It is apparent that Japan is on the declining road; but due to the technical strength and talented workers, less people really attach words of ‘end’ and ‘death’ to Japan’s electronic industry. Indeed, Japanese electronics industry has a distance from hopelessness. However, the situation is so grim that the entire industry is asking: what happens to Japanese electronic market?
Before we have an analysis of reasons, first let’s us see what surprising loss Japan has suffered?
Japan-based DRAM chip dropped from 76%to 3% in market shares;
LCD displays declined from 100% to 5% from 1995 to 2005;
Car navigation systems see 20% in 2007, down from 100% in 2003;
Lithium ion batteries fell from 90% to 48% from 2000 to 2008;
This year, Japan’s home appliance and electronic component industries will suffer the first trade deficit of 800 billion yen during January to September, comparing with about 220 billion trade surplus in the same period;
Japan comes to really dangerous stage, is losing more ground to US and South Korea-based manufacturers. As for reason, I think you have seen many reports about economic downturn worldwide, yen and management philosophy issues, increasingly fierce competition and so on. How about Japan’s supply chain? Is it outdated？
In fact, Japan’s integral production is obsolete. Across global electronic markets, you can hear news: Samsung set electronic components plants in Xi’an (Shanxi province); SK Hynix has production line in Wuxi; Apple outsourced production of iPhone and iPad to Foxconn… But there are fewer examples for Japan’s manufacturers, even when Sony, Sharp, Panasonic were in their peak. Undeniable, for the consideration of increase employment, it is a right way for Japan integration production in its countries; but with the decomposition of production offers more advantages, it is time for corresponding supply chain adjustment in Japan’s declining market.
“The decomposition of production has undermined the competitive advantage of Japanese business models that rely on long-term relationships with suppliers, banks, and workers to foster incremental advances in production processes,” says METI, “Sangyou kouzou bijon gaiyou”.
Japanese firms have a strong record of innovation, but the integral production has a negative impact on Japan’s breakthrough discoveries, which plays a more important role in today’s business market place, due primarily to more rapid product cycles. Japan’s lagging behind is especially obvious in mobile device area. In the race, despite early foray into mobile phone market, Japan did not get good achievements; Sony is seeing increasingly fewer market shares.
“Integration became a liability as Japanese electronics firms were slow to capture either the cost benefits of modular production or the innovative potential of independent software and components firms,” notes Robert E. Cole and D. Hugh Whittaker.
In addition, the integral production affects Japanese firms’ market position as well. The high-tech and high-quality products they make are usually only suitable for the Japanese markets. A simple example: Japan cellphone manufacturers have produced some of the most sophisticated cellular telephones, which dominate Japanese market; but due to high price, obvious Japanese tastes, these products did not reach good result.
Integration production was good for automobiles and digital cameras; but with outsourcing become an inevitable trend, Japan’s electronic industry should give up the outdated supply chain.
Tags：
Outdated Supply Chain,Japan’s Electronics Industry