China Syndrome
usnews.com
Eating Japan's lunch
Traditional industries are being hollowed out by a ravenous foreign competitor. Workers protest jobs fleeing overseas. It could be America in the 1980s, when companies trembled at the feet of Japan. Or it could be Japan today, fearful of a growing China.
In a survey by Tokyo broadcaster NHK, 2 out of 3 Japanese firms said they planned to move manufacturing to China because of its cheap labor. Japan's firms once relied on China for lower-end components, but Tokyo's business elite has been shocked by how quickly Chinese suppliers have moved into more-sophisticated production.
So far, Japan has not developed service and information technology industries to replace its lost business. And Japanese firms often find it harder to sell to the China market than do U.S. firms because of the two countries' history of mistrust, says Jenny Hsui Theleen of venture capital firm ChinaVest.
Japan's apparent impotence has sparked enormous bitterness. Diatribes against China have become bestsellers. Tokyo's governor, Shintaro Ishihara, an anti-Beijing populist, is touted as a possible next prime minister.
But China's economy still complements Japan's, and Asia business experts say it will be five to 10 years before China's firms can design the most advanced products. And some of Japan's leading firms are rediscovering their world-beating dynamism. Once wary of trade pacts, Japan is now pushing for a free-trade zone with Southeast Asia as a bulwark against Chinese growth. Nor can anyone truly predict China's growth curve. In the early 1800s, China was the world's largest economy, and pundits predicted it would dominate the globe. A century later, it was a poor, lawless mess. -J.K. |
