An era of Japanese Capitalism Again? Or

[Astroboy]

As far as the Japanese economy is concerned, some high tech and manufacturing areas (I stress "some") are very competitive. But, at the same time, many other areas in the economy are very inefficient due to red tapes, excessive regulations, and protectionism.

Partly agree. But I want to know about "other areas" specifically.

 

[JerseyBoy]

Partly agree. But I want to know about "other areas" specifically.

If you lived and worked in the industrialized country such as US and other western countries, you should be able to feel this right away by the seat of your pants. Examples are: transportation, distribution, domestic service providers, retailing, pharmaceutical, medical equipment, IT, aerospace, and etc.

The service sector is close to 3/4 of the GDP.

Google is your friend.

http://www.weforum.org/documents/GCR0809/index.html

--> Page 70
The Global Market

 

[Astroboy]

Examples are: transportation, distribution, domestic service providers, retailing, pharmaceutical, medical equipment, IT, aerospace, and etc.
The service sector is close to 3/4 of the GDP.

Except IT and aerospace, all the industries you quoted are so-called "Domestic" industries. Domestic industries are domestic market oriented and thus reflect the domestic market. Plus very much affected by politics, which is also affected by majority voice of Japanese voters.

So I think World Forum's comparison is not usable.
But if we have the same base for comparison, it is possible to say "Which is better".

Interesting examples include the followings:
1. French Hypermarket operator "carrefour" entered Japan in 2000, but pulled out in 2005.

2. The global retail giant "Wal-Mart" entered Japan in 2001, but sine then continued to lose money and never marked black figures in Japan.

3. US Southland - an operator of 7-Eleven - ran into financial difficulties and was rescued from bankruptcy by Ito-Yokado, its largest franchisee in Japan. The Japanese company gained a controlling share of 7-Eleven in 1991. Since then US 7-Eleven resurged.

Theoretically US/European service industry is superior to the Japanese one. But once they face head-to-head competition, the theory is not likely correct.

 

[JerseyBoy]

Theoretically US/European service industry is superior to the Japanese one. But once they face head-to-head competition, the theory is not likely correct.

You have not considered the regulatory issues and Japan-specific business cultures into your argument. If the Japanese retailers try to enter USA or other western countries, I don't think their model will work there (there are simply too many middlemen in the supply chain in the domestic Japanese markets). I am not sure if you have the actual experience in living and working outside Japan (from your previous posts, I guess not). But, from what I can see, there are many inefficiency in Japan.

 

[caster51]

from what I can see, there are many inefficiency in Japan.

Japan, a country that continues to struggle with the principles of competition and market-driven endeavor. Yet, despite the difficulties in acclimatizing itself with such tenets, Japan boasts the wealthiest population in the world, continually runs a high trade surplus, holds impressive levels of foreign reserves and is the greatest creditor nation on earth ( donating and lending capital to countries throughout the world). The status of Japan, a country that today remains aloof and even ignorant in terms of its political and economic strategies, is destined to eventually attract the world's keen attention with the ongoing decline of America.

 

[Astroboy]

You have not considered the regulatory issues and Japan-specific business cultures into your argument. If the Japanese retailers try to enter USA or other western countries, I don't think their model will work there (there are simply too many middlemen in the supply chain in the domestic Japanese markets). I am not sure if you have the actual experience in living and working outside Japan (from your previous posts, I guess not). But, from what I can see, there are many inefficiency in Japan.

That's why I pointed out "Wal-Mart in Japan". It is said that competitive edge of Wal-Mart is its "efficient/highly-streamlined" supply-chain. IF they implant US-SCM in Japan + utilize its Global sourcing network, they must been enjoying success in the Japanese market Today.
However, the reality does not look like.

Or somebody Japanese block Wal-Mart to do so. ?

 

[JerseyBoy]

IF they implant US-SCM in Japan + utilize its Global sourcing network, they must been enjoying success in the Japanese market Today.

That's exactly the point. You need to look at the system wide condition. The Japanese regulatory regimes and business cultures (nemawashi, stock ownerships among Japanese companies, and etc) contribute to the inefficiency in Japan.
It seems that helps Japan achieve its egalitarian society by beefing up the employment opportunities through many layers of middlemen and regulations. I don't mind about that as I myself is always free to try different models in Japan or overseas. (I was in Shiodome the other day and I saw a team of 4 police officers writing up a parking ticket. That episode illustrates how I feel about the big chunk of the Japanese economy).

 

[Astroboy]

That's exactly the point. You need to look at the system wide condition. The Japanese regulatory regimes and business cultures (nemawashi, stock ownerships among Japanese companies, and etc) contribute to the inefficiency in Japan.

I think comparison based on different regulatory system is meaningless.

Another interesting link "Why Toyota Won"
Why Toyota Won
GM and Ford still treat customers as strangers engaged in one-time transactions....

I am remebering when I visited Wal-Mart stores in USA some years ago. Opened Checkout lanes were limited to 2-3 lanes while many customers waited in a long queue.... According to US Business School Definition, Wal-Mart must be doing well by cutting labour costs and increasing "productivity".... But my customer's perspective, I don't want to go there next time.

 

[JerseyBoy]

I think comparison based on different regulatory system is meaningless.

The economy does not exist in a vacuum as there is no such thing as laissez-faire capitalism in reality. The companies and individuals compete within the confines of the rules and regulatory regimes in general.

One industry such as auto does not make the entire economy competitive (One of the factors Toyota and Honda has been able to keep the profit margin in USA is their non-unionized workers and do not get bothered with the pension and health care expenses for the retired workers; personally, I won't buy a Toyota in USA as their cars are too boring for my taste.). What I am telling you is Japan's capitalism is not cracked up to be in the scheme of the whole global economy.

By the way, about Wal-Mart. They have thousands of stores in USA. The retail industry tends to hire the local people for their service positions. So, a store in a certain city or town may different from the other stores.

Also, Wal-Mart is not in the market to pamper their customers. People shop there to save some bucks. I bet those customers you saw in the line at the check out will accept the longer waiting time over the higher cost. Different market. Different customer.

 

[JerseyBoy]

Bloomberg - Are you a robot?
One of the examples of Japanese business' reliance on the international market. The domestic Japanese market is a no-growth business (with the aging populations, its domestic growth is dead in the water). If it wants to build wealth, Japan needs the international market to sell its products and services (Its post war growth is mainly through its export business). Japanese capitalism thrives when it has an access to the international market. Without it, it will not keep its current level of living standard.

 

[otoko]

This thread has become a bit like a pissing contest, who has a better version of capitalism.

There have been specific cases presented. You can find a case to support your point of view, that still does prove anything regarding the big picture.

Japan did not suffer much from the subprime crisis as Japanese institutions did not purchase mortgage backed securities. Let us be honest here though. They didn't buy them because they understood them or they knew what would happen. They didn't expose themselves to that risk because they could not do so. Japan has still not recovered from their own finanacial crisis. Banks have been very cautious. They were fortunate.


These days no economy is isolated. They are all intertwined. Japan is feeling that now. No Japanese should wish for the decline of America.
Japan does do some things very well. Japan's best companies have shown to be extremely competitive. The way that these companies operate do not represent how all companies operate in Japan though.

Some talking points:
Japan's healthcare and nenkin amount to government subsidies. I am not saying this is right or wrong. In America companies are expected to bear the costs of retirement. Which is a huge part of American car industries costs for example.

Japan is very much dependent on exports. Their domestic market will shrink.

If Japan's immigration policy does not change their population will shrink and they might have to find different industries to be competitive in.
In regards to Japan's service industry. Japan does this well. At the customer level they do this well, maybe better than anybody else. Yes they have problems with flexibility sometimes. I think people are debating the wrong issue here though. Japan has failed in service industries in other countries not because of their service but because of their corporate culture. Financial services for example they have failed miserably. Even with English speaking ability were not able to succeed managing foreign staff. Nomura recently bought the European and Asian divisions of Lehman brothers. But alot of people are not optimistic about their chances of untilizing those divisions effectively.

I think things like lack of access to the courts(relative to America). Conseravtive judges, lack of watch dog groups, self-censorship by the mass media, these are all things that indirectly affect Japan's competiveness.

Education is something that Japan should invest more in. It seems the current system in place really is just to strengthen the status quo in society. Japan needs more high quality public education. The second strongest economy should have more top quality universities yet they have only a handful, Tokyo University, Kyoto University. Keio and Waseda don't count. This speaking from having two siblings attending those universities. The quality of the students is extremey disapointing. Maybe it was better in earlier generations. Keio for example has a High School in New York. At first it was created to serve Japanese -Americans. They had an English requirement. Now all they do is accept Japanese students from Japan whose parents can afford the 40,000 dollare a year tuition and have scrapped the English requirement. All those who graduate can't speak a word of English despite living in America for three years. What was the point? It would have been a perfect oppurtunity to nurture some Japanese who could be change Japan for the better. Instead Keio decided to sell their name to those who are more concerned with the cache of attending a New York school and a easy chance to get into Keio. They fail.

 

[Astroboy]

Japan is very much dependent on exports. Their domestic market will shrink.

Are there any source for proving that Japan is much dependent on exports ?

 

[JerseyBoy]

Are there any source for proving that Japan is much dependent on exports ?

Why is it so difficult for you to accept the export business has been the driving force of Japanese economy? Japan's domestic business is no growth business, practically speaking (I doubt it will grow that much in the future). The trade surplus (which helps Japan accumulate the foreign reserve) helps it build the wealth (The repatriated revenues from Japan's overseas ventures also contribute to Japan-based corporations' bottom line).

A simple econometric measurement (ie. export ratio of Japan's GDP) does not tell you the qualitative data. Example: For building wealth, making and selling computer chips are more valuable than potato chips, regardless of the size of each market.

Japan has followed the protectionist capitalism practiced by England, continental Europe, and USA during their early stages of industrialization. After those wealthy countries achieved the advanced state of industrialization, they actively promoted the free trade principle. If you look at the current rich and poor countries, you can see clearly traditionally poor countries stay poor even with the financial aids by the wealthy countries.

 

[JerseyBoy]

This thread has become a bit like a pissing contest, who has a better version of capitalism.

I think there is no better version of capitalism per se. Current wealthy industrialized countries (including Japan) follow the certain steps to build their industrial base and have an access to the market which can buy their products at the initial phase of industrialization. So, there is nothing too special about the Japanese model.

 

[Astroboy]

Why is it so difficult for you to accept the export business has been the driving force of Japanese economy? Japan's domestic business is no growth business, practically speaking (I doubt it will grow that much in the future). The trade surplus (which helps Japan accumulate the foreign reserve) helps it build the wealth (The repatriated revenues from Japan's overseas ventures also contribute to Japan-based corporations' bottom line).

A simple econometric measurement (ie. export ratio of Japan's GDP) does not tell you the qualitative data. Example: For building wealth, making and selling computer chips are more valuable than potato chips, regardless of the size of each market.

Japan has followed the protectionist capitalism practiced by England, continental Europe, and USA during their early stages of industrialization. After those wealthy countries achieved the advanced state of industrialization, they actively promoted the free trade principle. If you look at the current rich and poor countries, you can see clearly traditionally poor countries stay poor even with the financial aids by the wealthy countries.

I think ALL countries, except North Korea or similar, are dependent on trade (import/export) in today's global economy. So the point is .... how much dependent and compared to others.

Otherwise, discussion about "Japan is much dependent on export (or trade)" is not meaningful. IF you want to believe, I don't block you, but such way of thinking is not persuasive, but it's called "religion".

So... Are there any source?

 

[JerseyBoy]

think ALL countries, except North Korea or similar, are dependent on trade (import/export) in today's global economy.

Of course, almost all countries do some import and/or export (INCLUDING North Korea--there are some reports about some nuclear and rocket technology exchange with other rogue states). The question is how important those international trades are for those other countries.

Japan is the second largest economy in the world. There is a reason for that (the primary reason is Japan's export-driven economic policy coupled with the industrial policy to build its industrial base). So, for Japan, the export business is very important for its wealth and economic growth.

By the way, there is nothing wrong about being labeled as an "export-oriented economy." If it is solidly industrialized and technologically advanced compared to its trading partners, the country is well positioned to gain more wealth through more trading.

So... Are there any source?

Please read the books and search the web or wikipedia. And, please synthesize that info by yourself. I cannot make you think)

 

[Astroboy]

Citigroup To Sell Local Trust Banking Unit To MUFG Firm

According to Nikkei, Citigroup Inc. decided to sell its Japanese trust banking unit NikkoCiti Trust & Banking Corp. to Mitsubishi UFJ Trust and Banking Corp., which apparently made the highest bid.....

So ... it falls into the hands of the Japanese capital again.

The Japanese units of AIG will follow soon, I assume.

 

[JerseyBoy]

Citigroup To Sell Local Trust Banking Unit To MUFG Firm
According to Nikkei, Citigroup Inc. decided to sell its Japanese trust banking unit NikkoCiti Trust & Banking Corp. to Mitsubishi UFJ Trust and Banking Corp., which apparently made the highest bid....

That means Citi found a suckXr who wants to acquire the asset in the current turbulent economic environment. Jokes aside, Mitsu needs the intellectual properties of Nikko Citi. Japanese banks have not been known for M&A and other financial expertise.

 

[Astroboy]

That means Citi found a suckXr who wants to acquire the asset in the current turbulent economic environment. Jokes aside, Mitsu needs the intellectual properties of Nikko Citi. Japanese banks have not been known for M&A and other financial expertise.

IF the "intellectual properties" are something do to with "Wallstreet-crook", Mistubishi UFJ better adopts "return goods" policy.

Either way, it is a result of so-called "competitive" service sector of USA.

 

[JerseyBoy]

Either way, it is a result of so-called "competitive" service sector of USA.

Are you aware the Japanese company bought that piece of the service sector from an American company? Japanese finance sectors tend to look inward (recent purchases are the foreign companies' Japan operations). Japanese domestic business is a dead end business (the market is pretty much matured and there is not much growth potential. As it has fewer eligible workers (and more older workers or people), Japan's markets would shrink. There is a high probability that more dynamic countries will surpass Japan over several decades.

 

[Astroboy]

Are you aware the Japanese company bought that piece of the service sector from an American company? Japanese finance sectors tend to look inward (recent purchases are the foreign companies' Japan operations). Japanese domestic business is a dead end business (the market is pretty much matured and there is not much growth potential. As it has fewer eligible workers (and more older workers or people), Japan's markets would shrink. There is a high probability that more dynamic countries will surpass Japan over several decades.

You are contradicting yourself, aren't you? You are doing business in Japan, where you said the domestic business is dead end, while you said there are more dynamic countries that will surpass Japan over several decades...

A US company allows you to continue to stay in such a sluggish market ?

 

[JerseyBoy]

You are contradicting yourself, aren't you? You are doing business in Japan, where you said the domestic business is dead end, while you said there are more dynamic countries that will surpass Japan over several decades...
A US company allows you to continue to stay in such a sluggish market ?

Your comment does not make any sense. Maybe this is a language barrier. Please read my comment again (if you have a difficulty with English, please grab your dictionary). Or, I am afraid you may lack a critical thinking skill.

 

[caster51]

IMF Considers Issuing Bonds to Raise Money

The International Monetary Fund is finalizing a $100 billion loan from Japan and is considering issuing bonds for the first time in its history, as part of an effort to double the financial resources it has to fight the deepening global recession...............

IMF Considers Issuing Bonds to Raise Money

 

[JerseyBoy]

IMF Considers Issuing Bonds to Raise Money
IMF Considers Issuing Bonds to Raise Money

That J-gov is loaning $100 billion is a slap-in-the-face to the tax payers in Japan, given the deepening economic downward spiral to the bottomless pit. It should cut taxes (which I benefit). That loan would not contribute one iota to an increase for Japanese exports.

 

[Zulan Grey]

Hmph...
Why CAPITALISM namely? China has a great potential for examples... But it`s not Capitalism