/ |

‘Made in Japan’ label under assault


Take a stroll through home sweet home. You’ll almost certainly see an entertainment system, refrigerator, microwave oven, rice cooker, toaster, mixer/blender, vacuum cleaner, heater/air conditioner, hair dryer, electric blanket and so on. From personal hygiene to food preparation to recreation and entertainment, electric appliances are a ubiquitous part of our daily lives.

For the previous half century, the Japanese consumer-electronics industry enjoyed a extraordinarily successful run as both innovator and competitor, capturing dominant market shares of everything from calculators and boom-boxes to microwave ovens and video cassette recorders.

Among its manifold products, certainly none have held the aura of television, referred to in Japanese as kaden no ōsama (the king of appliances). So said not because TV was necessarily the most expensive or essential, but because people spent more hours per day looking at it than everything else combined. “It’s like having a billboard to promote your brand right in the customer’s living room,” a PR spokesman at a manufacturer explained to me years ago.

During the five years leading up to July 2011, practically every household in Japan replaced its analog cathode-ray tube TV for a digital set. Did this result in a major windfall for TV makers? Hardly. In an article titled “The End of Japan’s TV Industry,” Shukan Diamond (Nov. 12) describes its death throes. Overproduction and oversupply has resulted in a price collapse. At retail a TV now sells for less than ¥1,000 per inch of display size, i.e., a 32-inch model might go for below ¥32,000.

Even the majority of Japanese brands sold here are assembled abroad of foreign components. As the result of strategic decisions made well over a decade ago, South Korea and Taiwan came to dominate production of LCD display panels, and now hold a respective 52.7 and 31 percent of the world’s output, as opposed to only 15 percent by Japan.

But TV sets are just the tip of the iceberg. Starting with radios (remember radios?), from about 1995, imported goods have successively come to dominate Japan’s consumer-appliance markets, gradually surpassing domestically manufactured washing machines, refrigerators, vacuum cleaners, microwave ovens and others.

“Whereas electronics were once a major earner of foreign exchange,” rues Shukan Diamond, “Japan has become a net importer,” i.e., with an overall trade deficit.

That turning point came in 2009, a year after the yen’s value soared in the wake of the “Lehman Shock.” Presently, out of 18 listed product sectors, only in five — storage batteries, dry-cell batteries, light bulbs, digital cameras and the almost defunct sector of video tape recorders — does Japan still maintain a clear edge.

The consequences of this shift are grave. Compared with 1985, when the consumer electronics manufacturing sector employed some 440,000 workers, by 2009 that figure had shrunk to 156,400. The total value of electronics exports, which peaked at ¥4.54 trillion in 1985, has shrunk to one-third that figure, and this impacts in turn on the nonconsumer sectors of Japan’s electronics industry, such as components, devices and industrial-use electronics.

Nikkei Business (Dec. 26-Jan-2) observed that 2012 might mark a tipping point in the hollowing out of Japanese manufacturing.

In the past, Japanese companies — which made considerable investments to develop their brand image — could always rely on their compatriots’ reluctance to stray from the fold. Unfamiliar foreign brands with funny names raised questions. Will it perform reliably? Is it safe for my family? Will I be able to read the user manual?

Now, ominously, a growing body of evidence demonstrates a “Made in Japan” label can no longer be relied upon — not on things consumers purchase to rub on their skin, or plug into the wall, or hold against their ear, or ingest through their mouth.

As one example, reports Nikkei Business, take the “Market O Real Brownie” from South Korea, sold through convenience-store chains in Japan from last September. For 12 straight weeks, according to point of sales data, this American-style chocolate confection was the second-best selling item at 250 Tokyo convenience stores. Its pink, brown and white cardboard display stand and the individual packets carry only English and Korean. The virtual absence of Japanese POP (point of purchase) appears to have been no deterrent to sales.

But why is this happening now? More than irradiation of the environment per se, perhaps trauma over the March 11 nuclear disaster may have served to dash the myth of Japan-made products being safe. And this, compounded by the flooding in Thailand, where many Japanese companies have factories, exposed the fragility of the product supply chain.

The disasters’ impact on Japanese consumer psychology will no doubt be studied for years to come. But the magazine concludes the success of foreign products during 2011 is part of a trend that’s not about to change anytime soon.

“With the present declining loyalty toward ‘Made in Japan,’ what direction should Japanese companies take?” the magazine asks rhetorically. “One thing’s for sure: We will need to reexamine aspects of product manufacturing up to now, from the bottom up.”