Japanese products, especially in electronics and engineering holds a superiors place all over the world. Their products are reputed as consisting of premium technology and high-quality with little or no space for even the consideration of malfunction throughout the period of warranty.
There was a time when Japanese products were considered as less than up to standard. American Businesses looked down on their Japanese adversaries as purveyors of low-quality cheap knockoffs. Not only the U.S, but they were looked down by the entire international market.
Japan was tainted by accusations of low-quality products, poor safety standards and mimicking designs and trademarks. However, after the end of World War II, Japan went through a revolutionizing phase.
How did they do it? While China still to an extent holds a grand reputation for shoddy exports, how did Japan manage to rise above?
It was then that Business Leaders of Japan instigated actions to reverse this image. They first started by welcoming foreign experts on quality management. Their strategies were concentrated on a “Total Quality” approach and in improving the organizational processes all over the company. Consequently, they started manufacturing high-quality products at lower costs and rapidly earned a reputation throughout the world for their consistent integrity and trustworthiness.
Initially, U.S companies perceived that Japan’s success was limited to their price and no other component was a challenge. Thus, they responded by strategies that were aimed to reduce domestic production costs and to restrict imports, unfortunately, this had no effect on increasing their competitiveness.
By the end of 1970s, Japan had captured the majority of the world electronics and auto market. Finally, American manufactures realized that their competition wasn’t with the price of products, but with quality, and they embraced a new approach, explicitly known as “Total Quality Management”. With this, they initiated various quality related approaches.
Japan’s rise to glory has been a story that portrayed conventional wisdom to all businesses. However, their reputation has taken a bit of a blow in recent years and they are still trying to pick up the pieces.
Some of the most popular business scandals of Japan includes falsifying testing data for products including shock absorbers used in ships, buildings and trains and the fine of $200 million to be paid by Airbag maker Takata for installing defective and potentially fatal devices in 23 million cars.
In 2015, the quality of Japanese cars sold in the U.S fell below the industry average. However, they were selected as having the best “Country Brand” in early 2015, by the Consultancy Firm FutureBrand.
A strong brand allows them to charge a higher price and thus obtain better profit margins. It may not be wrong to assume that investors purchase stocks of Japanese companies due to their strong brand name. However, according to a study conducted by Bloomsberg, Japanese manufactures have the lowest operating margins within a group of seven countries.
Japan’s low-profit margins despite their reputation is an indication that it is high time they change their strategies. While they have had a hit to their ranking as a quality manufacturer, a better alternative maybe to improve the productivity of the supply chains and expand offshore. Recent study conducted by J.D Power states that Chinese manufactured cars have lower fault rates than U.S. Emerging economies are developing at incredible phase introducing cheaper and higher quality products, just as Japan’s rise to recognition.
An extensively dispersed supply chain can act as an enhancer in superior branding. While maintaining a respectable reputation is crucial, it is also important that it paves the way to higher profit margins.