Japan May Be Able To Compete Globally But Not Yet

By James Santagata
Principal Consultant, SiliconEdge

In response to Richard Solomon's (Beacon Reports) very thoughtful piece first questioning and then analyzing the ability of Japanese firms to complete globally (see: Can Japanese Firms Compete In Global Markets?), I had written an article entitled "Can Japan Compete Globally? You Betcha And Here's Why".

The purpose of my article was not only to surface and then to debunk what I see as a plethora of Myths and Memes that continually surface in the media and in our daily conversations regarding Japan but also to help us all question the other Myths and Memes that govern our lives.

Of the many comments I've received, I'm mostly interested in the comments that disagree with my article or point of view because these help test the soundness of the arguments I've forwarded.

Here is an example of a common but very thoughtful response which is in disagreement with my arguments:

I say "not yet" (Japan can't compete) - because of the inner structure of Japanese companies. Everything takes just too long. They are usually too late, so foreign competitors, for instance Indians have already landed deals while Japanese still circle around decisions."

Here's my reply to such comments.

I. Speed of Decision Making: What Is The Real Value?
No one with any amount of first hand Japan business experience will doubt or question the generally molasses-like decision making process found within Japanese companies and organizations.

However, the speed of decision making is just but one important aspect of a country's competitiveness although, to be sure, there are first mover / early mover advantages to be had as well as disadvantages to consider and avoid. There is also the timing of a decision for economic or other reasons to consider.

But beyond the speed of decision making, it would be wise to consider both the quality of decision and decision making process as well as the ability to execute effectively.

II. The Empirics Trump The Myth & Meme 
For for all its warts, blemishes and shortcomings, Japan is still the number three economy in the world.

Japan's GDP stands at 5,87 billion USD.
India's GDP stands at 1.89 billion USD.

Japan's GDP is 3.1 times larger than India's. Or conversely India's GDP is just 32% of Japan. Put in yet another way, India's GDP is less than one-third the size of Japan's.

Can it be any clearer than this?

(notes: recently we have seen large fluctuations in exchange rates,especially with regard to the devaluation of the rupee; see BBC News - Indian rupee falls to new low against US dollar, August 28, 2013;  these GDP figures come from 2011; ).

Now let's consider the case of India further.

III. Analyzing The Indian Case
If Indian decision makers or the Indian decision making process is so fast, why is their economy (in terms of GDP) still in only 10th place?

Remember, India's GDP is still just 32% of Japan's. This means the Japanese can effectively stop working for 68% of the year or 8 months and still enjoy an economy that is just barely larger, but still larger, than India's.

This then begs the question, "What deals are the Indian's getting that the Japanese aren't and how come these deals aren't moving India to the point of producing a GDP which is greater than Japan's?"

Moreover, we must but this into perspective that India, like China, is a very huge country. India has over 1.2 billion people and many natural resources. Japan by comparison has only 127 million people, so the Indian population is 10 times larger than Japan's yet the Indian economy is only 32% as large of Japan's.

I understand that over twenty years of myths and memes can condition us to believe things to be or to seem different than they really are. But Japan is still the number three economy in the world and for good reason -- Japan and the Japanese know how to compete.

IV. Abenomics & The Near Future
In a future article, entitled "Can Japan Compete Globally? You Betcha And Here's How", I will detail exactly how Japan can retool and restructure to compete even better. 

Lastly. and again for the record, I'm highly critical of Abenomics and I think his approach as well as the actual implementation of it, especially the huge devaluation of the yen, was a massive error and with that error, a perfect opportunity was missed for Japan to prime the catapult and launch itself beyond China to again retake the number two position in world economic rankings.