Japan’s economic and technological platform was developed roughly 50 years ago. It is creaking now. Dragged down by a faltering domestic economy and rising domestic workforce prices, it is reduced to offshoring its manufacturing interests into other Asian countries and balancing payments that seem weighed against it. Japanese marques may remain prominent in consumer electronics, but increasingly its premiere marques are produced in neighbouring countries. Japanese manufacturers have failed to make any great impact in the world of mobile telephony, for instance.

Japan is vulnerable to any shift in power to its more efficient, less expensive neighbours. Like European counterparts such as the UK, it might be forced to shift its priorities from manufacturing to services and will doubtless be forced to pay an economic and political price for this shift.

In the technology sector, much of Japan’s weakness stems from the conditions imposed upon its by the US in 1945. It became an offshore production facility for consumer electronics destined for the US market and through the 1970s to the 1990s that was pretty much OK for all concerned. Much of the related IPR remained under US control, with America attempting to countermand Japan’s economic development in much the same way that it is doing to China just now.

After recent years of sluggish economic performance, Japan may just now be starting to stick its head above the global industrial parapet. The transfer of production to low-cost companies in China and the Asia-Pacific region should not be seen negatively; nor should the growing bank of intellectual property found in Japan.

If Japan can do away with its ‘cultural cringe’ in technology spheres, it might be capable of establishing a new global dynamic in technology. The last time it came close to this was with the Sony Walkman, swamped by me-too offerings and superseded by the iPod. Just one Japanese innovation will reverse that trend.

A Japanese Google or a Japanese Microsoft would see to that. Both, sadly, seem a long way away.

Rights, wrongs and Richter scales
Techtonix scale/short term: 5/10. Set back by poor economic conditions at home and the legacy of underperformance in Europe.
Techtonix scale/mid term: 6/10. Right up there on the back of mobile technology, Asian sales and links to the Chinese market.
Techtonix scale/long term: 6/10. Unable to break through into new markets internationally. A static performance at best.
Jim Chalmers

Tomorrow: Latin America wrestles with its future.