In addition, the rolling energy crises of the 1970s reduced the appeal of traditional gas-guzzling American-style V8 automobiles and dramatically increased consumer interest in the smaller, more fuel-efficient vehicles made by Japanese auto makers such as Honda and Datsun (now Nissan).īy the 1970s and 1980s, Japan extended its domination to the global electronics industry as it manufactured the majority of the world’s consumer electronics products and introduced innovative and revolutionary new products such as the pocket transistor radio, the VHS recorder and the Sony Walkman, which created a consumer love affair that was similar to the Apple iPod and iPhone craze of recent years. automobile industry, which was still assembling cars by hand. By the late 1970s, Japan’s use of assembly-line robots in automobile manufacturing, which made human error nonexistent and boosted overall quality, sent shivers throughout the U.S. To compensate for their relative lack of natural resources, Japanese companies focused their efforts on developing innovative and efficient manufacturing methods and improving the quality of their products, giving Japan a strong competitive advantage in high value export products such as cars and electronics (BPIR, 2002). Japanese industry gained its competitive edge by copying Western products, improving upon them and selling them back to the West for cheaper prices. Keiretsu conglomerates received a very high-level of support from the Japanese government – a system of crony capitalism that became known as “Japan, Inc.,” which was both revered and reviled by Western commentators and executives for its unfair advantage over domestic businesses. Starting in the 1950s and accelerating during Japan’s bubble, keiretsu corporations purchased each other’s shares to form an extensive network of cross-holdings, a practice that was seen as important for guaranteeing long-term stability and developing lasting business relationships. Other examples of keiretsu conglomerates are Sumitomo, Mitsui, Fuyo, Dai-Ichi Kangyo and Sanwa (Wikipedia, n.d.). Most corporations within a keiretsu conglomerate carried names that were variants of their keiretsu’s overarching brand name, for example: Mitsubishi Bank, Mitsubishi Corporation, Mitsubishi Heavy Industries and Mitsubishi Motors. Typical keiretsu conglomerates were arranged in the form of a series of interlocking industrial corporations organized around a Japanese bank, which provided banking and financial services to the industrial corporations. Japanese industry was first dominated by large family-controlled industrial and financial business conglomerates known as zaibatsu (translated as “financial clique”), which evolved into keiretsu business conglomerates in the latter half of the twentieth-century. The U.S.’ Marshall Plan provided aid to rebuild Japan’s economy and the two countries’ improving relationship created an opportunity for Japan to export manufactured products to the increasingly-affluent United States. Japan’s highly traditional society experienced significant changes after their defeat in the Second World War due, in part, to the Westernizing influences of the occupying Allied Forces (Molasky, 1999). Japan’s Nikkei stock average hit an all-time high in 1989, only to crash in a spectacular fashion shortly after, causing their real estate bubble to collapse and throwing the country into a severe financial crisis and long period of economic stagnation known as the “Lost Decades.”Įvents Leading Up to Japan’s Economic Bubble In the late 1980s, on the heels of a three-decade long “Economic Miracle,” Japan experienced its infamous “bubble economy” in which stock and real estate prices soared to stratospheric heights driven by a speculative mania. By Jesse Colombo (This article was written on June 4th, 2012)
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