Japan as a defeated nation in WW II, recovered and rebuilt its economy to be the second largest in the world in the 1980’s weakened the U.S. manufacturing industry and taken a greater share of the consumer market. The U.S. auto industry basically collapsed under the Japanese car imports and Japanese brands assembled in the U.S. Americans and people world-wide buy Japanese cars because they believe Japanese products are of higher quality. This belief was established partly by the Japanese manufacturers’ attention to details in manufacturing and partly by Japanese companies’ strong belief in product packaging, marketing and advertising. Japanese product packaging is usually impressive, even a piece of candy can be presented in elaborate wrappings and pretty boxes. We also note that there is no shortage of Japanese car advertising on American television. In Japanese business philosophy, marketing and advertising lead their businesses; even R&D pays more attention to elements that help marketing and sales and not enough on risky intrinsic or revolutionary inventions. This philosophy may have roots in the West, but it works so differently in Japan and in Japanese enterprises which may explain the recent damaging reports on Japanese product quality fraud. This article is written for Japanese manufacturers to reflect on the ‘trust’ issue in products and for American consumers to step back from TV ads and get ‘Internet wise’ to compare Asian products. Consumers should realize that business world is very competitive. Marketing and advertising can open the door but can never sustain any product if it is outperformed by a competitor’s product.
Recently, NY Times (10-10-2017) exposed that Kobe Steel had been falsifying its steel product’s strength and dimension precision. Kobe’s steel products have impact on U.S. aircraft and car manufacturing, for example, Boeing imports materials and parts from Kobe Steel for its aircraft wings. Apparently, this fraud has been going on for more than ten years. The high level managers must have known it. As Japanese customs, the top leaders of Kobe Steel bowed and apologized to the public. CNN reported in June 2017, the big Japanese car airbag manufacturer, Takada, declared bankruptcy. Their airbags are unsafe. When they are released, sometimes, they break and spit out sharp objects like knifes cutting drivers’ face and throat. Apparently, the company knew this problem fifteen years ago but they continued to sell their products. Sad thing is Takada’s cover-up and dishonesty has resulted in more than 200 deaths over the years. CNBC (4-20-2016) reported, the giant Japanese enterprise, Mitsubishi Motors, was exposed in its falsifying test data on combustion efficiency, known as “fuelgate” or ‘firegate’ in remembering the legendary ‘Watergate’. Mitsubishi Motors had made false fuel efficiency data on their cars sold since 1991, nearly 20 years cheating practice. For such a long period, the top managers of the company must have known the practice.
Why the Japanese manufactures cheat on their product quality, test data and product safety, you may ask? When these big companies commit fraud, it cannot be brushed away as a small incidence. Looking deeper into Japanese business culture and philosophy, the above cases may be explainable. First, Japanese businesses strongly believe in marketing and advertising to the point that R&D and manufacturing pays acute attention to marketing and advertising. The Japanese consumers are very receptive to advertising. The Japanese industry and businesses seem to believe that if you keep saying Japanese products are higher quality than other Asian products enough times; people will accept this claim as gospel. However, when non-Japanese competitors became capable of competing in product quality, innovation and price, the Japanese manufacturers sometimes just cannot cope with the competition. The above incidences are results of this competitive pressure.
How can Japanese corporations commit such sinful cove-up for decades, you may ask? Again, a number of Japanese business cultures may be the culprit. The first is that the Japanese employees tend to have a blind royalty to their employers. Hence, whistle blowing especially in and to the public is considered as a shameful act. When reported to the management in the company, the matter can be handled in a different manner from Western companies. Workers in a Japanese company are different from western style employer and employee or manager and staff relation but more like father and son or master and apprentice relationship. This personal bond and loyalty and fear of admitting mistakes in public are likely responsible for the above cover-up of fraud and keeping them as company secrets. Notoriously, the Japanese cannot honestly admit the war crimes the Japanese Imperial Army committed in China under the leadership of Emperor Hirohito is a testimony to this Japanese culture – feel more shameful by admitting committed a shameful act.
Another Japanese culture which has both merits and faults is that the society expects the top leader to take responsibility for any mistake or fraud made by any subordinate even when the leader may not be aware of or involved in the fraud. Thus, the top leaders are tempted to take the cover-up or denial route. This decision may be kept and passed on to next generation of leaders who are typically picked by the previous leaders. This can explain why Mitsubishi Motors, Takada and Kobe Steel have kept the fraud for so long. Perhaps, they were hoping to improve their products to live up to the false claims, but covering it up for decades endangering people’s lives are definitely not acceptable.
We do have to give credit to the Japanese workers as diligent, good learners; with the help of the U.S. they recovered from the WW II first in Asia possibly first in the world. However, the globalization process enables many countries to have opportunities to develop if no external interference blocks the process. So the South Korea emerged along with three other little dragons as competitors to Japan with very similar business models. The Asian four little dragons did put a pressure on Japan but Japan was not threatened seriously until China had risen to be a major manufacturer. Particularly, in the recent decade, the Chinese has placed such importance on innovation and creativity, the Chinese people not only are diligent good learners but they are more creative people. Thus, the Chinese products not only elevated in quality, remained competitive in price but also enriched with advanced technologies enabling her to move up in high-tech industries threatening Japan.
China has nearly cornered the home market in consumer products; the Chinese manufacturing automation and robotics are advancing rapidly making Japan worried. The high-speed rail, used to be Japan’s pride now is outshined by the Chinese in all aspects from construction, manufacturing to system control. Projecting into the future, the wisdom seems to lie in cooperation rather than blind competition. Globalization is not stoppable unless invoking war. Nations must optimize for their people with realistic policies based on demographics. With limited natural resources and an aging population, Japan must find beneficial and complementary cooperation with China rather than spend on costly military build-up and wish to derive advantages from military alliances. Japan must reflect on its business practices to develop a sustainable and independent Japanese business strategy with China and the U.S. as partners.
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