Is it a Blip or Everlasting?

Is it a Blip or Everlasting?

Doing business in Japan in the mid to late 1980s was an education. Japan’s economy was riding high, companies oozed with confidence and trees were growing taller towards the sky.

There was not a black cloud on the horizon. Japanese workers were employed for life, relentlessly trained and reassigned abroad and sent back to Japan for retraining when it looked like they were becoming too westernized, usually after 5 years. Working 15-hour days were the norm with 5 or 6 of those hours entertaining overseas visitors and drinking Jack Daniel’s whiskey. Then it was back to the office at 8.00 am the next morning to do the same thing all over again.

Such was the Midas touch of the Japanese. The Nikkei 225 rose from 8500 to 40000 in the space of 7 short years. Real estate prices in Tokyo fetched about $139,000 per square foot. I have always intrigued by the young recruits who would carry their senior manager’s bags and first-class rail tickets, but travel in economy class themselves. One day, such a “lackey” would have a “lackey” of his own.

But by 1990 it was all over.

On a recent flight from Cairo to London, I sat behind a “lackey” whose “master” sat in the seat right next to me in economy class. How things have changed! The “lackey” was next to a young woman holding a crying baby. The cabin attendant whispered something into “lackey’s” ear that caused his face to flush. Politely he turned around and spoke in Japanese with his “master.” The “master” instantly got up and went to business class, where a seat had been found for our “lackey.” The “lackey followed with “master’s” bags in tow unable to accept the privilege ahead of his “master.” He then returned to sit next to me. Some things never change!

Back in the 1980s, it seemed to all that Japan had figured it out. Japanese manufacturing led the way and their management philosophy was trumpeted everywhere in the world as the new way forward. The Japanese worker gave everything to his corporate bosses, lived in the corporate apartment, and with children attending the corporate-sponsored schools.

What followed has been termed the “lost decade 1991-2001”(Ushinawareta Nijunen). It was a period of economic stagnation unprecedented in Japan. The Bank of Japan sharply raised inter-bank lending rates in late 1989 causing the economic bubble to burst and the stock market collapse. Equity and asset prices fell, leaving the banks sitting on toxic loans that no one could payback. Most of Japan’s companies were burdened with heavy debt and layoffs became the norm as cost-cutting programs started to bite. Sounds familiar somehow!!

Not too long ago the world marveled at the low cost of manufacturing from Taiwan and Hong Kong. But it was all short-lived.

Today China is brimming with confidence as its economy flourishes. Deng Xiaoping’s “open door” policies have brought millions of Chinese out of poverty and into the middle classes at breakneck speed. It has also made many super-rich, even within our own industry. Chinese travellers have replaced the Japanese and are using every opportunity to see the world’s best-known sites. The world has changed making it a little better for some at the expense of others.

China’s focus is for overseas expansion and its international acquisitions are relentless as they “buy up” the world, just like Japan did. The authoritative autocratic, management styles typical of Chinese companies, who want subservient employees to know their place, will have trouble managing Western organizations for sure. There is no new Kaizen management approach coming from China. It’s much more seat of the pants and don’t interrupt me, “I’m trying to make a decision” approach.

While the Japanese spurt for its economy proved to be nothing more than a blip in its history, the Japanese did bring solid management principles that hold firm today. They include continuous improvement policies, just-in-time inventory management, productivity theory and quality culture.

What will China bring as it ascends to become the biggest economy on the planet? More importantly, will it just be a blip or everlasting?