The NY Times’s Keith Bradsher does a compelling piece on comparing China to Japan. Here’s some of the stats in no particular order:
- China’s current population: 1.3 billion people
- Japan’s current population 130 million people (1/10th of China’s)
- China’s current economy: 33% of Japan’s economy
- In rural China, 200 million live on less than $1/day
- There are more unemployed adults in rural China than the total American work force
- US and Japan factory wages are essentially equal. China’s manufacturing wages are 4% of Japan’s or the US’s in 2002. Four percent!!!
- China is using 33% of all the steel produced in the world and 50% of all the concrete used in the world. That is incredible!
- “China is a nuclear power that, unlike Japan, does not depend on the United States for military protection. Yet the United States looks to Beijing for help in coping with problems in countries including North Korea, Pakistan and Afghanistan. ”
My takeaway from this is that now, more than ever, Japan must stop manufacturing, except at the highest-value-added areas (microprocessors, etc.) and must begin creating intellectual property: software, other creative IP, etc. There is just no way to compete against China in manufacturing.
The sad reality is that Japan’s caught in “The Innovator’s Dilemma” in the sense that Japan has perfected manufacturing techniques after adopting Deming and the Toyota Production System, and TQM, etc. So Japan’s best in the world at manufacturing processes, but it is too expensive to build things in Japan today.
On the other hand, Japan is, as a whole, very bad at software, especially consumer-facing software. Setting aside embedded systems, name one globally famous Japanese software besides video game systems. There isn’t one. That’s the challenge. I do wonder if Japan is capable of building world-class consumer-facing software. I have yet to see any. Please prove me wrong.
Like Japan in the 1980′s, China Poses Big Economic Challenge [nytimes.com]
comparing china and japan
http://www.kanai.net/weblog/archives/001916.html...
Korea is in a similar position to Japan. Korea has and is losing many of its manufacturing jobs to China. A number of people have told me that the Korean economy is worse now than during the IMF crisis…
Those are some very interesting statistics. Japanese culture has traditionally been more successful with refinement of existing things than development of new things. I believe that the general societal mindset makes that very, very hard to change and is based in the rigid or authoritarian nature of Japanese society in general.
The more riotous the society, it appears, the more innovation seems to occur. I have a natural U.S. prejudice, of course – but note that most of the meaningful innovation of the 20th century, which coincidentally includes the bulk of innovation in all of human history, has been enabled in some form through the United States. Most of this has to do with economic incentivization – in the U.S. you aren’t burdened with the extraordinary human and capital costs of socialism, which are almost never calculated – but some of it is due to the general expectation that people should do something on their own.
The economic impacts of socialism, including nationalized single-payer healthcare systems and economic transfers to the poor, though have a stifling effect far beyond what is popularly reported. In fact, you could write a huge paper on it as a doctoral thesis in either economics or sociology – although you wouldn’t win a prize for it because the inevitable conclusions are not particularly “nice” in the classic sense.
But the general social structure, too, has an equally enormous impact. Witness Italy at the time of the Enlightenment, France at various times, England at various times – generally chaotic open cultures where the primacy of the individual was emphasized.
Note that none of this is to be taken as a criticism. The Japanese primary focus on perfecting existing technologies has resulted in some marvelous engineering (motorcycles, anyone?) and other achievements – achievements that probably would be just as unachievable in the U.S. as some of the U.S. achievements would be in Japan.
cdg