Kobe Steel, iPhone bright spots for 'declining' Japan, but challenges lie ahead from China

I'm a big fan of the TV Tokyo program "Sora kara Nihon o mitemiyo" (Let's take a look at Japan from the sky). The dialogue between Kumojii (Grandpa Cloud) and Kumomi, a "girl cloud," is entertaining, and it's refreshing to see various parts of the country from a vantage point not unlike that of a floating cloud.

The program, moreover, is informative. The other day, viewers were given a glimpse of the steel manufacturer Kobe Steel, based in Kobe, Hyogo Prefecture, and told that if the company were to stop its operations, production of half the world's cars would come to a halt. I'd had no idea.

Looking into the matter, I found that Kobe Steel has about a 50-percent share of the wire rods used to produce valve springs, which are installed at the top of car cylinders.

The valves are subject to strenuous contraction and expansion, but their quality must remain unchanged even when a car clocks 100,000 kilometers. Kobe Steel's wire rods apparently fit the bill and therefore dominate the world market. I find this good news, especially nowadays, when Japan's economic decline has become widely accepted.

Japan is a major exporter of finished products such as cars and LCD televisions, but with regards to world share, companies like Kobe Steel that produce materials and parts account for a larger share. While such companies are little known in Japan, they are the ones that are helping to maintain the country's economic edge.

A Dec. 15 Wall Street Journal (WSJ) article, "Not Really 'Made in China,'" highlights the problem with distortions in trade statistics. The iPhone was developed by Apple Inc., an American company, but is assembled in China. Because of this, the phones are considered to be "imported" by the U.S. as products "made in China," adding $1.9 billion to the U.S. trade deficit with China. But does it make sense to credit the $1.9 billion to China alone?

There are some very interesting figures with regards to iPhone sales. The phones are sold wholesale by China for $178.96 each, but since Chinese workers are only involved with assembling the phones, only 3.6 percent of that amount actually goes to China. The countries that provide the parts actually get a larger share of the wholesale cost. Japan receives 34 percent, while Germany gets 17 percent, South Korea 13 percent, and the U.S. 6 percent.

What struck me was the figure, 34 percent. With Apple's iPod, most of the parts were made in Japan. Since I'd been told previously that Japan had no chance against South Korea and China when it came to the iPhone, I was relieved to hear that it still holds a 34-percent share.

The WSJ article runs the risk of giving a false impression, however. No longer a mere "assembling factory," China is rapidly shifting towards becoming a Japanese-style supplier of materials and parts. Southeast Asian countries are in great fear of China's rise to economic hegemony, which they see as imminent. Japan must also acknowledge that maintaining its 34-percent share will not be easy. (By Michio Ushioda, Expert Senior Writer)

(Mainichi Japan) December 22, 2010
毎日新聞 2010年12月22日 東京朝刊

by kiyoshimat | 2010-12-23 13:49 | 英字新聞

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