Japan Nippon Paint

Economy: Japan

Firm: Nippon Paint

Introduction to Japan economy

Show GDP figures and graph

Talk about labour market

Relate to Northern Rock issue, explain the cause, and how it effect the economy worldly in a quick spread

How the housing market affected? Relate to Nippon paint, the problem

Introduction to Nippon paint, history, main focus, growth and market share

Explain the vulnerability, how Nippon largely exposed to the market (related to Nippon Steel),housing industry

The solution to the strategic hell

Diversification

Coating pain in Automobile industry and electronic paints

Close government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation have helped Japan become the second largest economy in the world, after the US, at around US$4.5 trillion in terms of nominal GDP and third after the US and China in terms of purchasing power parity. Banking, insurance, real estate, retailing, transportation and telecommunications are all major industries. Japan has a large industrial capacity and is home to some of the largest and most technologically advanced producers of motor vehicles, electronic equipment, machine tools, steel and nonferrous metals, ships, chemicals, textiles and processed foods. It is home to leading multinational corporations and commercial brands in technology and machinery.

Construction has long been one of Japan's largest industries, with the help of multi-billion dollar government contracts in the civil sector. Distinguishing characteristics of the Japanese economy have included the cooperation of manufacturers, suppliers, distributors and banks in closely-knit groups called keiretsu and the guarantee of lifetime employment in big corporations. Recently, Japanese companies have begun to abandon some of these norms in an attempt to increase profitability. (source: wikipedia)

 

Japanese economy is the second largest economies in the world, only after the US, at around $4.5 trillion in terms of nominal GDP. Even though being heavily destroyed during World War II, the Japanese, with appropriate strategy and government policies has experienced an industry boom and become one of the triad markets: Japan, USA, and EU. Without any natural resources, Japanese firms are mostly composing of banking, insurance, real estate, retailing, transportation, telecommunications and other heavy industries or services. It has a labour force with very high level of skills and quality. Base on human resource and open policy, Japan has given birth to large companies such as Toyota, Sony, Honda, etc. Even though the country has just recovered from a big recession, GDP figures show some promising numbers in 1st half of 2004, 2nd half of 2005. Still, being under the effect of the recent economy downfall, Japan economy is struggling to hold on to the slim GDP growth figures. "The Bank of Japan's quarterly Tankan business survey next week will probably show a drop in confidence of large manufacturers for the first time this year, economists said. The central bank will hold off raising its key interest rate from 0.5 percent until at least the second quarter of 2008, according to 21 of 30 economists surveyed by a government think tank" ( http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=JPY&_kk=japan+gdp+graph&_kt=86762ea2-7fbe-4da3-89ca-776ef35a2651&gclid=CPXB7ujW-5ACFQ8wlAodPyClsA )

The labour market in Japan is still very content, with 70% of the population employed, higher than the average 66% of the OECD countries. Likewise, the unemployment in Japan is among the lowest in OECD, only around 4% in 2006. Despite of a low unemployment rate, the standard wage share fell from 75% of total national income in 1980 to 61% in 2005. Despite that matter, labor productivity has been growing with a fast pace of 2% 1995-2005, only after the US. This means that, on average, wages have grown less than labor productivity. This may reflect the adoption of capital-intensive technologies by Japanese firms and the shift from labor-intensive to capital-intensive sectors, stimulated by increased competition from low wage countries. Which further mean that the labor market in Japan is still hot seeking for job with high standard work force, thus will give growing potential to local development.

Looking back in the history of development of Japan, construction investment has been one of Japan's keen industries that were heavily invested in. Due to the lack of resources, Japan made up for it by rapidly developing in high-tech industries such as automotives, electronics, banking and services. As a consequence, there was a huge need for developing in infrastructures, giving birth to a large growth in construction industry.