Japan Economy: Secondary Sectors

By | November 12, 2021

Industry Configuration

As a country starting with letter J listed on COUNTRYAAH, Japan suffered a prolonged industrial crisis during the 1990s, however, after drastic restructuring and rearrangements, it seems that the main industries are on the road to recovery and definitive reactivation in 2005.

The internationally known Japanese companies are mainly those that are part of the large groups, the so-called Keiretsu (chain of companies). These large groups have the following characteristics: cross participation, mutual allocation of positions on the boards of directors, guaranteed internal financing, existence of trading companies and joint investment.

Another characteristic of Japanese industry is the close link it maintains with the banking system. Banks, even those not belonging to large groups, exercise greater control over their clients than European banks. They are not limited to assessing financial risks and approving requested loans, but participate in the activities of companies, as well as in their financial management.

The prolonged crisis in the Japanese economy since the mid-1990s is largely destroying these peculiar elements. Ties between Keiretsu companies are also weakening, as evidenced by the reduction, since the mid-1990s, of cross-shares held by the Japanese business sector. Likewise, the proportion of business that keiretsu companies conduct with group members is also decreasing.

Automotive

The automobile industry continues to be the main export item and one of the bases of the manufacturing sector. The production of passenger cars in Japan has had a more or less stable evolution (in millions of units): 8.1 (1999), 8.4 (2000), 8.1 (2001), 8.6 (2002), 8.5 (2003), 8.7 (2004).

This process of globalization has resulted in the weakening of the “keiretsu” in this sector. Manufacturers, in the need to buy more competitive automotive components, no longer respect the famous ties that united them with their suppliers.

Component manufacturers, for their part, now have to survive without the “shelter” of the “keiretsu”, accepting capital injections from multinational manufacturers or forming strategic alliances with foreign companies.

Information technology

Japan is one of the world leaders in IT industries, along with the United States and the European Union.

Japan has a powerful component industry so it has an important advantage in sectors now considered to have a more future: high definition television, plasma screens, digital devices, minidiscs, DVDs. On the other hand, a loss of dynamism has been observed in the audiovisual and traditional television sectors, due to the saturation of the market and the relocation of companies as a result of the transfer of their production centers to China and the ASEAN countries.

There is also a rapid development of products related to the telecommunications sector, such as personal computers, mobile computers and information processors.

Iron and steel industry

With a crude steel production of 112.7 million tons in 2004, Japan is the world’s second largest producer, behind China and ahead of the United States. Japan had been the world’s leading steel producer until 1997, but declining domestic demand from the construction, automotive and electronics industries has relegated it to second place (www.worldsteel.org).

Machinery and robotics

Japan is one of the world’s leading producers of machine tools.

The trend towards business automation promises sustained growth in this sector in the long term. This is due to factors such as the need to streamline production and integrate quality control into production.

The main clients of the robotics industry are the automotive and electronic sectors, although the former shows a tendency to decrease its investment in robotic machinery in view of the better prospects presented by the electronic sector.

Chemical industry

The trends point towards vertical diversification and the elaboration of more complex products with higher added value. On the other hand, there is a strong investment in R&D, in the field of manufacturing products for high-tech sectors (electronics, automobile, aerospace, medicine), such as “technological plastics” and high-resistance resins. , whose demand has experienced a notable increase.

The Japanese chemical industry is immersed in a progressive restructuring that is becoming evident through successive mergers and alliances between companies in the sector to gain competitiveness against the entry of foreign groups into the domestic market.

Making

Brand image is extremely important to the Japanese consumer, and all major brands have multiple stores in Japan with a high level of sales. However, the Japanese apparel market has been inundated in recent years with very cheaply priced garments, generally produced in Japanese factories in China and Southeast Asia. Although they are not renowned brands, they have been very well received by consumers, especially those garments that maintain high quality at a reduced price. There is a growing trend to dress more casually.

The type of company that is succeeding in this sector at present is one that manages to reduce intermediary expenses by having the design, manufacture and sale of garments under the same direction, and applies the quick response system, attending to the fast to change in trends.

The Japanese market has opened its doors and internationalization has allowed many foreign companies to enter, either through licensed manufacturing contracts, joint ventures or by opening their own establishments.

The companies in the sector are numerous, as it is a highly fragmented market dominated by small companies specialized in one or more sectors.

Food industry

The Japanese food, tobacco and beverage industry constitutes one of the main manufacturing sectors. There are numerous companies competing fiercely for share in this huge market of 127 million people. The presence of imported products is becoming stronger. Agriculture and fishing have long played an important role in the Japanese economy.

However, recently the industry has evolved in parallel with the modernization of Japan and has brought numerous farmers to the trading and industrial cities. The fields near the big cities have been turned into residential areas. For some time, the way of life and diet in Japan have been westernized in a significant way, thus many food products have been imported from all over the world, especially from the United States.

Being an island country, fishing has always provided the Japanese with their main source of protein. Very modern industrial fishing continues to be an important activity for this country. Livestock has recently been expanding, but large quantities of meat must be imported to meet consumer needs. Iron and steel: Approximately nine thousand tons of iron ore are imported each year to make cars, boats, etc. We can say that steel production is closely related to the development of industries.

Transformation: The processing industry is the center of industrial activity in Japan. Machine tools, sewing machines, automobiles, boats, cameras and watches are the main products of this industry and are very good items for export. Automobiles: The automobile industry represents a large part of the transformation industry, the most important as regards products manufactured in the country. Japan has now become the second country in the world for automobile production.

Japan Food industry