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Adjustment to less-developed country competition in some Japanese industries

University of British Columbia

This exploratory study addresses the issue of adjustment to less-developed country (LDC) competition by affected firms and industries in developed countries (DCs). Empirically-based insights into the nature of the adjustment problem are inductively derived from examination of adjustment in four Japanese industries (producing, respectively; cutlery, footwear, umbrellas, and mosaic tile) which have faced severe competition from producers in the Asian newly industrializing countries (Korea, Taiwan, Hong Kong, and Singapore). The study employs existing public and non-public reports, interviews with informants in Japanese government and industry and the results of field research in a production centre. External factors favouring rapid development of LDC competitive strength are identified, including earlier Japanese exports which internationalized O.E.C.D. markets for the products examined. The pattern of evolution of LDC competitive strength along dimensions other than those of relative product standardization and factor-intensity is discussed. Japanese foreign direct investment in competing LDCs served to increase the adjustment problem of Japanese producers. This is related to the rapidity of LDC competitive development and to the structure of the Japanese industries examined. Adjustment alternatives are discussed, in terms of the concept of value-added, under the categories of: cost-improving, price-improving, and margin-improving adjustment. The last of these incorporates improvements in value-added arising from a change of product or of functional activity. The adjustment problem is seen to be a function not only of LDC development but also of concurrent DC development external to the affected industries. Variation among industry participants in the impact of the adjustment problem and in the number and nature of adjustment alternatives was highly related to differences in the functional activities of firms. Where existing producers are unable to adjust within an industry, the industry, itself, is found to "retrogress" and production activities are transferred to a geographic and socio-economic periphery within the DC. This shifts the ultimate exposure to LDC competition onto those who have the least mobility and are least able to actively adjust to that competition. Some suggestions are made regarding the implications of the findings for government, business, and further research.

Text

2010-05-02

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http://hdl.handle.net/2429/24291

Business Administration

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