Japan and Out – The End of a Tech Powerhouse

January 10, 2013 by  
Filed under Features & Editorials

There’s been a significant shift in power at the tech top table. I explain where the balance now lies…


Sony, Nintendo, Panasonic, Canon, Toyota, Honda, Nissan, Suzuki, Mitsubishi and Citizen. Japan’s roll-call of its biggest companies reads like a who’s who of technological innovation, but increasingly they are being looked upon as the old guard, as dinosaurs well past their best. Instead today’s biggest and most progressive brands appear to be coming from Taiwan and South Korea. The former boasts Asus, Acer, HTC and Foxconn, the later is home to the might of Hyundai, Kia, LG and Samsung. Is it the end of an era?

Certainly a power shift is underway. Japan, Taiwan and South Korea have traditionally endured difficult relations with one another both politically and economically. Korea in particular has felt the might of Japan having been under Japanese rule from 1910 until the end of the Second World War in 1945. Subsequently Japan only established diplomatic relations with South Korea in 1965.

Even as recently as five years ago Japanese brand loyalty was such that it saw Samsung pull out of the Japanese electronics market while other famous global brands from the Bank of America to Tesco have found it an impossible nut to crack. Even Xboxes don’t sell! The motto appeared clear: the world needed Japan, Japan didn’t need the world.

Now it is all change. Sony’s inability to find a solution to the popular ecosystems of Google, Apple and Microsoft combined with an unwillingness to compete on price has handed the momentum to younger, hungrier rivals like Acer, Asus and HTC (founded in 1976, 1990 and 1997 respectively). It has also opened the door to the economies of scale afforded by LG and Samsung. Sony lost $5.7bn last year and doesn’t plan to return to profitability until March 2013.

It has been a similar story for Nintendo. After the initial success of the Wii it has struggled to compete with console rivals seeing sales fall to such an extent that it reported its first annual loss in three decades in February. The launch of the new Wii U will bring hope of a turn around, but in October it still slashed annual profit forecasts by 70 per cent.

Conversely South Korean heavyweight Samsung continues to challenge Apple as the technology success story of the century. It is now firmly established at the world’s largest mobile phone manufacturer while it is also number one globally in televisions, laptops and displays and number two in tablets to Apple and semiconductors to Intel.

As for Taiwan both Acer and Asus are now inside the top five largest personal computer manufacturers despite their relatively short histories and HTC has leapfrogged both RIM and Nokia in the smartphone sector this year.

This turnaround isn’t just evident in technology. In the car industry over the last 10 years Hyundai has overtaken Mitsubishi and Suzuki and is now challenging Toyota, while the rise of South Korean success has seen the so-called ‘Korean Wave’ hit Japan – a reference to the increase in popularity of South Korean entertainment and culture.

Perhaps most interesting, however, is how all three countries are dealing with this change in fortunes: with cooperation. Inside Japan fierce rivals Sony and Panasonic have formed an alliance to better compete on the world stage and Japan and South Korea recently declared they would strengthen their economic ties as the two agreed to reduce the size of their so-called ‘currency swap’ loans from $70 billion to $13 billion.

Meanwhile Japan has found new impetus through progressive environmental innovation which has seen Toyota and Nissan lead the way in electric cars and Citizen reinvigorate itself through its hugely popular range of ‘Eco Drive’ solar powered watches.

It all remains far from a revolution, but it does suggest the old dog can still learn new tricks…

Then again, with Chinese mobile giants Huawei and ZTE also set to become household names in 2013 on the back of government subsidies and an unmatchable cheap labour force – those tricks better be good ones…

Reprinted with kind permission of MSN Social Voices

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