices in the Japanese language.
Japanese companies in Asia have bright and dark aspects.
Factories are bright in the sense that they achieve good performance with
motivated local workers. Japanese production system works well at their
Asian factories. On the other hand, administrative offices have problems.
They do not attract high level local managerial, professional and engineering
people. Limits of Japanese style international management are evident at
the offices.
In forecasting the future of Japanese business in Asia,
China may be the most important factor. China has continued rather high
level of economic growth for more than twenty years since its basic policy
change in 1978. Will China's economy grow in the future? As the market
economy will develop, the tension between the market economy and the politics
of socialism will increase. Will the politics of one party system be able
to coexist with the market economy?
It may be that Japanese companies have already hit their
peak of their overall international competitiveness in Asia. They might
have already started to go on the declining process. They invest more in
foreign countries than in Japan, which results in the hallowing of industry
at home. They are facing various kinds of resistance to change such as
so-called lifetime employment, existing organization routines, vested interests
and sunk costs. Japanese companies are managed by old men and thus lack
in strong leadership.
Hideki YOSHIHARA
Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: (81) 78 803 7036
Fax: (81) 78 803 7059