Why Are Japanese Companies Dead?

Why Are Japanese Companies Dead?

1)
Japan is home to well-known and influential companies such as Nintendo, Mitsubishi, Toyota, and Panasonic. Japanese companies are a natural disaster; we're talking about a catastrophe that could weigh down the country's economy; to give you an idea, the operating profit margin is less than half that of American companies. 

Indeed, Japanese companies are very well known, but do you know any Japanese company that has been created in the last 20 years? 

2)
Nintendo was founded in 1889, Mitsubishi in 1921, Panasonic in 1918, and Sony, the youngest on our list, was founded in 1946. 

Japanese companies are older than Tuton Carmon Sandals, and that has consequences: despite their reputation, Japanese companies tend to be grossly inefficient, they fail to adapt to new markets and trends, Japanese wages have been stagnant for years, and their productivity is the lowest of all the G7 countries. 

3)
The question is, what is the reason for this, and how does it relate to the age of the companies? The problem is not a lack of decision-making when it comes to innovation.

4)
Regarding innovation, Japanese companies and the country are among the world's highest spenders on R&D; up until the pandemic, Japan was well ahead of the United States. 

In the OECD, if it's not that, maybe it's that companies are unproductive because Japanese people are lazy and work too little.
Japan is the opposite; it's the OECD country with the most extended and exhausting working hours, which is deadly.

5)
I'm not joking; have you ever heard that Japan has a high suicide rate? The culprit for so many suicides is, to a large extent, the overexploitation of labour; in 2022, around 2 968 people in Japan committed suicide because of problems related to their work situation. 

The phenomenon of work-related suicide is so significant that it has its name: "karoshi," which means death by overwork, but then something doesn't add up here: the Japanese work harder than anyone else, they spend a lot of money on innovation, they are serious people, very well educated. 

6)
So why are their companies so deficient? Why are no new, young, and thriving Japanese companies capable of storming international markets? Where is the Japanese Facebook or Google?

7)
The answer lies in Japanese culture and, more specifically, in its business culture. Japan is the perfect example of a country that, despite having all the factors for economic success, could have all of them brought down by its cultural factors. 

Today on Visual Economics, we're going to tell you all about it and, of course, with everything we're going to tell you about the incredible power that is Japan, you'll probably want to travel there and make the most of your experience, if so, don't forget your data connection in our daily lives. 

8)
We use many applications in our daily lives, from Google Maps to Instagram. When we travel, we tend to increase our usage, so it's essential to have an internet connection plan that offers ease of use and security without breaking the bank with excessive roaming charges. 

9)
Let's continue with Japan and its formidable video games industry. With the theory of relativity, Einstein discovered that time is relative; later, the film Interstellar brought this concept to the cinema and showed how time passes much slower on distant planets. 

But you know what Japanese companies are even worse than the planets in Interstellar? But do you know what Japanese companies are even worse than the planets in Interstellar? 

10)
The Japanese waste a lot of time. We could almost say that what takes 10 seconds in an American company takes 10 hours to do in a Japanese company. The reason is that in Japanese philosophy, the concept of time is cyclical.

It is not lost, and the long term is much more important than the short term. But what are the implications in the real world beyond the philosophical illusion? 

11)
For an American, for example, many daily decisions must be made at work. On the other hand, the Japanese spend a lot of time making decisions, commenting in meetings, checking that everything is all right, and bureaucratising work to such an extent that bosses and managers have absolute control over even the most minor things.

12)
It is not lost, and the long term is much more important than the short term, but beyond the philosophical delusion, what are the implications in the real world? 

For example, for an American, many day-to-day decisions must be made quickly and autonomously, even if this does not always mean the best decision. 

13)
On the other hand, the Japanese spend a lot of time making decisions, commenting in meetings, checking that everything is all right, and bureaucratising work to such an extent that bosses and managers have absolute control over even the most minor things. 

14)
Proof of this is that if you go to a restaurant in Japan and ask the waiter to add an extra ingredient that is not on the menu, he may be wholly stymied because he would have to get permission from his manager, he will not be able or will not have the power to make the decision quickly on his own, and that is just the case. 

15)
This was and still is an entirely open Japanese office, so managers can constantly monitor their employees, the open-plan model. 

The open plan model has become commonplace in the United States and Europe in recent years, but in Japan, they take it to another level to get on the good side of their bosses. 

16)
Employees have to work long hours, and in Japan, it is frowned upon for an employee to leave the office before their boss, even if it means staying at work until 1 am. But the worst thing that can happen is an employee getting fired, even if it means staying at work until 1 am.

17)
The worst thing is that effort is valued, not results, so many workers spend their working hours doing useless tasks to look busy. 

Many Japanese workers invent useless, busy work for themselves all day. 
The most extreme anecdote I heard involved people copying records from computer to paper and back again. 

18)
Efficiency is not essential in Japan. It is about appearance, showing loyalty to the boss and adhering to rigid social norms. Still, there is an excellent science to this in leading ed industries where products of the highest quality are demanded. 

19)
Japanese control and meticulousness are a guarantee of success: iPhone cameras are usually made in Japan, flashy cars like the Mazda MX5 and Red Bull's Honda F1 engines are also made in Japan, and I'm sure you're all aware that Taiwan makes the best microchips in the world, well, without going any further, these chips are printed in a special resin, which in turn is made almost entirely in Japan. 

20)
However, its control and bureaucracy business model is a disaster in other sectors. Why don't workers look for better, less exploitative, more efficient companies? 

Because, in reality, they don't want to. In Japanese culture, work is a sign of identity: you join your company right out of college and don't leave until you retire, so whether you're more productive, innovative or dumber. 

Your company is as much a part of you as you are as much a part of you as your height or where you were born, and for the Japanese, it is essential to be in a large company that is like a family, 

21)
Your company is as much a part of you as your height or your place of birth, and for the Japanese, it is essential to be in a large company that is like a family, and in a sense, this has its advantages. 

Because Jobs for Life companies guarantee job stability for all their employees, it is not uncommon for large companies to lose money rather than lay off their employees. Some companies keep unprofitable businesses alive to maintain employment. 

22)
It is expected to keep businesses going if they don't make significant losses. However, the work is hard, which is compensated for by stability, and the longer you are with a company, the more you earn and the higher up the corporate ladder you go. Japanese managers are not the smartest or the most challenging workers; they are just the ones who have been with the company the longest, and you will say, what is the problem? Isn't it better that the most experienced people are the ones who get paid the most and have the most power? 

23)
Google, he is not precisely a dinos. This is Sh Z Chu, CEO of TikTokTok, only 41 years old, and this is Mark Zuckerberg; you will know they are all relatively young, at least compared to the CEO of Sony, who is 64 years old, and let's not forget the CEO of Nintendo, who is 52 years old. 

The probes that young people tend to have the desire, energy and new ideas. Japan's problem is that it has not been able to adapt its business models to the current ti; it hardly competes in new sectorsThect; the country has lost a lot of strength in the star sector of video games; young people are stuck in almost trainee positions, bringing coffee to managers when they have much more refreshing potential. 

Remember, you only become a manager based on seniority in the company, not productivity. If everything is going so badly, why don't the company's shareholders change the system and hire young managers directly? D? Don't they don't make more money? 

25)
Well, here we get into another can of wo: ms, the incentives for managers in Japan are not necessarily the same as those in Europe. 

The incentives for managers in Japan are not necessarily to make money, and they also have enough legal power not to quickly fire: a 2017 study found that many managers avoid making investments, making big decisions or carrying out restructuring, and why? 

26) Their incentive is not to make money but to keep the company in an endless status quo, to keep it alive and well. 

It's to keep the company in an endless status quo, to keep it alive and thus keep their jobs, and of course, if there's no investment and no big decisions, the companies may not do as well, but the manager doesn't risk his job either. 

The results strongly suggest that CEOs of US companies want to maximise company performance, while CEOs of Japanese companies prioritise long-term company survival.

27)
In any other country, it is easier for shareholders to fire managers. Still, in Ja, pan, this is not the case, and the business story is even worse when it is possible to fire a Japanese manager. 

As we have said, in Japanese companies, promotions are based only on seniority, and when they fire a CEO, they hire another who is just as senior, with the same business culture and ideas. 

28)
All this means that while management changes are commonplace in the United States and tend to revitalise companies, changes in Japan are pointless or even make the situation worse, to put the icing on the cake. 

The Japanese state is determined to protect, defend and bail out large companies, even if they are money-losing machines. 

29)
Nissan, of course, received the most significant loan guarantee ever from the Japanese government, discouraging managers even more. After all, if the government will bail out the company, why to bother trying to improve it? 

These constant bailouts corrupt the Japanese production system: on the one hand, small innovative companies cannot compete with government-protected giants, but on the other hand, the business system is entire of zombie, non-competitive companies that survive by sucking the life out of the company. 

30)
that live by sucking the blood out of taxpayers. Japan must let more companies die to promote creative destruction that will lead to faster growth. Now, the visual economic community in this video, we don't just bring you lousy news both the state. 
And the companies themselves are beginning to realise that their model has been a complete failure. 

31)
In recent years, things have begun to change. On the one hand, in 2015, the government introduced a new corporate governance code. This code makes it possible to increase shareholder control over managers and also change the corporate promotion system entirely with this new system.
The government hopes that companies will adopt independent professionals, people with solid skills from outside the company, to join the board on their merit. 

32)
With this new system, the government hopes that companies will put independent professionals on their boards, such as people with solid skills from outside the company who get on the board on their own merits and not by seniority. So far, the results have been spectacular. 

Since introducing the new code, the proportion of companies with at least 1/3 independent directors has skyrocketed from 6. 4% to 72. 8% in just six years. 

33)
For their part, many companies have begun to tackle the problem of excessive working hours by introducing homeworking; others, such as Mitsubishi, have opted for an automation model that reduces the workload of their employees: in the production of turbochargers, for example, they have gone from needing 20 people to just three on each production line. 

But even further, some companies like Panasonic have developed this idea.

34)
But going even further, some companies like Panasonic have come up with this; Panasonic is the latest Japanese company to break with Japan's workaholic culture and work week; in time, young people will be able to change Japan's business culture. 

Many will come from other countries with new ideas, and Japan will probably recover from the chaos it has been in, but as we often say, only time will tell! 

//Other people's Comments//

1.
It should be noted that Japanese companies will also cut wages to keep their employees, which has contributed to the low salaries over the last 30 years. Also, the work-from-home companies have died out since the pandemic calmed down. And for companies with shorter work weeks, most still require a certain number of overtime hours, so you end up working more on another day. I think we still have a long way to go…

2.
I don't mind inefficient Japanese management techniques. They tend to include Total Quality Management. I recently sold my Toyota after 16 years, not because it started breaking down, but because I got divorced. So I bought another Toyota. Japanese products have a fantastic quality that no one else seems to equal

3.
I have been working for several Japanese companies for more than a decade. I noticed that employers are focusing on cost reduction on labour, selling their product cheaply, trying to maintain competitiveness and making employees work hard and long hours without paying overtime. Working in Japan is like being enslaved unless you are motivated for the job, but living in Japan is very nice, cheap and comfortable. So, getting a US salary(or other high-wage countries) and living in Japan is the best combination.

4.
Lack of appreciation of hard work, dedicated workforce, and meticulousness produce highly efficient and precise service and product. Working over 10 hours without overtime pay, the product/service is selling below the ideal margin, but that's how Japanese operate as a norm natively. Everyone works/produces and receives the same rate, which is highly efficient. They keep it low in inflation; that's the secret sauce: operating homogeneously, sacrificing oneself to work collectively, and combating inflation while keeping savings high (another secret spice). That's why most economists have overlooked it. For example, I invite you to get a haircut at the barbershop and witness what their services entail. You will get a significant length of work sufficient for meticulous work. By the way, no tips are needed. Otherwise, it's treated as an insult.

Why Are Japanese Companies Dead?

https://www.youtube.com/watch?v=dqEadBLo4xk

//Postscript//

Recently, Taiwanese semiconductor manufacturer TSMC has set up a factory in Kumamoto.
Rapidus, founded by eight major Japanese companies, including Toyota and Sony, has built a semiconductor plant in Hokkaido.
I believe both have the power to revitalise local areas.
At the same time, it is also necessary to create a system where local people can make money and develop, not just foreign companies.

After World War II, we recovered by producing weapons and ammunition for the war on the Korean peninsula. Since then, we have moved on to making textiles, toys, cars, electrical appliances and semiconductors.

Then, after the "bubble economy" burst and the "lost 30 years" passed, factories returned to Japan because of low wages and a weak yen.
At the same time, Japan's anime, film and tourism industries have also developed.

I think it's almost time for us to think and act on our own and share our philosophy, ideas, culture and technology with the world to rebuild a better order.

Because our country does not receive many immigrants, we have been unable to stop the population decline.
Birth rates are falling, the population is ageing, real wages are falling, and many women and young people are in informal employment.

But in Japan, the subways are safe at night, prices are low, and the environment is relatively mild. Although the country is increasingly divided, inequality is not as great, and the employment rate is high. Incidents of homelessness, murder, theft, drug crimes, and guns are few noticeable.

In the past, there was a lot of overtime and death from overwork was a big problem, but recently, large companies have taken the lead in reducing overtime and increasing paid holidays.
Because the status quo is paramount, reform and change are frowned upon, and data must still be faxed, stamped, and circulated.
The worst thing you can do is undermine your team members' peace, accuracy and loyalty. Even if it takes time or is wasted, everything is forgiven.

Can we say that Japanese companies are dead?

Isn't it a problem that we quickly fall into homelessness once we have speed, reform and brilliant achievements?

Let's take the best of both worlds.
Japanese companies need to look further into the future, and not fear change.
We no longer have seniors to imitate, but we must not forget that many predecessors existed throughout history.

To achieve true freedom, we must cherish our fundamental beliefs and friends and work hard together to create a future.

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