Why Japan's 'lost decade' wasn't lost
Monday, April 18, 2005 Posted: 11:50 AM JST
The past ten years in Japan are generally considered to be a "lost decade". Veteran Japan analyst James Abegglen, who coined "Japan Inc." and "lifetime employment", begs to differ in an interview with Anthony Fensom of the Daily Yomiuri. According to Abegglen it was a decade in which Japanese business was busier than ever.
"It was a vital decade and it certainly wasn't a fun decade, but to describe it as lost is simple nonsense. We were making a transition from extraordinarily high growth to maturity--demographic and industrial," he said. "We had to restructure industries--companies had overdiversified to a grotesque degree, losing market share and focus."
In the West restructuring involved high-profile mergers and acquisitions which produced mass layoffs and factory closures. Japanese firms, says Abegglen, achieved the restructuring "without blood on the walls" by shedding jobs through attrition instead of redundancies. This takes more time, but is a lot easier on the employees.
Writes Fensom: "But with Japanese manufacturers now having cleaned up their balance sheets, with debt levels half their U.S. rivals, the nation's firms are now steadily gaining in profitability.
According to Abegglen's consultancy, Asia Advisory Service K.K., firms listed on the First Section of the Tokyo Stock Exchange have clocked up double-digit growth in operating profit over the past three consecutive fiscal years, including an impressive 28 percent jump in net profit in fiscal 2004."
2001 interview with James Abegglen in Japan.inc
Asia Advisory Service K.K.
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