782-Swami Ghanshyam Jivandasji Mba College

Transcripción

A
GLOBAL / COUNTRY STUDY AND
REPORT
ON
JAPAN
Submitted to
SGJ MBA College
IN PARTIAL FULFILLMENT OF THE
REQUIREMENT OF THE AWARD FOR THE
DEGREE OF
MASTER OF BUSINESS ASMINISTRATION
In
Gujarat Technological University
UNDER THE GUIDANCE OF
MeerabaZala
(Assi. Professor)
Submitted by
1. Deepa Goswami
2. Dipensi Shah
3. Ramesh Gohil
4. Rajesh Sangar
5. RiddhiDavda
6. Khushboo Thacker
Batch : 2011-13,
117820592001 to 117820592006
MBA SEMESTER III/IV
SGJ MBA College
Affiliated to Gujarat Technological
University
Ahmedabad
Introduction of JAPAN
Japan is an island nation in East Asia. Located in
the Pacific Ocean, it lies to the east of and Shikoku,
which together comprises about ninety-seven percent of
Japan's land area. Japan has the the Sea of
Japan, China, North Korea, South Korea and Russia,
stretching from the Sea of Okhotsk in the north to
the East China Sea and Taiwan in the south.
The characters that make up Japan's name mean "sunorigin", which is why Japan is sometimes referred to as
the "Land of the Rising Sun".
Japan is an archipelago of 6,852 islands. The four
largest islands are Honshu, Hokkaido, Kyushu,
world's tenth-largest population, with over 127 million
people. Honshu’s Greater Tokyo Area, which includes
the fact capital city of Tokyo and several
surrounding prefectures, is the largest metropolitan
area in the world, with over 30 million residents.
Archaeological research indicates that people lived in
Japan as early as the Upper Paleolithic period. In the
late 19th and early 20th centuries, victory in the First
Sino-Japanese War, the Russo-Japanese
War and World War I allowed Japan to expand its
empire during a period of increasing militarism.
The Second Sino-Japanese War of 1937 expanded into
part of World War II in 1941, which came to an end in
1945 following the atomic bombings of Hiroshima and
Nagasaki. Since adopting its revised constitution in
1947, Japan has maintained a unitary constitutional
monarchy with an emperor and an elected legislature
called the Diet.
A major economic power, Japan has the world's thirdlargest economy by nominal GDP and by purchasing
power parity. It is also the world's fourth-largest
exporter and fourth-largest importer. Although Japan
has officially renounced its right to declare war, it
maintains a modern military with the sixth largest military
budget, used for self-defense and peacekeeping roles.
After Singapore, Japan has the lowest homicide
rate (including attempted homicide) in the
world. According to Japan's health ministry, Japanese
women have the second highest life expectancy of any
country in the world. According to the United Nations,
Japan also has the third lowest infant mortality rate.
Automobile sector
Introduction
The Japanese Automotive industry is one of the
most prominent and largest industry in the
World. Japan has been in the top three of the
countries with most cars manufactured since the
1960s, surpassing Germany. The automobile
industry in Japan ripadly increased from the
1970s to the 1990s (when it was oriented both
for domestic use and worldwide export) and in
the 1980s and 1990s,overtook the U.S. as the
production leader with up to 13 million cars per
year manufactured and significant exports.
Japan is now currently the third
largest automotive producer in the World with an
annual production of 9.9 million automobiles in
2012. Japanese investment helped grew the auto
industry in many counters throughout the last few
decades.
Cars designed in Japan have won
the European car of the year, International car of
the year and World car of the year awards many
times.
History
The history of the Japanese automobile
industry dates back to the Taisho era (1912-1926). After
World War 1 a number of corporations, guided by the
government and Imperial Army, started to produce
military trucks. Later on auto companies such as Toyota
and Nissan started their business. That was essentially
the beginning of the Japanese automobile industry.
However, the Japanese automobile industry was
insignificant throughout World War 2, and auto
corporations produced almost only military and industrial
trucks and buses. Indeed, in those days, it was very rare
that an average Japanese household owned a car. After
World War 2 the Alied Occupation General
Headquarters banned automobile production until
1950.Japanese companies were allowed to produce
only a limited number of trucks. Then, Nissan and
Toyota restarted their businesses.
In 1904, Torao Yamaha produced the first domestically
manufactured bus, which was powered by a steam
engine. For the first decades after World War 2, auto
production was limited, and until 1966 most production
consisted of trucks. Thereafter passenger cars
dominated the market.
Rapidly increasing domestic demand and the expansion
of Japanese car companies into foreign markets in the
1970s further accelerated growth. With Japanese
manufacturers producing very affordable, reliable, and
popular cars throughout the 1990s, Japan became the
largest car producing nation in the world in 2000.
Today, Japan is third largest automobile market and,
until china recently overtook them, was a largest car
producer in the world.
Early years
In 1904, Torao Yamaha produced the first
domestically manufactured bus, which was powered by
a steam engine. In 1907, Komanosuke Uchiyama
produced the Takuri, the first entirely Japanese-made
gasoline engine car. The Kunisue Automobile Works
built the Kunisue in 1910, and the following year
manufactured the Tokyo in cooperation with Tokyo
Motor Vehicles Ltd. In 1911, KwaishinshaMotorcar
Works was established and later began manufacturing a
car called the DAT. In 1920, JitsuyoJidosha Seizo Co.,
founded by William R. Gorham, began building the
Gorham and later the Lila. The company merged with
Kwaishinsha in 1926 to form the DAT Automobile
Manufacturing Co. (later to evolve into Nissan Motors).
From 1924 to 1927, Hakuyosha Ironworks Ltd. built
the Otomo. Toyota, a textile manufacturer, began
building cars in 1936. Most early vehicles, however,
were trucks produced under military subsidy.
Cars built in Japan before World War II tended
to be based on European or American models. The
1917 Mitsubishi Model A was based on the Fiat A3-3
design. (This model was considered to be the first massproduced car in Japan, with 22 units produced.) In the
1930s, Nissan Motors' cars were based on the Austin
7 and Graham-Paige designs,
while
the Toyota
AA model was based on the Chrysler Airflow. Ohta built
cars in the 1930s based on Ford models, while Chiyoda
built a car resembling a 1935 Pontiac, and Sumida built
a car similar to a LaSalle.
The Ford Motor Company of Japan was
established in 1925 and a production plant was set up in
Yokohama. General Motors established operations in
Osaka in 1927. Chrysler also came to Japan and set up
Kyoritsu Motors. Between 1925 and 1936, the United
States Big Three automakers' Japanese subsidiaries
produced a total of 208,967 vehicles, compared to the
domestic producer’s total of 12,127 vehicles. In 1936,
the Japanese government passed the Automobile
Manufacturing Industry Law, which was intended to
promote the domestic auto industry and reduce foreign
competition; ironically, this stopped the groundbreaking
of an integrated Ford plant in Yokohama, modeled
on Dagenham in England and intended to serve the
Asian market that would have established Japan as a
major export. Instead by 1939, the foreign
manufacturers had been forced out of Japan. Vehicle
production was shifted in the late 1930s to truck
production due to the Second Sino-Japanese War.
For the first decade after World War II, auto
production was limited, and until 1966 most production
consisted of trucks (including 3-wheel vehicles).
Thereafter passenger cars dominated the market.
Japanese car designs also continued to imitate or be
derived from European and American designs.
Growth of Automobile
Industries
The automobile industry plays an important role in
overall business cycle developments. Although the
industry accounts for only a small share of industrial
output in most OECD economies, it is comparatively
volatile and can thus, at times, make a large contribution
to aggregate fluctuations in economy-wide activity. And
with the location of final assembly and motor parts
production having become increasingly internationalised
over time, disruptions to supply in one country, as in the
aftermath of the earthquake and tsunami in Japan this
March, can potentially have adverse near-term effects in
others.
 A sharp downturn in motor vehicle and parts
production accounts for a sizable proportion of
the observed slowing in the growth of economic
activity since the early part of 2011. The direct
impact of the decline in vehicle and parts
production in the second quarter is equivalent to
a reduction in the annualised rate of GDP growth
of 2½ percentage points in Japan, around ½
percentage point in China and between 0.1 to 0.2
percentage points in the United States, the United
Kingdom and France.
 There are clear signs of global supply-chain
effects, with production disruptions in Japan in
the aftermath of the earthquake and tsunami
having direct effects on production, sales and
prices in other countries.
 In the major economies, the level of new car
sales in April and May is estimated to have been
4¾ per cent below that in the previous two
months. This points to some possible underlying
weakness in car demand, and thereby private
consumption, in the second quarter of this year,
even allowing for the impact of shortages in
availability and rising car prices due to supplyside disruptions and the effects from the phasingout of earlier schemes to support car demand.
 At current low levels, car sales are well-below
estimated longer-term trend levels in many OECD
economies, suggesting that scope remains for
strong, pent-up demand for cars to emerge as the
recovery progresses.
The Japanese auto industry is not only less integrated
into parts production n than the U.S. Big Three, but it
also organizes purchasing differently. In Japan, car
makers typically contract out subassembly and
component manufacturing, while the Big Three primarily
purchase simple parts. Thus while Chrysler may buy
from 5,000 suppliers, Japanese auto companies buy
from 200-300 firms--thought hose direct suppliers sub
contract simple parts production to numerous small
firms. Likewise, procurement in Japan is based on longterm "strategic" partnerships rather than the short-term
contracting which has been typical of the U.S. until the
past five years. One consequences that Japanese auto
firms are smaller.
In 1985 Toyota and Nissan together employed as cant
120,000 while in North America GM alone employed
419,000 in 1988. This pattern is repeated across most
industries; two-third so the entire Japanese labour force
are found in small establishments while two-thirds of
U.S. workers are in large firms. Because of this structure
managers at Japanese suppliers take over tasks which
in Detroit are performed by the visible hand of middle
management.
In particular, Japanese managers at both suppliers and
assemblers face the challenge of coordinating activities
across firm boundaries he Japanese auto industry
developed innovative approaches to contract into govern
his system which influenced practice in much of
manufacturing T. he parallel is obvious. While in the
U.S. in the 1920sG M was one centre for
experimentation with the "visible hand" of internal
management, in Japan in the 1950s Toyota develop an
"invisible hand shake" for managing strategic
purchasing. The implications mirror those in the U.S.—
having lowered inter firm transactions costs, Japanese
companies on the margin resorted to purchasing rather
than vertical integration Management innovations Japan
not to an increase in the scale of firms, but to a
decrease in scale.
Changes in Automobile
Industries
During the 1960s, Japanese automakers launched a
bevy of new kei cars in their domestic market; scooters
and motorcycles remained dominant, with sales of 1.47
million in 1960 versus a mere 36,000 kei cars. These
tiny automobiles usually featured very small engines
(under 360cc, but were sometimes fitted with engines of
up to 600cc for export) to keep taxes much lower than
larger cars. The average person in Japan was now able
to afford an automobile, which boosted sales
dramatically and jumpstarted the auto industry toward
becoming what it is today. The first of this new era,
actually launched in 1958, was the Subaru 360. It was
known as the "Lady Beetle", comparing its significance
to the Volkswagen Beetle in Germany. Other significant
models were the Suzuki Fronte, Mitsubishi Minica,
Mazda Carol, and the Honda N360.
The keis were very minimalist motoring, however, much
too small for most family car usage. The most popular
economy car segment in the sixties was the 700-800 cc
class, embodied by the Toyota Publica, Mitsubishi Colt
800, and the original Mazda Familia. By the end of the
sixties, however, these (often two-stroke) cars were
being replaced by full one-litre cars with four-stroke
engines, a move which was spearheaded by Nissan's
1966 Sunny.[10] All other manufacturers quickly followed
suit, except for Toyota who equipped their Corolla with a
1.1 litre engine - the extra 100 cc were heavily touted in
period advertising. These small family cars took a bigger
and bigger share of an already expanding market.
Rapidly increasing domestic demand and the expansion
of Japanese car companies into foreign markets in the
1970s further accelerated growth. Passenger car
exports rose from 100,000 in 1965 to 1,827,000 in 1975.
Automobile production in Japan continued to increase
rapidly after the 1970s, as Mitsubishi (as Dodge
vehicles) and Honda began selling their vehicles in the
US. Even more brands came to America and abroad
during the 1970s, and by the 1980s, the Japanese
manufacturers were gaining a major foothold in the US
and world markets.
With Japanese manufacturers producing very
affordable, reliable, and popular cars throughout the
1990s, Japan became the largest car producing nation
in the world in 2000. However, its market share has
decreased slightly in recent years, particularly due to old
and new competition from South Korea, China and
India. Nevertheless, Japan's car industry continues to
flourish, its market share has risen again, and in the first
quarter of 2008 Toyota surpassed American General
Motors to become the world's largest car
manufacturer.[11] Today, Japan is the third largest
automobile market and, until China recently overtook
them, was the largest car producer in the world. Still,
automobile export remains one of the country's most
profitable exports and is a cornerstone of recovery plan
for the latest economic crisis.
TIMELINE OF THE JAPANESE
CAR INDUSTRY
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1907 - Hatsudoki Seizo Co., Ltd. Established
1911 - Kwaishinsha Motorcar
Works Established
1917 - Mitsubishi Motors' 1st car
1918 - Isuzu's 1st car
1920-1925 - Gorham/Lila - auto production
established (merged into Datsun)
1924-1927 - Otomo built at the Hakuyosha
Ironworks in Tokyo
1931 - Mazda Mazdago - by Toyo Kogyo corp,
later Mazda
1934-1957 - Ohta begins auto production
1936 - Toyota's 1st car (Toyota AA)

1952-1966 - Prince Motor Company (integrated
into Nissan)
 1953-1967 - Hino Motors starts auto production
(merged into Toyota)
 1954 - Subaru's 1st car (Subaru P-1)

1955 - Suzuki's 1st car (Suzulight)

1957 - Daihatsu's 1st car (Daihatsu Midget)

1963 - Honda's 1st production car (Honda S500)

1966 - One of the best selling cars of all time,
the Toyota Corolla, is introduced

1967 - Japan Automobile Manufacturers
Association (JAMA) is founded
 1967 - Mazda Cosmo 110S was one of first two
mass-produced cars with Wankel rotary engine

1980 - Japan surpassed the United States and
became first in auto manufacturing
 1981 - Voluntary Export Restraints from May
limit exports to United States to 1.68 million cars
per year; redundant by 1990 as production inside
US displaces direct exports; similar policies in
several EU countries
 1982 - Honda Accord becomes the first
Japanese car built in the United States
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1982 - Mitsuoka 1st car (BUBU shuttle 50)
1983 - Holden and Nissan form a joint venture in
Australia
1984 - Toyota opens NUMMI, the first joint
venture plant in the United States with General
Motors
1986 - Acura is launched in the US by Honda
1988 - Daihatsu enters the US making it the first
time all nine Japanese manufacturers are
present
1989 - Lexus is launched in the US by Toyota

1989 - Infiniti is launched in the US by Nissan
 1989 - United Australian Automobile
Industries (UAAI) founded in Australia as a joint
venture between Toyota and Holden
 1991 - Mazda HR-X was one of the
first hydrogen (combined with Wankel rotary)
car

1994 - Japan conceded to the United States back
in auto manufacturing
 1996 - UAAI joint venture dissolved
 1997 - Toyota Prius was the first massproduced hybrid car

2003 - Scion is launched by Toyota

2006 - Japan surpassed the United States and
became first in auto manufacturing again
2008 - Toyota surpassed General Motors to
become the world's largest car manufacturer
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2009 - Japan was beat by China and became
second in auto manufacturing
2010 - 2009–2010 Toyota vehicle recalls

2011 - Tohoku earthquake affects production.
Logo of Japanese Car Brands
Top 10 List of Japan Industry
This Top 10 List includes those automobile
manufacturers who are successful in Japanese market.
Japan is one of the countries who dominate car industry
of the world. Most of the car manufacturers have their
manufacturing factory in Japan. Now here is the Top 10
List of Car Manufacturers in Japan.
1. Toyota Motor Corporation:
Toyota Motor Corporation is in the first position in
the Top 10 List of Car Manufacturers in Japan. It is
an automobile manufacturer company with the
headquarters in Aichi, Japan, and the world’s biggest
automaker by production and sales. Kiichiro Toyoda
founded this company in 1937. In 1934, being a
department of Toyota Industries, it made the first
manufacture, the Type A- engine. In 1936 it created
the Toyota AA, first passenger car. This company’s
annual sales in 2010 in Japan were 1,531,722 units.
2. Honda:
Science 1959, Honda has been world’s largest
motorcycle manufacturing company and one of
the biggest car manufacturers. It is the world’s
biggest manufacturer of the internal combustion
engines. It was the first company which released
Acura, the luxury brand in Japan. Besides
automobile it also manufactures marine engines,
garden equipments personal watercraft etc. This
company’s annual sales in 2010 in Japan were
647,289 units. It is in the second position in
the Top 10 List of Car Manufacturers in Japan.
3. Nissan Mootor Company:
Nissan Motor Company is a multinational
automaker with the headquarters in Japan. It is
under the Nissan Group and after restructuring
under Carlos Ghosn, it has became more
independent. Previously it used to market
vehicles under Datsun brand. At present Nissan’s
market share is along with Toyota and Honda.
The range of normal models, it also manufactures
luxury models as Infinity. This company’s annual
sales in 2010 in Japan were 645,369 units. It is in
the third position in the Top 10 List of Car
Manufacturers in Japan.
4. Suzuki Motor Corporation:
Suzuki Motor Corporation is a Japanese
multinational
automobile
manufacturer
headquartered in Hamamatsu of Japan. It
manufactures cars, motorcycles, outboard marine
engines, all-terrain vehicles, wheelchairs and
internal combustion engines. After the Toyota,
Honda and Nissan, Suzuki is Japan’s fourth
biggest automobile manufacturer. In 23 countries
it has 35 production facilities and 132 distributers
in 192 countries. This company’s annual sales in
2010 in Japan were 619,517 units. It is in the
fourth position in the Top 10 List of Car
Manufacturers in Japan.
5. Daihatsu:
It is Japan’s oldest car manufacturer. It is
headquartered in Ikeda, Osaka Prefecture. It was
founded in 1960 as Successor Company to
Hatsudoki. This company is popular for its offroad and smaller vehicles. This company’s
annual sales in 2010 in Japan were 608,510
units. It is in the fifth position in the Top 10 List of
Car Manufacturers in Japan.
6. Mazda:
It
is
a
Japanese automobile
manufacturer founded in 1920 by Jujiro Matsuda;
it is headquartered in Fuchu, Aki, Hiroshima,
Japan. First, it started with the name Toyo Kogyo
Co. Ltd. It changed its name to Mazda in 1984.
This company’s annual sales in 2010 in Japan
were 23,747 units. It is in the sixth position in
7. Subaru:
This automobile manufacturer was founded in 7th
July 1953 by Kenji Kita and Chikuhei Nakajima. It
was headquartered in Ōta, Gunma, Japan. It is
under the parent company Fuji Heavy Indrustries.
Subaru introduced its first car in 1954. This
176,698 units. It is in the seventh position in
8. Mitsubishi Motors Corporation:
Mitsubishi Motors Corporation is in the eighth
position in the Top 10 List of automobile
manufacturing companies. It is a multinational
manufacturer of automobiles. Its headquarters is
situated in Minato, Tokyo. During 2009, it was the
fifth Japan based largest automaker. Mitsubishi
was formed in 1970 as the automotive section of
Mitsubishi Heavy Industries. Actually, its origin
date is 1917. This company’s annual sales in
2010 in Japan were 176,065 units.
9. Volkswagen:
Volkswagen Group, previously known as VAG is
a German automobile manufacturer. In 2008,
Volkswagen Group was world’s third automobile
manufacturer and the largest in Europe. It makes
complete vehicles- Volkswagen Commercial
vehicles and Volkswagen Passenger Cars. There
are two divisions in Volkswagen group, the
Financial Service Division and the Automotive
Division. This company’s annual sales in 2010 in
Japan were 46,707 units. It is in the ninth position
in the Top 10 List of Car Manufacturers in Japan.
10.
Isuzu Motors Ltd.:
Isuzu Motors Ltd. the Japanese automobile
manufacturer that manufactures heavy trucks and
commercial vehicles. Its headquarters is situated
in Tokyo. During the year 2005, it became
the largest manufacturer of heavy-duty trucks in
the world. Isuzu is now very famous for its diesel
engines and
commercial
vehicles. This
44,021 units. It is in the tenth position in the Top
10 List of Car Manufacturers in Japan.
Advantages of Automobile
Sector
The altering tendencies in the utilized vehicle sector,
domestic auctions have become very well-liked, the
place they try to deliver more effective products and
services for both of those the functions. Auctions which
have been not furnishing English listings simply cannot
survive considering that they know the actuality that their
important clientele is foreign purchasers and exporters.
To control the charges from Japan it is unavoidable to
lay down with the human employees. Most of the
auction homes have a computerized method of
shopping for and advertising.
Whilst made use of auto-bus are presently the most
preferred automotive export, sourcing of buses, trucks
and equipment are also turning out to be much more
widespread. Japanese trucks are mainly functiondesigned, even though individuals made in other
countries are not. Hence it is probable to acquire the
fantastic truck for the job at hand by exporting it from
Japan. The moment again, the quality and worth of
these goods exceed what could typically be attained
regionally.
The complete environment is mindful of the fact that
made use of Japan vehicles is the most inexpensive in
this world. What's more, the applied Japan autobus
occurs with a lot of bundled add-ons, which make
acquiring an employed Japan vehicle more worthwhile.
All the applied Japan cars and trucks that are sold will
be in top rated issue. The looks of the used Japan cars
and trucks will be as fantastic as the new kinds. With all
these superior points, has anyone wondered why these
utilized Japan autobus is offered for lifeless lower cost
charges? Just hold studying on the short article to know
the major 3 explanations at the rear of the low-cost
pricing of the utilized Japan automobiles and the terrific
availability of the similarities.
It is generally excellent to get the pro-forma invoice sort
the Japanese applied vehicle exporter. This phase is
pretty vital to establish that the utilized Japan motor
vehicle exporter legally agrees to all your conditions and
disorders associated with the order. This will help you to
prevent any issues with the used car or truck exporter
just one the vehicle is shipped to you. Some of the best
made use of the Japan car exporters will even concur to
deliver the images of the applied vehicle you have
requested. The photos will be sent to you via email
messages promptly when you place the purchase.
Impact of Automobile Sector
Popularity of the automobile has consistently moved
with the state of the economy, growing during the boom
period after World War I and dropping abruptly during
the Great Depression, when unemployment was high.
World War II saw a large increase in mass transit
because employment was high and automobiles were
scarce. The rapid growth of car owners after World War
II, particularly in the United States and Western Europe
demonstrated the population's favor towards
automobiles. During the war, automobile motors, fuel,
and tires were in short supply. There was an unsatisfied
demand when the war ended and plenty of production
capacity as factories turned off the war machine. Many
people had saved money because there was little to
buy, beyond necessities, in the war years. Workers
relied heavily on mass transportation during the war and
longed for the freedom and flexibility of the automobile.
A historian has said that Henry Ford freed common
people from the limitations of their geography. The
automobile created mobility on a scale never known
before, and the total effect on living habits and social
customs is endless. In the days of horse-drawn
transportation, the practical limit of wagon travel was 10
to 15 miles, so that meant any community or individual
farm more than 15 miles from a city, a railroad, or a
navigable waterway was isolated from the mainstream
of economic and social life. Motor vehicles and paved
roads have narrowed the gap between rural and urban
life. Farmers can ship easily and economically by truck
and can drive to town when it is convenient. In addition,
such institutions as regional schools and hospitals are
now accessible by bus and car.
Yet, the effect on city life has been, if anything, more
prominent than the effect on the farms. The automobile
has radically changed city life by accelerating the
outward expansion of population into the suburbs. The
suburban trend is emphasized by the fact that highway
transportation encourages business and industry to
move outward to sites where land is cheaper, where
access by car and truck is easier than in crowded cities,
and where space is available for their one or two story
structures. Better roads were constructed, which further
increased travel throughout the nation. As with other
automobile-related phenomena, the trend is most
noticeable in the United States but is rapidly appearing
elsewhere in the world.
Before the automobile, people both lived in the city and
worked in the city, or lived in the country and worked on
a farm. Because of the automobile, the growth of
suburbs has allowed people to live on the outskirts of
the city and be able to work in the city by commuting.
New jobs due to the impact of the automobile such as
fast food, city/highway construction, state patrol/police,
convenience stores, gas stations, auto repair shops,
auto shops, etc. allow more employment for the world's
growing population.
IMPROVEMENTS IN
JAPANESE AUTOMOBILE
INDUSTRIES
 Improvements must be an incremental, continual,
integrated effort.
 Vehicles manufactured per worker per year
tripled at TOYOTA between 1955 and 1957.
 Gross productivity at NISSAN increased fivefold
between 1955 and 1964 doubled between 1965
and 1970.
 In late 1960 TOYOTA began teaching its
production system to major subsidiaries and
affiliates such as HINO & DAIHATSU.
 These efforts helped produce significant rises in
turn over at nearly all firms in the TOYOTA group.
 Manufacturing innovation can lead to competitive
advantage
CONCLUSION
At last we have concluded that the JAPANESE
AUTOMOBBILE INDUSTRY is one of the most
prominent and largest industries in the world.
JAPAN has been in the top three of the countries with
most cars manufactured since the 1960s.
JAPAN is now currently the third largest automobile
producer in the world with an annual production of 9.9
million automobiles in 2012.
GLOBAL COUNTRY STUDY REPORT
ON
ELECTRONICS SECTOR IN JAPAN
Submitted to
(SGJ Institute of Management)
REQUIREMENT OF THE AWARD FOR THE
DEGREE OF
MASTER OF BUSINESS
ASMINISTRATION
In
Assistant Prof. Mr.Himanshu Goti
Submitted by
Mehul Joshi(117820592007)
Hardik Naygandhi (117820592008)
Priyanka Thakkar (117820592009)
Ami Shah(117820592010)
Rushbh Mheta(117820592011)
Firoz Moyda(117820592012)
Batch : 2012-13,
MBA SEMESTER
III/IV (SGJ Institute of
management)
MBA PROGRAMME
Affiliated to Gujarat Technological
University Ahmadabad
May 2013
INDEX
SR NO.
TITLE
1.
Introduction
2.
History
3.
Overview of japan’s electronic sector
4.
Structure of japan’s industry
5.
Japans electronics brand
6.
Latest development
7.
Conclusion
30
PAGE NO
Electronic Sector Of Japan
 Introduction
The Japanese electronics industry has a high concentration of leading companies which
have a reputation for high quality products. Over the years the market share of these
Japanese companies has gradually declined. Japanese companies have been responsible
for a number of important innovations, including having pioneered the transistor radio and
the Walkman (Sony), the first mass-produced laptops (Toshiba), the VHS recorder (JVC),
and solar cells and LCD screens (Sharp).
Major Japanese electronics companies include Canon, Casio, Citizen, Fujifilm, Fujitsu,
Hitachi, JVC Kenwood, Mitsubishi Electric, NEC, Nikon, Nintendo, Olympus, Panasonic,
Pioneer, Ricoh, Seiko Group, Sharp, Sony, TDK and Toshiba.
 History
History of Japanese Electronics

1960 Sony all-transistor TV The Japanese have produced hundreds of
popular products based on American inventions. In the 1950s U.S. companies
failed to fully utilize transistors because they wanted to protect their
investments in vacuum tubes. This paved the way for companies like Sony to
make transistor radios. In the 1950s and 60s many Japan companies pirated
their designs almost directly from foreign products. Canon and Nikon cameras
were modeled after German Leicas
 The Japanese have made advances in lasers, diodes, CD players, screen
technology, video recorders, and music synthesizers based in many cases on
physics and chemistry discoveries made at U.S. laboratories like Bell Labs
and RCA.
 The mass production of radios began soon after the first radio broadcasts in
1925. Television mass production began in 1953. In the 1960s, the goal of
many Japanese families was to obtain the “the three divine appliances”: the
television, the refrigerator and washing machine. It wasn’t long before this
was replaced by obtaining the three Cs: a color television, a car and a cooler
(air conditioner).
31
 The total number of appliances increased from 68.1 million units in 1955 to
9.35 trillion in 1997. At one point Japan was producing 52 million calculators a
year.
 In the 1970s there was battle the Sony-backed Beta system and the
Panasonic-backed VHS system over which one would be the standard for
VCRs. Sony invested heavily in the Beta system, which was introduced in
1975, but lost out to VHS.
 The Japanese electronic industry was arguably at the height of its dominance
in the 1980s. In 1985, Japan shipped 13.4 million color televisions, compared
to only 3.5 million in 1994. The top five television producers (televisions per
year) in the late 1980s were: 1) Japan (13,275,000); 2) the United States
(12,084,000); 3) former USSR (8,578,000); 4) South Korea (7,641,000); and
5) China (6,840,000).
 Japanese electronics companies did very well in the late 1990s as worldwide
demand for electronic gadgetry was peaking, use of personal computers and
the Internet was exploding in Japan and the value of the yen was declining.
Japanese companies were leaders in digital cameras, cell phones, car
navigation systems, DVD machines and flat-panel liquid crystal and plasma
television.




20th century
After World War II, Japanese business began to rapidly develop consumer
electronics products using keiretsu methods. By the 1980s, a relatively small
number of industries dominated Japan'sinternational trade and investment
interaction with the rest of the world.
Sony was founded in 1946 by Masaru Ibuka and Akio Morita and rapidly
advanced in the electronics field. The invention of the pocket transistor radio
placed the company at the forefront of electronics development, both in Japan
and worldwide. As other companies were formed to compete in this area, the
consumer electronics industry became major exporters that invested overseas
in the 1980s. In 1991, 46.7 percent of color televisions and 87.3 percent of
video cassette recorders produced in Japan were exported. The export
shares of some products were too small to show separately in summary trade
data, however audio tape recorders represented 2.9% of total Japanese
exports in 1988, video cassette recorders 2.3 percent, radio receivers 0.8
percent, and television receivers 0.7 percent, totaling 6.7 percent.
These industries built Japan's success in developing commercial applications
for the transistor in the 1950s and generations of semiconductor devices of
the 1970s and 1980s. Output came from large, integrated electronics firms
manufacturing semiconductor devices, consumer electronics, and computers.
The
companies’
international
success
came
from
continually
pushingminiaturization and driving down manufacturing costs.
Japan's success overpowered the United States consumer electronics
industry. Unproved charges of dumping and other predatory practices led to
orderly marketing arrangements by Japan in 1977. Restraints limited the
export of color televisions to 1.75 million units annually from 1977 to 1980.
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 The agreement gave some protection to the United States' domestic industry.
Japanese companies responded by investing in the United States, by the end
of the 1980s, only one United States-owned television manufacturer
remained.[citation needed] The Japanese electronic industry as a result has
maintained its dominance in the market over the United States, and
maintained its export strength in this field due to the high reputation of its
electronics
 Japan's foreign direct investment in the consumer electronics industry was
motivated by protectionism and labor costs. After three years of voluntary
export restraints, seven Japanese firms located plants in the United States by
1980. Japanese firms continued production of the most technologicallyadvanced products especially in Japan but also U.S., while shifting production
of less-advanced products to developing countries, such as Taiwan.
21st century
The current headquarters of Sony Corporationin Tokyo.
Since the beginning of the 21st century a number of the largest Japanese electronics
companies have struggled financially and lost market share, particulary to South Korean and
Taiwanese companies. Japanese companies have lost their dominant position in categories
including portable media players, TVs, computers and semiconductors. Hit hard by
the economic crisis of 2008 Sony, Hitachi, Panasonic, Fujitsu, Sharp, NEC and Toshiba
reported losses amounting to $17 billion. By 2009, Samsung Electronics operating profit was
more than two times larger than the combined operating profit of nine of Japan’s largest
consumer electronic companies. The relative decline has been ascribed to factors including
high costs, the value of the yen and too many Japanese companies producing the same
class of products, causing a duplication in research and development efforts and reducing
33
economies of scale and pricing power. Japan's education system has also been highlighted
as a possible contributing factor.
One response to the challenges has been a rise in company mergers and acquisitions. JVC
and Kenwood merged (forming JVC Kenwood Holdings), and Renesas Technology and
NEC Electronics -the semiconductors arm of NEC- to merge forming Renesas Electronics. In
a similar move, in 2009 Panasonic acquired a voting stock majority of Sanyo, making the
latter part of the Panasonic Group. Also some of the bigger players resorted to merging
some of their operations as Hitachi, Casio and NEC, and Fujitsu and Toshiba, did with their
cellphone business. On November 15, 2011, facing tough competition from Samsung and
LG; Sony, Toshiba and Hitachi signed a deal to merge their LCD businesses, creating a new
company called Japan Display by spring 2012.
As of 2013, most Japanese companies no longer enjoy the same reputation they did about
one to two decades ago. Currently, the international consumer electronics market is
dominated by South Korean, Chinese and Taiwanese electronics companies. Only a few
Japanese companies have significant international market share, and are well known
internationally. The future of the Japanese electronics industry is debated.
 Overview of Chaina’s Electronic Information Industry
China’s electronic information industry has grown three times faster than the national GDP
growth rate and has grown faster than the machinery manufacturing and metallurgy
industries.
In 2005, total sales in the electronic information industry increased by 28.4% from 2004 to
3.8 trillion yuan (approximately US$475 billion).
The added-value base of the Chinese electronic information industry is about 900 billion
yuan (approximately US$112 billion). The value added ratio is (amount of value added / total
sales x 100%) only 23.4%, compared to the whole national average of 27.1%.
This is evidence for China's role as an assembly base that is dependent upon overseas
components and parts, intermediary goods, and capital goods.
The number of electronic information industry-related companies in China jumped from
7,500 in 2001, to 17,600 in 2003 and 67,000 in 2005, with approximately 56,000 of these
being manufacturing companies. The number of employees engaged in the industry grew
from 3.01 million in 2001 to 4.08 million in 2003 and 7.61 million in 2005 (out of whom 5.51
million are employed in the manufacturing industry).
34
 JAPANESE ELECTRONICS INDUSTRY
Advanced Sony PlayStation Portable
 Japanese companies are the world leaders in the production of compact disc
players, video cameras, laptop computers, fax machines, photocopiers, cell
phones and various key computer components.
 Japan is regarded as proving ground for a wide variety of new products and
technologies. Japanese electronic manufacturers are known for producing a
wide variety of products lines, including televisions, mobile phone handsets
and personal computers even if they have a low market share for each
product.
 Consumer electronics account for a third of Japan’s economic output. In
today's marketplace products like computers are made up of components that
are often produced or assembled in a dozen or more countries. One thing that
has kept many Japanese companies strong is the fact that declining sales in
final products like cameras and DVD players have been offset by the strong
sales of important components (like CD ROM players, memory chips, liquid
crystal display screens and batteries for notebook computers) and production
and manufacturing machinery (like robots and machine tools).
 With operating resources spread very thinly across the industry and global
competitive strength of Japanese manufacturers on the wane, “selection and
focus” are becoming keywords in the electronics industry. Increased
competition and the expense of making products in Japan has forced many
companies to rely on outsourcing especially for flat-screen televisions and
semiconductors. The computer software business is known for its high profits.
Traditionally, its profit margins have been around 15 percent, compared to 7
percent for oil companies.
 Japanese companies are finding it hard to compete against lower-priced rivals
from South Korea and China. Competition has become so fierce in the
electronic industry—both between Japanese companies and against foreign
rivals mostly in South Korea, China and Taiwan—in some cases engineers,
technicians and workers were unable to take their usual summer holidays in
2010.
 CEATAC is Asia’s largest electronics show. Held in early October at the
Makuhari Messe convention center, it is a great place to see cutting edge
technology. In 2008 a total of 804 companies and groups, of which 289 were
35
from overseas, displayed cool stuff and gadgets in 3,121 booths during the
five-day event. Among the highlights were robots that rode on unicycles and
bicycles, organic, light-emitting televisions as thin as a map, 3-D full-definition
home theater systems and the latest WiMax next generation high-speed
technology. Among the showstoppers at the 2009 CEATEC were liquid crystal
and plasmas televisions capable of showing 3-D images, single lens 3-D
cameras and liquid crystal television with depth-creating back lights that used
light-emitting diodes.
 The CEATEC technology and electronic trade show in October 2010 drew
616 companies and groups, with 196 of them from overseas. Among the
biggest attention-getters were the latest 3-D technologies, including a 3-D
theater that simulated being in a futuristic city, Toshiba’s 3-D television that
doesn’t require glasses and new Hitachi liquid crystal screens that require
less energy and allow users to read screens longer without charging batteries,
CEATEC stands for Combined Exhibition of Advanced Technologies.
 Structure Of Japanese Electronic Industries
The main areas of China’s electronic information industry are computerrelated goods (including software), communication equipment, electronic parts
and household entertainment equipment.
Electronic parts-related investment made up 50% of the total investment in
the electronic information industry. Promotion of the electronic parts industry
is a part of China’s national industrial policy to raise the ration of value added
in the sector.
China’s software industry – 11% of the electronic information industry –
(software products, system integration, software services, and others) growth
has been rapid as demonstrated by a growth rate of 40% with sales of 390
billion yuan (approximately US$48.8 billion) as of 2006.
Approved software companies have reached 11,660, increasing by over 1,000
per annum. There are roughly 1 million employees working in China’s
software industry. China’s software exports have reached US$35.9 billion in
2005, though this was short of the US$50 billion export goal set forth in the
Tenth 5-Year Plan, which ended in 2005.
36
 Japanese Electronics Companies
Sanyo factory The famous Japanese electronics giants Sony and, Panasonic are
among the most famous companies in the world. Other Japanese electronic
appliance makers include Hitachi, NEC, Fujitsu, Toshiba, Kyocera, Sharp, Sanyo,
TDK, and Pioneer.
 Japanese electronic companies no longer dominate their fields as they once
did. They suffer from high production costs, increased competition from
abroad and being too heavily diversified, making everything from chips to
submarine cables. Japanese electronic companies got their butts kicked by
Taiwan in the flat-panel display market and by South Korea in the memory
chip market..
 Japanese electronic companies were hit hard by a slump and decline of
prices of chips, computers and telecommunications equipment in 2001. The
Big Five electronic firm (NEC, Toshiba, Hitachi, Fujitsu and Mitsubishi
Electronics) posted losses of $12 billion in fiscal 2001-2002. Bloated and
losing business to Asian rivals, they underwent restructuring.
 Many Japanese electronic companies have moved production overseas to
take advantage of cheap labor. Sony and Panasonic have had plants in
Mexico since the 1980s that produce goods for the United States market.
These days may companies have factories, suppliers or partners in China.
 Japanese Electronics in the 2000s
Fujitsu server
37
The market for popular electronic items like digital cameras, cell phones, and flat
screen televisions is very competitive and cut throat. To save money many Japanese
companies have moved their manufacturing operations to China and other countries
where labor costs are low.
 Japanese electronics makers didn’t do so well in the early 2000s as people
obtained all the computers and electronic gadgetry they wanted and
competitors from other countries were putting out products almost as good as
the Japanese but at a considerably cheaper price.
 Sharp, Seiko Epson, Toshiba, Panasonic, NEC, Hitachi, Samsung, LG Philips
and several other Japanese, South Korean and Taiwanese companies were
being investigated in late 2006 for forming a cartel to control the price of liquid
crystal displays (LCDs).
 In recent years consumers have begun spending more money and a larger
share of their income on electronic and communication items such as cells
phones, MP3 players and flat screen televisions. As of 2006, 55 percent of
U.S. households owned a high-definition television. Many manufacturers have
suffered as result of stiff competition and low prices.
 Over the last few years people have been replacing there boxy, tube TVs with
flay screen televisions and Japanese companies from profited albeit with their
profits limited by competition. The next big televison technology is expected to
be laser projection screens. Developed by Mitsubishi, they uses colored
lasers to display bright deep images on large, thin, lightweight screens,
surpassing images seen in film.
 The Japanese seem to have lost their ability to come up with the next cool
thing as they did with the Walkman. Apple’s iPods and iPhones have sold well
in Japan as they have everywhere. Sony and other companies have
scrambled to come up with products that can compete with them. Japanese
like to buy accessories for their iPods as they do for their cell phones.
 Japanese companies make 80 percent of the components for the iPod, with
many of the components made in China. They are also doing good business
supplying electronics for automobiles.
 Semiconductor Industries in Japan
NEC chip
 American companies created the semiconductor manufacturing equipment
and materials industry decades ago. Japan took over several critical areas of
the market in the 1980s and today is the leading supplier of several key
pieces of equipment, including lithography machines that miniaturize circuitry
design and use light waves to transfer them onto silicon wafers.
38
 In the 1980s the Japanese dominated the global computer chip industry in
may cases at the expense of American companies. Japanese companies
produced 51 percent of the world’s semiconductors and the three top
chipmakers—NEC, Toshiba and Hitachi—were Japanese. During the 1980s,
semiconductors were dubbed the "rice of industry" due to their
indispensability.
 Today Japanese global market share (28 percent) is about half of what it used
to be and Japanese companies is being outperformed by American as well as
South Korean, Taiwanese and even Chinese companies, In 2006 Intel and
Samsung had a combined share of the market that was as large as Japan’s
20 largest chipmakers.
 After sharply falling off in 2008 and 2009, the semiconductor industry picked
up in 2010 both in terms of volume and prices, driven by strong demand for
cell phones, computers and other electronic devices, with total sales of
semiconductors expected to top $310 billion for the year.
 DRAM makers, market share in sales (2010 July -September quarter): 1)
Samsung, South Korea (40.4 percent); 2) Hynix Semiconductors, South
Korea, (19.8 percent); 3) Elpida, Japan (16.1 percent); 4) Mircon Technology,
U.S. (12 percent); 5) Nanya Technology (4.2 percent); 6) Powerchip
Technology, Taiwan (2.6 percent); 7) ProMOS Technologies, Taiwan (1.8
percent). [Source: DRAMeXchnage survey]
 Specialized Technology Companies
 Kyoritsu is an Ibaraki-based company that holds 60 percent of the domestic
market and 40 percent of the global market for hydraulic spools—cylindrical
metal components used in hydraulic valves that are essential to the operation
of various kinds of machinery. One of the keys to making quality hydraulic
spools is making their surface smooth. Kyoritsu is able to make surfaces with
protuberances a maximum of 0.001 millimeter.
 Gunma-based Nishi Industry went from producing fabric-making machines to
being a world leader in making devices for manufacturing polarizing plates
used in liquid crystal displays. The company’s textile background turned out to
be well suited for making these plates which involves taking resin and
stretching it until t is very, very thin and pasting it together with film. Textile
technologies used to avoid wrinkled and irregularities have applications in
making plates.
 Chiba-based ABI Co. is a leader in producing quick freezing machines that
don’t destroy the taste and freshness of food. Conventional quick freezing
methods freeze the water first, thus killing the cells of the food and destroying
the taste, ABI machines uses CAS (Cells Alive System) freezing technology
that keeps water molecules in the food moving, preventing cell damage. The
machines are widely used on tuna fishing boats and are capable of even
freezing fresh cream, something that was once thought to be impossible. The
company has plans to sell its own line of food frozen with the CAS method.
39
 Japanese Chipmakers
Fujitsu chip
 The major Japanese chip makers—Toshiba, NEC, Hitachi, Mitsubishi
Electronic and Fujitsu—dominated the chip market in 1980s. The have been
slow to respond to changes in the chip market and have had trouble
competing against their rivals. The chip industry is led by Intel and Samsung.
Chipmakers in other Asian countries are challenging Japanese chipmakers,
which have laid off more than 54,000 employees in recent years.
 Japanese chipmakers are having a hard time competing with rivals from
South Korea and Taiwan, who can harness the kind of scale and investment
needed to get ahead. Japanese companies also rely too much on the
Japanese market for sales and don’t put enough money into updating
factories. Japanese chipmakers have lost money and as they have they have
spun off their chip operations as separate companies that are too small to
make the kind of advancements necessary to keep up with their overseas
rivals.
 Large Japanese chipmakers are responding to the challenge by focusing on a
few kind of chips the same way that Intel and Texas Instruments did in the
United States. Japanese companies are also joining together with other
Japanese companies In February 2006, Toshiba, Sony and NEC said they
would jointly produce cutting edge microchips with a circuitry width of 45
nanometers.
 Toshiba Flash Memory Chips
 Toshiba employee Fujio Masuoka invented the flash memory chips—circuits
that prevent data from being erased when power is turned off that are widely
used in a variety of devises—in the 1980s. They are like mini hard drives but
more durable because they have no moving parts.
 Masuoka complained that he was never properly compensated by Toshiba for
his invention, sued the company and won an ¥87 million judgment from
40
Toshiba in 2006. Toshiba is estimated to have earned ¥20 billion from the
devises. Masuoka was given ¥6 million from the company for his invention
when he retired in the 1987. He demanded ¥8 billion for his work. The flash
chip market is worth around ¥2 trillion worldwide.
 Toshiba and Samsung are in a bitter battle for control of the flash memory
business. Toshiba has new sophisticated plant on Yokkaicha Japan that
makes the devises and is very secretive about what actually goes on there.
While Toshiba invented the chips Samsung has used bigger production
volumes and cheaper prices to become the market leader. It had 50 percent
of the market in 2005 while Toshiba had 22 percent.
 Describing the part of the factory he got to see Martin Fackler wrote in the
New York Times: “Inside the windowless plant...tiny cranelike robots shuffle
along automated production lines, moving stacks of silicon wafers the size of
dinner plates. Masked technicians watch as rows of tall machines grind the
wafers and etch circuits on their surfaces.” The factory produces 48,750
wafers a month, each with hundreds of NAND chips.
 Chip Espionage
 In the early 2000s, Sony, Toshiba and IBM collaborated to make a
revolutionary computer chip—the superfast Cell chip— for Sony’s PlayStation
3. In his book on creating the chip The Race for a New Game Machine, IBM
computer engineer David Shippy documented how IBM secretly provided
Microsoft with the same chip for its Xbox 360 game.
Shippy said one of the hardest obstacles to overcome to in creating the Cell
chip was heat. In his book he wrote: “game consoles are smaller than PCs
and have less capacity to keep the chips cool, and games are very computeintensive functions that tend to max out the processor usage. Higher power on
the PlayStation 3 would lead to more costly thermal control techniques like
fans and heat sinks...We had to invent a new animal that ran like cheetah,
roared like a lion, and ate like a kitten.”
 On handing the chip over to Microsoft, Shippy wrote: “Though three STI
partners (Sony, Toshiba and IBM) previously agreed to the use of parts of the
Cell chip in future derivative [products] and it certainly was within IBM’s right
to do so it never occurred to anyone that this would happen before the Cell
chip was completed and the PlayStation3 launched. So it wasn’t illegal, but it
reeked of unsportsmanlike behavior...Keeping secrets from the Japanese
engineers who had worked side by side with us for the last two years...didn’t
feel right to any of us.”
41
 Japanese Electronics Retail Sector
 In July 2012, Yamada Denki Co., the largest electronics retail store operator
in Japan announced it would Best Denki Co., the seventh-largest firm. This
decision follows a move the previous month by Bic Camera Inc., the largest
electronics retail store operator in Japan, to make Kojima Co. a subsidiary. In
the early 1990s Kojima was the largest electronics retail store operator in
Japan.
“Even though the market for home electronic products, especially flat-screen
TV sets, has been shrinking, economists predict large electrical appliance
retail companies will continue to expand. The focus of attention is how smaller
companies in the industry will cope with the deteriorating situation.
Realignment of industry expected as competition may wipe out all but large
firms.
 Competition from South Korea, Taiwan and China
 Hiroko Tabuchi wrote in the New York Times in May 2010, “Japan's
electronics makers, like Sony and Panasonic, have been usurped on one end
by rivals elsewhere in Asia, which have overtaken the Japanese by making
cheaper versions of the products Japan long dominated. Samsung Electronics
of South Korea now leads the global television market with an almost 25
percent share in flat-panel TVs, according to DisplaySearch. Acer, based in
Taiwan and the world's No. 2 vendor of personal computers after HewlettPackard, now has twice the market share of Japan's top PC company,
Toshiba, according to IDC.
 Increasingly Japanese electronics firms are being out competed by South
Korean firms. In 2010, a number of Japanese companies including Sony,
Panasonic and Sharp, released 3-D televisions and other devices but some of
their buzz was taken by South-Korea-based Samsung that introduced similar
devices and cheaper prices. In 2009, Samsung made more in operating profit
than Japan’s nine electric companies combined. Some say South Korea’s
success is a product of its technological know-how combined with clever
marketing and good sense of timing.
 Japanese and South Korean companies are not only facing off against each
other in the United States and Europe there are also battling in developing
countries such as Brazil and Vietnam and in the Middle East. Hitachi was
outbid by a South Korea on firm in its bid to build a nuclear power plan in the
United Arab Emirates. Jeeva Raj, director of a major retailer in Singapore, told
the Yomiuri Shimbun, “South Korean firms are giving consumers better bang
for their buck than their Japanese counterparts. Chinese brands, such as
Haier and TCL are on their way up too.”
42
 Japanese firms are also increasingly being out-competed by Chinese firms,
who are beginning to approach Japanese quality at much lower price. One
shopper in Shanghai told the Yomiuri Shimbun that she decided to buy flatpanel television from the Chinese company Hisense because “I can also
watch movies that I download from the Internet. I could only watch TV on the
same-priced Sony. Japanese products are good, but the Chinese products
aren’t so different anymore.”
 The same is also true with appliances such as washing machines and
refrigerators. Japanese drum-style washing machines tend to be 10 percent to
30 percent more expensive than their Chinese-made counterparts. Nobuo
Kurhashi of Mizuho Investors Securities told the Yomiuri Shimbun, “In terms
of making products at low prices, the South Koreans and Chinese are way
ahead are way ahead of Japan.” In response Japan is making products with
fewer functions and are focusing on lower prices.
 Decline of Japanese Electronics
 There has been some talk that Japan is on the decline in the electronics
industry as evidenced by critiques of products by Japanese companies at the
International Electronics Show in Las Vegas in 2010 and the growing strength
of South Korea electronic companies, namely Samsung, in the U.S. market
place. In 2009 in the U.S., Samsung had an 80 percent share of LED
televisions and a 75 percent share of the market for televisions that accessed
the Internet. In 2010, Samsung is expected to be first put of the blocks with a
3-D television.
 Monozukuri, the Japanese obsession with craftsmanship, has been described
as an outmoded idea in electronics. A representative with one U.S. electronics
maker told Japanese pop culture expert Roland Kelts, that monozukuri was a
virtue of the product-oriented “analog era” but it is a liability in the digital era,
“where emphasis is on network effects, and advantages flowing from
connections across various platforms.” Based on the wow-factor of some
Samsung products, one CES headline said the there was “passing of the
torch” as “the gadget world’s balance of power shifts from Japan to Korea.”
 Despite their technological prowess, neither Japan's analog high-definition
broadcasting system nor its mobile phone technology are used in Europe or
the United States, forcing Japanese companies to fight tough competitors in
global markets. Roland Kelts wrote in the Yomiuri Shimbun, “Be it Japanese
pop culture, consumer electronics, flagship airlines or even national
government, plug in the problems and you get the same result: a clear picture
of a staggering Japan en route to irrelevance. Is it any wonder so many
Japanese youth see their homeland as a hopeless enclave, plagued by hasbeen paradigms and unable to evolve? Why else would a dynamic culture
relegate its younger resources to the margins, where they are withdrawing
43
and shrinking away from engagement, while its neighbors race ahead on
silver-streaked water skis?”





 Apple and Japan's Decline as Tech Innovator
Hiroko Tabuchi wrote in the New York Times in May 2010, “First came ''iPod
shock,'' which knocked Japan's favorite gadget - the Walkman from Sony, and
its line of successors - off its long-held perch at the top of the tech-savvy wish
list. Then came ''iPhone shock,'' which sent Japan's cellphone companies long used to scoffing at the clunky offerings from their overseas peers scrambling to develop similar smartphones. On Friday, ''iPad shock'' hit
Japan, threatening to bring upheaval to an ever-widening slew of industries in
a nation once proud of being on the cutting edge of technology.
A flood of orders in Japan for the iPad caused Softbank, the exclusive phone
carrier of the iPad in Japan, to stop accepting them after three days. About
1,200 people lined up for the release of the iPad at an Apple Store in central
Tokyo. ''Apple never fails to wow me, time after time,'' Sayuri Aruga, a 38year-old singer in rock band told the New York Times. Ms. Aruga, who said
she owned multiple iPods, an iPhone and a MacBook Air, flew to San
Francisco in April just to get her hands on the Wi-Fi model of the iPad but now
wants a 3G model, she said. She arrived at the store at 4 a.m., four hours
before it opened. ''I'm going to do everything on it - read, write music,'' she
said. ''The possibilities are endless.''
Michihiko Ueno, a 26-year-old design student who had joined the line at 9 the
previous night, said he felt sad that a Japanese company had not come up
with a device like the iPad first. ''This makes me feel America's way ahead,''
he said. ''It's a new device, or even like a new way of thinking.''
“The hype around the iPad in Tokyo highlights what has become a sobering
reality for a country once considered the technological trend-setter,” Tabuchi
wrote, “Japan now frequently looks overseas for innovation....Made-in-Japan
electronics have lost their innovative edge to American companies like Apple.
The iPod now leads the digital music player market in Japan. And despite
initial skepticism from critics - who said the iPhone lacked many of the
functions that Japanese were used to, like mobile TV - it has been wildly
successful among Japanese. Shipments of the iPhone more than doubled, to
1.69 million units, in the year ended in March, giving Apple a 72 percent share
of the country's smartphone market, according to the MM Research Institute.
Sony said at a news conference at the time the Ipad was released that it
would create an electronic book reader and online content distribution
platform in Japan, China and three other markets, to add to its offerings in the
United States, Canada and a number of countries in Europe. ''Competition is
heating up in this business, not just in Japan but around the world,'' said Fujio
Noguchi, senior vice president at Sony Electronics. ''We feel that the market is
going to take off all at once, and it's a natural time for us to make a move.''
44
 Japan’s electronics sector in race against time
Japan’s battered electronics giants are in a race against time, analysts say,
as losses that threaten their very survival mount and as overseas rivals look
like they are running away with the show.
The latest earnings season has been ugly for the likes of Panasonic and
Sharp, which say they will post an eye-watering combined annual loss of
more than $15 billion, underlining fears about the sector’s future.
Money-losing Sony offered a glimmer of hope by saying it was still on course
to eke out an annual profit, after four years in the red.
However, Sharp nearly doubled its loss forecast to a record $5.6 billion—and
voiced doubt for the first time over whether it could remain a going concern—
just a day after Panasonic said it would lose $9.6 billion in the year to March.
The sector’s myriad woes range from high labour costs at home and the
strong yen to strategic blunders and a failure to keep up with rivals such as
Apple and South Korea’s Samsung in the lucrative smartphone and tablet
market.
Japan’s formerly world-beating brands are falling further behind while they
continue making everything from phones and CD players to money-losing TVs
and washing machines—even as their key domestic market slows.
Among its missteps, the industry made huge investments in flat-screen
televisions only to see prices plunge in an intensely competitive market,
meaning razor-thin profit margins—or none at all—for firms that can ill afford
them.
45
But they’ve largely resisted calls to abandon money-losing units, with longtime
rivals Sony and Panasonic saying they are teaming up to make televisions.
“Japanese electronics firms need to sift through their businesses, taking
what’s good and leaving what’s bad,” said Masahiko Hashimoto, economist at
Daiwa Institute of Research in Tokyo.
Slick marketing campaigns and locally-tailored products offered by profitable
auto makers such as Toyota and Nissan are noticeably absent among many
of the nation’s once-mighty television giants.
“Japanese electronics makers had managed to get by through relying heavily
on the domestic market so it’s no wonder they’ve reached an impasse in line
with that declining market,” said Mitsushige Akino, an analyst at Ichiyoshi
Investment Management in Tokyo.
“Before, they succeeded in selling things in developed nations by merely
copying what they sold at home—and they didn’t take developing economies
very seriously at first,” he added.
The sector was slow to tap fast-growing emerging economies such as the socalled BRICS nations— Brazil, Russia, India, China and South Africa—and
has paid the price for their glacial strategy shift, Akino said.
Like many Japanese companies, electronics companies are hamstrung by
high labour costs at home and the stubbornly strong yen, which makes their
exports expensive and eats into repatriated profits.
A slowing global economy, last year’s quake-tsunami disaster and weak
demand in Europe—a key market for Japanese exports—are also unhelpful.
And this week the firms pointed to yet another unwanted problem: Tokyo’s
diplomatic spat with China over a disputed East China Sea island chain,
which has seen a Chinese consumer boycott of Japan-brand goods.
Sharp, Sony and Panasonic have all announced massive corporate overhauls
that include tens of thousands of job cuts to rescue their bleeding balance
sheets, suffering credit downgrades and share price plunges in the process.
This summer, Sony’s stock tumbled below ¥1,000 for the first time since 1980
and the era of the Walkman.
Panasonic said shareholders would not get dividend payments this year, the
first time in decades.
Sharp, meanwhile, is putting up real estate—including its Osaka
headquarters—as collateral for bank loans crucial to keeping the century-old
firm alive. This week, Sharp ominously warned there was “material doubt”
about its ability to carry on as a viable company.
That warning was quickly followed by Fitch’s six-notch credit rating
downgrade that reduced Sharp’s debt to junk status, warning they faced a
severe cash-flow crisis. “We think time is running out for the company,” said
Shunsuke Tsuchiya, analyst at Credit Suisse.Once admired for their
innovation, Japan’s electronics sector must recalibrate with products that not
only match rival offerings, but outdo them, analysts say.
46
 Japanese electronics firms the mighty, fallen
JAPAN'S electronics companies once epitomised its national power and
defined late-20th-century consumer technology. Sony introduced the
transistor radio and the Walkman. Toshiba was first to mass-produce
laptops. Sharp—which got its name from inventing the mechanical pencil
in 1915—pioneered solar cells and LCD screens. The companies earned
their fortunes from running efficient operations at home that shipped in
huge quantities to the West.
But the world changed and Japanese technology firms did not keep up.
They kept too many low-value activities in high-cost Japan for too long.
They focused on satisfying domestic consumers with advanced features
that didn't matter to customers elsewhere. And they were tardy in entering
emerging markets. Over the past decade NEC and Hitachi posted returns
on assets of around 2%. In an extraordinary reversal, last year Japan
became a net importer of televisions and stereos (albeit often with a
Japanese brand on the casing).
In recent months the electronics companies have begun to overhaul their
businesses by outsourcing operations and selling poorly performing units.
And as they do so, they are striking alliances with Asian rivals that they
once would have regarded as inferiors.
The biggest changes are taking place at NEC, which is also the most
ailing. On February 25th it agreed to sell 70% of its LCD-panel production
business to AVIC, a Chinese company. A few weeks earlier NEC had
partially exited the personal-computer business by creating a joint venture
with Lenovo, a big Chinese computer maker. The deal is an implicit
admission of failure: NEC is the top PC maker in Japan, with a 20%
market share, but globally its share is less than 1%. It comes six years
after IBM sold its PC division to Lenovo, and NEC's delay means it was
stung with more losses and got less for the business.
Toshiba said in December that it would outsource production of some logic
chips. Samsung of South Korea will get some of the work. Toshiba's
decision to collaborate with a company with which it competes fiercely in
flash memory, among other things, is remarkable.
Taiwan's Hon Hai (also known as Foxconn), the world's biggest
outsourced manufacturer, is moving in. Last year Sony sold control of its
television factories in Mexico and Slovakia to Hon Hai and transferred
production to it; half of the televisions it sells are now assembled by other
firms under its “asset-light” strategy, compared with just 20% a year ago.
Hon Hai is also said to be talking to Sharp about outsourcing some LCDpanel production; and to Hitachi Display, which makes small LCD screens
for mobile phones, about buying a controlling stake.
47
This flurry of deals shows how Taiwanese, South Korean and Chinese
firms have caught up with Japanese ones. It also shows how the
Japanese have realised that such foreign firms can be useful partners as
well as deadly rivals. The deals let the Japanese firms exit capitalintensive, low-margin businesses in which scale is needed but the product
is little differentiated. This frees them to focus on becoming premiumbrand marketers of products, and providers of services allied to them, as
well as on developing the next generation of gadgets—or that is their
hope.
Japanese electronics firms remain powerhouses of innovation. Last
month, as NEC announced its foreign tie-ups, the company also trumpeted
the world's thinnest mobile phone (at 7.7 millimetres) and the first
contactless fingerprint and finger-vein reader for biometric authentication.
NEC in particular still has a long way to go in turning itself around, but the
Japanese firms' technological strengths mean they should not be counted
out yet.
 Japan’s Electronics Crisis
Japan is struggling to cope with the faded glory days of the late 1970s and
early 1980s, when the country dominated the world of consumer
electronics with color TVs and videocassette recorders, while their
research labs gave birth to gadgets that would define an era: the
Walkman, CD and DVD players.
Now Japan’s device makers are an afterthought to Amazon.com Inc.,
Apple Inc., Google Inc., and Korea’s Samsung Electronics Co. No longer
the kings of electronics, Sony Corp., Panasonic Corp. and Sharp Corp.
combined to lose about $20 billion in the past fiscal year.
In a three-part series, The Wall Street Journal examines the changed tide
for Japanese electronics companies and how they are attempting to regain
their footing is an ever-increasingly competitive market.
 Popular Japanese Electronics Brands
Japan is home to a lot of outstanding electronics companies that continue
to supply different types of electronics and gadgets to a global market.
Because of their quality, design, and amazing features, people from
diverse cultures trust any of the following brands for their electronic
devices needs.
One of the most famous and very profitable electronics brands originating
in Japan is Sony. To date, Sony holds the Number 1 spot as Japan’s
leading manufacturer of electronics, game consoles, IT products, video,
and many other types of gadgets. Another celebrated Japanese
electronics brand is Sharp, which began to manufacture electronic devices
48
throughout the world since 1912. Another noteworthy brand of electronics
coming from the Land of the Rising Sun is Panasonic, which is included in
the Forbes Global’s Largest Companies for 2009.
 The era of Japanese consumer electronics giants is dead
A Sony Wega rear-projection television found by the garbage in New
York.The financial prospects of Sony and its fellow Japanese companies
aren't far behind.Not that long ago, Japanese companies such as Sony,
Panasonic, and Sharp were considered premium brands. They made
virtually everything in the consumer electronics world, from televisions to
microwaves and digital music players. There seemed to be no way to stop
their momentum. Their products often carried higher price tags to reflect
their perceived quality, and people snapped them up.
Big companies equal slow companies
So how did the likes of Sony and Sharp lose their way? As with many
other downfall stories, these companies failed to pay attention to shifting
trends and were outmaneuvered by overseas competitors. As consumer
markets shifted to digital media and games, mobile devices, software apps
and the Internet, the Japanese struggled to keep up. External factors like
the rising value of the Japanese yen, which made products exported from
Japan more expensive abroad and cut into margins at home, further
squeezed the companies.
49
The decline in the Japanese television business present best illustrate their downfall.
Sony, Sharp, and a myriad of other Japanese companies were dominant in the
television business when bulky tube TVs ruled. The Sony Trinitron had a sterling
reputation as the television to own.
Kazuo Hirai took over as CEO of Sony this year in an attempt to breathe new life into
the company.
Few of them managed the transition to flat-panel display televisions all that well.
While many of them reaped profits early on, increased competition and tightening
margins began to squeeze many of the companies, according to Costa. Weaker
players such as JVC, Hitachi, Fujitsu, Toshiba, NEC, and Pioneer exited the
business.
In their place were companies such as LG and Samsung. Samsung, in particular,
focused on building higher quality flat-panel TVs, packing them with a larger array of
features and selling them for a competitive price -- and steadily boosted its share. It
has long surpassed its Japanese rivals in features and design. Now, it's the leader in
the television business with a gold-standard brand.
"As flat panel and HD got more prevalent, you started to see a (TV) business model
more akin to the PC market," said Baker. "Most of those guys weren't prepared for
that."
50
Another problem lies in the sheer breadth of products these companies offered,
many of which barely exist any more. Do people buy digital music players or DVD or
Blu-Ray players at a time when everything is streamed?
Missing Out On Mobile
The Japanese similarly missed the boat on mobile. Panasonic and Sharp were too
insular and focused on their home market to be effective enough to compete around
the world. Sony was tied down by its joint venture with Ericsson, which actually saw
some success with basic phones.
But when Apple came knocking a few years ago with the iPhone, these companies
quickly found themselves unable to compete. When Google and Android arrived a bit
later, the Japanese companies were slow to adopt the burgeoning platform and
found themselves far behind as Samsung and HTC took the lead.
The Xperia TL from Sony, an exclusive with AT&T this holiday season.
As with the television market, the smartphone business has proven incredibly
cutthroat, with only a few winners in the business. Along with Apple, Samsung is the
only other major player able to generate significant profits with its smartphones.
Sony has a shot at a minor comeback with the Xperia TL, its latest flagship phone -best known for its use by James Bond in the film "Skyfall" -- coincidentally also
produced by Sony. Sharp has some phones in the U.S. market, but few, if anyone,
has ever heard of them. Panasonic had ambitions to expand outside of Japan with
its Eluga line of smartphones, but now lacks the clout or resources to do so.
The Wall Street Journal reported earlier this month that it was scaling back its push
to enter Europe.
51
Identity Change
These companies are in for some drastic changes in the coming years -- if they
survive.
Among the three fallen giants, Sharp has deflated the most. The company earlier this
monthreported a loss of 387.6 billion yen ($4.87 billion) in the six months ended
September 30, a near tenfold increase over the year-earlier period. The company
was already in the middle of a restructuring, having cut more than 10,000 jobs and
looking to sell manufacturing plants to Foxconn, and insisted that those efforts would
help generate cash flow.
Rather than consumer products, Sony and Sharp have found some headroom
supplying to other more popular companies. Sony, for instance, provides the camera
for the iPhone, while Sharp is one of several display suppliers to Apple's
smartphone.
But even the display business isn't entirely safe, with lower cost competitors
threatening to eat Sharp's lunch.
"They don't have a lot of options and they're in a very poor place," Costa said.
The Panasonic brand and business is under assault.
Panasonic President Kazuhiro Tsuga, meanwhile, has been forthright about his
desire to move away from consumer electronics. He recently told managers that any
business failing to earn margins of at least 5 percent would have no place in the
company, the New York Times reported.
Panasonic could very well disappear from the consumer landscape as it leans on its
more successful non-consumer operations, analysts said. In fiscal 2012, the
company's PC, television, and digital camera unit posted an operating loss of 67.8
billion yen ($853 million).
52
Sony, the maker of the PlayStation and owner of Hollywood movie and recording
studios, may have the best shot at survival given its diversified presence in gaming
and entertainment. The company is looking to focus more on areas such as imaging
and gaming, even as it looks establish its footing in the mobile area. But TVs could
end up being a "hobby" and the company moves its focus away from that area,
according to Costa. Still, it has a wide variety of consumer lines to fall back upon.
"Sony's probably the best positioned of any Japanese company," Baker said.
New Pressure
While all have laid out a path back to profitability, the truth is the pressure will only
get worse. The competition isn't just coming from the U.S. and Korea, but
increasingly from China. Lenovo has shown its dominance in the PC business,
yesterday reporting record sales of $8.7 billion and record market share, according
to IDC.
This comes as Sony and Toshiba laptops sink further into the also-ran category.
On the smartphone side, Huawei and ZTE are making strides around the world with
both low and high-end phones. In the U.S., the companies have yet to break into the
major carriers in a significant way, but both companies can be counted on to provide
affordable smartphones andtablets.
53
Huawei is an up-and-comer that the Japanese companies need to watch out for.
In the television market, the Chinese companies represent a potential threat. The top
Chinese domestic TV manufacturer is TCL, followed by Hisense. While neither have
a significant presence in the U.S., they are starting to make moves. Both companies
have been chipping away with extremely low-cost televisions, and Hisense has even
introduced a high-end 4K model to the US market. CNET's TV reviews editor David
Katzmaier said he believes the two stand to gain share over the next couple of
years.
"With the three Japanese companies losing share, it makes sense that some of it will
go to the Chinese companies," he said.
The companies aren't standing idly by. Sony is pushing hard to extend its presence
in gaming, and analysts believe it could still benefit from more tightly integrating its
products together, similar to the way Samsung has bridged together its televisions,
tablets, smartphones, and even appliances. Panasonic is set to deliver the opening
keynote address at the Consumer Electronics Show in January, likely to be a
reaffirmation of its presence in the industry.
 Latest Development
•
The Japanese economy expanded 0.5% year-on-year (YoY) in the third
quarter of 2012, moderating from a 3.9% YoY growth in the second quarter.
•
The Japanese government and Bank of Japan (BOJ) released a joint
statement in January 2013 that they would coordinate policy to overcome deflation
and achieve sustainable economic growth, with the BOJ introducing an inflation
target of 2% along with an open-end asset purchasing programme.
•
According to preliminary figures, Japan’s exports fell 2.8% to US$799 billion in
2012, while imports surged 3.7% to US$886 billion. Japan continued to post a trade
deficit of US$87 billion, following the US$32 billion deficit in 2011, the first in a
decade.
•
Japan's consumer price index (CPI) posted zero growth in 2012, after
registering a deflation of 0.3% in 2011. The unemployment rate stood at 4% in
November 2012, moderately improving from previous months.
•
Japan is Hong Kong’s third largest export market and its second largest
source of imports. In 2012, Hong Kong’s total exports to Japan grew 6.5% to
US$18.5 billion and imports from Japan fell 2.2% to US$39.9 billion.
•
Hong Kong is the largest export destination for Japanese food and live animal
products. In 2012, Japan’s export of food and live animal products to Hong Kong
amounted to US$873 million, accounting for 23.4% of Japan’s exports under such
category.
54
 Conclusion
Weak performance for Japanese consumer electronics market
The Japanese consumer electronics industry experienced a weak performance in
2011. The most important driver of performance was the end of the eco-point
system, a government incentive to encourage consumers to purchase eco-friendly
consumer electronics and appliances. Japanese consumers used the campaign to
replace a variety of consumer electronics, and when it ended there was a significant
drop in new purchases. However, there were some bright spots as the industry saw
strong growth emerge from new categories such as smartphones and tablets. Sales
in these new categories were not strong enough to offset losses in larger categories
such as TVs and computers, however.
Smartphone phenomenon prevails
Japan has long been associated with its “Galapagos” phone environment,
comprising mostly domestic models and manufacturers. However, smartphones
have been able to penetrate the market and achieve strong growth. Innovations
including Apple’s iPhone and a proliferation of Android smartphones were key
growth drivers in the mobile phones category in 2011. The emergence of
smartphones went beyond just impacting the mobile phone category, shaping the
direction of new product developments in the wider consumer electronics industry.
However, due to the multi-functionality of smartphones, their strong performance
also led to the cannibalisation of other categories, such as portable media players,
imaging devices and in-car entertainment.
Japanese players remain dominant
While Sharp Corp retained its position as a leading company in the Japanese
consumer electronics environment in 2011, the major success story was Panasonic
Corp. The company saw strong growth in overall volume share in the industry due to
its acquisition of Sanyo Electric Co Ltd in in-car entertainment. Panasonic’s
acquisition allowed the company to offer a broader product range, particularly in lowend segment. A bright spot for international players was Apple’s success in tablets
and smartphones, enabling the company to gain share.
Specialist retailers continue to dominate consumer electronics
Electronics and appliance specialist retailers remain Japanese consumers’ first point
of access to Japanese consumer electronics. This increased over the review period
as electronics and appliance specialist retailers gained purchasing power and
demonstrate a clear pricing advantage over other traditional channels such as mass
merchandisers. Specialists such as Yamada Denki and Edion have performed well
by placing greater emphasis on providing dedicated customer service. While Internet
55
retailing is growing, Japanese consumers still prefer the experience of purchasing
products via a specialist rather than solely based on price.
Weak growth predicted for forecast period
Outlook for consumer electronics remains sluggish, with lack of the government
incentives to stimulate the industry. In particular, demand for televisions will remain
weak as a large number of consumers have already bought digital TVs to prepare for
the digital terrestrial switchover in 2011. The strong growth of smartphones will not
offset losses from television sales and rather considerable convergence around key
devices will be worrying. Furthermore, price erosion will continue to pressurise value
growth as Japanese consumers maintain an expectation of continued price
discounts over the forecast period.
56
Global Country Study Report
On
IT Sector In Japan
Submitted by:
Harsha Shah (117820592018)
Mayur Boda (117820592017)
Nishit Vekariya (117820592013)
Vishvas Thacker (107820592014)
Pradeepshinh Jadeja(117820592015)
A Report submitted in partial fulfillment of the requirement of
MBA-II (2011-13)
Submitted to:
Gujarat Technological University (GTU)
SJG INSTITUTE MANAGEMENT & IT
Bhuj-Mandvi Road, Ta. Mandvi, At Koday Pul – 370460
(Kutch – Gujarat- India)
57
Information and Communication Technologies Sector
Japan

Introduction to ICT
From the end of the 20th century to the beginning of the 21st century, we have seen a lot of
digital technologies emerge, or, in other words, we have seen a general shift from analogue
to digital technology. Since Japan is one of the leading technology developers in the world
(many new technologies have been commercialized here), this applies in a very high extent
to Japanese homes. This can be illustrated by PC vs. TV set, Mini Disk vs. Cassette tape, MP3
player vs. vinyl LP, digital camera vs. traditional chemical film camera, DVD player vs. VTR,
and Internet vs. traditional sources of information like radio, TV and newspapers. This
conversion to better and newer technology is a never stopping process.
Currently there is an ongoing battle over a new DVD standard capable of recording/playing
high-definition broadcasts which is expected to become the leading storage/reproduction
medium for visual images over the next 20 years. One of the competing groups consists of
Toshiba Corp. and NEC Corp. while the other group consists of 13 Japanese, U.S., European
and South Korean firms, including Sony Corp and Matsushita Electric Industrial Co. The
Toshiba-NEC group is pushing for a standard called HD DVD, while the other group pushes
for a standard known
As the Blue-ray Disk. The two standards are not compatible and cannot be integrated. HD
DVD is a standard that tries to utilize conventional DVD characteristics With much better
quality, whether the Blue-ray Disk aims to create a new recording medium [NIKKEI a].
Another issue is the rapid development of the telecommunication technology. At the end of
2003, household penetration rate for mobile phones was 93.9 percent, of which 56.5 %
were Internet compatible. The number of mobile phone subscribers exceeded the number
of fixed phone subscribers. The household penetration rate for PC was 78.2 %, facsimile:
53.9 %, car navigation systems: 30.6 % [JTH 2004].
 Information and Communication Technologies Policy in Japan:
58
Meeting the Challenges Ahead HIDEO SHIMIZU, Ministry of Internal Affairs and Communications,
Japan
KUNIKO OGAWA, Ministry of Internal Affairs and Communications, Japan
KOICHI FUJINUMA, Ministry of Internal Affairs and Communications, Japan
The world has witnessed remarkable growth and diffusion in information and communication
technologies (ICT) system usage in this decade. The further development of the ICT industry will
become a major factor for economic growth. This chapter will provide some economic background
related to current Japanese ICT policies. It also sets out changes in the regulatory environment and
looks at the current status of ICT infrastructure in Japan. The positive outcomes of the steps that
have been taken are found in the high penetration rate of the broadband, including fiber optic cable
services, mobile telephones with a high Internet access rate at 87 percent (incidentally, over 60
percent of these mobile telephones are third-generation telephones). Mobile telephones in Japan
can be used also for watching television, using electronic money, and purchasing electronic tickets.
The final section of this chapter will highlight challenges in the ICT field for the future, such as
convergence of communications and broadcasting, security and privacy, and relating government
policies.
 History of Japan’s ICT policy up to 2005
Japan has made sequential national ICT policies since around 2000, with the aim of fostering an
advanced ICT network society. The Information Technology Basic Law was enacted in November of
2000. In 1999, Japanese Internet penetration rate was just 13.4 percent, lagging behind that of
Northern Europe and North American countries. Also, in April 2001 the number of broadband
subscribers in Japan was 737,000, behind the United States and Korea. At the time, introducing ICT
into corporate management in Japan meant simply installing information technology devices and
systems. The law was established because of a sense of urgency on the part of the government
about Japan’s slow start in the ICT revolution.
In January 2001, based on the Law, the Advanced Information and Telecommunications Society
Promotion Headquarters was established within the Japanese cabinet. Beginning in January 2001,
the headquarters crafted several national “e-Japan Strategies” that would put Japan among the
leading ICT nations. Specific targets were set: “Promote the upgrading of Japan’s Internet network to
meet the highest global standards, with super high-speed access (30–100 Mbps) possible within 5
years; and make this access available at affordable rates for all citizens.” Under the principle of
private-sector-driven development, a number of government policies were implemented. Among
these were policies to enforce fair competition in the information and communications field, policies
to support the development of e-commerce systems, policies that implement e-government, and
policies for human resources development.
The ICT environment in Japan made it possible for 35 million households to have a constant
connection to a digital subscriber line (DSL), for 23 million households to have cable TV, and for 17.7
million households to have fiber-to-the-home (FTTH) connections. As infrastructural improvements
progressed, interest turned toward the promotion of usage. In 2003, the headquarters established a
new strategy called “e-Japan Strategy II,” settling on seven areas—health care, diet, lifestyle,
59
financing for small businesses, knowledge, labor, and administrative services— where ICT could be
used in groundbreaking ways. Again, as infrastructural improvements progressed, attention turned
toward the issue of ICT usage. E-Japan Strategy II aims to continue to maintain the Japanese position
as the frontrunner in terms of ICT technology beyond 2006
 Toward the ubiquitous networked society
In December 2004, just before the target year for completion of the e-Japan Strategy, the Ministry of
Internal Affairs and Communications (MIC) drafted its u-Japan Policy. This policy seeks to create a
ubiquitous networked society by 2010 that will permit ICT access “at anytime, anywhere, with
anything and by anyone.”
The major goal of the u-Japan Policy is to “lead the way as the world’s most advanced ICT nation in
2010,” to have the world’s best ICT infrastructure, and to contribute to the world by providing an
original and creative Japanese social model that balances infrastructure with Front runner in the
world’s ICT evolution Realization of an autonomous ICT society 2001 2003 2004 2005 2006
Realization of a ubiquitous networked society Ministry of Internal Affairs and Communications’ IT
Policies Ministry of Internal Affairs and Communications’ u-Japan Policies e-Japan Priority Policy
Program (Mar 2001) e-Japan Priority Policy Program 2002 (Jun 2002) e-Japan Priority Policy Program
2003 (Oct 2003) e-Japan Priority Policy Program 2004 (Jun 2004) e-Japan Priority Policy Program
2006 (Jul 2006)
1. Health care
2. Diet
3. Lifestyle
4. Financing for small businesses
5. Knowledge
6. Labor
7. Administrative services
KEY AREA
Emphasis on IT usage (7 leading areas)
E-Japan Strategy (Jan 2001)
E-Japan Strategy II (Jan 2003)
IT policy package (Feb 2005)
IT New Reform Strategy (Jan 2006)
E-Japan Strategy II accelerated package (Feb 2004)
The following are the three basic elements of the u-Japan Policy:
60
• Development of ubiquitous networks that can be used seamlessly for both wireless and fixed
networks,
• advanced usage of ICT to assist in resolving social issues, and
• Improvement of the environment for ICT usage in a safe and secure manner.
In January 2006 the Advanced Information and Telecommunications Society Promotion
Headquarters created the Information Technology New Reform Strategy, which included follow-up
on the capability of ICT to facilitate structural reforms (that is, its ability to help resolve issues facing
Japanese society), ICT infrastructure improvement (that is, developing infrastructure that moves
Japan toward the goal of being a ubiquitous networked society), and dissemination to the world
(that is, Japan’s ICT contribution to the world). The new strategy seeks to make all areas of Japan
accessible to broadband so that Japan’s communications infrastructure is completely broadbandcapable by 2010.
The strategy also seeks to make 2011 the “First Year of Completely Digital Networks” for all
communications and transmissions, with the changeover to digital terrestrial television broadcasts
complete by July of 2011.All of this is to be accomplished through the principle of private sectordriven development and a variety of government policies that seek to promote these goals.
ICT and macroeconomics: Three effects on economic growth Japan has placed priority on ICT-related
policies because ICT has an impact on economic growth in a number of ways:
• Through the growth of the ICT industry,
• Through a deepening of ICT capital stock, and
• By fostering productivity increases for all industries, as a result of ICT spreading across industries
and
Corporations.
The following section provides some economic background, drawn from the Japanese information
and telecommunications white paper of 2006, for current Japanese ICT policies.
The first effect: The direct impact of ICT industry growth The ICT industry accounts for an increased
percentage of GDP.The per-industry real GDP of the ICT industry in 2004 was 61.9 trillion yen
(US$560 billion), or 11.7 percent of Japan’s real GDP.Also, the percentage change of per-industry
real GDP for the ICT industry was 9.21 percent. This means that the ICT industry contributed 40
percent to the change in Japan’s real GDP.
The effect that the ICT industry’s performance has had on Japan’s economic growth is significant, no
matter what other industry it is compared with.
The second effect: ICT capital stock and economic growth Real investments in ICT in 2004 totaled
16.4 trillion yen (US$150 billion)—21.5 percent of the total capital investments made by the private
sector (see Figure 3). ICT capital stock totaled 36.9 trillion yen (US$335 billion), comprising 3.0
percent of private capital stock.
61
A look at investments in ICT capital stock over the years shows that, although they temporarily
dipped in the mid-1990s, they have since rebounded and continue to grow. The contribution of ICT
capital to the economic growth rate. ICT capital stock contributed 0.21 percent to economic growth
from 1990 to 1995 (economic growth was 1.51 percent); from 1995 to 2000 ICT capital stock
contributed 0.54 percent (economic growth was 0.97 percent); and from 2000 to 2004 they
contributed 0.21 percent (economic growth was 1.15 percent).Thus ICT capital stock deepened
overall economic growth by 13.9 percent, 55.7 percent, and 18.3 percent respectively over these
years. Considering that ICT capital stock comprises 2–3 percent of private capital stock, its impact on
economic growth is significant.
The third effect: The spread of ICT and economic growth the third effect is an increase in
productivity resulting from the spread of ICT in industries and businesses. This increase is due to an
improvement in total factor productivity (TFP), which is a variable factor and not explained in terms
of changes in the input of factors of production such as capital and labor. The increase in TFP for the
general ICT industry in Japan between 2000 and 2004 was 3.7 percent; it was 2.9 percent for
electrical machines. Clearly TFP was high for fields related to ICT, but in other industries it was not
necessarily so high, and the overall industry total stood at just 0.09 percent. It is now believed that
growth in Japan’s TFP is being primarily supported by the ICT industry, which is a leading factor in
technological innovations. History of changes in the regulatory environment Over 20 years have
passed since the privatization of Nippon Telegraph and Telephone Public Corporation (NTT) in 1985.
Since that time a number of businesses have ventured into the communications market; coupled
with an easing of regulations, this has resulted in a considerable growth of the communications
market.
Software” “Electronic computers and peripheral attachments” “Telecommunications equipment”
“Percentage of ICT investment covered by private-sector capital investment
■ Software
■ Electronic computers and peripheral attachments
■ Telecommunications equipment Percentage of ICT investment covered by private-sector capital
investment
■ ICT industry
■ Other industries All industries providers offering a variety of communications services.
The regulatory framework for telecommunications businesses in Japan is continually revised to meet
the needs of the telecommunications services market and to ensure that users enjoy a broad range
of services through the promotion of fair competition in the facilities and services fields. These
changes in the regulatory framework can be divided into three time periods, as related below.
Period one: From monopoly to competition (1985–)
In April of 1985, the Telecommunications Business Law went into effect. Based on this law, the
government introduced competition into all areas of the telecommunications market; also NTT was
privatized. When the law went into effect, a type 1 telecommunications business (that is, the setting
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up of physical facilities containing telecommunications lines and providing telecommunications
services) required a massive initial investment in order to construct a network. Economies of scale,
as well as other factors— such as the externality of the network—made it difficult to enter into the
telecommunications market. The design of the network was based on the principle that
telecommunications was an essential industry to the life and economy of the nation and that the
network would play a major role in serving the public interest, by ensuring, for instance, that people
received important announcements during emergencies and crises.
For these reasons, type 1 telecommunications carriers were required to obtain a license.
Period two: Promoting further competition (1997–)
In order to facilitate the entry of new carriers into the telecommunications market, revisions made
to the Telecommunications Business Law in 1997 eased a requirement for obtaining permission to
operate for type 1 telecommunications carriers. In 1998, restrictions on foreign investment were
abolished in principle. In 1999, in order to further increase the international competitiveness of
Japan’s ICT industry and to create a more dynamic, competitive environment, NTT was restructured
under holding corporations into three separate companies: a regional company for eastern Japan, a
regional company for western Japan, and a long-distance network company.
By establishing shared facilities to allow competitors to connect (a process called “colocation”). In
2001, in consideration of the degree to which competition had progressed, the Telecommunications
Business Dispute Settlement Commission was established to handle disputes and other matters
between telecommunications companies, and to recommend necessary improvements and changes
in the rules to the MIC. In 2002, the universal service fund system was upgraded to eliminate
geographical digital divide.
Period three: From ex-ante regulations to ex-post regulations (2004–)
Because of changes in the market structure, revisions were made to the Telecommunications
Business Law in 2003.
These revisions aimed to continue to adapt the law to changes in the market environment and
network structure, as well as to encourage new companies to enter the market and to promote fair
competition among them. The original business classifications were abolished and market entry
regulations were greatly eased, shifting the regulations from ex-ante to ex-post. In principle,
regulations governing fees and notification of contract conditions were abolished and steps were
taken to ease the authorization of the relative contracts. Along with relaxing these regulations, rules
to protect consumers were introduced in 2003 together with a system for evaluating competition in
the telecommunications.
Evaluation of competition in telecommunications in 2003, an analysis and evaluation of competition
in telecommunications was conducted by the government. The analysis was done in each major
service such as Internet access, mobile telecommunications, Internet protocol (IP) telephones, and
fixed-line telephones. The following are some of the results of the analysis.
63
For the broadband market, attention was paid to changes in the competitive environment
accompanying the shift toward the convergence of communications and Broadcasting with fiber
optic lines (FTTH). In the asymmetric digital subscriber line (ADSL) market, NTT East and West’s share
as of December 2005 was 39.1 percent; the market was judged to be functioning effectively under
The rules governing connections, with vigorous competition in terms of cost and service. In the FTTH
market, NTT East and West had a 60.7 percent share as of December 2005; the number of contracts
was growing and video services were being increasingly realized. The mobile telephone market was
switching from the 2nd generation (2G) to the 3rd generation (3G), and competition remained as
Vigorous as ever. NTT DoCoMo’s share was 54.1 percent as of December 2005. It becomes difficult
to predict the future trend of ICT with the innovation and changes in ICT field such as the
convergence of communications and broadcasting, the convergence of fixed and mobile telephones,
the further spread of broadband, IP telephones, and fiber optics.
 The current status of ICT infrastructure in Japan
The following section describes the remarkable development of ICT infrastructure fostered by the
above-explained Japanese policies; it also describes the new trend of convergence in broadcasting
and communications. The development of ICT infrastructure The International Telecommunication
Union (ITU)’s July 2006 edition of The World Information Society Report listed a Digital Opportunity
Index (DOI) of 11 factors (such as population coverage for mobile telephones, Internet connection
fees, Internet access from mobile telephones, and ratio of broadband coverage) for 180 economic
regions. Korea had the highest DOI score, followed by Japan.Also, in a comparison of broadband
fees, Japan was the cheapest at US$0.07 per 100 kilobits; it was tied with Korea as the fastest with a
transmission speed of 51.2 Mbps. Increase in the number of Internet users In 2005, the number of
Internet users in Japan stood at 85.29 million people (66.8 percent of the population). A majority of
people—estimated at 48.62 million (57.0 percent of total Internet users)—used both personal
computers and mobile devices (such as mobile telephones) to access the Internet. Of these, 19.21
million people (22.5 percent) used only mobile devices, and 15.85 million (18.6 percent) used only
personal computers. The rate of penetration for broadband has been increasing (see Figure 5). By
the end of 2005 the number of contracts for broadband lines had reached 23.30 million (a 19.1
percent increase over the previous year). Looking at the breakdown of this figure, we see that
contracts for DSL were the most common, at about 14.52 million in 2005 (a 6.2 percent increase
over the previous year). Next came FTTH, with approximately 546,000 contracts (an 88.4 percent
increase over the previous year).This was followed by approximately 331,000 contracts for cable
Internet (an 11.8 percent increase) and approximately 20,000 contracts for fixed wireless access
(FWA) (a 34.8 percent decrease).
The government’s goal, based on the u-Japan Policy, is to make broadband available in every region
in Japan by 2010 through measures promoting the upgrading of the broadband network. Interest in
switching to FTTH Internet connection lines is increasing, and a comparison of the net increase in the
number of contracts during the fourth quarter shows that the number of contracts rose for FTTH
during the period, surpassing that for DSL.
By the end of 2005, 11.46 million people (such as DSL subscribers and fiber optic subscribers) had
used IP telephones. In addition, there are peer-to-peer telephones that are cheaper and utilize IP
technology, but they do not have an assigned IP phone number because they do not satisfy a quality
64
standard. In keeping with the spread of the Internet, NTT has stopped investing in circuit switches
and is instead promoting a switchover of the network to IP. Major companies in Japan have
indicated a policy of switching communications networks from public switched telephone network
(PSTN) to IP by 2010; it is expected that telecommunications services, including telephones, will be
offered via an all-IP infrastructure. Penetration and sophistication of mobile telephones Mobile
telephones are no longer just for talking; they have become people’s most accessible mobile
information terminals. One example is their Internet capabilities. By the end of 2005, the number of
people accessing the Internet from mobile telephones or other mobile information terminals was
69.23 million (81.2 percent, a 7.9 percent increase over the previous year).This was the first time
Internet access from mobile devices had exceeded Internet access from personal computers (the
relevant figure for personal computers was 66.01 million).
In addition, mobile telephone terminals offer games, music for downloading and playing, “onesegment broadcasts” (terrestrial television broadcasts aimed at mobile terminals), and video
telephone. Furthermore, there are a number of mobile terminals with functions that enable the user
to connect to a variety of information read from barcodes, and even to handle electronic money and
tickets via smartcard or radio frequency identification (RFID). In 2004, the market size for mobile
commerce (m-commerce) was 971 billion yen (US$8.8 billion), encompassing 17.2 percent of the
business-to-consumer e-commerce market. People are able to do a variety of tasks whenever and
wherever they want with their mobile telephones.
Currently, telecommunications carriers provide subsidies to encourage the sale of mobile telephone
units; thus, users are often able to purchase relatively cheap units that offer a high degree of
functionality. This structure is credited with having a great effect on helping highly functional
terminals to broadly penetrate the competitive portable device market. However, to produce more
competitively priced products, discussion on replacing this funding scheme with a new price plan is
underway. Dramatic increase in Internet traffic.
It is believed that the increase in IP traffic is to the result of factors such as the strong momentum
Internet use is gaining in society and the economy, the sudden rise in peer-to-peer file sharing, and
the ability of individuals—not just content providers—to transmit heavy content such as music and
movies.
Convergence of broadcasting and communications:
The development of digital broadcasts Terrestrial digital television broadcasts in Japan began in
December 2003.The reception area for these broadcasts has expanded rapidly—by June of 2006,
this area covered 32.2 million households of potential viewers, or 68 percent of the total number of
households in Japan. By the end of 2006 all prefectural capitals in Japan began terrestrial digital
television broadcasts; by July 2011, all broadcasts will be done digitally. Television is one of the most
accessible means for citizens to obtain information, and it is hoped that switching television to
digital will lead to a communications infrastructure in households. Also, in April 2006 digital onesegment broadcasts (terrestrial television broadcasts aimed at mobile terminals) began, enabling
image and data broadcasts to be received on mobile devices as clearly as they appear on home
televisions. Movement toward convergence of telecommunications and broadcasting In line with
the increase in digital broadcasts and the dramatic increase in carrying capacity—the result of the
65
spread of broadband throughout the communications network—telecommunications carriers are
using their optical fiber networks as a single channel for both broadcast services (for television
shows and so on) and for communications services. The movement, described as a “convergence of
telecommunications and broadcasting,” is based on the three phenomena of (1) full-scale online
delivery of movies and music; (2) sharing of terminals, networks, and so on; and (3) the simultaneous
entry of corporations into the communications and broadcast fields. The acceleration of this
convergence, as well as the situation of the telecommunications and broadcasting industries, will
lead to an increase in information provided and to improved production of content. These increases
are expected to contribute to strengthening the standing of Japan by, for example, disseminating
Japanese culture in the world at large. With features such as video on demand (VOD) distribution
services that allow people to view videos from their personal computers (that is, Internet
broadcasts); and with the common usage of the same transmission channel for both
communications and broadcast services, business tie-ups continue to transcend industry boundaries.
Terrestrial digital television broadcasts have been shown in Japan since 2003. One of the goals of
digitizing terrestrial broadcasting is to provide bidirectional services by connecting broadcasting with
the Internet. Such bidirectional services enable the viewers and listeners to have access to a wide
variety of services. Television is the medium that most people use to obtain day-to-day information
and can be found in practically every household. Therefore, digitizing television will provide a basis
for ICT in households. Among cable television and telecommunications corporations in recent years,
an increasing number are offering a “triple play package” to consumers: Internet access, video
delivery, and IP telephone service.
 Challenges for the future
The world has witnessed changes to society as a result of ICT advancement. Public policies to reflect
these social changes and to further ensure that the benefits of ICT trickle down are needed. Japan is
restructuring its systems and policies in the ICT field, as well as promoting various measures. The
following are some challenges that Japan faces in this area.
Promoting discussion on the frameworks of communications and broadcasting The MIC held a Panel
on Frameworks of Communications and Broadcasting from January to June of 2006.A
comprehensive range of proposals for Japan to reach its goal of creating the world’s leading
communications and broadcasting infrastructure by its target of 2011 were suggested.
Proposals included making use of its strengths to become the leader in the field of broadband,
mobile, and television communications; preparing legal systems for the convergence of
communications and broadcasting; revising its communications-related regulations; easing its
broadcast regulations; and reforming Nippon Hoso Kyokai (NHK), Japan’s public broadcaster. In June
2006, an agreement between government and ruling parties was reached on the framework of
communications and broadcasting.
Based on this agreement, a Program for Restructuring the Communications and Broadcasting Sectors
was announced in September 2006.This program addressed the four sectors relating to NHK reform,
66
broadcasting, convergence, and communications. In addition, at the end of August 2006, a study
group on the comprehensive legal structure for communications and broadcasting was established.
For approximately a year and a half, this study group will examine, from a technical standpoint, how
to concretely orient discussion on the legal system with regard to combining and linking
communications and broadcasting.
Negative issues brought about by ICT advances As the ubiquitous network continues to develop, and
as ICT continues to permeate citizens’ lives, it is important to deal with concerning issues such as
privacy and security, a safe and secure ICT usage, and eliminating the digital divide.
For example, ensuring security in ICT usage is becoming a major social issue. Individuals and
companies may become the victims of crimes such as ID theft, skimming, or billing fraud in their
daily lives and daily operations (when using an ATM, using a credit card, shopping on the Internet,
and so on).These security concerns must be addressed effectively and promptly.
There is also a need to provide measures against spam email. The MIC initiated a revision to the antispam law (effective from November 2005) whereby anyone who uses the information of an email
sender in a deceptive way is liable for prosecution. The ministry is also promoting a
Spam Purging Project (begun in February 2005) that operates through the joint cooperation of the
government and the private sector. The project encourages telecommunications companies to cut
off and otherwise deny line access to spammers. International cooperation is also being sought; an
agreement was reached between Japan and other Asian countries in April 2005, with France in
May2006, with the United Kingdom in September 2006, and with Canada in October 2006.
Furthermore, in recent years there has been a succession of incidents involving illegal or harmful
information being posted on websites and electronic bulletin boards. In response, the Provider
Liability Limitation Law (in effect since May 2002) and its related guidelines establish standards of
restriction on providers’ responsibility that enable providers to remove illegal information. Also, by
creating guidelines (rather than required regulations), the government supports the voluntary
efforts of ISPs to deal with this issue.
 New competition promotion program 2010
The MIC held a meeting on a framework for competition rules to address the transition to IP-based
networks and released a report in September 2006.This report was written in light of the changes to
the market environment resulting from the development of IP, such as the spread of broadband, the
switching from PSTN to an IP network, and the diversification of business models. The measures for
implementing these upgrades by 2010, with a view toward promoting greater competition and
ensuring the interests of users, were released in September 2006; the MIC then set about
implementing them. When competition policies are developed, the fundamentals of fair competition
will be ensured, providing an appropriate balance between promoting competition to build facilities
for creating networks on the one hand, and opening up the networks of dominant
telecommunications companies that have bottleneck facilities on the other hand. The strategy also
promotes fair competition, thus allowing for the spread of a vertical integration business model that
cuts longitudinally through each network layer.
Promotion of the u-Japan Policy
67
The MIC is promoting the u-Japan Policy as a means of contributing to the entire government’s
initiatives on behalf of the IT New Reform Strategy, which aims to achieve a ubiquitous network
society in Japan by 2010 as previously related in this chapter. The ministry has summarized the
necessary policy packages for each year in its ICT Policy Outline; it promotes a variety of policies
related to topics such as “eliminating the geographical digital divide,” “developing a seamless access
environment for both fixed and wireless networks,” “promoting advance social system restructuring
through ICT,” “ensuring the safety and security of citizens through ICT,” and “ensuring network
reliability and security.”8 In September 2006, the u-Japan Promotion Program 2006 was assembled
as a mid-term policy to be implemented until 2010, reflecting the changes in the communications
and broadcasting situation that have taken place since the creation of the original u-Japan Policy.
This mid-term policy includes (1) the promotion of the convergence of communications and
broadcasting, (2) strengthening the growth rate, the competition levels, and the national standing
through ICT, and (3) achieving a safe and secure ubiquitous network society through ICT.9 Japan
faces issues that stem from changes in its social and economic environment, such as a declining
population the result of a lowering birthrate and aging population. However, we believe that ICT will
generate economic vitality and will encourage social and economic development through factors
such as the increasing accumulation and integration of knowledge and technology, transforming the
existing social and economic system, and accelerating the pace of innovation via the realization of a
ubiquitous network society where ICT affects all aspects of socioeconomic activity.
 Research Institute of Economy, Trade and Industry
The last decade of the 20th century was marked by the emergence of a "knowledge-based
economy," with governments in most OECD countries intensifying their commitment to the
underlying research and development activities. Japan is no exception. The Japanese government
affirmed setting the objectives of a "Nation Based on Science and Technology" as the fundamental
policy goal in 1980 and since then it has implemented several laws and policy packages in the fields
of science, technology, industry and higher education, with the common denominator being
"Industry-University State cooperation." This policy orientation has been consolidated by the Science
and Technology Basic Law, introduced in 1995, which gave the government legal competence in
science and technology.
This trend tends to reinforce stereotypic images of the Japanese innovation system, such as the
"government picking up technological paths" or "industry and government working hand-in-hand."
Does this perception reflect reality? This study attempts to clarify this by
Examining:
· How the technology policy evolved during the postwar period in Japan;
· What its impact was on the private sector's decision on R&D activities;
· What the underlying philosophy was of the government's R&D policies, if one existed;
· What the new perspective is.
68
Science1 and technology, Research University, Technological change, Technology policy1
Introduction
The last decade of the 20th century was marked by the emergence of a "knowledge-based
economy" (OECD, 2000), where technological innovation seemed to function as the engine of
growth, and governments in most OECD countries intensified their commitment to the underlying
research and development (R&D) activities. Reflecting this orientation, we are also observing a
phenomenon of convergence among economic, technology and research policies.
Japan is no exception. The Japanese government affirmed setting the objectives of a "Nation based
on Science and Technology" as the fundamental policy goal in its 1980 white paper on science and
technology (STA, 1980). Since then it has implemented several laws and policy packages in the fields
of science, technology, industry and higher education, with the common denominator being
"Industry-University-State1 tripartite cooperation." This policy orientation has been consolidated by
the Science and Technology Basic Law, introduced in 1995, which gave the government legal
competence in promoting the advancement of science and technology. The R&D expenditure
financed by the government is expected to attain 1% of GDP during the second term Science and
Technology Basic Plan (2001-2005).
This trend tends to reinforce stereotypic images of the Japanese innovation system, such as the
"government picking up technological paths" or "industry and government working hand-in-hand,"
despite the fact that, in Japan, R&D activities are financed and performed mainly by the industry
sector. Does this perception reflect reality? This study attempts to clarify this. Pursuing the
proposition of Nathan Rosenberg (1994) that "technology and science, which are now acknowledged
to be central to the achievement of economic growth, need to be understood as path-dependent
phenomena", we examine:
· How the technology policy evolved during the postwar period in Japan;
· What its impact was on the private sector's decision on R&D activities;
· What the underlying philosophy was of the government's R&D policies, if one existed;
· What the new perspective is.
Our analysis will be based on a literature survey and interviews conducted by the author with
government officials in charge of the planning of the industrial technology policy.
This study is organized as follows. Section 2 identifies the evolutionary path of the Japanese
technology policy after WWII, with a particular emphasis on the first white paper on technology
(1949) and the Large Scale Industrial Research and Development System introduced in 1966. Section
3 focuses on the Science and Technology Basic Law (1995) and Basic Plan (1996) to investigate how
Japan expects to shift towards a "nation based on the creation of science and technology." Section 4
attempts to perceive the new trend for the 21st century's technology policy through the analysis of
the Science and Technology Basic Plan II
69
A complete overview of science, technology and industrial policies in Japan is beyond the scope of
this study. Our emphasis is just on the technology policy. This choice reflects our point of view that
places the technology policy at the intersection between the industrial and science policies.
1. In this context, the "State" represents national research laboratories.
2. 0.70% in 1998 (Follow-up of the Science and Technology Basic Plan, 2000).
3. More than 70% of domestic R&D expenditure is performed by the industry sector (STA,
2000).
4. See the list of interviewed persons in the appendix.
 Emergence of the Japanese technology policy
The Situation before WWII For a better understanding of the genesis of the technology policy, we
start with a brief description of the state of science and technology in Japan before WWII.
At the beginning of the Meiji Era (1868-1912), almost all laboratories founded during the Edo Era
(1603-1868) were integrated into the imperial universities, becoming "Research Laboratories"
(Miyahara, 1982). However their research activities were limited in the sense that there was no
specific budget allocated for this purpose, or a clear idea about "research" at this time (Saito, 1987).
Besides these universities, there were also some research laboratories attached to the government.
As part of the industrial restructuring initiated around 1910, the first policy statement in favor of
setting up public research institutes with the aim of improving industrial technology was issued in
1912 by the Industrial Council.
Along this line, a group of researchers initiated the idea of a chemical laboratory as a means to go
beyond imitating imported technology, that is, for Japan to develop its own technologies. With the
advent of WWI, which resulted in a drastic fall in the importation of manufactured goods,
particularly industrial raw materials, the government was urged to support manufacturing these
products. Thus the Chemical Industry Council, established in 1914 within the Ministry of Agriculture
and Commerce, recommended setting up a chemical research institute based on Industry-State
cooperation. The convergence of this recommendation and the above-mentioned private
researchers' initiative, materialized in 1917 with the creation of the Institute of Physical and
Chemical Research (Riken), a public utilities organization financed by subsidies and private
donations.
The First White Paper on Technology
70
The end of WWII marked the departure from the national objective of military strengthening. Japan
opted for an economic-oriented objective with a strong emphasis on social benefits. Along this line,
thirty-one delegates from different divisions of the Ministry of Commerce and Industry (MCI), the
Patent Office, the Small and Medium Enterprise Agency, the National Experimental Laboratories,
and the Ministry of Transport, with the support of the Industrial Technology Agency, 10 worked
together to give birth to the first white paper on technology, called "the state of our country's
industrial technology" (ITA, 1949; Masuda, 1998a). This white paper expressed the great concern of
Japanese officials over technology matters and contained practical and pragmatic proposals to
improve the state of Japanese industry, thus conferring a certain orientation to the postwar science
and technology policy. It also undertook the mission of awakening the public conscience concerning
the critical role of technology in economic development.
The white paper starts by identifying the weaknesses of Japanese industry, which were:
· The lack of Japan's own technology, partly due to the myopic attitude of Japanese industrialists
foreseeing short-term returns and preferring to import technology rather than invest in costly R&D
activities.
· Difficulty in translating the research results accumulated within academia into industrial products,
due to the lack of applied research and development. This point was mentioned as Japan’s primary
problem by the US Academic Commission.
· Predominance of tacit knowledge, embodied skills, tricks and craftsmanship in the production
process, in particular within small and medium enterprises (SME), causing low productivity of labor
and long training periods, and preventing a large-scale diffusion of technology;
· Presence of sectionalism in technical fields, reflecting the hierarchical structure of academic
disciplines, the consequence being the underdevelopment of technology requiring an
interdisciplinary approach; being aware of these facts and in the context of increasing international
competition, it became urgent for Japan to strengthen its technological capability. The white paper
proposed
· Enhancing applied research and development, as suggested by the US Academic Commission
· Soliciting academia's active enrollment in the technology transfer;
· Applying the "scientific method" 13 in production control through the establishment of standards
and norms, the enhancement of quality control and the development of assessment technology and
measurement instruments
· Giving technical support to the small and medium enterprises which dominated Japanese industry
in terms of the number of establishments and employees.
· Favoring a comprehensive approach to development of a new technology.
Founded in 1948 within the Ministry of Commerce and Industry.
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* The argument being that a rise in the productivity of labor and of exportations in the technologyintensive sector will induce the improvement of living standards.
* The Commission also noted that "Japan is forced to improve its technology level by importing from
the US and Europe during the kick-off period, but Japan would have excess technology to export if it
made the effort to climb out of its post-war apathy and generate innovative technologies."
* This idea was already present in the discourse of Masatoshi Okochi (Saito, 1987) given these
guidelines, the government could intervene in several ways, for example by giving fiscal incentives
for technology transfers, by subsidizing the training of engineers, investing in the technological
infrastructure, and by fixing the rules of the game concerning standardization,
* Normalization and measurement. Three existing institutions – the patent system, academic
societies, and training of engineers – were expected to play a crucial role in making these
government measures efficient. The patent system, allocating a temporal monopoly to the inventor,
was considered as an incentive mechanism for technological innovation in accordance with
Schumpeter's point of view. Japanese officials were already aware of the property rights issue as a
means of diffusion and dissemination of new technology rather than the passive use of rights for
defensive purposes. The white paper, however, recognized that there were some problems in its
application. The existing laws related to industrial property rights, such as the patent law, the utility
model law, the trademark law, etc. These were copies of Western countries' laws without any
adaptation to the Japanese context, so that social acceptance of this institution was limited.
Furthermore, there was no institution to control and enforce property rights. Japanese officials
viewed academic societies as having two roles: through meetings and publications, they provided a
place of exchange and communication among university researchers and people from industry; and
by participating different government commissions, members of academic societies contributed to
the formulation of guidelines on technology issues, such as standardization. However, these possible
contributions were not adequately perceived by the industry people at the time, as noted by Masaru
Masuda.

The formal training of engineers was considered to be a key factor in being able to
implement the above-cited scientific approach of production. To ameliorate the quality of
future engineers, the white paper pointed out the importance of having a background in the
fundamental sciences for high-level engineers on one hand, and the need for students to
have some practical experience within industry during their university curriculum on the
other. What should be retained from this overview? First, the white paper emphasized
"industrial technology," i.e. technology with a practical application in industry, rather than
focusing on technology seeds based on R&D activities. Second, the idea of an innovation
system based on the patent system, standardization, quality control, the contribution of
academic societies and the high-level training of engineers was already present. Third, the
white paper urged strong political support to develop a technology-based economy. It is
worth noting that all these elements constituted the key ideas of the "national strategies for
industrial technology,"
72
Which marked a keen shift in the Japanese technology policy by the end of the 1990's. Paradigm
Shift: A Large-Scale Industrial Research and Development System During the 1950's, the trend for
importing technologies continued. Japan was successful in incorporating and improving imported
technologies, and backed by reinforced quality control, the production process was greatly improved
during the 1960's. A new trend in technology appeared during the same period: private companies
started to set up research laboratories, called "Central Research Laboratories," which were devoted
to developing their own technologies. Despite the official intention of Japan developing its own
technology, in 14 The "Law on the standardization" (No. 185) and the "Subsidies for development
system" were voted on in 1949.
The most cited example is Sony's transistor radio. Practice, few technological breakthroughs
emerged. The efforts of industry concentrated mainly on improving existing or imported
technologies. With this background, the Law on Industrial Technology Research Association" (No.81)
was promulgated in 1961. Its purpose was to improve industrial technology by giving incentives to
private companies to join efforts in applied research activities (AIST, 1998). This law, which gave a
juridical personality to the "research association," constituted the first step towards the forthcoming
"Big Projects." In 1963, the Industrial Structure Research Committee 18 recommended that the
Minister of the Ministry of International Trade and Industry (MITI) implement targeted research
projects based on Industry-University-State cooperation, the objective being the development of
innovative technology (Group for promoting the 20th anniversary, 1987).
Research results were to be shared by all participants. It is worth noting that the underlying idea of
research cooperation here was the commissioned research system. This meant that each institution
would individually execute one part of a research project, so no on-site research collaboration was
planned.
The Industrial Structure Council, recognizing technological innovation as the key factor to increasing
competitiveness and generating economic growth, presented in its intermediary report (1965), the
concept of the "Big Project" as follows
· Objectives: to develop new technologies and new products that would not be developed by the
private sector alone due to the presence of high risk and high cost.
· Characteristics: long-term investment in terms of researchers, engineers and money;
· Targeted fields: to select fields which have the potential for large spillovers and economic impact,
or fields in which there is some urgency for development.
· Participating private companies: selected according to their research capacity and their weight in
the potential market.
· Scheme: totally financed by the government, mobilizing the research capacity of the private sector
operating in the targeted field.
· Organization: based on the commissioned research system involving universities, national research
laboratories and private companies.
73
· Management: implement a structure charged with surveying, managing and evaluating each step of
the project, with the capacity to adjust and stop the research agenda if necessary.
Following this agenda, in 1966, the Japanese government implemented its "Large Scale Industrial
Research and Development System," commonly called "Big Projects," with the aim of supporting
high-cost, long-term, and high-risk research projects, which have a large potential to induce
technological breakthrough and large spillovers, but have little chance of being initiated by private
companies in the absence of government intervention. By selecting some technological avenues and
subsidizing intensively on one hand, and by gathering the efforts of private companies, universities
and national research laboratories on the other, the government sought to consolidate its
technological base in promising industries, and subsequently to increase Japan's competitiveness.
This preference for "seed money," which 18 founded in 1961 and later becoming the Industrial
Structure Council. finds its justification in the linear model of innovation,
marked the orientation of Japan's technology policy until the late 1990's. Practically, a big project is
implemented in the following way. The Industrial Technology Council at the MITI selects a
technological avenue after consultation with industrial circles. The Agency of Industrial Science and
Technology (AIST) attached to the
MITI is then charged with designing and planning a big project along the selected technology
avenue, after consultation with the Industrial Science and Technology Commission located within
the AIST. Generally, a big project covers the phase of development of the "basic technologies" and
the phase of "system set-up" that gathers these basic technologies – that is to say, a big project is
expected to present a "pre-commercial product" in its final stage. In accordance with the concerned
industrial circle, a research association is founded. This is charged with coordinating sub-research
projects commissioned by the AIST to its member companies, and surveying up-to-date information
on the technological avenue. Related AIST national research laboratories contribute to develop a
basic technology and evaluate it. They also carry out feasibility studies on how to use research
results. As for research results, patents and know-how generated within a big project become the
property of the State. However, priority is given to commissioned companies to use the patents
(Nihon keizai chosa kyogikai, 1988). The Japan Industrial Technology Association (JITA) was founded
in 1969 to handle the task of technology transfer, dissemination and the valorization of these
results.
What this research system introduces is the presence of a research association. The latter provides
member companies with a place to meet other industrial people working in a related field, exchange
information, share ideas, and to share the results generated by ongoing research activities. Thus a
research association facilitates establishing a network of people and ideas. Another merit of a
research association is its light structure: it is easy to create and dissolve a research association
through the choice of a technological avenue (Group for promoting the 20th anniversary, 1987).
For member companies, being enrolled in a big project guarantees long-term financial support from
the government, gives credibility to pursuing risky research projects without immediate prospects
for commercialization, allows easy access to up-dated information and facilitates informationsharing among them. All these elements were expected to consolidate the technological capability
of member companies in the new technology field. The lack of flexibility is often perceived as a
drawback. Once objectives were defined and research planned, adapting them to the intermediate
74
results obtained within the advancement of the project became a complex and arduous task, the
consistency of the initial planning having a high priority. Another drawback was the fact that the
technologies developed within a big project were not easily translated into a commercial end
product, especially when the selected technology avenue had not been experimented with
elsewhere
The choice of technological avenues pursued during the 1960's and 1970's was dictated in some
cases by social needs, such as finding solutions to the problems of pollution, traffic jams, and water
shortages, but the main driving force was the need to fill the technology gap between Japan and the
United States. During this period, Japan had a model of a technological path, and following this
direction, participating companies consolidated their technological base and succeeded in catching
up with American companies in appropriate fields (Group for promoting the 20th anniversary, 1987).
19 The "Linear model of innovation" describes the step-by-step process of turning an idea into a
commercial product, starting from basic research, passing through application research and
development, and ending in commercialization.
The situation became more complex in the 1980's when Japan entered the post catchup phase. With
no model to follow, Japan had to select technological avenues in its own way, which involved more
risk and uncertainty; the technology required became more complex and sophisticated.
What was the significance of the big projects? The MITI was successful in enlarging its competency;
hence the "industrial technology policy," which included the underlying R&D activities. One of the
consequences was that the MITI's technology policy would be more focused on technology creation
rather than on technology innovation closer to product commercialization. The AIST, through its
functions of planner and manager of big projects, acquired a certain authority vis-à-vis private
companies, moving from its original function to give technological support to Japanese companies.
Incremental Changes
Parallel to the big projects, but based on the same scheme, several R&D systems were introduced
during the 1970's and 1980's. The advent of the first oil crisis urged the Japanese government to
diversify its energy supply and to exploit new and clean energy sources. Following the
recommendation of the Council for Science and Technology20 (5th Report), the "New Energy
Technology R&D System," called the Sunshine project, was implemented in 1974 by the MITI (Nihon
keizai chosa kyogikai, 1988). The "Energy Conservation Technology R&D System," called the
Moonlight project, was added in 1978 to complement the Sunshine project. As R&D systems, the
Sunshine and Moonlight projects function in exactly the same way as the big projects, and differ only
in the fields covered. The New Energy Development Organization (NEDO), a special corporation, 21
was founded in 1980 under the authority of the MITI with the aim of managing the Sunshine and
Moonlight projects. It is worth noting that with the NEDO, the MITI was equipped with a dual
structure of R&D management: the AIST and the NEDO. In 1981, the MITI founded the "Next
Generation Industry Basic Technology R&D System," called Next Generation, along the lines of the
government's objective to become a "Nation based on Science and Technology," as noted in the
1980 white paper on science and technology. It marked the end of the catch-up phase and the
government's intentions were reflected in its targeted fields, such as biotechnology, information
processing, and new materials, which required basic level R&D. However, the way the Next
75
Generation was planned and managed was exactly the same as the big projects. Because of this fact,
the basic and innovative nature of this new system was somewhat diluted according to Masuda.
Besides the MITI, the Science and Technology Agency (STA) introduced the "System for Promotion of
Coordinated and Creative Science and Technology" in 1981 (Nihon Keizai Chosa Kyogikai, 1988). The
Ministry of Education (ME) 23 implemented "Cooperative 20 Founded in 1959 as a consultative body
attached to the cabinet of the Prime Minister with a secretariat at STA.
The Prime Minister shall consult the Council on science and technology policy and respect its
recommendations. The Council, presided over by the Prime Minister, is composed of ten members,
among them ministers of the Ministry of Education and the Ministry of Finance, presidents of the
Economic Planning Agency, STA and the Science Council of Japan.
"Special corporation" is defined as a public enterprise not directly attached to a Division of a
Ministry, an agency, or a local government. It may be founded under a special law or jointly
established by the government and the private sector (Furuta, 1996).
 The technology transfer business is defined as follows:
· Information gathering on inventions with a potential for commercialization generated within
associated universities
· Acquisition of the right to patent and patent filing of selected inventions among the latter, or
assignment of a patent, and acquisition of an exclusive license of already patented inventions;
· Licensing (exclusive and non-exclusive license) or assignment of above patents to private
companies;
· Passing on to the researchers and to their affiliate institution a part of the licensing and other
revenues. The TLO, charged with executing the technology transfer business, may be organized as a
stock company or a corporation according to the Commercial Code in the case of national
universities, and also as a division of a school corporation in the case of private universities. The
TLOs, once approved (shonin) by the Minister of ME or Minister of MITI on the basis of the execution
plan they present, become eligible to receive subsidies, guarantees and support for information
gathering, provided by the Industrial Structure Improvement Fund.
76
Thus it falls under the jurisdiction of the Public Finance Law and the National Property Law.
Between1978 and 1999, the Japan Society for the Promotion of Science was also charged with
administrative tasks and the licensing of patents generated within national universities.
The Office for the Promotion of University-Industry Cooperation implemented in 1996 was in charge
of this task. Regarding national universities, they consist of faculty-owned inventions, and regarding
private and public universities, they also cover those owned by the university. Limited to an annual
subsidy of 20 million yen per TLO during the first five years. Besides the conditions guaranteed by
the law, the TLOs may benefit from the service of the "patent distribution adviser" dispatched by the
Patent Office and managed by the Japan Techno art Foundation without charge to reinforce their
competence in legal issues.
Regarding patents generated within national universities and owned by the State, the Law defines
another category of TLOs – those said to be "accredited (ninety)" by the competent Ministers. They
are allowed to file and to keep the patent free of charge, and to exploit these patents. As for the
licensee, the law introduced a derogation to the Law for Facilitating the Creation of New Business
allowing SME to remain the beneficiary of the investment provided by the SME Investing and
Promoting Company beyond the limit of capital fixed to 100 million yen.
After the first period of application, some supplementary measures were taken to improve the
operation of the TLOs. The Industrial Revitalization Law, 44 enacted in 1999, allowed the TLOs to
benefit from a reduction in the filing and patent fees during the first three years of their operation.
The Law for Reinforcing Industrial Technology, enacted in 2000, allowed the approved TLOs to use
facilities located on national university campuses for their operation free of charge.
Despite these incremental adjustments, the number of approved TLOs and licensing contracts
remained limited.45 Indeed, the implementation and the functioning of TLOs needs the support of
both faculties and private companies, which implies a rupture in the informal relationship based on
tacit agreements and the acceptance of the new rules of the game, such as contract-based
relationships. TLOs have to prove themselves and convince these players of their usefulness by
culminating in successful experiences.
The focus of current TLOs on patenting activities may be another source of limitation. The TLOs have
to aim at transferring technologies in a more pragmatic way, in that the transfer of the right to
patent to the private sector has to be envisaged as one option. However, in this case, TLOs have to
preserve the right to force the private sector party to valorize the invention within a reasonable
amount of time and to guarantee a reasonable level of return to the inventor and his institution.
Another possibility would be to reinforce the TLO's function of intermediary by informing the private
sector not only about existing inventions but also about the potential of universities to generate new
inventions through joint or commissioned research projects. The crucial question for the TLOs
becomes: "How to build a mutually beneficial relationship between industry and universities?"
New Trend for the 21st Century
Since the publication of the first white paper on technology in 1949, the MITI's stance on industrial
technology has evolved over time, and accordingly, new laws and measures were added as
described in the above sections. However, building up a national innovation system requires more
77
than assembling individual measures. It implies the founding of a philosophy on industrial
technology, a structural and organizational reform of the actual systems based on it, and a clear
indication of the policy direction.
MITI's New Philosophy or the Return to the Source
This move toward the rebuilding of the technological innovation system51 was initiated in 1998 at a
meeting of the Industrial Technology Council's General Committee at the MITI (Masuda, 2000). The
new orientation of industrial technology policy presented at this meeting Proposed:
· A comprehensive approach to build a fertile social structure for technological innovation;
· A management with the objective of industrial technology policy;
· A review of the existing policy tools to build a more coherent and comprehensive system of policy
instruments.
There are two innovations in this proposal: first, the social contributions of technological innovation
were considered the final technology policies instead of technological advancement; second the idea
of "National Strategies for Industrial Technology" was evoked. This new orientation received a
positive echo at the Industry Competitive Council and the Prime Minister made a commitment to
implement a strategic plan for industrial technology based on Industry-University-State cooperation.
It is worth noting that the Japan Federation of Economic Organizations (1998) expressed their
interest in building up a comprehensive strategic technology policy. Concretely, the Industrial
Structural Reform and Employment Measures Headquarters, headed by the Prime Minister, decided
that the strategic plan for national industrial technology will be reflected in the Science and
Technology Basic Plan II scheduled for 2001. Herewith, the Committee for National Strategies for
Industrial Technology consists of representatives of industry, universities and the government, and a
working group on industrial technology within the Special Committee for a Basic Plan at the Council
for Science and Technology was founded.
How do we define the underlying philosophy of this new approach? First, while maintaining the
dichotomy between fundamental research and applied research, which justifies the division of labor
between the ME and the MITI, it is recognized that applied research may lead to the discovery of
new fundamental knowledge. This first point implies the move from the "Linear Model of
Innovation" to the "Chain Linked Model" (Aoki and The "technological innovation" includes the full
range of conceptualization & planning, technology creation, technology transmission and diffusion,
technology valorization, technology management and social acceptance, social evaluation and
feedback.
78
National Strategies for Industrial Technology
The National Strategies for Industrial Technology (called the Strategic Plan) was presented for the
first time in April 2000, and a revision is planned every two years.
Recognizing that Japanese competitiveness has decreased during the last decade and that Japan will
face a decline in its labor force, and the increasing awareness of the sustainable development in the
near future, technological innovation became the designated candidate to resolve all these
problems. Thus the Strategic Plan declares the objective of shifting from the "catch up" style of
technological innovation to that of "frontier creation." It proposes investing in a number of targeted
fields, which have the potential to develop new markets, and to set up a national innovation system
capable of generating innovative and socially valuable technologies.
The Strategic Plan selects three R&D areas as beneficiaries of prioritizing government investment:
those responding to social needs, seed technologies presenting innovative and basic characteristics,
and intellectual infrastructure.
With regards to the national innovation system, four goals are specified:
1. To create a truly operational Industry-State-University relationship;
2. To reform Japanese universities with the aim of making them internationally competitive;
3. To nurture creative researchers and engineers;
4. To restructure the government's industrial technology support system. The Strategic Plan also
indicates a plan for each goal: for the first goal, to facilitate the exchange of people, capital and
ideas; for the second, to set a competitive environment; for the third, to create a mobile labor
79
market of researchers and engineers; and for the last one, to make the supporting system more
flexible and responsive to the ever-changing technology trends.
There are two innovations with respect to the approach used to design the Strategic Plan. As
opposed to the traditional way – i.e. a blueprint prepared by the administration is presented to the
related committee and approved by the latter – working groups consisting of representatives from
academia, industry and related Ministries and Agencies, were formed at the early stage with the aim
of finding a common understanding of technological issues, to identify the drawbacks of Japanese
industry and to investigate remedying measures, both at the national and sector levels. Thus,
civilians were offered the opportunity to express their points of view and a cross-ministerial
cooperation took place. Another point is that a cross-sectional approach was used to overcome the
compartmentalization of decision-making.
In the first instance, sector-level working groups formulated their expectation on the national
innovation system, then these points were aggregated to design the common goals stated above.
Science and Technology Basic Plan II
The Science and Technology Basic Plan II has been prepared according to the following schedule:
presentation of the draft by the end of 2000; discussion and presentation of the final version by the
General Council for Science and Technology newly founded within the framework of the
administrative reform of the Central Government, and adoption by the government by the end of
March 2001. Sixteen sectors were selected to implement the sector-specific strategy. Among them
were biotechnology, information technology, machinery, chemistry, energy, environment, materials,
and automotive.20
The Preparatory Office of the Science and Technology Basic Plan, set up at the STA and consisting of
representatives from the STA, the ME and the MITI, started to review the Basic Plan I in 1999. Its
aims were to assess the effects of the Basic Plan I, to identify inherent problems and to take them
into consideration when preparing the Basic Plan II.
Items Effects Remaining problems Competitive environment
Research funds allocated on a competitive basis were doubled between 1995 and 2000 Research
funds targeted to young researchers were more than doubled during the same period
Limited total amount
Mobility The objective "10,000 post-docs" was attained in 1999 Problem of follow-up after the postdoc period due to lack of a competitive market of researchers
Time limited positions were increased within national research laboratories (129 positions in a total
of 9,791 in 1999) timid introduction in national universities (75 in 59,557 in 1998)
80
 Conclusion
The evolution of the Japanese technology policy shows that it is not just limited to technological
advancement, but rather, there are significant economic, political and institutional implications.
Thus, a comprehensive approach is needed to prevent generating any negative outcomes and to
take advantage of the synergy that may exist among different policies.
With regards to the investment in the innovation process, the presence of market failures and the
fact that the social rate of return is superior to the private rate of return justifies the State's
intervention. The question remains over how to choose the means. Although a clear philosophy was
already expressed in the 1949 white paper, the Japanese technology policy has often been dictated
by short-term visions and external pressures. Japan had to wait until the advent of the 1990's
recession before any reconsideration of its technology policy was instigated. The new philosophy,
with a particular emphasis on social contribution, fixes objectives that promote tripartite
cooperation, to create a competitive environment and set an evaluation system. Accordingly,
different means are proposed within the framework of the Basic Plan II. However, one must keep in
mind that these objectives are not the ultimate aims of the plan, just a means to remove or reduce
existing barriers to free the flow of people and ideas, to set the rules of the game, and to generate
the dynamics of innovation.
This is our last comment on the decision-making process. The trend, which dominates throughout
this review of Japan’s technology policy, is the top-down approach. The State acts as a social planner
by making decisions based on the information it possesses. In this context, the problem of
asymmetric information may arise, and in some cases it is less costly to let private agents decide on
their own preferences and then take advantage of the private The secretariat of its predecessor was
hosted by the Bureau of Science and Technology Policy (STA) and with the support of the Division of
Academic Affairs at the Science and International Affairs Bureau (ME) regarding the university issue.
Passing from ten to the maximum number of fourteen and leaving to the Prime Minister a greater
margin to define the composition of members.
Representatives from the STA and MITI and one civilian were appointed as chief executives of the
secretariat.
The five positions for counselor are occupied by representatives from the STA, MITI and Ministry of
Agriculture (Yomiuri, October 29th 2000) initiative, i.e. to benefit the bottom-up approach. How do
we find the right balance between these two approaches? Our point of view is that the principle of
subsidiarity has to decide on the relationship between private agents and the State: when private
agents manifest difficulty in overcoming market failures, it is up to the State to intervene in a
concerted manner, respecting the principles of accountability and assuming its social responsibility.
81
A
GLOBAL / COUNTRY STUDY AND REPORT
ON
JAPAN
Submitted to
SGJ MBA College
REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ASMINISTRATION
In
Yograj jethwa
(Assi. Professor)
Submitted by
Jintal katarmal - 117820592019
Manoj Patel – 117820592021
Amit keniya – 117820592022
Disha karatola- 117820592023
Shweta dharod - 117820592024
Amar joshi -107820592001
Batch : 2011-13,
MBA SEMESTER III/IV
SGJ MBA College
Affiliated to Gujarat Technological University
Ahmedabad
82
INTRODUCTION TO INFRASTRUCTURE
Infrastructure is basic physical and organizational structures needed for the
operation of a society or enterprise, or the services and facilities necessary for an
economy to function. It can be generally defined as the set of interconnected
structural elements that provide framework supporting an entire structure of
development. It is an important term for judging a country or region's development.
The term typically refers to the technical structures that support a society, such as
roads, bridges, water supply, sewers, electrical grids, telecommunications, and so
forth, and can be defined as "the physical components of interrelated systems
providing commodities and services essential to enable, sustain, or enhance societal
living conditions."
Viewed functionally, infrastructure facilitates the production of goods & services, and
also the distribution of finished products to markets, as well as basic social services
such as schools & hospitals; for example, roads enable the transport of raw
materials to a factory. In military parlance, the term refers to the buildings and
permanent installations necessary for the support, redeployment, and operation of
military forces. To make it simple, infrastructure is anything that is needed every day.
TYPES OF HARD INFRASTRUCTURE
The following list of hard infrastructure is limited to capital assets that serve the
function of conveyance or channeling of people, vehicles, fluids, energy, or
information, and which take the form either of a networker of a critical node used by
vehicles, or used for the transmission of electro-magnetic waves.
Infrastructure systems include both the fixed assets, and the control systems and
software required to operate, manage and monitor the systems, as well as any
accessory buildings, plants, or vehicles that are an essential part of the system. Also
included are fleets of vehicles operating according to schedules such as public
transit buses and garbage collection, as well as basic energy or communications
facilities that are not usually part of a physical network, such as oil refineries, radio,
and television broadcasting facilities.
83
Transport infrastructure
• Road and highway networks, including structures (bridges, tunnels, culverts,
retaining walls), signage and markings, electrical systems (street lighting and traffic
lights), edge treatments (curbs, sidewalks, landscaping), and specialized facilities
such as road maintenance depots and rest areas
•Mass transit systems (Commuter rail systems, subways, tramways, trolleys, City
Bicycle Sharing system, City Car Sharing system and bus transportation)
•Railways, including structures, terminal facilities (rail yards, railway stations), level
crossings, signalling and communications systems
•Canals and navigable waterways requiring continuous maintenance (dredging, etc.)
•Seaports and lighthouses
•Airports, including air navigational systems
•Bicycle paths and pedestrian walkways, including pedestrian bridges, pedestrian
underpasses and other specialized structures for cyclists and pedestrians
•Ferries
For canals, railroads, highways, airways and pipelines see Grübler (1990),[13] which
provides a detailed discussion of the history and importance of these major
infrastructures.
Energy infrastructure
Electrical power network, including generation plants, electrical grid, substations, and
local distribution.
•Natural gas pipelines, storage and distribution terminals, as well as the local
distribution network. Some definitions may include the gas wells, as well as the fleets
of ships and trucks transporting liquefied gas.
•Petroleum pipelines, including associated storage and distribution terminals. Some
definitions may include the oil wells, refineries, as well as the fleets of tanker ships
and trucks.
•Specialized coal handling facilities for washing, storing, and transporting coal. Some
definitions may include Coal mines.
•Steam or hot water production and distribution networks for district heating systems.
Coal mines, oil wells and natural gas wells may be classified as being part of the
mining and industrial sector of the economy, not part of infrastructure.
Water management infrastructure
84
•Drinking water supply, including the system of pipes, storage reservoirs, pumps,
valves, filtration and treatment equipment and meters, including buildings and
structures to house the equipment, used for the collection, treatment and distribution
of drinking water
•Sewage collection, and disposal of waste water
•Drainage systems (storm sewers, ditches, etc.)
•Major irrigation systems (reservoirs, irrigation canals)
•Major flood control systems (dikes, levees, major pumping stations and floodgates)
•Large-scale snow removal, including fleets of salt spreaders, snow plows,
snowblowers, dedicated dump trucks, sidewalk plows, the dispatching and routing
systems for these fleets, as well as fixed assets such as snow dumps, snow chutes,
snow meters
•Coastal management, including structures such as seawalls, breakwaters, groynes,
floodgates, as well as the use of soft engineering techniques such as beach
nourishment, sand dune stabilization and the protection of mangrove forests and
coastal wetlands.
Communications infrastructure
•Postal service, including sorting facilities
•Telephone networks (land lines) including telephone exchange systems
•Mobile phone networks
•Television and radio transmission stations, including the regulations and standards
governing broadcasting
•Cable television physical networks including receiving stations and cable distribution
networks (does not include content providers or "networks" when used in the sense
of a specialized channel such as CNN or MTV)
•The Internet, including the internet backbone, core routers and server farms, local
internet service providers as well as the protocolsand other basic software required
for the system to function (does not include specific websites, although may include
some widely-used web-based services, such as social network services and web
search engines)
•Communications satellites
•Undersea cables
85
•Major private, government or dedicated telecommunications networks, such as
those used for internal communication and monitoring by major infrastructure
companies, by governments, by the military or by emergency services, as well as
national research and education networks
•Pneumatic tube mail distribution networks
Solid waste management
•Municipal garbage and recyclables collection
•Solid waste landfills
•Solid waste incinerators and plasma gasification facilities
•Materials recovery facilities
•Hazardous waste disposal facilities
Earth monitoring and measurement networks
•Meteorological monitoring networks
•Tidal monitoring networks
•Stream Gauge or fluviometric monitoring networks
•Seismometer networks
•Earth observation satellites
•Geodetic benchmarks
•Global Positioning System
•Spatial Data Infrastructure
TYPES OF SOFT INFRASTRUCTURE
Soft infrastructure includes both physical assets such as highly specialized buildings
and equipment, as well as non-physical assets such as the body of rules and
regulations governing the various systems, the financing of these systems, as well
as the systems and organizations by which highly skilled and specialized
professionals are trained, advance in their careers by acquiring experience, and are
86
disciplined if required by
accreditation and discipline).
professional
associations
(professional
training,
Unlike hard infrastructure, the essence of soft infrastructure is the delivery of
specialized services to people. Unlike much of the service sector of the economy,
the delivery of those services depend on highly developed systems and large
specialised facilities or institutions that share many of the characteristics of hard
infrastructure.
Governance infrastructure
•The system of government and law enforcement, including the political, legislative,
law enforcement, justice and penal systems, as well as specialized facilities
(government offices, courthouses, prisons, etc.), and specialized systems for
collecting, storing and disseminating data, laws and regulation
•Emergency services, such as police, fire protection, and ambulances, including
specialized vehicles, buildings, communications and dispatching systems
•Military infrastructure, including military bases, arms depots, training facilities,
command centers, communication facilities, major weapons systems, fortifications,
specialized arms manufacturing, strategic reserves
Economic infrastructure
•The financial system, including the banking system, financial institutions, the
payment system, exchanges, the money supply,financial regulations, as well as
accounting standards and regulations
•Major business logistics facilities and systems, including warehouses as well as
warehousing and shipping management systems
•Manufacturing infrastructure, including industrial parks and special economic zones,
mines and processing plants for basic materials used as inputs in industry,
specialized energy, transportation and water infrastructure used by industry, plus the
public safety, zoning and environmental laws and regulations that govern and limit
industrial activity, and standards organizations
•Agricultural, forestry and fisheries infrastructure, including specialized food and
livestock transportation and storage facilities, major feedlots, agricultural price
support systems (including agricultural insurance), agricultural health standards, food
inspection, experimental farms and agricultural research centers and schools, the
system of licensing and quota management, enforcement systems against poaching,
forest wardens, and fire fighting.
Social infrastructure
87
•The health care system, including hospitals, the financing of health care, including
health insurance, the systems for regulation and testing of medications and medical
procedures, the system for training, inspection and professional discipline of doctors
and other medical professionals, public health monitoring and regulations, as well as
coordination of measures taken during health emergencies such as epidemics
•The educational and research system, including elementary and secondary schools,
universities, specialized colleges, research institutions, the systems for financing and
accrediting educational institutions
•Social welfare systems, including both government support and private charity for
the poor, for people in distress or victims of abuse.
INFRASTRUCTURE OF JAPAN
Japan has a very advanced and well-maintained infrastructure, which undergoes
regular upgrading and expansion. Both the private and public sectors undertake
various infrastructural projects and operate their respective services.
Prime Minister
General Information
Mr. Naoto Kan
Capital
Tokyo
Area
total: 377,835 sq km
land: 374,744 sq km
water: v3,091 sq km
note: includes Bonin Islands (Ogasawara-gunto),
Daito-shoto, Minami-jima, Okino-tori-shima, Ryukyu
Islands (Nansei-shoto), and Volcano Islands (Kazanretto)
Culture
Culture
History
History Overview
Climate
There are a wide range of climates in Japan, ranging
from the freezing conditions of Hokkaido in the north
to the tropical weather in the southern islands of
Okinawa. In the main area of Japan, the four seasons
are evident and similar in time periods to the west
coast of North America. There is a rainy season from
mid-June to mid-July, although the temperaturesare
still warm and the humidity rises to very high levels.
The typhoon season is in September, but it is the
88
southern islands that are most affected by any
typhoons.
Food
Japanese Food
Natural Resources
negligible mineral resources, fish
Irrigated land
27,820 sq km
Natural hazards
many dormant and some active volcanoes; about
1,500 seismic occurrences (mostly tremors) every
year; tsunamis
Environmentinternational
agreements
party to: Antarctic-Environmental Protocol, Antarctic
Treaty, Biodiversity, Climate Change, Desertication,
Endangered Species, Environmental Modification,
Hazardous Wastes, Law of the Sea, Marine Dumping,
Nuclear Test Ban, Ozone Layer Protection, Ship
Pollution, Tropical Timber 83, Tropical Timber 94,
Wetlands, Whaling
signed, but not ratified: Climate Change-Kyoto
Protocol
Population
125 million (Approx.)
Birth rate
10.48 births/1,000 population(Approx.)
Death rate
8.12 deaths/1,000 population (Approx.)
Net migration rate
-0.34 migrant(s)/1,000 population (Approx.)
Sex ratio
at birth: 1.05 male(s)/female
under 15 years: 1.05 male(s)/female
15-64 years: 1.01 male(s)/female
65 years and over: 0.72 male(s)/female
total population: 0.96 male(s)/female (Approx.)
Life expectancy at
birth
total population: 80.11 years
male: 77.02 years
female: 83.35 years (Approx.)
Religions
observe both Shinto and Buddhist 84%, other 16%
(including Christian 0.7%)
Legislative Body
: bicameral Diet or Kokkai consists of the House of
Councillors or Sangi-in
89
Official Language
Japanese
Literacy
definition: age 15 and over can read and write
total population: 99% (1970 est.)
male: NA%
female: NA% (Approx.)
Currency
yen (¥)
Inflation
1.0% (CPI)
Legal System
modeled after European civil law system with EnglishAmerican influence; judicial review of legislative acts
in the Supreme Court; accepts compulsory ICJ
jurisdiction, with reservations
GDP: Purchasing
Power Parity
-$2.903 trillion (approx.)
GDP - real growth
rate
-2.6% (approx.)
GDP - per capita
purchasing power parity-$23,100 (approx.)
GDP - Composition
by sector
agriculture: 2%
industry: 38%
services: 60% (approx.)
Household income
lowest 10%: NA%
highest 10%: NA% (approx.)
Inflation rate
(consumer prices)
0.9% (approx.)
Industries
among world's largest and technologically advanced
producers of steel and nonferrous metallurgy, heavy
electrical equipment, construction and mining
equipment, motor vehicles and parts, electronic and
telecommunication equipment, machine tools,
automated production systems, locomotives and
railroad rolling stock, ships, chemicals; textiles,
processed foods
Industrial
production growth
rate
-6.9% (approx.)
90
Agricultureproducts
rice, sugar beets, vegetables, fruit; pork, poultry, dairy
products, eggs; fish
Communication
Telephones
55 per 100 pop
Radios
900 per 1000 pop.
Televisions
610 per 1000 pop.
Transportation
Railways
total: 23,670.7 km
standard gauge: 2,893.1 km 1.435-m gauge (entirely
electrified)
narrow gauge: 89.8 km 1.372-m gauge (89.8 km
electrified); 20,656.8 km 1.067-m gauge (10,383.6 km
electrified); 31 km 0.762-m gauge (3.6 km electrified)
(approx.)
Roads
27,000 km
Highways
total: 1.16 million km
paved: 859,560 km (including 6,070 km of
expressways)
unpaved: 300,440 km (approx.)
Waterways
: about 1,770 km; seagoing craft ply all coastal inland
seas
Pipelines
crude oil 84 km; petroleum products 322 km; natural
gas 1,800 km
Ports and harbors
Akita, Amagasaki, Chiba, Hachinohe, Hakodate,
Higashi-Harima, Himeji, Hiroshima, Kawasaki,
Kinuura, Kobe, Kushiro, Mizushima, Moji, Nagoya,
Osaka, Sakai, Sakaide, Shimizu, Tokyo, Tomakomai
Tax Structure
Tax Structure
A mountainous, island nation, Japan has inadequate natural resources to support its
growing economy and large population. Although many kinds of minerals were
extracted throughout the country, most mineral resources had to be imported in the
postwar era. Local deposits of metal-bearing ores were difficult to process because
they were low grade. The nation’s large and varied forest resources, which covered
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70 percent of the country in the late 1980s, were not utilized extensively. Because of
the precipitous terrain, underdeveloped road network, and high percentage of young
trees, domestic sources were only able to supply between 25 and 30 percent of the
nation's timber needs. Agriculture and fishing were the best developed resources,
but only through years of painstaking investment and toil. The nation therefore built
up the manufacturing and processing industries to convert raw materials imported
from abroad. This strategy of economic development necessitated the establishment
of a strong economic infrastructure to provide the needed energy, transportation,
communications, and technological know-how.
Japan’s infrastructure, such as roads, bridges, tunnels, city water systems and sewer
systems, were built mainly during the high economic growth period of the 1960s and
’70s. Much of this infrastructure is nearing the generally accepted useful life of 50
years or has passed it. Systematic repair or replacement work is indispensable for
preventing fatal accidents. The central and local governments must work out plans to
effectively meet this need.
In coping with aging infrastructure, the central and local governments should drop
the practice of carrying out repairs only after structures appear to have developed
problems. They should switch to a preventive maintenance practice that entails
making systematic repairs in accordance with plans worked out in advance.
Transportation
Japan has a very extensive and modern road network. It consists of 1,152,207
kilometers (715,981 miles) of highways, of which 863,003 kilometers (536,270 miles)
are paved. They include 6,114 kilometers (3,799 miles) of expressways. The number
of motor vehicles increased from 70,106,536 in 1995 to 73,688,389 in 1999. Major
development projects to expand the Japanese highway network include a $32-billion
project for the construction of a second Tomei-Meishin Expressway, connecting
Tokyo and Kobe via Nagoya. The length of Japan's railways is 23,670 kilometers
(14,708 miles), more than half of which is electrified. Japan is famous for its highspeed trains.
As a country surrounded by water, Japan has developed a very extensive and
modern sea transportation system. It includes many ports and harbors such as Akita,
Amagasaki, Chiba, Hachinohe, Hakodate, Higashi-Harima, Himeji, Hiroshima,
Kawasaki, Kinuura, Kobe, Kushiro, Mizushima, Moji, Nagoya, Osaka, Saki, Sakaide,
Shimizu, Tokyo, Tomakomai, and Yokohama. Japan has a very large merchantmarine fleet, which is a necessity for its international trade and for ensuring an
uninterrupted arrival of raw material, fuel, foodstuffs, and other necessary products.
The fleet comprises 662 ships with a total capacity of 13,039,488 tons.
Japan benefits from a modern and extensive air transportation system. In 1999,
there were 171 airports, of which 140 have paved runways, and 14 heliports. Airports
in Tokyo, Kagoshima, Osaka, and Kansai provide international services. The major
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international airports are Narita, which serves Tokyo; Kansai, which serves Kobe,
Kyoto, and Osaka; and Chitose (Sapporo) and Sendai in Northern Japan, which
serve many northern cities. Major airport construction projects include a second
runway for Kansai International Airport, a $7.2 billion-project for Central Japan
International Airport in Ise Bay, and the New Kitakyushu Airport in the Kyushu region
located in the western part of Japan. Japan has a large air passenger fleet consisting
of private and public airlines.Transportation in Japan is modern and infrastructure
spending has been large.
Japan has an efficient public transportation network, especially within metropolitan
areas and between the large cities. Japanese public transportation is characterized
by its punctuality, its superb service, and the large crowds of people using it.
Japan's road spending has also been large. The 1.2 million kilometers of paved road
are the main means of transportation. Japan has left-hand traffic. A single network of
high-speed, divided, limited-access toll roads connects major cities and is operated
by toll-collecting enterprises.
Dozens of Japanese railway companies compete in regional and local passenger
transportation markets; for instance, 7 JR enterprises, Kintetsu Corporation, Seibu
Railway, and Keio Corporation. Often, strategies of these enterprises contain real
estate or department stores next to stations. Some 250 high-speed Shinkansen
trains connect major cities. All trains are known for punctuality.
There are 176 airports, and the largest domestic airport, Haneda Airport, is Asia's
busiest airport. The largest international gateways are Narita International Airport
(Tokyo area), Kansai International Airport (Osaka/Kobe/Kyoto area), and Chūbu
Centrair International Airport (Nagoya area). The largest ports include Nagoya Port.
Road transportation
According to Japan Statistical Yearbook 2011, Japan has approximately 1,203,600
km of roads made up of 1,012,000 km of city, town and village roads, 129,000 km of
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prefectural roads, 55,000 km of general national highways and 7,600 km of national
expressways.[6]The Foreign Press Center/Japan sites a total length of expressways
at: 7,641 km (fiscal 2008).[7] A single network of high-speed, divided, limited-access
toll roads connects major cities on Honshu, Shikoku and Kyushu. Hokkaido has a
separate network, and Okinawa Island has a highway of this type. In the year 2005,
the toll collecting companies, formerly Japan Highway Public Corporation, have been
transformed into private companies in public ownership, and there are plans to sell
parts of them. The aim of this policy is to encourage competition and decrease tolls.
Road passenger and freight transport expanded considerably during the 1980s as
private ownership of motor vehicles greatly increased along with the quality and
extent of the nation's roads. Bus companies including the JR Bus companies operate
long-distance bus service on the nation's expanding expressway network. In addition
to relatively low fares and deluxe seating, the buses are well utilized because they
continue service during the night, when air and train service is limited.
The cargo sector grew rapidly in the 1980s, recording 274.2 billion tonne-kilometres
in 1990. The freight handled by motor vehicles, mainly trucks, in 1990, was over 6
billion tonnes, accounting for 90 percent of domestic freight tonnage and about 50
percent of tonne-kilometres.
Air transport
Japan currently (2012) has 98 airports.[8] The main international gateways are
Narita International Airport (Tokyo area), Kansai International Airport
(Osaka/Kobe/Kyoto area), andChūbu Centrair International Airport (Nagoya area).
The main domestic hub is Tokyo International Airport (Haneda Airport), Asia's
busiest airport and the world's 4th busiest airport; other major traffic hubs include
Osaka International Airport, New Chitose Airportoutside Sapporo, and Fukuoka
Airport. 14 heliports are estimated to exist (1999).
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The two main airlines are Japan Airlines and All Nippon Airways. Other passenger
carriers include Skymark Airlines, Skynet Asia Airways, Air Do, Star Flyer and Fuji
Dream Airlines. United Airlines and Delta Air Lines, formerly Northwest Airlines, are
major international operators from Narita Airport.
Domestic air travel in Japan has historically been highly regulated. From 1972, the
three major domestic airlines (JAL, ANA, and JAS) were allocated certain routes,
with JAL and ANA sharing trunk routes, and ANA and JAS sharing local feeder
routes. JAL also had a flag-carrier monopoly on international routes until 1986.
Airfares were set by the government until 2000, although carriers had freedom to
adjust the standard fares starting in 1995 (when discounts of up to 50% were
permitted). Today, fares can be set by carriers, but the government retains the ability
to veto fares that are impermissibly high.
Marine transport
There are 1770 km of Waterways in Japan; seagoing craft ply all coastal inland seas.
The twenty-two major seaports designated as special important ports by Ministry of
Land, Infrastructure and Transport include Chiba, Fushiki/Toyama, Himeji,
Hiroshima, Kawasaki,Kitakyūshū, Kobe, Kudamatsu, Muroran, Nagoya, Niigata,
Osaka,
Sakai/Senpoku,Sendai/Shiogama,
Shimizu,
Shimonoseki,
Tokyo,
Tomakomai, Wakayama, Yokkaichi, andYokohama.
Japan has 662 ships of with a volume of 1,000 gross register tons (GRT) or over,
totaling 13,039,488 gross register tons (GRT) or 18,024,969 metric tons deadweight
(DWT). There are 146 bulk ships, 49 cargo ships, 13 chemical tankers, 16
combination bulk, 4 with combination of ore and oil, 25 container, 45 liquefied gas, 9
passenger, 2 passenger and cargo combination ships, 214 petroleum tankers, 22
refrigerated cargo, 48 roll-on/roll-off ships, 9 short-sea passenger, and 60 vehicle
carriers (1999 est.).
95
Ferries connect Hokkaido to Honshu, and Okinawa Island to Kyushu and Honshu.
They also connect other smaller islands and the main islands. The scheduled
international passenger routes are to China, Russia, South Korea and Taiwan.
Coastal and cross-channel ferries on the main islands decreased in routes and
frequencies following the development of bridges and expressways but some are still
operating (as of 2007).
CONSTRUCTION
The mainstay of infrastructure development is the construction industry, which
employed 9.4 percent of the labor force in 1990 and contributed some 8.5 percent of
GDP. After the two oil crises in the 1970s, construction investment turned sluggish,
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and the share of construction investment in GNP decreased gradually. In 1987,
however, business expanded through investor confidence, continued increase in
corporate earnings, improvement of personal income, and rapid rise in land prices.
The share of construction investment in GNP rose sharply, especially for more
sophisticated and higher value-added private housing and private non housing
structures.
Construction starts in FY 1990 covered a total area of about 283 million square
meters, with about 134 square meters exclusively for housing. Total construction
costs were estimated in excess of ¥49 billion.
Although demand for new private housing is expected to grow in the 1990s, even
greater growth is expected for new urban office buildings. A number of large projects
are underway, suggesting that the construction industry would experience continued
growth throughout the 1990s. These include projects for Tokyo's waterfront and
other urban redevelopment, highway construction, and new or expanded airports.
Japan's construction technology, which includes advanced earthquake-resistant
designs, is among the most developed in the world. Major firms compete to improve
quality control over all phases of design, management, and execution. Research and
development focuses especially on energyrelated facilities, such as nuclear power
plants and liquid natural gas (LNG) storage tanks. The largest firms are also
improving their underwater construction methods.
Mining
Mining was a rapidly declining industry in the 1980s. Domestic coal production
shrank from a peak of 55 million tons in 1960 to slightly more than 16 million tons in
1985, while coal imports grew to nearly 91 million tons in 1987. Domestic coal mining
companies faced cheap coal imports and high production costs, which caused them
chronic deficits in the 1980s. In the late 1980s, Japan's approximately 1 million tons
of coal reserves were mostly hard coal used for coking. Most of the coal Japan
consumed is used to produce electric power.
Japanese coal is found at the extreme ends of the country, in Hokkaido and Kyushu,
which have, respectively, 45 and 40 percent of the country's coal deposits. Kyushu's
coal is generally of poor quality and hard to extract, but the proximity of the Kyushu
mines to ports facilitates transportation. In Hokkaido, the coal seams are wider and
can be worked mechanically, and the quality of the coal is good. Unfortunately, these
mines are located well inland, making transportation difficult. In most Japanese coal
mines, inclined galleries, which extended in some places to 9.7 kilometers
underground, were used instead of pits. This arrangement is costly, despite the
installation of moving platforms. The result is that a miner's daily output is far less
than in Western Europe and the United States and domestic coal costs far more than
imported coal.
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Energy
Japan lacks significant domestic sources of energy except coal and must import
substantial amounts of crude oil, natural gas, and other energy resources, including
uranium. During the 1960-72 period of accelerated growth, energy consumption
grew much faster than GNP, doubling Japan's consumption of world energy. By
1976, with only 3 percent of the world's population, Japan was consuming 6 percent
of global energy supplies.
After the two oil crises of the 1970s, the pattern of energy consumption in Japan
changed from heavy dependence on oil to some diversification to other forms of
energy resources. Japan's domestic oil consumption dropped slightly, from around
5.1 million barrels of oil per day in the late 1970s to 4.9 million barrels per day in
1990. While the country's use of oil is declining, its consumption of nuclear power
and LNG has risen substantially. Because domestic natural gas production is
minimal, rising demand is met by greater imports. Japan's main LNG suppliers in
1987 were Indonesia (51.3 percent), Malaysia (20.4 percent), Brunei (17.8 percent),
Abu Dhabi (7.3 percent), and the United States (3.2 percent). Several Japanese
industries, including electric power companies and steelmakers, switched from
petroleum to coal, most of which is imported.
In 1989 Japan was the world's third largest producer of electricity. Most of the more
than 3,300 power plants were thermoelectric. About 75 percent of the available
power was controlled by the ten major regional power utilities, of which Tokyo
Electric Power Company was the world's largest. Electricity rates in Japan were
among the world's highest.
The Japanese were working to increase the availability of nuclear power in 1985.
Although Japan was a late starter in this field, it finally imported technology from the
United States and obtained uranium from Canada, France, South Africa, and
Australia. By 1991 the country had forty-two nuclear reactors in operation, with a
total generating capacity of approximately 33 million kilowatts. The ratio of nuclear
power generation to total electricity production increased from 2 percent in 1973 to
23.6 percent in 1990.
Of alternative energy sources, Japan has effectively exploited only geothermal
energy. The country had six geothermal power stations with a combined capacity of
133,000 kilowatts per hour in 1989.
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POWER
The Japanese power-generation industry includes both private and public
companies, though in 1999, only 5 percent of the nation's power was created by the
private sector, a proportion that is expected to increase with industry deregulation (a
lessening of government controls). Japan's electricity is derived from 4 major
methods: thermal (using oil, liquefied natural gas, and coal), nuclear, hydro (water
power), and non-conventional (geothermal, solar, and wind). In 1998, the proportion
of electricity generated from these sources was 57 percent, 32 percent, 9 percent,
and 2 percent, respectively. In that year, total electricity produced amounted to
995.982 billion kWh, well above the consumption of 926.263 billion kWh. In
anticipation of large increases in consumption in the 21st century, Japan is planning
to increase its output to 1,280 billion kWh by 2020.
Since its thermal generators depend heavily on large imports of fuel, Japan is
planning to decrease its dependency on this method and increase its dependence on
nuclear power, although that method is more costly. Accordingly, 9 new nuclear
reactors are planned to become operational by 2008, providing an additional 11.3
gigawatts (GW) of electricity. Japan is also encouraging the expansion of generators
using renewable energy, such as hydropower and geothermal energy.
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PUBLIC WORKS IN JAPAN
As of 2003, Japan spent $208 billion a year on public works projects such as
highways, tunnels, dams and bridges. Construction consumes 40 percent of the
national budget.
The Japanese government seems to have never met a public works project it didn't
like. But the costs can be astronomical. Each year Japan spends more money on
public works than was spent to build the entire Panama Canal. Osaka Bay has eight
artificial islands and 95 percent of its 160-kilometer shoreline is reclaimed land.
There are also large amounts of reclaimed land in Saga Prefecture.
Dams in Japan
100

There are lots of dams in Japan. They have been built to generate electricity,
control floods and provide irrigation water for agriculture. Japan uses it water
supplies very cleverly. Often getting energy, irrigation water, and drinking
water from the same dam. Even so many Japanese feel there are too many
dams and environmental groups have joined with farmers worried about
having their land submerged to protest the construction of new dams.

Share of the worlds dams: 1) China (45 percent); 2) the United States (14
percent); 3) India (9 percent); 4) Japan (6 percent); Other countries (26
percent).

Some prefectures have announced a cessation of all dam projects after they
were deemed unnecessary for water supplies and flood control. A concrete
dam proposed for a major river in Kumamoto was axed by the governor there
on the grounds that it world upset the flow of rivers there that attract large
numbers of tourists and fishermen seeking ayu sweetfish. See Nagano
mayor.

In 2008, Japan announced plans to build 182 new hydroelectric projects by
2030, up from the 38 it had originally projected, to create construction jobs
and boost total hydroelectric power generation to 78.1 billion kilowatt hours.

Tokuyama Dam, Japan’s largest dam in term of water capacity, was opened
in May 2008. Plans for the dam, which can hold 650 million tons of water,
were announced in 1957 though construction did not begin until 2000. The
dam cost $3.5 billion.

Some expensive dams have been white elephants. The $380 million Togo
dam north of Furano in Hokkaido was built between 1977 and 1993 to hold
back 4.3 million tons of water to be used in agriculture. Unfortunately though it
began leaking after it opened through the loose volcanic soil at the base of the
dam. Much of the money to build the dam came from local sources. Local
farmers are angry. The repair bill has been estimated to be around $120
million.
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Bridges in Japan
Akashi-Kaikyo Bridge
 The Akashi Kaikyo Bridge (7 miles west of Kobe) is the world's longest
suspension bridge. Opened in April 1998 and connecting Kobe with Awajishima island, it is a 3,911 meters long, a few meters longer than the Great
Belt Connection (connecting the islands of Funen and Zealand in Denmark),
completed in 1999. The Akashi Kaikyo Bridge has been designed to resist
powerful earthquakes and typhoons. Illuminated at night, it is a breathtaking
sight referred to as the "Pearl bridge."
 The world’s 10 longest suspension bridges (length and year completed as of
2007): 1)Akashi-Kaikyo Bridge, Japan (1991 meters, 6,529 feet, 1998); 2)
Great Belt Bridge, Denmark (1,624 meters, 5,328 feet, 1998); 3) Runyang
Bridge, China (1,490 meters, 4,888 feet, 2005); 4) Humber Bridge, Britain
(1,410 meters, 4,626 feet, 1981); 5) Jiangyin Bridge, China (1,385 meters,
4,543 feet, 1999); 6) Tsing Ma Bridge, Hong Kong (1,377 meters, 4,518 feet,
1997); 7) Verrazano-Narrows Bridge, New York (1,298 meters, 4,260 feet,
1964); 8) Golden Gate Bridge, San Francisco (1,280 meters, 4,200 feet,
1937); 9) Hogakustenbron, Sweden (1,210 meters, 3,970 feet, 1997); 10)
Mackinac Bridge. Michigan (1,158 meters, 3,800 feet, 1957).
 The Shimanami Route (between Onomichi on Honshu and Imbari on Shikoku)
is 59-kilometer route with 10 suspension bridges of varying size that connect
the main island Honshu (Hiroshima Prefecture) and Shikoku (Ehime
Prefecture) and nine small islands in between. Opened in May 1999, it cost of
$7 billion and the lives of seven men. The Shimanami Route includes the
Tatara Bridge, which connects Ikuchi-jima and Omishima islands, the world's
longest cable-styled bridge; and the 4,045-meter Kurushima Kaiyo Bridge,
the first bridge in the world with three suspended sections.
Tunnels in Japan
102
The longest tunnel in the world is the 33.5-mile-long Seikan Tunnel under the
Tsugaru Strait between the main Japanese island of Honshu and the largest island
in the north, Hokkaido. The tunnels is nearly twice as long as any railroad tunnel
constructed before it. The project began in 1964. Thirty-four men were killed before it
was finished in 1988. Work began at both ends, with construction workers drilled and
blasting through volcanic rock 800 feet below the turbulent Tsugaru Strait.
In 1984, a 50,000-ton wedge of rock broke through the roof of a tunnel bored
through a volcanic mountain on Hokkaido. The rock crushed a bus with 19 people on
board and a car with a single occupant. There were no survivors in those vehicles.
In June 1999, a chunk of concrete fell from a tunnel in Fukuoka Prefecture and hit a
passing train, causing the closing of the Shinkanensen. A survey after the accident
found defects in more than half the highway tunnels and 20 percent of the highway
bridges investigated.
There has been some discussion of building a tunnel between Kyushu in Japan and
South Korea. It would be over 200 kilometers long and require engineering feats like
those used to build the Chunnel; under the English Channel. If it were to be built it
would be the deepest and longest tunnel im the world. One plan calls for the
construction of three undersea tunnels linked by two small islands. The final stretch
would be over 70 kilometers long and 140 meters deep. Such a project would take
10,000 workers 10 years to completer at an estimated cost of $25 billion. One
person who has said he would back the project is the Rev. Sun Myung Moon.
The Kammon Tunnel, connecting Honshu with Kyushu, was the world’s first
undersea tunnel. Completed in 1958, it is 3,461 meters long and connects Fukuoka
on Kyushu with Shimonoseki in Honshu.
Aqua-Line
One of the most wasteful projects is the Aqua-Line, a 15.1 tunnel-bridge that runs
under Tokyo Bay between the Tokyo side of the bay and the Chiba side. It was built
at a cost of ¥1.4 trillion—about $1 million a meter—over 10 years—and embraces a
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shopping complex that looks likes a cruise ship and huge shock absorbers to help
the complex to weather earthquakes and typhoons. It opened in 1997, but is largely
unused because few people want to fork over the expensive toll.
The Tokyo Bay Aqualine was a political project. Anticipated traffic figures were
inflated to get the project approved. It has only has sluggish traffic—40 percent of
what was expected—and has amassed a huge debt that the next generation will
have to pay back. Each year it brings in ¥14.4 billion in revenues and cost around
¥49.5 billion in expenditures, including maintenance costs.
The toll was initially ¥4,000 one-way for a standard-size vehicle but was lowered to
¥3,000 in 2000. Taking the Aqualine route to Narita airport from Kawasaki cost twice
as much as the Bayshore route and Higashi-Kanto Expressway. The Aqualine toll
was reduced from ¥3,000 to ¥1,000 in March 2009 and reduced again to ¥800 in
August. The result was increased business for tourist spots in Chiba and traffic jams
on the bridge.
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Local Government and Public Works in Japan
In recent years there has been a drive to decentralize power from the central
government to local governments and one the biggest steps to making this happen is
freeing the local government from the burden of financing extensive public works
projects such as dams, expressways and Shinkansen rail lines dreamed up by the
central government.
Large government projects, the central government pays two thirds and local
governments pay a third. The system was set up under the notion that people who
benefit from projects should pay for them. But in many cases the costs of projects
outweigh the benefits.
Local governments complain they are “slaves” to the national government and their
requests. Sometimes they are required to come up with billion of dollars to fund
projects like highways, ports and train lines that were largely hatched without their
consent by the national government
The Niigata prefectural government said it may defy a request by the central
government to increase its spending on a Shinkansen project by ¥22 billion, arguing
it would be too much of strain to come up with the extra money.
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782-Swami Ghanshyam Jivandasji Mba College

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