International Competitiveness of Automotive Industry in Japan

Global Economic Competitiveness
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Global Economic Competitiveness
Executive Summary
Japan’s automotive industry boasts of being one of the world’s largest and most profitable. In 2019, the country’s motor vehicle exports totaled 15.9 trillion Yen, while the production rate was 9.68 million units (Japan Automobile Manufacturers Association, 2020). These numbers are indeed indicative of an industry that contributes greatly to the nation’s GDP. Further, the industry employs 8.1% of the country’s total workforce, which translates to 5.42 million people. Such figures clearly show the industry’s importance to the country. However, how has Japan managed to attain such growth through its automotive industry? How has the automotive industry in Japan managed to innovate and showcase improvement consistently? How have they managed to overcome the many innovation challenges? The answer lies in four attributes: factor conditions, demand conditions, supporting industries, and firm strategy and domestic rivalry.
These four attributes are key in helping a country build an environment that fosters growth, innovation, and consistency. In Japan, factor conditions are limited to labor and infrastructure, and the country has managed to develop an unbeatable industry against consistent efforts to enhance the skills of its workforce and build an enabling environment. With regards to demand conditions, the demand from home has helped the automotive industry to master ways in which they can continue to innovate to match the needs of their target market. Further, regarding supporting industries in Japan, the country has an integrated supply chain of companies that help to maintain and sustain its production. Finally, regarding firm strategy, the management in Japan’s companies are known to emphasize individual’s best effort at all times, which greatly contributes to increased production. On domestic rivalry, it is highly competitive within the Japanese market, and this greatly contributes to increased innovation and consistency within the automotive industry.
Introduction
The automotive industry in Japan is considered one of the largest in the world. According to Japan Automobile Manufacturers Association (2020), in 2019, the automotive and related industries employed more than 5.42 million people, representing 8.1% of the country’s total workforce. Further, the country boasts of having some of the biggest automotive companies in the world, including Toyota, Suzuki, Honda, Daihatsu, Nissan, Mazda, Subaru, Mitsubishi, and Isuzu, among others. These companies have helped to enhance and propel the Japanese economy forward for decades. Further, they have also helped to consolidate the thousands of suppliers in the industry, thus causing a ripple effect in growth. Japan’s global leadership and competitiveness in the automotive industry is anchored on unmatched domestic support. Gorka (2022) notes that though other automotive manufacturers continue to grow globally, Japan’s domestic market remains dominated by its own companies. On the global stage, Japan’s automotive companies have also shown their mettle, especially in terms of competitiveness. ...