The Japanese Electronics Industry: History, International Trade Theories, Competitiveness Essay.

Japanese Electronics Industry and its Leading Position in Semiconductor Component Manufacturing

Discuss about the Japanese Electronics Industry.

Controlling electric power is a science that is responsible for handling generation, switching and turning electrical energy into other forms of energy. This phenomenon is known as electronics. There are many types of electronic equipments such as different types of active parts of electron tube and resistors. It also includes different types of passive parts like transformers and coils, electrochemical like tuners and connectors, and functional as microphones and speakers. Our world has been lightened by electronics industry. For making our lives easier electronics have provided immense benefits to us. However, electronics not only improves and enhances our studies and research but also it enhances and improves communication (Don, n.d).

In our daily life, electronic products provided many help to us. It helps in gaining knowledge about the current situation of the world while improving entertainments for instance, Gameboy, PlayStation, etc. It also supports medical world while diagnosing diseases at early stages. Apart from that, electronics also helps in building new agreements and trade forms i.e. evolving e-commerce that has a very low cost of operations and are very efficient. In modern competitive world, electronics devices can control the electric power, as they have started to use the component of semiconductor (Don, n.d).

In the world of electronics, Japan is listed in the richest countries. Japan is known for cars, electronics, great culture and Zucchini. In the electronics market, electronics has entered its footsteps in Japan. In electronics world, Japanese manufacturers hold a leading position. Japan ranks third in the manufacturing industry of the world. It is also a member of the information technology component of WTO. Japan is the largest exporter of the component of semiconductor as well as a reputed producer. Apart from that, Toshiba and Sony are listed under the top 10 companies that buys semiconductor component and are considered as big manufacturers of semiconductor component. However, it can be said that Japan is competitive in terms of electronics market, as it is the home for innumerable companies other than Toshiba and Sony such as Canon, Nikon, Panasonic, Matsushita, Yamaha, TDK, NEC, Fujitsu, Fujifilm, etc. Lower cost of inputs and price of the product along with higher innovation is the result of higher competition among the companies in the market (Ingo, Peter, and Ulrich, 2011).

It is about a story that has started in 1952. A Japanese company known as NHK has initiated radio broadcasting. At that time, emergence of radio buyers and sellers has started to emerge in the Japanese cities. Popularity of radio component has been seen in 1930. Japanese government in the year of 1960 had noticed the advantage of radio in the field of communication and started to supply raw materials to the radio manufacturers. Most of the Japanese companies had manufacture radio on the early 950s. Companies of Japan have developed video recorder, laser, CD player, technology, LCD sand transistor, VSH solar cell, Walkman and receivers (nhk.or.jp, n.d).

History of Companies Using Japanese Technologies

Production of radio in huge amount has been started from 1952. In 1952, Japan produces television in masses. However, in 1960s, most of the Japanese families have the ambition of buying refrigerator, TV and washing machines. In 1959, the ratios of transistors, capacitors, and speakers production when compared to the rate of production in 1958 were 2:0, 2:0 and 2:4 respectively. 1957 is the year of internalisation of the Japanese companies to foreign locations. Many of the Japanese companies have targeted to open their office at United States. However, from the year of 1958, companies have started to export various Japanese techniques to different foreign nations. 1997 witnessed the increased production of electronics items from the year of 1955. It was 68.1 million to 9.35 trillion. In 1985, 13.6 million TV has been exported by Japan. In 1980s Japan had become the third largest manufacturers of TV in the world. In the late 1990s, it is seen that Japan has mastered in the production of electronic goods to meet the demand of the domestic market. Moreover, Japanese companies had performed well in the manufacturing of digital camera, plasma TV, cell phones and car navigation system (Jeffrey, 2012).

In 1980s semiconductor component was manufactured by Japan. Companies of Japan in today’s world are considered as renowned market leader in the manufacturing of semiconductor component. Almost half of the world’s semiconductor productions are manufactured in Japan. Companies like Hitachi, Toshiba and NEC are listed as the top producer of semiconductor component in the world. However, due to economic recession in the year of 2008, Japanese companies fall due to the currency appreciation (Jeffrey, 2012).

Many theoretical frameworks explain international trade. Trade is defined as the exchange of products and services between many countries. Trade theories are of two types such as modern and classical. Classical theories are classified into many categories such as Comparative advantage, absolute advantage, Heckscher-Ohlin and Mercantilism. A country’s total quantity of silver and gold is known as Mercantilism. On the other hand, Adam Smith proposed the theory of absolute advantage that focused on the capability of a country while manufacturing products at a better quality than the other country. For instance, Japan has all the favourable conditions of producing electronic goods such as skilled and educated workers, competitive market landscape, and other aspects. Hence, it can be said that Japan faces less risk in producing electronics goods by Japanese companies (lardbucket.org, n.d).

International Trade Theories and the Impact on Japan's Competitiveness

Competitive advantage can be characterized at the situation where one country is capable of manufacturing higher quality products than the other countries. For instance, Japan has the capability of producing electronics items in an efficient manner compared to other categories of products such as jewellery, clothes and oil. After that, the Heckscher Ohlin theory highlights the fact that a country must sell its surplus production in terms of less expensive products. On the contrary, there are nations that will import products which require assets that are very rare. For instance, Japan imports crude oil and exports electronics. After the rise of World War II, rise of modern trade theories were identified (lardbucket.org, n.d).

The modern theory is alluded with the exchange of products manufactured in the same sector between two countries. It is advancement with the emergence of multinational companies. A good example is America imports Toshiba Laptops from Japan while it exports MacBook to Japan. Apart from that, when a nation directly invests into a product or service of a foreign country then it is known as Foreign Direct Investment (FDI). In 2016, Japan has witnessed the increment of FDI in of 44889 JPY hundred millions. From 1996 to 2016, Japan reaches 5370.12 JPY hundred millions and it has also recorded a low GDP of -3825.00 JPY Hundreds Million in 2010 (tradingeconomics.com, 2016).

Overall, in terms of growth of Japanese electronics industry international trade is responsible for creating a positive impact. It is seen that American inventions are found in most of the Japanese products. to avoid trade war between nations, Japan has invented a strategy of both exporting and importing goods. in 2014, Japan is ranked as fourth largest exporter and importer of goods. In 2015, the rank has shifted to one of the ten largest exporters. the whole Japanese electronics industry in 2015 has imported 490.2bn electronics goods and export $95.6bn goods. Some countries are capable of manufacturing products without the help of advanced technology. On the contrary, few companies adopt internalisation in order to get good economies of scale (Frankel, 1999).

For describing a competitive advantage of the country, Michael Porter has developed a model in 1990. The theory highlights the fact that the competitiveness of a nation is determined by the ability of the industries while developing and innovating things. It also illustrates the reason of choosing a particular industry. For instance, South Korea, Taiwan and Japan etc. are focused on electronics industry. Porter points out four determinants. They are demand conditions, local firm characteristics, factor conditions and complementary industries & local suppliers.

Local capabilities and market resources considers some factors such as skilled labour, infrastructure, technological base, etc while deciding the product selected for import and export of goods by a particular country. The second factor is demand condition that illustrates that local market is the best place for innovation while enabling competitive advantage. In terms of local suppliers, companies have to maintain a strong relation with the local suppliers in order to get a competitive advantage. Last is industry that will include construction, competition and strategy (investopedia.com, 2016).

Innovation and quality is the result of increased level of competition. Porter has pointed out the role of government in controlling the competitiveness of the companies. For instance, free trade agreements are formulated for the benefit of foreign companies in a country. However, Government will invest in the electronics sector while encouraging the new entrants (investopedia.com, 2016).

Conclusion

It can be concluded that international trade theories have a vital role in creating a significant impact in appreciating international trade. Theories of international trade put emphasis on the production in larger quantities with lower cost of manufacturing. However, companies and government both implement these theories. Japan implements various theories of international trade in order to maintain good relations with other nation. Japan has advantage of having good hold over electronics industry but it also imports many electronic items. It is due to the high number of educated and skilled labours as well as electrical engineers. Investment of government in this industry has also developed the condition of the industry. However, Japanese government has not taken any steps to protect the domestic companies in this market. On the other hand, South Korea has introduced the free trade agreement to save the local markets from the foreign multinational giants.