A Japanese businessman came to call on me the other day to talk about the UK economy. In telling me about his company's experiences it struck me that his story was the story in microcosm of most of Japanese industry. Little Red Riding Hood it's not, but maybe an instructive textbook example.
The company manufactures pneumatic control equipment, with applications across a huge range of manufacturing industries, from food packaging to car assembly. Established in 1959 as the Japanese industrial machine really roared into action, it concentrated initially on domestic sales. It made its first overseas sale in 1967, to Australia. Since then it has gradually expanded to its current sales network covering 320 locations in 78 countries, and is now a world leader. Production overseas started in the mid-1980s when the Plaza Accord sent the yen soaring and made production outside Japan look more attractive. Then followed research and development overseas, with a network of technical centres, including one in the UK which services the European market. Most of their overseas factories and development operations were originally run by Japanese managers; now they're largely locally-run.
Sales grew steadily right through until 2007, when the financial market collapse, saw their sales and profits decline dramatically as manufacturers held back on both production and capital spend. They stepped up their engagement in Asia, as the one bright spot, and things have stablised a bit in the past financial year. They're now anticipating a good profit for 10/11 but are cautious, preferring to hold on to their earnings in case of future shocks, rather than spending on acquisitions or new facilities. Nevertheless, they continue to launch new, improved products and are eyeing opportunities in the burgeoning low carbon sector as a way of reviving and expanding their business
And that, dear reader, is the story of Japanese industry over the past 50years. And I'm quite sure that won't be The End!
Sue Kinoshita
Sue.kinoshita@fco.gov.uk
Director, Trade & Investment
UKTI Japan