Why Japan lost its comparative advantage in producing electronic parts
voxeu.org
voxeu.org
I used to think that sensible and compelling new ideas would be adopted quickly. Today, I believe this view is hopelessly naive. After all, it took 40 years before we recognized the power of the Toyota Production System.
But even I'm going to say you're making a rather absurd statement that's filled with delusional correlation.
MBA programs aren't the "cause" of US Industry decline. I don't even know where to begin with unpacking that they are the cause, because of the absurdity. MBA like programs (specialized business teachings to an advance level) have existed since the days of enterprise. The only difference between now and antiquity is the fact we've standardized the model and the naming conventions.
Don't forget too it's the consumer's dollar that ultimately has the "real vote" in where production happens. That's why the past two decades, small farms are more and more... viable is a strong word. But they're more popular and there are plenty that do well. Because certain consumers do vote "Yes, I think that a heritage chicken that's cage free and free range is worth the extra money compared to the commercial broiler breeds."
But it's a real difficult sell on someone to tell them, "Hey, you can go into an industry where there's money being thrown around or you can try raising a dying industry from scratch and hope it works out for you before the end of your lifetime." It's the same reason we tell kids you should go into STEM classes and not basket weaving. If consumers already have a history in paying for something, why should someone go into something where there's a history of consumers NOT paying for something?
The gospel of MBA programs changed to include financialization and outsourcing as two principal techniques that can be applied to every company and industry (they’re all the same, right?). This probably began in the early 80’s when the MBA began to gain currency as a respected degree.
Furthermore there is a hostility between management and labor In the US that does not exist in other advanced manufacturing nations such as Germany and Japan. Blame can be placed on both sides for this situation, but nevertheless the MBA worldview is one that above all treats labor and human capital as a commodity to be managed like any other.
Hell, you get that here in HN. While being smart in programming or IT infrastructure is a feat, that doesn't mean you instantly/magically understand dick all in infrastructure, geopolitics, transportation logistics and so on. I really picked up on that a year or two ago when an article talking about why there aren't that many women in the trucking industry because "it's such a great job".
Everyone was "Yea, trucking sounds great. We need to increase women in it, blah blah".
I did OTR trucking (over the road, meaning you do the long distance truck driving). It's a terrible, low paying job, low respect, zero life fulfillment job. You are only home 3-4 days every MONTH. You don't go home everyday. You live in that truck and it's not fun. I went from a relatively healthy and active person to gaining 25 pounds and I have chronic back problems after 7 months of doing it. It's been 8 years now. Still have those back problems. And I'm a lucky one. There are many other people who got it worse. There's a good reason why you won't be seeing a shirtless trucker calendar.
But holy shit, lots of silicon valley folks tell me I don't know what I'm talking about. Even though I actually did the job. One idiot who never did the job either writes an article and is suddenly an expert because they interviewed one person who "tried" to get a job as a truck driver... New York Times is an accurate and reliable news source... sure.
Why are you lot making me defend MBAs? It's pissing me off. The problems y'all are describing are not just "this one group is the cause of all our problems. We need to blame them and them alone instead of looking in a mirror and figuring out if I, myself, can improve myself and my situation." It's like with the bankers... which... fucking hell... I'm about to defend them... if people knew how to actually save and capitalize on money and that shit was taught properly in this country, there wouldn't have been fertile soil for all those financial instruments and shitty lending standards that crashed the market. Same goes with Apple. Can't blame them for making over priced, anti-consumer products. People buy it. It's their fault because there are options that people don't buy. They buy the overpriced trash and pay an arm and a leg for bs repair work. If I was in Apple's position, I'd crank that practice up to 11, all day long... damn it, I just defended Apple too... I need a drink.
Or infamously, anti trust law. There isn’t a week that goes by that someone doesn’t post “they are running afoul of anti trust law” where it doesn’t apply.
So I agree you don't need to tell people to do things other than the safe bets, for many reasons.
At the same time, don't beat and blame people who do the conventional wisdom and succeed. That's the part that pisses me off. Generally, people don't want to be "poor". Then one wisdom goes, shoot for the stars thus even if you miss, you still reach the moon. Alright, business or banking. Lots of money in both. The hedge their risk by getting degrees and an MBA, etc. And do well. People, even though they hate said field, still throw money at them. That person just shrugs and moves on with doing it, because why not? The only difference is, they got a finance degree instead of an engineering or art degree. Can't blame their choices if they have the mental fortitude to deal with that shit. They made the best decision within their life goals.
You don't take a degree with the mentality of "I want to spend money to make my life worse." If you have that outlook, better off on buying heroin.
The largest wage classes tend to be management now. The heroically competent worker does not get rewarded relative to others in the org like he used to, unless you specialise massively and have a reputation to boot.
I don't think you can measure mental fortitude like that, but I haven't taken those jobs to compare.
Some people are scared of money or behave irrationally with money. I've been to a few therapists that have high powered husbands or clients that illustrate just how irrational they can be. I can see the evidence for the spirit of malcontent with management but I would agree it's not something that can be half-heartedly expressed through a what is basically a meme. It needs to be articulated accurately if it is to improve.
That last comment: "Some people are scared of money or behave irrationally with money. I've been to a few therapists that have high powered husbands or clients that illustrate just how irrational they can be. I can see the evidence for the spirit of malcontent with management but I would agree it's not something that can be half-heartedly expressed through a what is basically a meme. It needs to be articulated accurately if it is to improve."
I find it difficult to take anyone seriously when they say people with lots of money make irrational decisions. Especially when making said money is generally viewed as an achievement in our society. None of us know that situation unless we're in it. That really goes for any situation. Just like in sports a spectator yells at a player for "making a stupid decision". Think about someone who just got an ego boost making a bunch of money. They can give/lend money to friends and family when they're down, being the hero. When before the money, they were kind of a nobody. They're going to protect that ability at all costs. Even at the cost of outside people to that circle of friends and family. Why care about people who don't care about your own family? Thus, you get someone who might be harder on their employees, making sure that certain numbers are met, so they get to stay at the high income position. Is it really irrational to maintain a level of heroism among your close friends and family at any cost? Livelihood, in modern society is pretty much the difference between life or death. No real income can lead to homelessness and a great chance of never getting out of it. Essentially "death". Obviously, it's no excuse for breaking the law or detriment to the health of "strangers" (employees). But if you realize that they're not just out to "destroy the world" and have the same basic drive as everyone else, do well for their family, you approach the "problem" differently. Which, comes to where you said, it needs to be articulated accurately to improve it. I just don't like the idea of "well, they're irrational even though I've never been in their same situation".
You're going to have to define your level of richness for me to answer that. But some people hoard dumb stuff even if they're rich. Some people leave close connections out in the cold that causes untold amounts of social damage that comes to bite them later on. Some people sink large amounts of money on vanity projects and dumb investments that put them back to square one.
I can understand attempting to do good an incurring a "dumb cost" as a stupid criticism of the rich. Some rich people don't even do good things, they just waste money and opportunities. Even some people on the pathway to being rich waste the opportunity. There is a story about a guy starting a scooter company. The scooter has two footholds in a V formation that lead to the central pillar you hold onto like a normal scooter. The inventor hooks up with Richard Branson and is set to hit probably tens of millions if not hundreds from all the way it was playing out. At the last hour before committing to launch he decides it's too much for him and sits it out. He goes home to a shitty job where he knows how everything works and has a middle class life.
Why?
Moving into any particular position in life takes a huge mental and social change, I can see rich people burning out and throwing their money away back down a few notches as they relax into a more common path in life. It can't only be measured in character or personality though. There is something else going on.
I've known people scared of accruing a lot of money. We outsource our money management to tax accounts, banks, brokers, dealers, financiers all the time. There is a deep principle in money or large quantities that is taken for granted. Emphasized even in the US. What is it that grants some the ability to manage a flood of cash, and others drown?
Homelessness in the US is not death, unless you choose it to be. It is exile at it's deepest. People come back from exile, not from the finality of death.
The world needs more of this style of thinking. Pure logic, or more accurately what people commonly think they're engaging is, even at its best falls short when trying to figure out what's really going on in a system as multi-dimensionally (and often counter-intuitively) complex as multicultural but globally integrated humanity.
Gosh,it's taken me hours to get this post through, I'd love to see HN open source their "you're posting too fast" algorithm, I suspect speed isn't the only thing involved.
Most CEOs and high-level executives in Japan and Germany (and many other countries) typically have:
- an educational background in the area they manage (say, mechanical engineering for car production)
- long careers/experience in that area
- passion for it (CEOs who race cars, etc)
Unlike executive in the US, who:
- have a 4-year business degree followed with an MBA
- jump from industry to industry (Carly Fiorina, etc),
- have no passion for the stuff they produce (they are typically finance or marketing guys)
The end result is that US companies turn into marketing/branding shells who outsource everything except for branding/sales or some kind of financial engineering schemes (GE)
Whether the dump on the company was justified or not. I literally don't know, I hate all wireless earbuds to begin with, I'm no expert. That, by itself, is a terrifying prospect. One slight misstep can be blown to crazy proportions. So, why not just "fuck it, just repackage something else we know works and move on. I want no emotional attachment to any of this, in case it blows up in my face." Before someone hits back, yes, the system can still do good, like the LockpickLawyer on youtube, showcasing shit, overpriced bike locks.
The downside of this is sometimes management attempts to optimise out the company's comparative advantages. Sometimes on purposes.
Most of my career has been in government, and the finance cadre that ends up running most agencies are similar to MBAs as they have financial and budgeting expertise and minimal area expertise.
They produce a certain type of leadership style. That said, the folks who have expertise in the program side usually have awful financial expertise. You end up with an imbalance where finance dominates.
In short, the problems with MBAs would mostly go away if engineers had 15 credits in accounting.
[1] For example, in current events: https://news.ycombinator.com/item?id=21166923
Effective change requires tact and self-discipline.
NUMMI (2015)
A car plant in Fremont California that might have saved the U.S. car industry. In 1984, General Motors and Toyota opened NUMMI as a joint venture. Toyota showed GM the secrets of its production system: How it made cars of much higher quality and much lower cost than GM achieved. Frank Langfitt explains why GM didn't learn the lessons—until it was too late.
They might have trolled or basically showing off superior production process.
Second hand knowledge, but I was told they're detailed oriented because they basically don't trust anyone to tell them when they're wrong. The culture is so adverse to causing offense, that instead of reporting a mistake to a colleague, errors are sometimes allowed through and "engineered around" at the next point of assembly.
There were a lot of nuances to how this sometimes became self correcting and sometimes caused project failure, but as far as I can tell, that applies to everything Japan.
Firsthand sidenote: A similar cultural thing is being ashamed at anything less than proficiency, and will "pretend" to have no knowledge of a topic if they're not an expert. For instance, most people will claim to not understand English, because they're not fluent. But make no mistake, they understand 95% of what you're saying.
Low error rates in their own output means that they understand industry processes very well.
They did go to great lengths to clone though, but that was a "we can do exactly what you can in two years from essentially nothing" international politics dick measuring contest. Anything other than an exact clone would lead to a "look at how the commies can only make an inferior clone" talking point.
Except for stories about total engineering fail or borderline fraud, nowadays I couldn't imagine any stories being told about about manufacturing in Germany, US or China.
Though who am I kidding, no one probably evaluates production like that. Though I imagine chip makers are pretty serious about that kind of stuff.
Although the American and Japanese factories were manufacturing the transmissions to the exact same spec, customers were specifically requesting the Japanese transmission. Investigations revealed that while the American transmissions met the spec, the Japanese ones exceeded it by a significant margin.
http://www.jimleonardpi.com/default/assets/File/Blog%20-%20W...
Not long ago a bored japan dude made a near mirror finish ball out of aluminum foil.
Is it bias from me or do they really have that desire/talent for refined everything ?
Abstract:
Population stratification is a potential source of error in psychiatric genetics. New study designs and statistical methods can help guard against this problem. Molecular Psychiatry (2000) 5, 11-13.
Anyway I don't think it's genetic, but cultural.
A car comes by, doesn't look right, anyone could pull the cord and stop the line while the problem was understood.
Yeah, but I bet that anyone frivolously pulling the cord would find themselves out of a job.
I get the downvotes now lol
It's because of William Edward Deming https://en.wikipedia.org/wiki/W._Edwards_Deming.
After WWII Deming was trying to get quality control using statistic to American Automakers. They didn't like it so he left for Japan. This is at least the story I've heard from my professors in quality control and statistic. The wikipedia is different in term of he started in Japan first and later on Ford hire him in the 1980s.
That’s why even executives will clean up their desks and offices, something Americans wouldn’t even know how to start.
Deming might have introduced electronics but the quality was always about the religious way they tackle their jobs.
A good book on this is "We were burning" Japanese were able to make chips with less defects simply because they were more clean and careful. Folks didn't even realize that specks of dust could ruin chip manufacturing. It was the observance that cleanliness leads to high yields that because the origin of clean room.
Hello No. What you see is only what is happening in very few industries in Japan, but "excellence" does not describe Japan at large. Worker productivity is incredibly low (too many meetings with people who have nothing to do there), lack of individual leadership/initiative, and "cluelessness" is rather the norm than anything else. Just look at how badly designed are most websites, how badly designed are most products made locally (cars and a few other industries are an exception) and how they only value small increments instead of trying completely new approaches (they could never have made the iPhone despite them having all the pieces ready 10 years before).
> always
No, after WII for a long time Americans considered Japanese products as being cheap rip-offs of what they produced themselves and that only changed after 1970s.
> excellence
How about their excellence at using English, by the way? Their attention to detail when it comes to using other languages? I hope you realize how wrong it is to make blanket statements.
In a macabre twist, the perfectionism is still alive in the work of doing nothing, such as in the way people make meticulously outlined Powerpoints for inconsequential meetings.
> How about their excellence at using English, by the way?
English is probably not considered Japanese, so it doesn't matter too much in the ethos of Japanese perfectionism. Still, non-native speakers in Japan are reluctant from using English as it makes they can not speak perfectly.
I'm sorry if I sound too sarcastic for HN commenting standards.
Everything is a tea-ceremony, like watching paint dry.
Take Iaido, where they spend a lifetime visualizing the perfect cut; and compare it to western fencing.
Tongue in cheek, there's a certain beauty and peacefulness to it as well.
Some things do suffer in Japan. On the other hand customer service is superb.
Ah yes, so should we also judge Englishmen by how well they use Japanese? What kind of anglocentric racist logic is this?
I agree with this. Mainly because of the belief that 'working hard' is working long hours. Lack of initiative is because being innovative and coming up with something new is considered as not having faith in what you already have and seen as betrayal or being disloyal to your cause.
But, it is certainly true that most people will satisfy their job requirements with utmost possible excellence and perfection. Not because they have to but because they want to. I still remember walking into a conbini (a term for convenience stores like 7-11) and buying two onigiris for me and my girlfriend, who was at the time browsing the store and not with me at the cashier. When she and I were exiting the store together, the cashier who saw us leaving came running towards us and handed a paper napkin. She thought I was alone and put only one paper napkin in the bag but noticing it's two of us now she had to give us another. I'd never expect see this level of observation and dedication to one's job in the US. This was just one instance, but I have several such anecdotes from my time spent in Japan.
> How about their excellence at using English, by the way? Their attention to detail when it comes to using other languages? I hope you realize how wrong it is to make blanket statements.
This is just anglo-centic racism and nothing else. Language is not a part of their job. You cannot expect one to do EVERYTHING in their daily life with attention to detail. If a Japanese person's job is to teach English or use English in a very professional setting where they are expected to speak correct English (and not just to get the point across) then they will learn it as required. They may still retain their accent but they'll speak with correct grammar. It can be extremely hard for a non-native English speaker to pick up the language. Grammar rules, pronunciations and exceptions are all over the place. It's unfair and very inconsiderate to judge someone based on this unless their job requires perfect English.
How about their excellence at using English, by the way? Their attention to detail when it comes to using other languages? I hope you realize how wrong it is to make blanket statements. "
As crazy as it sounds, the horrible English is because their fanatic adherence to pedagogical grammar and vocabulary cramming along with the fact that English's utility is mainly for university entrance exams. If you interact with any Japanese person from an elite university they will surprise you with their knowledge of English despite being unable to fluently communicate with English.
It is more an issue of conservatism than this so-called "culture of excellence".
The list is not too shabby.
Japanese goods also littered the low end prior to Taiwan, Mexico, Korea, and China.
When they moved away from manufacturing, many of the companies that built their reputations with sophistication and quality licensed their brands to any third party who'd pay to slap on their ersatz and second rate products.
Capability isn't uniform.
They're taught to do that since school, where students clean their own classrooms.
Even in the Olympics and World Cup etc., Japanese fans clean up after themselves, and other nations seem so impressed by that that it often comes up in the news:
https://www.reddit.com/r/videos/comments/8sck9f/japanese_fan...
Consider Tokyo, you'd think that a city with one of the highest and most dense metropolitan populations would generally be filthy and unhygienic, yet it's one of the cleanest.
It's because a lot of people's jobs is to clean. Look at how many folks clean up toilets in Tokyo, at certain places it's every 30 minutes.
There is no country in the world where things would stay clean without high frequency of cleaning, because statistically you only need one person out of a hundred or even less to make something dirty very very fast.
And Japanese cleanliness is true only when it comes to stuff at their door. How many times did I visit a beach where Japanese people who had a BBQ left all their garbage behind. On how many bottles and disposable bento boxes did I walk on after a large firework in summer.
In the mountains there are whole areas when you hike where all you see is garbage, because people throw stuff in nature without any regard for what it becomes.
yeah, how clean!
I read it in an article somewhere and can't remember the source, but:
For Americans, something is perfect if it's the best.
For Koreans, something is perfect if it's new.
For the Japanese, something is perfect if it has no flaws.
And it isn't a huge stretch to say for the Polish, something is perfect if it's inexpensive.
Anyway, speaking of the Japanese, an abacus might be seen as perfect if it's a perfectly crafted abacus. They might even be very proficient at using it (A pop science book I read mentions competitions between Americans armed with first electronic calculators, and a Japanese master abacus user, and the abacus user won). The rather extreme example is not to say the Japanese are backwards, but for illustration purposes. They may not always have the same priorities. It doesn't matter much you have superior ways of working with wood and paper if your towns regularly burn down and you have to settle on very, very wide streets to limit damage.
I remember this very comment from many years ago, but I've always wondered what it meant. Could you possibly flesh it out?
As an aside, I met you at an HN meetup 7 or so years ago in Tokyo, how time flies. Hope all is well.
Maybe he meant this.
Deming was awarded Japan's Order of the Sacred Treasure, Second Class for:
The citation on the medal recognizes Deming's contributions to Japan's industrial rebirth and its worldwide success.
He literally got Japan into scientific quality control using statistic. It's also something that six-sigma came out of (see: https://qz.com/work/1635960/whatever-happened-to-six-sigma/).
I don't remember exactly his biography, but I remember he was mildly respected at the US, and that's why Japan called him. There he made his name, so when he returned, he was the most respected thinker of his area.
I'd also add in some Deming here, his "lesser category of obstacles" which I'd prefer to call "terminal illnesses of megacorps" https://en.wikipedia.org/wiki/W._Edwards_Deming#Seven_Deadly... - listed after Seven Deadly Diseases.
Glorious. I loved that customer even though they were so, so hard to deal with.
We were building brand new optical sensors for robots and they had lots of experience in the area. They walked through our specs and needs and found the right part and helped us integrated. It was white glove service all the way.
That definitely comes at a cost. When you are prototyping, that cost is expected. If you cross into the millions of units, I can understand how their approach and offering doesn't scale well.
Hard to match the other Asian mfgs when numbers are huge.
They seems to have a company culture of very open technical discussions on pros and cons which I'm not so sure is common in other Japanese companies.
Here's the thing - if you take your comment to the logical limit, the only engineering requirement of a product is to make the sale. With this switch, I took it home and installed it, and probably will not return it, so even if I decide to throw it in the trash, it wasn't "underengineered".
But everything is becoming like this, and so people and companies that "irrationally" overengineer stuff are becoming more valuable, as are their brands. Even if you don't care about what I care about, there are too many factors in any product for either of us to track. So there is always incredible value in someone that pays attention to the aspects we are not paying attention to. But that is overengineering. There is no alarm bell that tells you you have crossed over from optimizing what your customer cares about to screwing them over with a piece of crap. Assuming anyone cared.
If you optimize everything, you destroy your brand.
You don't want to put your entire family in a car with poor quality control that will let me down in the middle of nowhere during winter.
But I dont mean that is a bad way, even with all its downside, I still view it as a good thing.
It is their stubbornness to not give in to crap and sloppiness. Always over engineering it, and made it uncompetitive again all other product in pricing. Not willing to adopt to market situation, as they believe in their design and system being better or "right".
Most of the Japanese companies manage to remain competitive only after they moved the production out of Japan. But while they say they have the same QA in place, in reality none of the product make outside of Japan of the same brand are anywhere as good as if they were Made in Japan.
You can buy a 3W bulb plus shipping for 1 RMB at anytime, including big brands, 1 RMB, that's $0.1399.
Friends in semi industry said one major reason, cleanliness standards in Japanese fab lines were much higher than American.
I'd note that the Koreans now own this market. Same strategy. Commoditized industry thus barriers to technological entry are not high - and low costs of capital.
I lived and worked in Japan for 6 years as a software engineer and left speaking and reading Japanese well. However I was in a joint venture quantitative investment mgmt firm and not manufacturing. Finance has its own particular views over, actually, all industries. You'll note that an important measure in the paper is stock prices.
I might add to the author's analysis: with all these countries (Japan, Taiwan, Korea and China) you have to watch the demographic curve and in particular see just how many new university graduates arrive in the economy each yr. That curve is now declining for all them - but did it start declining for Japan earlier than Taiwan and Korea? Or is the time frame involved (since the GFC) too short?
Traditional economics saw inputs as: land, labor and capital. Current understanding is more nuanced but that doesn't invalidate l, l and c. Less labor, less growth.
High interest during the 80s really hurt a lot of US companies, though. One example is Caterpillar vs. Komatsu for construction equipment. Cat had a price premium in early 80s, then interest rates were super high, the dollar popped, and that created a window for Komatsu to grab market share.
As the yen appreciated by 60% following the 1985 Plaza Accord, Japanese companies lost competitiveness in final electronics goods
In other words, if your currency appreciates, you’re doomed.
Switzerland is an example of it: its currency, and thus work of its people, is expensive. Their exports are things like high-end mechanical watches, and other low-volume high-precision machines.
Pivoting is much easier at small scale.
People prided themselves on owning Japanese TVs, radios, VCRs, sound systems, ACs, flashlights, water dispensers, beauty products and of course, cars and wristwatches.
Now the whole region is inundated with Chinese knockoffs for everything, and people understand they're not as reliable, but they're good enough for the average person and cheap, and that's what matters to the importers and buyers in the end.
Flimsy enclosures whose screws get permanently dislodged if knocked around in the slightest. Rechargeable lamps that dim after a month of regular use. Power strip sockets and power plug prongs of various devices have mismatching dimensions so they wobble all the time, often cutting power. Nothing is properly grounded so you often get static shocks. The same manufacturer making the same products with slight variations under dozens of brand names. There's no way of getting official support for any product, and forget about warranties or refunds.
There are astonishingly identical replicas of all major Japanese and Western products, even the latest iPhones, Apple Watch and game consoles, but of course they don't have the same specs or software when you turn them on (which is usually something like "500 games in 1!" kind of emulator menus.)
But more people can own them and many will never know what they're missing.
But that would also exacerbate the flux of capital. That Japan has a large number of Murata Manufacturing-like producers is exactly why the Yen appreciated so sharply.
That strategy makes sense for each corporation, but on a national scale it's a great way to find yourself overly specialized and with a diminished safety margin for even your niche, up-market products. So the paper's advice is also part of the reason for the dilemma.
The paper's first bit of advice was to save during profitable periods and spend during downturns. But there's a cooperation problem in that the first companies to apply the aforementioned advice won't have to be as skillful at navigating the swings, so the tendency will be for every company to pursue that strategy even though only a few will succeed while the others are merely hastening their demise.
Seems to me there need to be some institutional mechanisms in place to maximize long-term profitability and stability. I suppose the Keiretsu provided a mechanism like this--a self-interest in investing in diverse sectors, even during downturns. But they're diminishing as Japanese industrial practices increasingly mirror those in America and Europe.
The 1970s and 1980s saw the emergence of policies to restrain exports in certain industries. The great success of some Japanese export industries created a backlash in other countries, either because of their success per se or because of allegations of unfair competitive practices. Under General Agreement on Tariffs and Trade (GATT) guidelines, nations have been reluctant to raise tariffs or impose import quotas. Quotas violate the guidelines, and raising tariffs goes against the general trend among industrial nations. Instead, they have resorted to convincing the exporting country to "voluntarily" restrain exports of the offending product. In the 1980s, Japan was quite willing to carry out such export restraints. Among Japan's exports to the United States, steel, color television sets, and automobiles all were subject to such restraints at various times.
When I was working in a Japanese-owned PCB factory in China, faking/modifing records on the production lines was common as water, to think that this was probably one of the best ones in China or even the world, which supplied for Japanese TVs, DSLRs and iPhones, was eye-opening and somewhat chilling. I don't know if it was the same in Japan tho, people who went there to study said it was awesome and they produced better products using old equipment.
And I just read a story about how testing contractors in Apple's iWatch factories pass basically anything given after the stringen and supervised first batch.
Breaking down just after warranty is perfectly acceptable now, so I guess noboby buys craftsmanship.
Part of the problem is: how do identify it, if even premium brands don't reliably maintain their standards?
RoHS is a good example, but China somehow turned it into a competitive advantage.
I've wondered what the effect would be if the dump could force manufacturers to buy back broken appliances that are still under mandatory warranty.
Now, buying "Made in Japan" seems plausible. Panasonic has long made laptops in Japan, for the Japanese market only. Check out the Let's Note series, like the CF-SV7, SV8 - you won't find them anywhere else. There seem to be a lot of products that are made in Japan for the internal market only.
I can 100% testify this as true. Big manufacturers do "binning" on the final products just like chip fabs do.
If you see SKUs difference for 1st world and 2nd world countries without any spec difference, it's nearly 100% a case of such binning.
For example Dell diverts laptops with bad displays to Eastern Europe and low income Asian countries (with exception of China, China always gets best bins along with US market because they are afraid of backlash.)
In one Bangladeshi retail chain, every Dell device I saw had a dead pixel, or dust under bond layer. They were almost certainly specifically picking rejects.
Why so? MBA logic.
You definitely can not get so much bad panels if buy pretested panels (which is now standard.) They are picked 100% deliberately.
Defective panels are sold at great discounts, even for 4k and alike panels. So that makes a great temptation. You can near instantly get ~80usd off in case of a 4k panel out of a unit with $400 BOM.
This is why I'm afraid buying just any "premium" good in 3rd world countries. Cheaper devices are a bit safer in that regard as there is not as much incentive to do this with cheaper parts.
Ironically, low-end and mid-tier parts are often having superior reliability and defect rate exactly because there is no margin selling bad QC parts.
And you are often getting a worse bin or even completely different product under the same name for that! This is 100% true, and the big co will continue doing that for as long as they they think they can get away with that.
Samsung is notorious for that. Some of their devices with the same name can have up to 4 different sets of internals for sale in different countries.
I am too. My distant acquaintance does business with a large retailer in the UK where they would buy returned products off the retailer at a much cheaper price (e.g. defects) and resell them in the Baltics.
Voltage regulator was literally the same part. Ford specified statistical process control and sampling inspection was good enough. Cessna demanded that every voltage regulator be tested.
Solution: run the line, test the percentage of parts Ford demanded, stamp the additionally inspected parts with an additional Cessna part number. At the end of the line, if more parts were tested than Cessna needed, so what? Put 'em in a Ford box and ship 'em.
Cessna and Ford each got what they needed, far more cheaply than they could have individually.
Similarly, with a standard model on a same-day replacement plan, imperfections are likely to come back, with an added site visit cost. But the barrier to returning a customized model is higher. Creating another incentive for binning.
Part of the problem is the big contract manufacturers (like Foxconn) are impossible to compete with on precision/cost.
In a past life, we moved a product from German manufacturing to China, as the German tooling wasn't fine enough to hit our (admittedly insane) tolerances. Whether or not the China MFG lied, they signed the contract and produced the parts. Though, we had to spend a lot of resources on additional testing rigs to weed out the tolerance misses/assembly line faults/bad parts over and beyond what the MFG caught.
Not to mention that exporting stuff from China even 10 years ago was a lesson in geopolitics. Not for the faint of heart. We ended up having Hewlett-Packard (who we were a very large customer of, and white-label resellers for them) export our first thousand or so units in HP boxes. Like night and day.
The overall competitive advantage is hard to capture. Time, money, ethics, work ethic, efficiency. Having an entire country's incentives aligned with extracting a cut of almost all consumer electronics in the world is hard to challenge.
I wonder how the next 15 years will look now that the part seems to be over.
I have a tip from speaking to distributors that a large part of the precision story for those guys is that they essentially just buy lots of SCARA robots from the likes of Denso, Toshiba, Yamaha.
Cost .. unsure. Those guys are expensive and time consuming to talk to. They don't get out of bed for small quantities. I'd posit their real advantage is vertical integration and in-house engineering. Those guys can presumably turn out a mold, arbitrary quantity castings or injected parts, solve issues and be in production by Tuesday. Many other firms face 6-8 week wait times per mold iteration, and 2-3 month delays on equipment purchase (let alone production line integration). They also have government support as large employers, so face little issue with exports, land acquisition, etc.
Rebellious middle school drop-out (no offence) workers earning basic income plus 1.5x overtime wages for 12 hours a day 6 days a week won't take any of that seriously, schedule and cost are always of higher priority.
In the story of iWatch, the two groups of independent contractors use their barely working equipment to do seal test, the equipment is so bad that it returns different results even for a same watch part, but hey we gotta make it work, so their tech guy wrote code to always return results that are up to standards.
It's very ironic that when you are going to a higher tier contract manufacturer, you can expect worse results these days.
We often work with small contract manufacturers who very narrowly specialise in high value and low volume runs.
They have very competitive HR policy for good assembly line workers, and are meticulous on work hygiene (like strict 8h shifts, mandatory physical exam, mandatory P.E. and rests.) CNY15000 for a professionally educated assembly line worker with 4-5 years of experience and proof of skills is not a rarity there.
Same with SMT technicians industry wide. Up to date training certificates + 5-7 years of work experience on high end equipment sets CNY15000 as a minimum for a good professional. SMT technicians make higher net salaries in China now than in USA! Totally true, go google it.
You think cost? We don't give a square f* about that when labour on even low volume and poorly mechanised production runs makes less than 10% of product value. Dramatically lower return rates and faster turnovers pay for that like 10 times over.
[1] https://youtu.be/iiCBYAP_Sgg
where said Louis discovers placebo cooling.
This is broken by design. They should apply quality control to their minds, because no amount of that elsewhere can fix that.
But how did they even manage to oversee that during testing?
HOW?