Japan Manufacturing Trends 2020

Japan Manufacturing Trends 2020

Japan Manufacturing Trends 2020

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What are the main industries in Japan ?

TOSHIYA TOMITA:

Car manufacturing
Producing about 10 million units or 160 billion euro. Toyota owns 30 % of the domestic market, Honda 14%, Nissan 11%. Alliance proceeding to survive in the industry such as Nissan with Renault and Mitsubishi, Toyota with Suzuki and Mazda

Electrical & Electronics
About 360 billion euro sales by major 8 electrical product manufacturers such as Hitachi, Toshiba, Panasonic, Sony, Mitsubishi, Fujitsu, NEC. They are rapidly adjusting their business domain by selection and concentration strategy.  The device industry has over 80 billion euro sales by major players such as Kyocera, Murata, TKD, Omron enjoying big demand in smartphones, vehicles or other industries.

Construction
Over 470 billion euro in the domestic market. Biggest industry sector in Japan enjoying the demand related to the Olympic games in 2020. This industry is lead by 5 super general contractors of Obayashi, Kajima, Shimizu, Taisei and Takenaka.

eCommerce
Over 15 billion yen sales domestically. Major players of amazon.jp, Rakuten and Yahoo. Mercari is rapidly expanding its business by auctioning free-market site.

Chemical
240 billion euro market by Mitsubishi Chemical, Sumitomo Chemical, Mitsui Chemical, etc. Facing keen competition with Chinese producers, they are shifting to functional products such as high-performance plastics or battery materials.

What is the outlook for the main industries in 2020?

TOSHIYA TOMITA:

Car manufacturing

Expected to lead Japanese industries in export and in the development of technologies in the era of CASE (Connected, Autonomous, Shared, Electric). Also, the industry is exploring a new market in MaaS (Mobility as a Service).

Electrical & Electronics
Business selection and concentration are progressing and profits are expected to improve. In the electronics device market, new demand is expected to expand for automobiles and industrial equipment by the widespread use of 5G.

Construction
Demand in new construction of building or renovation of infrastructure is expected even after the Olympic games by the project such as linear bullet train or Osaka World Exhibition, while the industry will need to operate in overcapacity with facing the issue in lack of workforce.

eCommerce
The market is expected to grow 8 to 9% in the coming years. By the functional improvement by new technologies and AI, the advent of new service or new player are expected to drive the market.

Chemical
Demand for high-performance plastics and battery materials is expected to grow. Biodegradable plastics are being developed to cope with the serious marine pollution caused by microplastics.

Japan will modernize its railroad infrastructure

What are the main trends in manufacturing in Japan in 2020?

TOSHIYA TOMITA: Manufacturing trend is to produce more high-performance, high-quality core products that are essential parts of the international production collaboration ecosystem. Examples are high-purity hydrogen fluoride which has 80% share by Japanese producers in semiconductor manufacturing and RF devices installed in many smartphones. Also, it is expected that product development which matches the market demands analyzed by big data and AI will progress.

What are the main innovations in manufacturing in Japan?”

TOSHIYA TOMITA: Traditionally Japan has been manufacturing high-quality products by skilled workers with many years of experience, however, due to the aging and lack of labor, this manufacturing technique is facing a crisis and manufacturing by AI and machine learning is in progress as alternative methods.

What are the main challenges in manufacturing in Japan for 2020?

TOSHIYA TOMITA: While new product development based on big data and AI is being promoted by giant IT enterprises like GAFA, most of the major Japanese manufacturing companies have a sense of fear to become just subcontractors of these giant companies, and there is an urgent need for them to develop products by themselves more efficiently or to acquire technologies from abroad to meet market needs. On the other hand, the labor shortage is becoming more serious year by year due to the declining birthrate and aging population, and it is necessary to adopt AI or production robots and to increase the number of foreign workers.

What are the main opportunities in manufacturing in Japan for 2020?

TOSHIYA TOMITA: In the automobile manufacturing industry which is Japan’s main industry, there exist many related industries including its parts and materials. In order to make cars meet CASE requirement, a great opportunity for these sprawling industries including electronic parts and lithium-ion batteries are given to develop new technologies and products and to supply them to the market.

Photo by Franck V. on Unsplash

What are the DOs and DON’Ts for those who want to manufacture in Japan?

DO incorporate the skill of highly skilled workers into a production system by converting the skill to reproducible format using AI.

DO acquire efficient production machinery, facilities or systems by finding them from international supply sources.

DO buy a factory that has to be closed due to a lack of successors while having excellent technologies.

On the other side,

DON’T make thigs based on the product-out concept.

DON’T neglect checking the required specifications of finished products.

DON’T relocate easily factory to overseas.

DO incorporate the skill of highly skilled worker into production system by converting the skill to reproducible format using AI.

DO acquire efficient production machineries, facilities or system by finding them from international supply sources.

DO buy a factory that has to be closed due to lack of successors while having excellent technologies.

DON’T make products based on the product-out concept.

DON’T neglect to check the required specifications of finished products.

DON’T relocate factory easily to overseas.

DON’T relocate easily factory to overseas.

What to keep in mind when looking for the right manufacturing partner?

TOSHIYA TOMITA: It is necessary to check if the manufacturing partner’s production site can be communicated smoothly in English.

To check the corporate governance system thoroughly, especially for the product inspection system is also important.

Does the US-China trade war have an impact on your country’s manufacturing industry in 2020?

TOSHIYA TOMITA: There seems to be a big impact especially in the IT, electronics and semiconductor industries. Chinese companies such as Huawei are big customers in the semiconductor memory and device industries for Japanese suppliers, however, the suspension of business due to the U.S.-China trade war will reduce trade volume with China and significantly change the existing production ecosystem throughout Asia.

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