Domestic adjustments in the Japanese industries

Associated with the substantial changing international competitiveness of Japanese industry since the mid 1960s, private sectors in the industry have adjusted several important production processes: Investment strategies and products to the changing conditions in domestic and foreign markets. The adjustments have included shedding of excess labour and capital equipment, demise of inefficiently small plants, investing in modern labour saving equipment, undertaking more research and development, specialising production in products with high value added per worker, and shifting production abroad.

Role of government The government policies played key roles to create factorable climate through government's efficient attitude to technology transfer, particularly during the Meiji period when Japan concentrated transfer resources of technology and science on the government sector as the central inlet of foreign technologies and as the domestic diffusion centre.

The government assisted private sector by stressing infrastructure as well as subsidizing the dissemination of knowledge, both basic and applied. More critical was the attempt to influence the choice of technology by sending its nationals to select the most appropriate ones to Japan as well as reducing the level of reliance n foreign resources either in the form of foreign exchange for the procurement of foreign technology or foreign advisers or experts for the management, control and operation of imported technology.

Where the government has a direct investment, it was to demonstrate to the private sector, and whenever there have been investments which were neither strategic nor military, these were sold off to the private sector. Against this background of government involvement there has been continues to be a considerable degree of national consensus on what was appropriate to Japan.

Other area in which the Japanese government intervened to create better institutions in the modernization was in finance and international trade. In the financial sector, the Japanese experience is one of flexibility, by modifying the financial intermediation in order to create favourable climate for saving and investment.

The government direct intervention in the protection of its industry through tariffs was minimal as it had little tariff autonomy. This has meant that import substitution was exposed to the rigors of international markets as early as it was possible. This therefore meant that only the most efficient technologies were adopted and further developed. This is why the innovations undertaken on imported technologies in Japan were often aimed at cost reduction and quality improvement because a little margin of price below and little margin of quality above a competitor are all essential to successful marketing.

International competitiveness, industrial policy and research and development  Japanese textile industries have been relatively successful in retaining their international competitiveness and that the government has been keen to assist by implementing several policy measures which have helped rationalise the industry. Furthermore, the industry has invested in formal research and development activities to improve its efficiency. 

Some interesting causal relationships are identified by that statistical analysis. First, the government appears to have reacted to the decline in export opportunities for textile producers by increasing government finances for rationalisation. Such policy measures have eventually contributed to improving the industry's international competitiveness and thus increasing its exports. The research activity appears to have helped the industry increase its exports. In other words, the industry's efforts to rationalise production, with the assistance of government finances, and to introduce new technology through augmented formal research efforts. 

Conclusion The rise of the Japanese textile industry is clear from a number of perspectives: the relative importance of these industries in Japan's total and manufacturing value added, employment and exports, the importance of Japan in the world markets for textiles and clothing, and Japan's importance in the international fiber market.

The Japanese textile industry has undergone significant structural changes in response to change in internal and external environment during the past three decades. Measures to reduce labour inputs, the use of synthetic raw materials, product differentiation, and the opening up of new markets were actively undertaken as domestic labour costs rose, the value of the yen appreciated, and competition was intensified with the products from developing countries.

Competitive pressure in the domestic and foreign markets was the main force inducing individual firms to carry adjustments actively. This began with competition against the products from developing countries in foreign markets spreading to competition with imports in the domestic market and finally to competition among domestically produced goods. Textiles and industry transition in Japan, by Dennis L.Mc Namara, first published 1995 by Cornell University Press, Ithaca and London International competition and domestic adjustments: the case of the Japanese textile industry, by Hiderki Yamawaki, Wissenschaftszentrum Berlin, November 1989, p17

The development of capitalism in Japan, by Andrew Flood 1993 Technology transfer and industrialization in the developing countries: some lessons from the Japanese experience in the textile sector, which presented at the 19/09/83 on industrial planning and development. By A. Fabayo and L.G.Gatuguta, p17 Technology transfer and industrialization in the developing countries: some lessons from the Japanese experience in the textile sector, which presented at the 19/09/83 on industrial planning and development. By A. Fabayo and L.G.Gatuguta, p31 Political Economy of East Asia No.1- Japan's impact on the world's textile market, by Tim Beal, June 1982, p3

International competition and domestic adjustments: the case of the Japanese textile industry, by Hiderki Yamawaki, Wissenschaftszentrum Berlin, November 1989, p20 Export strategy of the textile industry in the Japanese economic development, by Sagara H. P, Peththawadu. International competition and domestic adjustments: the case of the Japanese textile industry, by Hiderki Yamawaki, Wissenschaftszentrum Berlin, November 1989, p18 Technology transfer and industrialization in the developing countries: some lessons from the Japanese experience in the textile sector, which presented at the 19/09/83 on industrial planning and development. By A. Fabayo and L.G.Gatuguta, p32