manufacturing industries

Manufacturing industries of Japan

Japan's major export industries include automobiles, consumer electronics (see Japanese consumer electronics industry), computers, semiconductors, and iron and steel.

Additional key industries''' in Japan's economy are petrochemicals, pharmaceuticals, bioindustry, shipbuilding, aerospace, textiles, and processed foods.

Japanese manufacturing industry is heavily dependent on imported raw materials and fuels.


Japan dominated world shipbuilding in the late 1980s, filling more than half of all orders worldwide. Its closest competitors were South Korea and Spain, with 9% and 5.2% of the market, respectively. Japan's shipyards replaced their West European competitors as world leaders in production through advanced design, fast delivery, and low production costs.

The Japanese shipbuilding industry was hit by a lengthy recession from the late 1970s through most of the 1980s, which resulted in a drastic cutback in the use of facilities and in the work force, but there was a sharp revival in 1989. The industry was helped by a sudden rise in demand from other countries that needed to replace their aging fleets and from a sudden decline in the South Korean shipping industry. In 1988, Japanese shipbuilding firms received orders for 4.8 million gross tons of ships, but this figure grew to 7.1 million gross tons in 1989.

In 2003, the Japanese Shipbuilders' Association reported that the market: remains steady in terms of volume, but the future of shipbuilding prices allows no optimism since intense international competition continues against a background of chronic supply-demand imbalance.


The aerospace industry received a major boost in 1969 with the establishment of the National Space Development Agency (now Japan Aerospace Exploration Agency), which was charged with the development of satellites and launch vehicles. Japan's aircraft industry was only one-twentieth the size of that of the United States and one-twelfth that of Western Europe, and its technological level lagged as well.

However, in the late 1980s, Japan began to participate in new international aircraft development projects as its technical capabilities developed. The Asuka fanjet-powered short takeoff and landing (STOL) aircraft made a successful test flight in 1985. In 1988, Japan signed an accord with the United States to cooperate in building Japan's next-generation fighter aircraft, the FSX. The FSX agreement was cancelled due to American fears of technology transfer, convincing Japan to build the next-generation fighter on its own.

There is a long term decrease in employment in the aerospace industry. In 2004, 29,000 people were employed. Japanese corporate turnover was seventh in the world at less than US$20 billion.

See: Defense industry of Japan.


The petrochemical industry experienced moderate growth in the late 1980s because of steady economic expansion. The highest growth came in the production of plastics, polystyrene, and polypropylene. Prices for petrochemicals remained high because of increased demand in the newly developing economies of Asia.

By 1990, the construction of factory complexes to make ethylene-based products in the South Korea and Thailand was expected to increase supplies and reduce prices. In the long term, the Japanese petrochemical industry is likely to face intensifying competition as a result of the integration of domestic and international markets and the efforts made by other Asian countries to catch up with Japan.

Biotechnology and pharmaceutics

The biotechnology and pharmaceutical industries experienced strong growth in the late 1980s. Pharmaceutical production grew an estimated 8% in 1989 because of increased expenditures by Japan's rapidly aging population. Leading producers actively developed new drugs, such as those for degenerative and geriatric diseases. Pharmaceutical companies were establishing tripolar networks connecting Japan, the United States, and Western Europe to co-ordinate product development. They also increased merger and acquisition activity overseas. Biotechnology research and development was progressing steadily, including the launching of marine biotechnology projects, with full-scale commercialization expected to take place in the 1990s.

Biotechnology research covered a wide variety of fields: agriculture, animal husbandry, pharmaceuticals, chemicals, food processing, and fermentation. Human hormones and proteins for pharmaceutical products were sought through genetic recombination using bacteria.

Biotechnology also is used to enhance bacterial enzyme properties to further improve amino-acid fermentation technology, a field in which Japan is the world leader. The government cautions Japanese producers, however, against overoptimism regarding biotechnology and bioindustry. The research race both in Japan and abroad intensified in the 1980s, leading to patent disputes and forcing some companies to abandon research. Also, researchers began to realize that such drug development continually showed new complexities, requiring more technical breakthroughs than first imagined. Yet, despite these problems, research and development was still expected to be successful and to end in product commercialization in the mid-term.

In 2006, the Japanese pharmaceutical market was the second largest individual market in the world. With sales of $60 billion it constitutes approximately 11% of the world market.

The Japanese Pharmaceutical Industry and Laws are very particular. They are ruled by The Ministry of Health, Labor, and Welfare which was established by a merger of the Ministry of Health and Welfare and the Ministry of Labor, on January 6, 2001 as part of the Japanese government program for re-organizing government ministries.

See also: List of pharmaceutical companies

Motor vehicles and machinery

The motor vehicle industry is one of the most successful industries in Japan, with large world shares in automobile, electrical machineries, parts, Tire and engine manufacturing.

Japan is home to six out of top 10 largest vehicle manufacturers in the world. For example it is home to multinational companies such as Toyota, Honda, Nissan, Suzuki and Mazda. Some of these companies cross-over to different sectors such as electronics to produce electronic equipment as some of them being a part of keiretsu. Japan's automobiles are generally known for their quality, durability, fuel efficiency and more features with relatively cheaper price than their competitors.

Japan car makers, Mitsubishi and Toyota, have had their patents violated by Myanmar car makers, such as UD Group (Mandalay), Kyar Koe Kaung (Yangon). These Myanmar car makers produced Mitsubishi and Toyota products including Mitsubishi Parjero, Toyota Town ace pick up and other various types of Japanese car under their owned tradename (Khit Tayar Parjero, Shwe Surf, UD Light Truck and KKK Light Truck).

Exports and the Japanese market

In 1991, Japan produced 9.7 million automobiles, making it the largest producer in the world; the United States in that year produced 5.4 million. Just under 46% of the Japanese output was exported. Automobiles, other motor vehicles, and automotive parts were the largest class of Japanese exports throughout the 1980s. In 1991 they accounted for 17.8% of all Japanese exports, a meteoric rise from only 1.9% in 1960.

Fear of protectionism in the United States led to major direct foreign investment in the USA by Japanese automobile manufacturers. By the end of the 1980s, all the major Japanese producers had automotive assembly lines operating in the United States: Isuzu has a joint plant with Subaru; one of Toyota's plants is in Alabama. Following the major assembly firms, Japanese producers of automobile parts also began investing in the United States in the late 1980s. Most Japanese auto parts are still made in Japan.

Automobiles were a major area of contention for the Japan-United States relationship during the 1980s. When the price of oil rose in the 1979 energy crisis, demand for small automobiles increased, which worked to the advantage of Japan's exports to the United States market. As the Japanese share of the market increased, to 21.8% in 1981, pressures rose to restrict imports from Japan. The result of these pressures was a series of negotiations in early 1981, which produced a "voluntary" export agreement limiting Japan's shipments to the United States to 1.68 million units (excluding certain kinds of specialty vehicles and trucks). This agreement remained in effect for the rest of the decade, with the limit reset at 2.3 million units in 1985. As Japanese assembly lines in the United States came on line, imports of Japanese automobiles in 1988 actually fell below the limit but then rose. The U.S. by the late 1990s repealed its restrictions on Japanese car imports.

Similar restraints on Japanese exports were imposed by Canada and several West European countries. Japan's investment increased in Western Europe as well, but it faced pressure to achieve high local value added with the then-forthcoming establishment of the European Union in 1993. Since then, tensions have greatly decreased. Canada and Western Europe, like the U.S., repealed restrictions on Japanese auto imports. Nissan has an assembly plant in Sunderland in England.


Foreign penetration of the automotive market in Japan has been less successful. Imports of foreign automobiles were very low during the forty years prior to 1985, never exceeding 60,000 units annually, or 1% of the domestic market. Trade and investment barriers restricted imported automobiles to an insignificant share of the market in the 1950s, and as barriers were finally lowered, strong control over the distribution networks made penetration difficult. The major United States automobile manufacturers acquired minority interests in some Japanese firms when investment restrictions were relaxed, Ford obtaining a 25% interest in Toyo Kogyo (Mazda), General Motors a 34% interest in Isuzu, and Chrysler a 15% interest in Mitsubishi Motors. This ownership did not provide a means for United States automobiles to penetrate the Japanese market until the end of the 1980s.

After the strong appreciation of the yen in 1985, however, Japanese demand for foreign automobiles increased. The greater sense of affluence in Japanese society was accompanied by a rising interest in European design. In 1988, automobile imports totaled 150,629 units, of which 127,309 were European, mostly West German. Only 21,124 units were imported from the United States at that time.

See also: List of Japanese automobile manufacturers


Many of the world's major electronics companies are based in Japan, including:

Japan has 7 out of top 20 world's largest chip manufacturers as of 2005. Japan's electronic products are known for their quality, durability, and technological sophistication. Some of these companies cross over to automobile and finance sectors as part of a keiretsu.

=Electronics Japan's computer industry developed with extraordinary speed and moved into international markets. Japanese computer technologies are some of the most advanced in the world.

The leading computer main frame manufacturers in Japan at the end of the 1980s (in the domestic market) were:

Leading personal computer manufacturers were:

In 1988, Japan exported US $1.5 billion of computer equipment, up more than twelvefold from the US$122 million in 1980. Japanese firms were not very successful in exporting mainframe computers, but they did very well in peripheral equipment, such as printers and tape drives. In the rapidly growing personal computer market, Japan achieved a modest market share in the United States during the 1980s. Imports of computer equipment in 1988 came to US$3.2 billion (including parts). However, much of the computer equipment produced by foreign-owned firms that is used in Japan is manufactured domestically by subsidiaries rather than imported.

The special treatment extended to the computer industry became the subject of trade disputes with the United States in the 1980s, in particular the government procurement practices for supercomputers. At issue was the inability of United States manufacturers to sell these machines to government-funded agencies in Japan. Some rules were changed in 1987, but supercomputers remained one of three products singled out for further negotiation by the United States in 1989 under the provisions of the 1988 United States Trade Act. Earlier, conflict ensued over a Japanese proposal to protect computer software under patent law rather than under copyright law, a move that the United States felt would reduce protection for United States-designed software in the Japanese market. This issue was resolved when the patent law proposal was dropped.

Economic developments, namely outsourcing and globalization made these disputes obsolete by the 1990s. Japanese and U.S. influence in the computer market dwindled, with Taiwanese and mainland Chinese companies taking over component production and later research and development. Supercomputers lost their importance, with large clusters of cheap consumer or server market components taking over their role.


The production value of the food industry ranked third among manufacturing industries after electric and transport machinery. Japan produces a great variety of products, ranging from traditional Japanese items, such as soybean paste (miso) and soy sauce, to beer and meat.

The industry as a whole experienced mild growth in the 1980s, primarily from the development of such new products as "dry beer" and precooked food, which was increasingly used because of the tendency of family members to dine separately, the trend toward smaller families, and convenience.

A common feature of all sectors of the food industry was their internationalization. As domestic raw materials lost their price competitiveness following the liberalization of imports, food makers more often produced foodstuffs overseas, promoted tie-ups with overseas firms, and purchased overseas firms.

In 2004, the Japanese food industry was worth US$600 billion whilst food processing was worth US$209 billion. This is comparable to the food industries of the United States and the EU.

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