Germany and Japan unlike the U.S. and the UK cannot be blamed for the subprime mortgage mess yet they have to similarly suffer the fallouts of the global financial meltdown.
As two of the largest exporters, Germany and Japan have the world as their market and have no choice but to support its recovery – although Germany’s Chancellor has been chided for her tepid response to the pump-priming orchestrated by the EU.
It’s a small world indeed.
Germany has a long history of innovation, R&D and product development. Japan, on the other hand, credits W. Edwards Deming for showing them the way to becoming the gold standard in product quality.
Deming, an American, introduced the Japanese, including Toyota, to the quality evolution starting with statistical quality control following the end of World War II. General Motors, on the other hand, had been viewed as a pillar of America’s industrial dominance and perhaps needed no help.
Fast forward to 2008, Toyota overtook GM as the world’s biggest auto company. And Toyota’s premium auto brand, Lexus is now the largest premium car brand in the U.S., beating Germany’s Mercedes Benz and BMW.
George Soros argues that the global financial meltdown was slow in coming. The same can be said of the fall of GM. As an example GM’s market share has been on a decline for decades and hence there is a lot of taxpayers’ anger in their bail out. Clearly, GM has failed in the market and its ability to compete and succeed in today’s highly competitive global market is suspect.
GM chose to nibble the edges instead of fixing its fundamental problem, i.e., products that consumers do not prefer. They played for and managed survival, i.e., focused on high-margin SUVs. It was a short-lease on life given a shrinking business. It was clear they were on the path to destruction which was only accelerated by the recent global financial meltdown.
Toyota, on the other hand, understands how small the world is and aimed for robust global market share and benefit from economies of scale to sustain success.
Toyota was laughed at when the first Toyopet appeared in 1957 on the U.S. high-speed turnpikes (which as we now know, were modeled after the German autobahn network by Eisenhower who admired it when he commanded the Allied Forces during World War II) for being so lame compared to the muscle cars from Detroit.
But Toyota has learned from Deming and has developed an insatiable appetite to accumulate learnings from the rest of the world. For instance, it stripped down a few German cars to figure out how to make better cars and then went to school in marketing and consumer insights from the likes of Proctor & Gamble, i.e., it interacted with consumers right in their homes in California. And presto, from pedestrian-cars evolved the Lexus brand.
Toyota also leads the hybrid car market although GM had early on bragged about their pioneering efforts. But playing the survival game made them decide to pull the plug on their electric-car project.
Product development for global brands even simple toilet soaps can take over a year and in some cases closer to 3 or even 5 years which is why innovative companies like P&G and GSK have 5-year product development plans.
Investors, companies and countries are gearing if not yet geared up for when the global slowdown (or recession in the developed world) would turnaround. For instance Warren Buffet just raised his investment in GE by $730 million and Pfizer is working on a merger if not an acquisition; while Vietnam is playing the role of door-to-door salesperson peddling its newly developed exports products given that their original target markets like the U.S. are in recession.
The global financial crisis has not spared Toyota but given its strong business fundamentals they are expected to ride out this rough patch. They not only understand economies of scale they are also very disciplined not to fall victims to sub-optimized thinking and practices.
As an example, Toyota has introduced the world to “just-in-time” manufacturing practices – and its support structure, i.e., flexible, low-cost, high-speed production and logistics and infrastructure network on a global scale. They know “it’s a small world”. In the past we called it “imperialism” whether it was out of Japan or America. But the reality is it reflects the model described by Nobel Prize winning economist Paul Krugman in his 1991 book, Geography and Trade, to illustrate economies of scale.
Countries can do aToyota too like China is doing. India, on the other hand, took a while to pick it up. For instance, for decades India subscribed to sub-optimized manufacturing by restricting the size of companies and instead promoted cottage industries. India is still lagging behind China in its infrastructure development and so even if India has had a longer history of the free-enterprise system, the Indian model has a lot of inefficiencies. Jack Welch the former CEO of GE that had poured tons of investments in India is now ringing the alarm bell.
Every country has its own problems yet the Chinese always see opportunity in adversity; not unlike our taipans. Should our economic managers take a similar mindset?
Our GDP is relatively small by global standards, i.e., our exports (at $ 50B yields a negative balance of $ 8B) are less than a third of Malaysia or Thailand’s; and given investors are constantly seeking investment opportunities how does NEDA in partnership with the private sector, for example, translate our economic development plans into a truly tangible business proposition for investors?
How do we, say, double exports which will still be just two-thirds of Malaysia or Thailand’s? This cannot happen overnight; do we want to be gearing up then?
How do we, for instance, build on our electronics exports, which account for 59% of our exports, and move up the value chain, i.e., we are producing intermediate as opposed to final products? We may not have the expertise to pursue such an initiative but there is no stopping us from partnering with global players that have the expertise in electronics consumer products for instance.
At the end of the day, we can look either at GM (i.e., nibble the edges) or Toyota (i.e., establish strong economic fundamentals) or China (i.e., leverage the global economy) or India (i.e., pursue sub-optimization) as a model.
Or we can opt to be an island unto ourselves?
As two of the largest exporters, Germany and Japan have the world as their market and have no choice but to support its recovery – although Germany’s Chancellor has been chided for her tepid response to the pump-priming orchestrated by the EU.
It’s a small world indeed.
Germany has a long history of innovation, R&D and product development. Japan, on the other hand, credits W. Edwards Deming for showing them the way to becoming the gold standard in product quality.
Deming, an American, introduced the Japanese, including Toyota, to the quality evolution starting with statistical quality control following the end of World War II. General Motors, on the other hand, had been viewed as a pillar of America’s industrial dominance and perhaps needed no help.
Fast forward to 2008, Toyota overtook GM as the world’s biggest auto company. And Toyota’s premium auto brand, Lexus is now the largest premium car brand in the U.S., beating Germany’s Mercedes Benz and BMW.
George Soros argues that the global financial meltdown was slow in coming. The same can be said of the fall of GM. As an example GM’s market share has been on a decline for decades and hence there is a lot of taxpayers’ anger in their bail out. Clearly, GM has failed in the market and its ability to compete and succeed in today’s highly competitive global market is suspect.
GM chose to nibble the edges instead of fixing its fundamental problem, i.e., products that consumers do not prefer. They played for and managed survival, i.e., focused on high-margin SUVs. It was a short-lease on life given a shrinking business. It was clear they were on the path to destruction which was only accelerated by the recent global financial meltdown.
Toyota, on the other hand, understands how small the world is and aimed for robust global market share and benefit from economies of scale to sustain success.
Toyota was laughed at when the first Toyopet appeared in 1957 on the U.S. high-speed turnpikes (which as we now know, were modeled after the German autobahn network by Eisenhower who admired it when he commanded the Allied Forces during World War II) for being so lame compared to the muscle cars from Detroit.
But Toyota has learned from Deming and has developed an insatiable appetite to accumulate learnings from the rest of the world. For instance, it stripped down a few German cars to figure out how to make better cars and then went to school in marketing and consumer insights from the likes of Proctor & Gamble, i.e., it interacted with consumers right in their homes in California. And presto, from pedestrian-cars evolved the Lexus brand.
Toyota also leads the hybrid car market although GM had early on bragged about their pioneering efforts. But playing the survival game made them decide to pull the plug on their electric-car project.
Product development for global brands even simple toilet soaps can take over a year and in some cases closer to 3 or even 5 years which is why innovative companies like P&G and GSK have 5-year product development plans.
Investors, companies and countries are gearing if not yet geared up for when the global slowdown (or recession in the developed world) would turnaround. For instance Warren Buffet just raised his investment in GE by $730 million and Pfizer is working on a merger if not an acquisition; while Vietnam is playing the role of door-to-door salesperson peddling its newly developed exports products given that their original target markets like the U.S. are in recession.
The global financial crisis has not spared Toyota but given its strong business fundamentals they are expected to ride out this rough patch. They not only understand economies of scale they are also very disciplined not to fall victims to sub-optimized thinking and practices.
As an example, Toyota has introduced the world to “just-in-time” manufacturing practices – and its support structure, i.e., flexible, low-cost, high-speed production and logistics and infrastructure network on a global scale. They know “it’s a small world”. In the past we called it “imperialism” whether it was out of Japan or America. But the reality is it reflects the model described by Nobel Prize winning economist Paul Krugman in his 1991 book, Geography and Trade, to illustrate economies of scale.
Countries can do aToyota too like China is doing. India, on the other hand, took a while to pick it up. For instance, for decades India subscribed to sub-optimized manufacturing by restricting the size of companies and instead promoted cottage industries. India is still lagging behind China in its infrastructure development and so even if India has had a longer history of the free-enterprise system, the Indian model has a lot of inefficiencies. Jack Welch the former CEO of GE that had poured tons of investments in India is now ringing the alarm bell.
Every country has its own problems yet the Chinese always see opportunity in adversity; not unlike our taipans. Should our economic managers take a similar mindset?
Our GDP is relatively small by global standards, i.e., our exports (at $ 50B yields a negative balance of $ 8B) are less than a third of Malaysia or Thailand’s; and given investors are constantly seeking investment opportunities how does NEDA in partnership with the private sector, for example, translate our economic development plans into a truly tangible business proposition for investors?
How do we, say, double exports which will still be just two-thirds of Malaysia or Thailand’s? This cannot happen overnight; do we want to be gearing up then?
How do we, for instance, build on our electronics exports, which account for 59% of our exports, and move up the value chain, i.e., we are producing intermediate as opposed to final products? We may not have the expertise to pursue such an initiative but there is no stopping us from partnering with global players that have the expertise in electronics consumer products for instance.
At the end of the day, we can look either at GM (i.e., nibble the edges) or Toyota (i.e., establish strong economic fundamentals) or China (i.e., leverage the global economy) or India (i.e., pursue sub-optimization) as a model.
Or we can opt to be an island unto ourselves?
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