The Rebound of Japanese Companies

Last year was a challenging year for Japanese industries. Japanese companies that focused on high-end products were hit hard in the wake of the global economic crisis and by the strong yen. The performance of Japan’s large companies hit bottom and a series of layoff and restructuring plans were announced. In contrast, major Korean companies did well thanks to the weaker won and successful marketing in emerging economies that suffered less of a shock from the crisis.

After a rough going, however, Japanese companies are making a strong comeback. The earnings before interest and taxes of Panasonic between April and September this year was six times that of last year at 168.9 billion yen. The company also saw net profit of 74.7 billion yen after suffering a deficit last year. Sony, which saw an operating loss of 58.2 billion yen and a net loss of 63.4 billion yen from April to September last year, posted 135.6 billion yen in earnings before interest and taxes and 56.8 billion yen in net profit over the same period this year. Japanese carmakers such as Toyota, Honda and Nissan also performed well. The combined ordinary incomes of 233 listed Japanese companies that released their half-year statements Oct. 28 rose 87.7 percent year-on-year.

The stellar performance is all the more impressive since it was produced despite the strong yen. Japanese companies this year targeted emerging economies with high growth rates such as China, and domestic sales were good thanks to Tokyo’s policy of stimulating the economy. Some say this is the result of tough restructuring, indicating the potential of Japanese companies that remained competitive despite the yen’s rising value from the 1985 Plaza Accord.

The Japanese daily Asahi Shimbun said in a comparison of Samsung Electronics and LG Electronics of Korea and Panasonic and Sony of Japan, there are signs of changes in the Korean electronics industry, which seems dominant in the global market. The daily said the dynamics of an industry in which Japanese electronics companies trail Samsung is changing. Given LG`s third-quarter deficit and Samsung`s drop in earnings before interest and income from the second quarter, though it performed better than its Japanese competitors, Korean companies should not grow complacent. A single moment of inattention can result in deadly defeat. Korean companies must check their quality, price, marketing, labor and strategies and increase their competitiveness.

Editorial Writer Kwon Sun-hwal (shkwon@donga.com)