Decline of Japan's Electrical and Electronic Industry

Japan's electrical and electronic industry, once dominant globally, now struggles due to excessive focus on quality over market adaptability.

### Challenges and Opportunities for Japan's Digital Transformation
* 📉  Japan's once dominant electrical and electronic industry is now struggling due to the inability to adapt to rapid market changes, stemming from **excessive quality focus** and a **long product development cycle**.
* 🇰🇷  In contrast, Korea's success in the semiconductor market was driven by a focus on **productivity** and **market-oriented innovation**.
* 🌀  Japan's transition to a digital society is hindered by an "**analog mindset**," making it challenging to **reform legacy systems**.
* 🏛️  Despite the government's efforts to promote digital transformation, Japanese society faces obstacles in **embracing change**.
* 🇰🇷  Due to a talent shortage in Japan's IT sector, one solution is to **attract IT professionals from Korea**.
* 🇰🇷  Many Japanese experts benchmark Korea when pursuing digital administration, as Korea is seen as a **leader in digital innovation**.
* 💰  To retain talented individuals in Korea, IT companies should consider **raising salaries**.
* 🇰🇷  Many IT companies in Korea view Japan as an **opportunity market** and have entered the Japanese market to **start or establish startups**.

Until the 1970s and 1980s, household appliances worldwide were made in Japan. So, there is a story that children in the United States grew up thinking Sony was an American product. Therefore, as Japan dominated the global market for electrical appliances, people felt the need to study Japan. However, now, take a look back. It's not easy to find Japanese appliances in any household appliance market worldwide. So, what caused the downfall of Japan's electrical and electronic industry, which used to be so successful that only behind the display shelves, [MUSIC] Japan's electrical and electronic industry, which used to be so successful, is now struggling to be seen in any household appliance market worldwide. So, what caused the downfall of Japan's electrical and electronic industry, which used to be so successful that only behind the display shelves, [MUSIC] Japan's electrical and electronic industry, which used to be so successful, is now struggling to be seen in any household appliance market worldwide.

Indeed, Japan's electrical and electronic industry made the biggest mark. By doing so, Japan has now gained the reputation as a kingdom of home appliances and a manufacturing powerhouse. Currently, in the United States and also in Korea, most of the fun and cost-effective products are predominantly made in China. Up until the 1970s and 1980s, household appliances worldwide were made in Japan. Therefore, there is a story that American children grew up thinking Sony was an American product. As Japan dominated the global market of electrical and electronic products and home appliances, in 1979, Professor Ezra Vogel of Harvard University suggested studying Japan through his book Japan as Number One, which talked about how Japan became the number one country in terms of management techniques and employment practices.

If we study these things properly, wouldn't the U.S. be the same? With this kind of meaning, books were written. This atmosphere continued until the early 1990s. At that time, from the 1980s to the early 1990s, Japan, in the semiconductor boom, held about 80% of the global market share in the field of large computer DRAMs. In 1989, companies like NC, Hitachi, and Toshiba dominated the revenue rankings in the global semiconductor market. However, now, take a look back. It's not easy to find Japanese home appliances in any home appliance market worldwide. You can hardly see Japanese home appliances, only maybe hidden behind the shelves, because Japanese semiconductor companies had rapid growth until the golden age of the TV market in the 1980s. But as they entered the PC market in the 1990s...

The leadership has been handed over to the intellectual United States, and the first company to send a signal of decline in the Japanese electronics industry is Sharp. Sharp was the first in Japan to develop black and white TVs and had overwhelming original technology to the extent of being the first in the world to release a 14-inch LCD TV. However, the company failed to innovate properly and only made improvements. As a result, in 2016, it was sold to Taiwan's Hon Hai Group. Recently, I saw news last week that Sharp, unable to overcome deficits, will withdraw from producing LCD panels for TV markets. This indicates that Japanese electronics companies are declining. Sony is also in a similar situation. Earlier, it was mentioned that Sharp developed LCDs, but despite this, the TV market transitioned from PDP to LCD, yet Brown

TVL has now been stubborn, and Sanyo is the same. Sanyo was taken over by China's Haier Group in 2011. Also, the display business of Xieyi has now been acquired by Honghai. As we investigated the cause of this power shift, it wasn't due to a lack of technology. When we looked for the cause, it was due to excessive quality resulting from extreme perfectionism and technology worship. This is what we are seeing now. So, now we can ask this question: What's wrong with excessive quality? Isn't high quality a good thing? To strive for the best quality, embodying the spirit of craftsmanship, the spirit of the artisan, the spirit of monozukuri, why is this becoming a problem? This is the kind of question we can ask. The important thing is not the best quality and good performance but the inability to adapt to rapid cycle changes.

Now, they couldn't read what the market wants properly, so they cannot lose the market that calculates quality compared to price. Japanese technicians are now insisting on high performance and quality as a priority, so it takes 25 years to make a product. This strict pursuit of quality increases the selling price. For example, in the DRAM market for large computers, they have such excellent technology that no one can follow. However, now they didn't properly grasp the shift from the era when families gathered in one room to watch TV to the era of using PCs in separate rooms. On the contrary, what about Korea? Since the 1990s, Korea has risen by focusing not only on speed but also on productivity. Unlike Japan's high-priced DRAM strategy that guarantees high quality for a long time.

Korea has suddenly entered the market for PC DRAMs with a three-year warranty. By the late 1990s, it had already taken a 1% market share worldwide. Korean-made DRAMs are relatively inexpensive and easy to install in the main slots, providing an immediate performance boost. People tend to judge that buying Korean products is much cheaper than buying Japanese products at a high price. However, this is not only about semiconductors. Do you happen to know that LG steamers are selling well in Japan? Yes, if it is said that LG only insists on its technological capabilities or sells products only to loyal LG customers, it probably would not have been able to capture the Japanese market. Therefore, the focus is on what consumers need. Thus, innovative.

We can launch the product, right? One of the representative medical management devices, the steamer, entered the market in Japan in 2016 and 2017. At that time, it wasn't simply because the steamer was a good product; it was because the Japanese people's needs were identified. Personally, I have allergies to pollen, which is quite severe in Japan due to the pollen from trees. Considering this unique aspect of Japan, the Korean steamer product added a pollen allergy mode that is not available in Korean products. They thoroughly planned and strategized, correctly understanding the psychology of consumers. Therefore, even though Japanese home appliance companies want to jump into this blue ocean, with over a thousand LG steam patents.

They are talking about how difficult it is to avoid and saying that Japan sees technology as art, while we see technology as a market. That's why there is such a story. Have you heard of beep beep before the mobile phone came out? Yes, beep beep was a trend in the 90s. It is said that beep beep discontinued its service in 2019. So, it seems that Japan is somewhat insensitive to such changes. What about the current status of analog in Japan? Before telling you the current status, let me compare two pieces of data. I can explain the process of transitioning to digital society in Korea and Japan. In 2022, the United Nations announced the E-Government Development Index for about 190 countries. In the overall ranking, South Korea ranked 3rd, and Japan ranked 14th.

Actually, we are quite behind. Since this is announced every two years, the announcement for 2024 hasn't been made yet, but it is expected that the ranking will remain almost the same. Another piece of data shows global digital competitiveness. In 2022, Korea ranked 8th and Japan 29th. So, there is quite a significant gap widening. So, if I may say, can we put it this way? Japan truly seems to love analog sincerely. On the other hand, Korea is rapidly advancing, and e-government is already an old story. Why is there such a difference? This could raise questions. Ultimately, Japan's technology is digital, but their administration is analog, and it seems that Japanese citizens are not trying to move away from analog thinking. Therefore, it can be said that they have an analog mindset.

Then, why can't Japan move away from analog technology? Even if they want to utilize certain technological capabilities, it's difficult to completely reform the existing legacy systems. For example, if you ask what I mean, I want to send an email, but the other person doesn't want to receive emails. So, even if I want to send an email, I have to send a fax because the other person doesn't want it. If I want to make an electronic payment, but the other person wants to use a stamp, then what can I do? I have to stamp it for business purposes. Also, there are too many technicians working in stamp companies, so it's impossible to get rid of all these technicians. That's why it's so difficult to change the existing legacy systems and analog culture. As I mentioned earlier, Japan is...

First of all, it's not about wage increases, but about employment stability. So, making sure that everyone can maintain a certain level of job is difficult to change the existing system entirely. This is also referred to as network effect. It means that the demand for a particular product affects others. So, you can't change it alone. Therefore, the social system needs to change for everyone, but the legacy system in Japan may be a hindrance to the Fourth Industrial Revolution. So, has the Japanese government neglected this? Not at all. Since 2001, the Japanese Ministry of Internal Affairs and Communications has been continuously taking IT strategies. This is what I mean. Now, we talk about the Fourth Industrial Revolution, and Japan calls it Society 5.0.

When we talk about it, Japan declared the era of 5.0. Also, Japan's Minister of Health, Labour, and Welfare, Katsunobu Kato, is now advocating for reform. They declared the One Hundred Million Total Active Society. Furthermore, Japan's Ministry of Economy, Trade, and Industry has improved the DX promotion guidelines. So, when we say DX, it refers to Digital Transformation. The government is making continuous efforts and has allocated budgets, but Japanese society is not adapting well. Therefore, in September 2021, they established a Digital Agency to reform these legacy cultures. However, there are still many areas that have not been properly implemented. Have you heard of the My Number Card, which is a typical example?

So, in our country, we take the resident registration card for granted, but in Japan, they don't have a resident registration card. So, now, if someone suddenly collapses in the mountains and dies of a heart attack, there is no way to know who that person is. Unless they have some ID in their pocket, like a passport, but if they don't have it, we can still find out through fingerprints or just by typing in their resident number, all the past data about that person comes out. Japan is not that kind of society anymore. That's why they started issuing My Number cards with 12 digits in 2016. Until this year, in April, last month, it exceeded 80%. It's been about 8 years since 2016. In a country like ours, I thought it would be over in about a year, but even after 8 years, they still haven't filled it up to 100%. So, why don't the Japanese people use this card properly?

Shall we create it because of the fear of personal information? That's why we are worried about information leakage. Because we didn't live in such a society, we naturally consider having a resident registration card as obvious. However, many Japanese people don't think so. So, what benefits do I have by getting this card? This is the kind of thinking I have now. But from the Japanese government's perspective, it's true, isn't it? Tigers leave their families behind when they die, and people leave behind data when they die, right? Therefore, in managing the most important data for the Fourth Industrial Revolution in the future, who has the data of 126 million people will be crucial. So, now the Japanese government is trying to create a My Number card to provide efficient public services to Japanese citizens for social security systems, tax issues, and disaster response. However, the Japanese citizens are not following along here.

So, it can be said that there are quite a few obstacles in transitioning to a digital society. There is no age limit for this issuance, and it is not mandatory to receive it. However, as Japanese people are now showing strong resistance, it was decided to integrate insurance certificates starting this fall. Also, when issued, about 20,000 lines of service are provided, which has increased the adoption rate to 80% now. Therefore, we can say that Japan is currently experiencing some labor pains. Of course, from our perspective, Japan may seem quite behind, but I must emphasize that Japan has a very solid fundamental base as a nation. If the transition to a digital society were to happen all at once, from then on, it would likely experience rapid growth.

I believe that the future of South Korea and Japan in terms of digital development will be visible. Even if it may feel like South Korea is now far ahead of Japan, the core infrastructure of digital policies in the 21st century is now data centers. It is said that global competition to attract data centers is becoming intense. Japan has been successful in attracting data centers through active government support. However, South Korea is facing difficulties due to the complexity of regulations and licensing procedures. With the revision of the Telecommunications Business Act, South Korea is actually strengthening regulations on data center facilities. Moreover, due to the aim of balanced regional development, there are difficulties in securing a stable power supply, which is causing a loss of competitiveness.

The story is now emerging, and Japan is now creating a digital tide at the government level, so it can be said that it is gradually undergoing such a changing process. Of course, the Japanese government has been receiving various criticisms because until last year, they were still using relics of the past, like floppy disks. Criticisms have been made about the level of analog in the Japanese government's administrative capacity. Although they have not yet fully implemented the My Number card, the Japanese government is now taking strong drive policies. Since it is a conservative society, they are experiencing a process of change without undergoing a drastic transformation. However, the problem still remains, not only in Japan but also in our country. Securing talent is the key issue.

The issue of the lack of popularity in public service is still prevalent in both Korea and Japan. Even in Japan, students who excel in their studies tend to avoid public service until they have filled their resumes. Similarly, in Korea, those who excel in their studies do not prefer public service and often move to the United States where salaries are much higher, leading to a shortage of talent and brain drain. As a result, there are problems in the supply of IT personnel, especially in Japan, where it is estimated that by 2030, there will be a shortage of around 450,000 IT professionals. In this context, one of the solutions in Japan is to bring IT professionals from Korea. Of course, why do we like Korean friends? First of all, Korean friends are polite.

And now, I am quite familiar with the Confucian ideology, so when I see guests, I bow my head and greet them, and even when having a drink, Japanese people just toast, and in front of the boss, they just drink together and smoke together with the boss. They smoke with seniors, but our Korean friends don't do that. When toasting, Koreans always toast under the glass and then turn around to drink. Have you seen them smoking flavored tobacco when they smoke? Korean friends never do that, so Japanese superiors think, Oh, Korean friends are really polite and truly have Eastern manners. They are good at English too. When we see them, it may seem like we are not good at English, but Koreans pronounce differently from Japanese. So, when Japanese people think about it, they judge that Korean youth are quite globalized.

Check the typing speed. Japan only develops thumbs because they only play Nintendo games. They say things like that. But we played PC games since we were young. So, Korean friends are much better. When we look at it, it's just that we don't stand out. When viewed from other countries, Korean youths seem very active, dynamic, and globalizing. So, within the Asian region, the Chinese and Japanese prefer Korean talents as the most suitable talents. But what's the problem? I've been saying this since earlier. Korean friends don't want to go to Silicon Valley. It's because the rent is cheap, the hourly wage is cheaper than in Korea, and the monthly salary is lower. So, I really want to bring young Korean talents to Japan. Double the current salary.

If we think about it, our talented individuals are more likely to go to Japan. But on the other hand, if you think about it, this is a side note, our department students, if they graduate in the fourth year, are likely to get jobs at IT companies in Japan. At first, I was really happy because our students were getting jobs in Japan. It's really good to work abroad, promote the department, and so on. I had these thoughts. Think about it. Wait a moment. From when these students were young until they graduated from university, their parents must have invested a lot. But by doing that, smart students are going to Japan. No, they should work here, dedicate themselves to the development of IT in our country, work for the 4th industrial revolution in our country. If these talented individuals aren't smart, they can't work overseas. Thinking like this, suddenly I felt like this is not right.

So, what about it, please raise the salaries of IT companies in Korea. Then, good people have gathered. Oh, and another thing is that many experts in Japan benchmark Korea when pursuing their own digital administration. Why? Because some find it difficult to reform themselves. As I mentioned earlier, they already have legacy systems, so they cannot reform or innovate on their own. But look, how about this? Korea is unified in the infrastructure of local self-government systems. There is a concentration of experts in the central government, and many young people have been exposed since childhood. So, I think Japan sees Korea as an opportunity in digitalization. Therefore, many IT companies in Korea have taken Japan as an opportunity market to start up or establish startups.

I would like that. In fact, isn't the Line Yahoo incident one of those things? In 2011, during the Northeast Japan Earthquake, when Japanese people couldn't communicate with each other due to the undeveloped messenger, Naver entered Japan and developed Line. Well, recently, it has become an issue, but that market is the Japanese market. It has an economic scale about three times larger than South Korea. So, there is no need to start a startup only in Korea. You can sufficiently enter the Japanese market. Also, Japan is open and a free country, so it is a free market country. I think you can go there and seize the opportunity.

"미국은 일본을 본받아야 한다" 미국보다 잘 나가던 일본이 한순간에 무너진 이유  (강철구 교수 / 2부)

* 출연신청 & 제휴 및 광고문의 : ssid@dpnstud.io


신사임당

The Decline of Japan's Electrical and Electronic Industry

Japan's electrical and electronic industry used to dominate the global market, leading to the perception of Japan as a powerhouse in home appliances.

However, the industry's downfall began in the 1990s as Japanese companies struggled to innovate and keep up with the transition to the PC market, ultimately losing their leadership to the United States.

This decline is exemplified by the struggles of companies like Sharp, which failed to overcome deficits and Sony, indicating a significant decline in the Japanese electronics industry.

The Impact of Quality Obsession on Technological Companies

Sanyo was acquired by China's Haier Group, while Xieyi's display business was taken over by Honghai.

The obsession with high quality and perfectionism has led to the inability of Japanese companies to adapt to rapidly changing market demands.

In contrast, Korean companies have focused on productivity and innovation, quickly gaining market share with affordable, high-performance products.

LG's success in the Japanese market was not only due to technological capabilities but also a deep understanding of consumer needs and a strategic approach to product development.

Japan's Analog Mindset and Technology Transition

Japan has a strong attachment to analog technology, struggling to move away from legacy systems like fax and stamps.

The country's analog mindset is deeply rooted in its culture and the stability of employment.

The legacy systems and analog culture create a network effect, making it difficult for Japan to transition to digital technology.

Despite this challenge, the Japanese government has been actively pursuing IT strategies and embracing the concept of Society 5.

0, aiming to keep up with the Fourth Industrial Revolution.

Japan's Transition to a Digital Society and the Challenge of My Number Cards

Japan has been making efforts to transition to a digital society, including the introduction of the My Number card, but has faced resistance from its citizens in fully adopting it.

The card, with 12 digits, is aimed at providing efficient public services for social security, tax issues, and disaster response.

Despite the government's efforts and the expansion of services, the adoption rate of the My Number card has only reached 80% due to the fear of personal information leakage and resistance from the Japanese people.

The Future of Digital Development in South Korea and Japan

Japan is actively attracting data centers with government support, while South Korea is struggling with complex regulations and licensing procedures.

South Korea is strengthening regulations on data center facilities, facing challenges in securing a stable power supply for balanced regional development.

Both countries are experiencing a shortage of IT professionals, with Japan expecting a shortfall of 450,000 IT professionals by 2030 and considering bringing in IT professionals from Korea.

The lack of popularity in public service among talented students is leading to a brain drain in both South Korea and Japan.

The Impact of Korean Talent on Japan's IT Industry

Korean youth are highly regarded for their activity, dynamism, and global perspective in the Asian region, particularly by the Chinese and Japanese.

However, there is a growing concern about the emigration of talented individuals to Japan due to higher salaries.

The influx of Korean IT companies into the Japanese market is seen as a significant opportunity, driven by Japan's need for digitalization and the potential for startups to thrive.