Japan's strength

When Michael Porter wrote about the "advantage competitiveness" in the global economy, there was much dispute on that in Japan: will Japan survive in the global market in the future? On such a naive question, there were also pros and cons: although Japan now has a large trade surplus, which seems to be the strength of Japanese manufacture, they wonder if it probably will decrease in the future due to powerful competitors such as China and India.

Trade surplus, however, doesn't prove to be the advantage competitiveness, but a large amount of saving held by the domestic people or short for domestic investment for equipment. It shows merely the stagnant economy in the 1990s. What is the Japan's strength? Here is the excerpt of good article:

Yomiuri Shinbun
YIES / 'Japan's strength lies in keeping jobs at home'
Koya Ozeki / Daily Yomiuri Staff Writer
Sep. 26, 2006

Japanese firms may have better odds of beating out their U.S. rivals in the global market in coming years, thanks to their reluctance to ship jobs overseas, Prof. Suzanne Berger of Massachusetts Institute of Technology said during a lecture in Tokyo.

"Mistakes that companies make is that somehow cheap labor can be a solution that will save them, and I think in the long run, cheap labor is really not a winning solution," she said at a Yomiuri International Economic Society (YIES) lecture Monday.

Berger led a study on 500 companies worldwide over the past five years, in search of a model for success in today's global economy. She recently put her findings into a book, titled "How We Compete."

.....Sony Corp. manufactures half of its top-of-the-line computers in Nagano Prefecture, whereas Dell Inc. made none of its computer components in the United States, according to her study. By keeping skilled labor in their homeland, Japanese companies retained a "capability that they could use in recreating themselves," she said. She also pointed out that although many companies in Japan and the United States have shifted manufacturing operations to China, the Japanese firms tended to build their own plants in China, whereas U.S. firms used outside contractors.

"My concern is that in dealing with contract manufacturers for our production in China, [U.S. firms] are failing to take advantage of the opportunity to learn about the China market," Berger said. But she believes Japanese firms are in a much better position to learn about the preferences of Chinese consumers. "Learning about a new market is a source of innovation," she said, and by missing that opportunity, "[U.S. firms] are failing to develop the capability for future sources of innovations."

Here I summarize Prof. Suzanne Berger 's remarks. Her points at discussion are put into three:

(1) By keeping skilled labor in their homeland, Japanese companies retained a "capability that they could use in recreating themselves."

(2) The Japanese firms tended to build their own plants in China, whereas U.S. firms used outside contractors.

(3) Learning about a new market is a source of innovation.

These are good lessons for not only businesspeople but also educators at school. The new prime minister, Abe, calls for the structural reform of Japanese education system. To many teachers and staffs at Japanese schools, Dr.Berger's points would be changed into:

(1) By keeping competent students in their homeland, the US universities retained a "capability that they could use in recreating themselves."

(2) The US universities tended to build their own campuses in itself, whereas Japanese universities used outside contractors like MIT, Princeton, Stanford, Yale, Columbia and Harvard.

(3) Learning about a new market is a source of innovation.

These might be good lessons for the people who are afraid of the future of Japanese universities. They should learn about a new market and thus lead to a source of innovation for rebuilding Japanese universities.