Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, January 28, 1994 TAG: 9401280133
SECTION: BUSINESS PAGE: B-4 EDITION: METRO
SOURCE: Associated Press
DATELINE: TOKYO LENGTH: Medium
Japanese dominance in electronics? Closed markets? Not exactly.
On the backs of many of the sets are panels stamped "Made in China," "Made in Korea." Even "Made in the United States."
When trade figures for 1993 are released, Japan is expected to have become a net importer of color TVs - a remarkable shift for a nation that built its economy by supplying the world with low-cost, high-quality electronics.
The rapid rise of the yen last year suddenly made many of Japan's bread-and-butter products uncompetitive, just as Asian competitors were growing in strength.
For most companies, it was a shock. The change prompted many firms to shift more production abroad, to countries where labor is cheaper. As a result, an increasing number of products bearing Japanese brand names are being made outside Japan.
But many in Japan fear the country's own industrial foundations may erode through "kudoka," or "hollowing," if the newest production facilities go overseas.
"Unless some measures are taken to stop the shift, domestic industry will be hollowed out," warned Kenji Mizutani, vice chairman of the private Tokai Research Institute.
Some officials say Japan's very economic base is at stake.
"If we lose out in manufacturing, we won't have anything," said Yoshio Tanzawa, director of the trade ministry's Technical Research and Information Division. "We're weak in the service industry, where the United States is strong, and lag behind in telecommunications."
Many worry that Japan is following in the industrial footsteps of the United States, which Japanese believe lost its manufacturing supremacy in the 1970s and '80s because too many companies shuttered U.S. plants and moved abroad.
"There's an industrywide concern about the need to keep a manufacturing base in Japan," said Sony Corp. Executive Vice President Minoru Morio.
The self-confidence of the booming 1980s has faded into a widespread "pessimism that Japanese industry is slowing sinking," the business daily Nihon Keizai said in an editorial Monday. "Japanese competitiveness is fading, and it is important to feel a sense of crisis."
Ironically, economists blame the boom years for many of Japan's current woes, pointing to what's derisively called the "bubble economy." With their stock prices soaring and bank loans flowing freely, many companies built extra manufacturing capacity that they now are having trouble shedding as they try to transfer production overseas.
The inflation of asset values during the bubble artificially boosted the strength of traditional industries, leading to complacency among executives and government bureaucrats while making it harder for innovative new businesses to emerge.
"Japanese industry should have been restructuring in the 1980s, but it didn't because of the bubble," said Yukio Noguchi, professor of economics at Tokyo's Hitotsubashi University.
"In the future, Japan will no longer dominate electronics production," said Sanyo President Yasuaki Takano. "Products will naturally shift to the places where they can be made well at low cost."
To regain competitiveness, economists say, Japan must prune costs at home, move production abroad and come up with innovative new products.
"For the next few years, Japan faces a very difficult time," said Tadakazu Yamamoto,Matsushita senior managing director.
by CNB