Japan's Kaizen strength is Monozukuri

Crises and the almost obsessive focus on the production (in Japan Monozukuri known) of Japan have made companies more competitive.

Kawasaki Chieko, 60, collects some of their Chinese porcelain plate on, in their Japanese restaurant near Ofunato.  Given the fact that Japan's debt first, mainly within the country, holds the second position of the world's largest creditor and third, has a tax rate of only 33 percent of GDP (in Austria, there are nearly 50 percent), the situation is not hopeless .

The late 1980s must have been a glorious time in Tokyo. Japan's export miracle was to the west is still in its thrall and flushed money into the coffers of companies and stock exchanges in the consumer money that has gone into real estate, investments and prestigious luxury trophies. At the height of the Japanese asset bubble was the imperial palace grounds in the center of the metropolis worth as much as the entire state of California wants it anyway-so the urban legend. And in December 1989, the Nikkei index reached with 38th 915, 87 points all-time high. "Only idiots and foreigners were not rich at that time," wrote U.S. journalist Karl Taro Greenfeld, who was stationed at the time in Tokyo, published in 1994 in his anthology "Speed ​​Tribes".

Business in Japanese.

The Japanese economic miracle of the postwar era had its origins in a national talent that is known in Japan as Monozukuri. The term can be roughly described as "making things" translate, and in fact, the achievements and performance of Japanese companies enriches the Western Business Administration and inspired, beginning with the logistics ("Just In Time 'supply chains), on production (the Kaizen principle, namely to promote a product in small increments), to personnel management (working in small teams, and continuous feedback from the shop floor to management). The active economic policy of the government in Tokyo, which promoted exports and imports with disabilities helped to further. Those readers who had studied in the 1980s and 90s at WU will remember for sure yet of the infamous non-tariff barriers in Japan, which were then covered in lectures. Japan's problems began in 1985 when it was fixed in New York, the "Plaza Accord". The agreement regulated the relations between the U.S. dollar, yen and Deutsche mark and led to a new appreciation of the Japanese currency. The external value of the greenback was halved within two years and Japan's products were on their most important market suddenly more expensive. To compensate for the decline in foreign demand, Tokyo relied on domestic investment and thus inflated a housing bubble of gigantic proportions, whose collapse in 1991, the Japanese economy has not recovered to this day, as clearly illustrated in the above-pictured fever chart of the Nikkei .

Up and down.



The economic problems that plagued Japan since the bursting of the bubble (deflation, debt and so on) have been studied extensively in recent years. The most prominent experts in the matter called Ben Bernanke and Adam Posen. The former is currently governor of the U.S. Federal Reserve, poses in turn acts as a non-voting member of the Presidium of the Bank of England. In this role poses held in May, a widely cited paper on the lessons of the Japanese crisis. He concludes that Japan was not condemned to the two "lost decades" and therefore should not be written off.

First of all, the U.S. economist has pointed out that Japan has undergone since 1991, no steady decline, but rather a mix of recessions (19,921,994, 1997-1999 and 2001-2002) and upturns. The period from 2002 to 2008, incidentally, the longest period of growth in the postwar Japanese history. And the competitive position of Japanese companies has deteriorated during this time all the prophecies of doom, but seek to improve how the development of unit labor costs (see chart below) has, in which case the positive side effects of deflation (everything is cheaper) should be taken into account . Detail: The Japanese export sector is now set out to live with a much stronger yen as the olden days. And it benefits from its geographical proximity to China.

In fact, Japan's performance is comparable in this respect with the current highly-acclaimed German cost management. Also, the development of fixed investment, private consumption and current account balances are similar to each other-what should really surprise anyone, since both nations have innovative and competitive export industries that can hold their own in the global context well. Both Germany and Japan have their rigid labor markets partly liberalized (the Japanese equivalent of the German loan and part-time workers is Freeter) but it seems that the Japanese consumer to have not suffered as much as the German in this revolution. On the other hand, in Germany also saved significantly more than in Japan.

Bad luck, mishaps and blunders.

Given these similarities, begs a question: Why is it better than Germany Japan? Adam Posen has a surprisingly simple answer to: the failure of policy makers in Tokyo have made a sustained cyclical crisis. Thus, the Bank of Japan has been too slow to open the monetary floodgates, and to combat deflation. The government in turn was too timid in reforming the debt-ridden banking sector, too short-sighted in the immediate crisis response, and they choked the dynamism of the private sector again and again. The powder was fired with fiscal expensive (and inefficient) infrastructure package, and a premature hike in VAT in 1997 pushed the country into recession again. "Japan's recoveries could be self-supporting, but they were stopped by policy mistakes," says Posen.

The continuing malaise makes the starting point for the reconstruction of the earthquake devastated the Northeast of the country not just easier. The state budget has been years in the deep red region (see below), and total debt is about 200 percent of GDP. So where will the 200 billion USkommen needed, according to Goldman Sachs for the reconstruction?

Martin Wolf, chief analyst of the "Financial Times", sees the matter calmly: The amount corresponds to only two percent of Japan's GDP and will also not due to a stroke. And as for the high public debt: Given the fact that Japan's debt first, mainly within the country, holds the second position of the world's largest creditor and third, has a tax rate of only 33 percent of GDP (in Austria, there are nearly 50 percent ), the situation is not hopeless.

A matter of time.

Interesting but the question remains, how long the disaster-related production stoppages in Japanese factories. Because the longer the problems persist, the greater the advantage of Japanese competition is abroad. In the coming months, Japan will be more need than ever before Monozukuri.