The Medium-Term Forecast for Japanese Industry
and the Challenges it Must Face:

Improving Japan's Quality of Life and Ensuring Full Employment Through Structural Economic Reform

2. Restructuring of Industry through Innovative and Challenging Management

To accomplish the environmental goals already noted, Japanese industry, particularly the manufacturing sector, needs to be restructured and corporations are staking their survival on all-out efforts to rise to the challenge.

  1. Promoting Restructuring and Re-Engineering of Japanese Corporations

    2. (abridged)

  2. Promoting Technological Development

    3. It has been noted that one of the factors prolonging the current recession is the fact that Japan's industries have reached or are approaching maturity. The appreciation of the yen has weakened Japan's price competitiveness. Meanwhile it has become gradually difficult for Japanese industry to maintain the non-price competitiveness in which it excelled in the past, due to the fact that the US and Europe have improved the quality of their products while other Asian nations are rapidly upgrading their technological capabilities. Japanese industry must make efforts to reform its high-cost structure and simultaneously generate products, technologies and services that are so distinctive and superior that other markets will want to purchase them, even if the prices are high. In other words, value-added and distinctiveness in products, based on clear-cut concepts are indispensable to remaining competitive in the global market.

    Although Japan remains a world leader in some fields like electronics, the reality is that Japanese technology is lagging behind in many sectors, including computers and biotechnology. Despite the harsh economic environment in which Japanese corporations exist, they must make grater efforts to expand technological innovation and incorporate it in their products and services.

  3. Use of Telecommunications Network

    4. (abridged)

  4. International Strategy

    5. (abridged)

  5. The Challenge to Create New Industries and Businesses

    6. Japan must create new industries and businesses if we are to re-employ those workers who are unemployed due to the relocation of production overseas and if we are to rationalize operations in domestic industries. Those new businesses that have been crated within our major corporations were chiefly related to the refinement of the firm's main lines of business or merely extensions of current operations.

    Even in the case of advances into wholly different industry, most firms have entered industries in which other businesses already existed and from which a profit could be expected. This demonstrates the fact that each firm watches the behavior of the other firms within the industry and all move in the same direction at once. But in order for major corporations to create businesses that are really new, that will have a wide effect on the nation's economy, they must revise their thinking regarding risk taking in new industries and give strategic meaning to such bold efforts.

    Another key role major corporations are expected to fulfill is that of becoming participants in corporate alliances by cooperating with independent venture businesses to provide them with financial stability, support in developing marketing channels and aid in research and development. Some corporations have already set-up clear-cut screening standards for evaluation of innovative ideas and systems for supplying funding to promote promising ideas. The corporate "urge" to start new industries and businesses is increasing and we hope that it will become even stronger.

  6. Improving the Efficiency of Marketing and Distribution

    7. (abridged)

  7. Addressing Problems of the Global Environment

    8. In 1991, Keidanren adopted its Global Environmental Charter and requested that its members adhere to its principles. Corporations responded positively and are expanding their environmental preservation activities by undertaking such measures as adopting internal corporate codes for environmental conservation and instituting voluntary environment control programs. As for waste recycling, whole industries are tackling the problem. Thus, Japan's move toward an environmentally friendly economy is accelerating.

    International standards for the monitoring and control of the environment, initiated by business leaders throughout the world, are being drafted within the International Standards Organization (ISO), with the bulk of the standards expected to be ready for implementation in the summer of 1996. Japanese corporations have made their contribution to this effort by providing pro-bono assistance to the ISO in the form of industry experts. We hope that a large number of Japanese companies will qualify for certification under the new standards.

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