Ulrike Schaede - The Business Reinvention of Japan: How to Make Sense of the New Japan and Why It Matters

Advance Praise for The Business Reinvention of Japan

Ulrike Schaedes new book combines an invaluable primer on Japanese business culture with a striking analysis of Japans little-understood strategy for producing enduring economic strength based on manufacturing excellence and constant, managed change. I came away with renewed admiration for the countrys political and corporate leadership, and Japans ability to forge a successful economic future despite the many daunting challenges one often hears about.

Ambassador Ira Shapiro, former U.S. Trade Negotiator with Japan, and former Chairman of the National Association of Japan-America Societies

Japan still matters. Corporates have reinvented themselves and seized important niches in high-tech supply chains, ensuring Japan remains a critical global business leader. So argues Ulrike Schaede in her important new book, The Business Reinvention of Japan. Her painstakingly curated argument helps dispel perceptions of a permanently stagnating Japanese economy and demonstrates Japans important economic balancing role against China. Must-read for scholars and policymakers alike.

Roy Kamphausen, President, The National Bureau of Asian Research

Dr. Schaede provides a deeply researched and powerfully argued analysis of Japans reinvention in the face of a rising China. Her thesis is that Japans aggregate niche strategy offers important lessons for the West by balancing the pursuit of corporate profits with social stability, economic equality, and social responsibility and sustainability. A must-read for those who seek a third path between the unbridled capitalism of America and the state-led capitalist socialism of China.

Glen S. Fukushima, Senior Fellow, Center for American Progress, and Former President, American Chamber of Commerce in Japan

This authoritative and sophisticated account of how Japanese companies have quietly reformulated how they compete in the global economy is a timely reminder of why we need to pay attention to Japan. Japanese companies and their technologies remain, and will continue to remain, critically relevant in our fast-changing world.

Alberto Moel, VP of Strategy and Partnerships, VEO Robotics

For more than a generation, the outside world has been ready to write off Japans economy as yesterdays story, in contrast to the tomorrows being created elsewhere, especially in China. Ulrike Schaede clearly and convincingly lays out how out-of-touch that judgment isand how much more impressive the creativity, flexibility, and reinvention of the Japanese business system look when examined up close. The crispness and concision of the book make it a pleasure to read, and its originality will make it useful for anyone who wants to understand the next stage in global business.

James Fallows, The Atlantic

Schaede truly understands Japanese business strategy and culture. With deep insights and keen analysis, she offers an update on how Japanese companies are evolving to compete in the new global economy, and she shows how they carefully harmonize social stability with economic success.

Kyota Omori, Chairman, Mitsubishi Research Institute

A gem! Schaede links corporate culture to incentives and outcomes, and shows how Japanese firms have kept the tight corporate culture that makes things right, but add elements of the loose culture that makes the right things. She gives concrete examples of Japanese firms that got it right and how they did it.

Robert Alan Feldman, Professor, Tokyo University of Science

Japans economy and its evolving business systems matter, and this insightful evaluation explains how and why. A definite read.

Hugh T. Patrick, Chairman, Center on Japanese Economy and Business, Columbia Business School

THE BUSINESS REINVENTION OF JAPAN

HOW TO MAKE SENSE OF THE NEW JAPAN AND WHY IT MATTERS

ULRIKE SCHAEDE

STANFORD BUSINESS BOOKS

AN IMPRINT OF STANFORD UNIVERSITY PRESS

STANFORD, CALIFORNIA

Stanford University Press

Stanford, California

2020 by the Board of Trustees of the Leland Stanford Junior University.

All rights reserved.

No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or in any information storage or retrieval system without the prior written permission of Stanford University Press.

Special discounts for bulk quantities of Stanford Business Books are available to corporations, professional associations, and other organizations. For details and discount information, contact the special sales department of Stanford University Press. Tel: (650) 725-0820, Fax: (650) 725-3457

Printed in the United States of America on acid-free, archival-quality paper

Library of Congress Cataloging-in-Publication Data

Names: Schaede, Ulrike, 1962 author.

Title: The business reinvention of Japan : how to make sense of the new Japan and why it matters / Ulrike Schaede.

Description: Stanford, California : Stanford Business Books, an imprint of Stanford University Press, 2020. | Includes bibliographical references and index.

Identifiers: LCCN 2020004513 (print) | LCCN 2020004514 (ebook) | ISBN 9781503612259 (cloth) | ISBN 9781503612365 (ebook)

Subjects: LCSH: Corporate reorganizationsJapan. | Industrial managementJapan. | Corporate cultureJapan. | Industrial relationsJapan. | JapanEconomic conditions1989

Classification: LCC HD2907 .S33 2020 (print) | LCC HD2907 (ebook) | DDC 338.70952dc23

LC record available at https://lccn.loc.gov/2020004513

LC ebook record available at https://lccn.loc.gov/2020004514

Cover design: Christian Fuenfhausen

CONTENTS

PREFACE

In 1982, U.S. presidential candidate Walter Mondale asked, What do we want our kids to do? Sweep up around Japanese computers? At the time, Americans feared a rising Japan, which had recovered from the ruins of World War II and looked set to challenge American economic hegemony. Two decades later, Japans economic bubble had burst, wiping out US$10 trillion in value from its stock and real estate markets. Japan then entered what pundits would later call the Lost Decadeso named for the countrys anemic growth, deflation, bad debt, and poor corporate performance.

The new millennium brought little relief. From 2000 to 2007, nominal GDP fell from $4.9 to $4.5 trillion, and Japan-watchers began referring to the period as the Second Lost Decade. As China continued to rise, Japan continued to struggle with deflation. Today, while China is a frequent topic of conversation for many international businesspeople, economists, and political scientists, few are talking about Japan.

Yet look closer, and it becomes clear that Japan still matters. Japan is the third largest economy in the world. It also ranks third, behind the United States and China, in terms of manufacturing output and number of Global Fortune 500 companieseven though it has a much smaller population, and its workforce of 65 million is roughly the size of Chinas three largest cities. What is more, Japanese companies have adjusted to the rise of China and the emergence of global supply chains by reinventing their strategies, operations, and financial markets. In this book, I argue that there are three key reasons why Japan is once again important. First, as a result of their reinvention, Japanese companies now anchor global supply chains by dominating world markets in a large number of critical input components and materials, meaning global manufacturing has become dependent on Japanese inputs. This has increased Japans economic power, in particular within Asia. Second, Japans business reinvention is creating new, lucrative markets for financial and consumer products within Japan. And third, Japan continues to uphold its alternative model of balanced capitalism in an economic system that moderates inequality and values social stability while pursuing economic success. This may prove informative in the ongoing discussion in the United States of the social responsibility of the corporation.