JAPAN INC.
CHINA CLOSES THE GAP
--------------------------------------------------------
By Henny Sender
Issue cover-dated November 13, 2003
----------------------------------------------------------
If there is one pervasive question Corporate Japan is currently pondering, it is how soon it will be before China closes the gap with its Japanese rivals. When China meant just cheap labour, the question seemed less urgent. But that's not so today. China has capital and can afford to buy the most sophisticated equipment anywhere in the world. Also, China is no longer just about vast pools of cheap labour, it is increasingly about the combination of that with skilled human capital.
"The facilities gap with China is narrowing," says Eiji Hayashida, a vice-president at JFE Holdings. "But that is not my concern. If they have new facilities and the soft infrastructure of Japan's engineering talent, then they can close the gap quickly." That fear translates into a reluctance to lay off engineers, lest they go to China and take with them the skills that have given Japanese steel the highest quality in the world, Hayashida adds.
At the same time, government officials worry that in addition to luring Japanese talent, Chinese companies may be tempted to buy Japanese companies to acquire technology. Executives at the big electronics conglomerates, now embarked on a course of perpetual restructuring, say they would be criticized if they were to sell divisions directly to the Chinese. But if, for example, "we were to sell to an American investment fund, and that fund in turn sold to a Chinese strategic buyer, we could hardly be criticized," says a top staffer at one of Japan's major conglomerates.
The concern with China is a world away from the disdain with which Japanese companies contemplated their Korean rivals just a few years ago. But with Samsung Electronics' market capitalization now larger than that of Japan's leading consumer-electronics companies combined, that complacency has vanished.
feer.com |
