Strategy – The Japanese Manufacturing Paradox

I found it particularly interesting to think of Japanese manufacturers as an example of how operational efficiency does not necessarily constitute or guarantee profitability, or even sustainability. Thinking of how the manufacturing sector from this island dominated the global market through much of the 1980’s and 1990’s thanks to high-tech technological advancements that eliminated the need for human labor, it strikes me that this same sector was unable to keep up its competitive advantage in the new millenium, and instead, is suffering more and more from rivalry from places from China that – ironically – still utilizes relatively more labor-intensive practices in its manufacturing industry. This paradox seems to be well explained by Porter’s claim that OE is not enough, and that strategic positioning is what ultimately helps a company prevail. China’s manufacturing sector seems to thrive on both a variety and access-based positioning – producing the most basic, least-profitable necessities that customers may not be as brand-conscious about (trash cans, plates, flip-flops) but are necessary to everyday life – to reaching markets that are as yet under-served, such as emerging markets.