Reply With QuoteWoah... I never knew the Japanese would ever reach a trade deficit. I hope things get better for them...
The end of an era for Japan
SourceWherever you are in the world, you've probably used or coveted some Japanese product - a Honda four-wheeler; a Toyota Prius, a Sony, a Panasonic TV, a Nikon camera. Since the 1950s, Japan's exports have flooded the world and fueled an economic miracle at home, making that country one of the wealthiest in the world. Well, this week marks a turning point - one of the world's great export engines has run out of gas.
What in the world is going on?
For the first time in 31 years, Japan has recorded a trade deficit. In simple terms, that means Japan imported more than it exported last year. Now this is not that unusual for some rich countries: the U.S. has had a trade deficit since 1975, and yet we've grown. But the U.S. economy is not built on exports. Japan's economic rise on the other hand, has been almost entirely powered by exports.
So what has changed in Japan?
The Japanese government would like to blame one-off events: Last year's earthquake and tsunami crippled factories and shut down nuclear energy reactors. The offshoot of that was decreased economic output, plus they needed to import expensive oil from the Middle East. But natural disasters have only highlighted and accelerated existing trends in Japan: A decline in competitiveness and an ageing work force.
China and other East Asian countries can now produce cheaper products and in greater quantities. Add to that a rising Yen, and Japan's exporters have been at a disadvantage globally. Toyota's chief perhaps said it best last year: "It doesn't make sense to manufacture in Japan."
Then add to this Japan's demographics. Between 1990 and 2007, Japan's working population dropped from 86 to 83 million. At the same time, the number of Americans between the ages of 15 and 64 rose from 160 million to 200 million. In a global marketplace, this is a major handicap for Tokyo.
Between 2001 and 2010, Japan's economy grew at seven-tenths of one percent - less than half the pace of America's. It was also well behind Europe. Contrast that with growth per person - or GDP per capita - and Japan actually outperforms America and the Euro Zone.
Woah... I never knew the Japanese would ever reach a trade deficit. I hope things get better for them...
It is true, their population will fall by a third in the next 30ys or so. So these are quite grim perspectives for the overall welfare of the country. As for the trade deficit last year one has to take the Tsunami and the Fukushima effect into account, I think they will have a positive trade balance again very soon. You canīt substitute the high professionalism of the Japanese workforce, which the most productive of the world by the way, with some sweatshop labour, at least until you still have enough people in their working age over there.
Well its not only Tsunami to blame. They are getting behind in some points of industry, as they just dont seem to be able to compete with international competition for some points. Take Sony Ericsson for example. It was at its high in 2007 where it sold over 100 millions cell phones. But with release of Iphone and financial crisis it sales have drastically dropped to only 34 millions in 2011. It just wasnt making things that would be as attractive to buyer as they were back then, as they arent offering anything that would be special. With Sony buying Ericsson`s stake in Sony Ericsson and it becoming just Sony i hope that they would be able to turn around and sale more, but their new models that were presented till now dont look as promising as they could be. Same applies to other companies too. They lost their advantage. They are making good products, but Koreans are making good products now too, so Japan has lost its place. Demographics play a role too, but isnt the reason for problems right now. Its the reason why they would become problems in future if they dont change something.
That is just an example, but the core of the industry still has very good products such as Toyota, Toshiba, Denso etc. ...Originally Posted by Nyusu
They are doing good, but in many fields they arent the best anymore. They have big market share, but it does shrink.
I don't know why people equate population fall with a decline of society. In my opinion there is approx. 4 billion too many of us on this globe. About 2 billion would be enough that the innovation and progress would march on and it would be much easier to keep things sustainable. Everyone could live quite comfortable with a resources that we actually have...
I think is also related to the change in the nature of the consumers products.
What used to be high tech products, requiring a good brand to ensure quality, are becoming simple and therefore more reliable. So the public is looking for the cheapest version (typically made in China), since it would provide an acceptable level of quality for the few years (months) until a new model appears. Just think cameras, phones, laptops, screens, printers, memory sticks, hard-disks... they're more like perishable consumer goods now.
They need to find a niche market, like the Swiss did with their watches, to ensure a good domestic manufacture industry. Otherwise, although the Japanese firms will live on, they will manufacture only in SE continental Asia.
Because if a population shrinks due to low birth levels it does not simply become fewer, but it becomes older as well. And an ageing society where 50% are older than 65ys certainly lacks the dynamism and creativity of a young and energetic society with with a median age of 25ys. On top you have the liabilities for the shrinking younger population to feed the growing proportion of elders. This leads to an overall decline in economic performance and welfare.
The 4bn surpluss population you are refering to are not living the industrialized nations but mostly in third world countries that cannot sustain such youth bulge themselves. Hence the emigration out of there to the industrializes countries in search of a better life or a life at all.
If it shrinks it is not because the Japanese are not productive of innovative, but because they missed the chance to collaborate more with non-Japanese companies. Take the automotive sector as an example where Japanese 1st tier suppliers work almost exclusively for Japanese OEMs whereas American or German suppliers have their customers across the globe. They need to become more international and they need to give higher positions in their companies also to non-Japanese in order to develop new relationships in their industries.
Depopulation is good for Japan. Japan is a small country with lots of mountains. Over 100 million people populating these islands is not sustainable for a long period of time.
I do understand that and do agree somewhat with you, but it would be a transitional problem. The age pyramid would correct itself and everybody would have more resources at hand. Japan ha a population of 127 million and it's no where near to able support her population.
Those "extra" 4bln are consumers. Consumers drive the show, not "artists".
In case the Japanese would start having more children than they do today it could work. The birthrate is currently at 1,38 while 2,1 per women it would mean that the population sustains itself. So basically as the population shrinks the Japanese government should find ways to encourage that, otherwise the whole things becomes a deadly spiral with less young people having less chidrean and so on. This would be the ultimate downturn. But the clock is already ticking...
If they have work and money - YES (like China for instance); if they have no money and no work - NO (like Mali, Niger etc.)
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