It’s a strange thing about Japan. Twenty years ago the economy of the rising sun seemed unbeatable. One of the features of the Japanese economy, or so we were told, which was so much superior, was the way banks and business worked so closely together. They had a symbiotic relationship, or so they said. If a Japanese business ran into difficulty, the banks were more supportive, and less likely to pull the rug away from the struggling firm. Japanese banks had a more long-term outlook, or so we were told, and were more willing to pile their money into a venture long before it was able to start turning a profit.
But now that Japan has suffered twenty years of economic anaemia, they say the trouble is that Japanese banks are too close to the businesses they lend to; that the banks in Japan throw good money after bad at ailing firms that will never recover. Instead, Japan needs to let businesses fail, and the vacuum that is left will be filled by dynamic firms.
In other words, the very characteristics that were cited as the reason for Japan’s success 20 years ago, are now cited as the reasons for its problems.
And yet throughout Japan’s lost decade, which has now been going for two decades, one company remained supreme. The car that was behind went from its position at the back of the grid, to world number one. The car in front was a Toyota.
The snag, of course, is that drivers of Toyotas are now worried that their car will be in front even when they are slamming on the brakes. A clever little slogan has become a millstone around Toyota’s neck.
But what lies behind this? Now there’s talk of a steering fault with the Corolla. Pop into a decent bookshop and in the business section you will see a book entitled, The Toyota Plan. A book which explains the philosophy behind the company and which made it so successful. The book, by the way, cites the company’s quality control as one of its strengths.
So what went wrong? Can we delve into the company’s philosophy and find that the characteristics that made it successful are now backfiring and working against it? Or is the problem with Toyota something else entirely?
Perhaps Toyota’s problem lies not so much in the cultural characteristics of Japan, but in the characteristics within the countries that are its main rivals in the auto industry.
In the US, the response to the economic recession was to blame China. US business was losing out to Chinese competitors, and we were told it was because China cheated via currency manipulation. Twenty years ago, attitudes in the US were just like that, only they were aimed at Japan.
And if a Japanese company was accused of dumping its goods at giveaway prices, then their PR departments hummed into life. It was the one accusation that corporate Japan hated.
Today, the Detroit Three are in disarray. If the market had been left to its own, GM and Chrysler would be bust by now. Ford may have survived, but on the other hand, maybe not. The resentment in the US is huge. When GM lost its mantle as the world’s number one auto maker to Toyota, there were those in the US who were spitting feathers.
In Germany, they don’t get it. Why are the Japanese companies so successful when there’s VWs. Or then there’s BMW. It is surely the ultimate driving machine. We all know German engineering is without peer, so why aren’t German cars number one?
The French, of course, don’t see it that way. They say that if you ask a French person where their favourite place to holiday is, they will say France. In the press this weekend, reports suggested that nearly-headless Nick Sarkozy told Gordon Brown he loved him. But we all know the French don’t love anyone quite like their fellow countrypeople.
France is in love with France. And Nicole and her Papa, along with the rest of the country, think French cars are best.
In Britain, by contrast, our favourite pastime is knocking ourselves. Those who know about these things say British engineers are among the best in the world. But can you imagine a British comedian making a joke about British excellence? Of course not. The joke is only funny if the punch-line involves ridiculing ourselves.
When the Brits opened their market to Japanese imports, our cousins across the water were furious. The French described Britain as a ‘Japanese aircraft carrier moored off the coast of Europe’.
And when the credit crunch hit, the resentment aimed at Japan, and at Toyota in particular, grew and grew.
The truth is, however, that cars develop faults. Those in the car industry say Toyota’s reliability is second to none. In Germany there are no official figures looking at recalls of German cars. Not so long ago there was a serious gearbox default in BMWs and Land Rovers – which as you know are owned by the Germany company. But where were the headlines?
One could say that Toyota is the victim of a concerted PR campaign orchestrated by its rivals. But this column is not a fan of conspiracy theories. A more likely explanation is that the cultural characteristics of the French, the Germans and the Americans are such that any whiff of failure in a seemingly unbeatable Japanese firm is greeted with such schadenfreude that a media backlash is inevitable The media, after all, do little more than pander to the whims of popularism.
Britain, too, has been a victim of this. Recall the problems the UK had getting Concorde accepted in the US. Did you know that the highest vehicle bridge in the world is in France, but was designed by a British architect? Chances are you didn’t know this, for the simple reason no one likes to talk about it. The French certainly don’t like to, and as for the Brits it doesn’t suit our self-deprecating nature.
Toyota is a similar victim.
As for the role in the debacle played by the British media, well, headlines and scandal always score over an attempt to present a balanced account.
© Investment & Business News 2013