Japan Braces for a 'Designed in China' World

Reviewed By Hitoshi URABE

Article:
"Japan Braces for a 'Designed in China' World"
http://www.nytimes.com/2002/04/21/business/yourmoney/21CHIN.html
by JAMES BROOKE, The New York Times

Related Article:

"Innovate or Die"
http://www.feer.com/articles/2002/0204_25/p028innov.html
by David Kruger and Ichiko Fuyuno/GIFU CITY, Far Eastern Economic Review

Comments:
Owing greatly to abundant investment by Japanese companies, China is now functioning as the factory of the world. What attracted all the investment was cheap labor. Diligent workers could be hired at a fraction of the cost of industrialized countries such as Japan. Consequently, most of labor intensive manufacturers in Japan have now disappeared.

The story cited as "related article" above, itself an interesting reading, reports the efforts being made by Gifu Prefecture Government, which had long relied its economy upon light manufacturing industries and since have had to watch many companies go down. In an attempt to revive their economy, the prefecture has invested heavily to develop an information technology research center. The article does not forecast the outcome explicitly, but hints that the road to success could be rough, as many of such projects supported by public money have not achieved their goals in the past.

Thus China is now the factory. But the general understanding is that it is still in Japan where planning and designing, research and development are carried out. The article cited here, however, raises doubts to this conviction.

The report introduces the remarks by Yotaro Kobayashi, chairman of Fuji Xerox, that "China is quickly becoming a country of low wage and high tech." It points out the fact that such companies as Matsushita, Toshiba, as well as other multinationals including Lucent Technologies, Microsoft and IBM of the United States, Alcatel of France and Nokia of Finland, have already or are planning to establish research and development units in China.

When China becomes fully capable of providing goods that are planned, developed, and manufactured in China, whether Japan would be able to secure sufficient income to purchase them is becoming a very viable question.