Why has Japanese Global Competitiveness Been Declining in the Automobile Industry? Comparative Analysis of Korea

Abstract

The paper is to study the reasons why the global competitiveness of the Japanese industry has weakened significantly in the automobile industry. Four leading causes will be analyzed to weaken Japanese global competitiveness regarding technical, market, policy, and corporate factors. Above all, the human element, which is consisted of the dynamics of entrepreneurs, workers, experts, politicians, and administrative bureaucrats, is the most critical in analyzing the technical, market, policy, and corporate factors of global competitiveness in each industry. In Japan, workers and experts were responsible for technology transfer within the industry. Japan was far ahead of Korea regarding technological equipment, but there were frequent cases of human leaking. Japanese automakers’ entrepreneurs failed to the quality management of the overseas workforce while promoting a growth-centered corporate strategy, resulting in a massive recall in 2009. As for the Japanese automobile industry, global competitiveness has been weakened due to the inability of the technicians to supply an overseas workforce to cope with the boom period of the worldwide market. In addition, politicians and bureaucrats, via the government's industrial support or policy, played an inevitable role in enhancing the competitiveness of Japan in early development. As an industry incumbent, Japan formed an industrial ecosystem while pursuing industrial development through government-led industrial policy. Thus, when the economy came into a recession, especially macroeconomic stagnation, there should have been timely action or policy support at the government level. With the technological development of products, the market of the industry was booming or depressed at that time, along with the government's policy and strategic support to develop each sector and to maintain its global competitiveness. The Japanese government failed to take advantage of the market due to the wrong choice of investment period and, thus, caused to lessen the gap with Korea. The investment reduction or cost reduction decided by entrepreneurs as one of the main factors, explained in detail by the corporate factor as the internal cause, is noteworthy among the four factors of weakening global competitiveness. The biggest reason Toyota lost global competitiveness, mainly due to its massive recall in the automobile industry, is that it made small investments during critical periods, delayed investments, or impractical cost reduction strategies in significant investment periods. The technology, market, and policy factors are the leading causes because of the necessary-to-sufficient relationship with the investment or cost reduction. With the decision-making process for investment or cost reduction by entrepreneurs, Toyota Motors would have avoided the massive recall in the global arena.