The Daily Brief Has Japan lost the auto race?
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Jun 16, 2025 The podcast dives into Japan's waning dominance in the auto industry, spotlighting Nissan's financial troubles and the cancellation of its merger with Honda. It contrasts Japan's traditional automotive ecosystem with China's innovative strategies. The discussion expands to geopolitical tensions, particularly the Iran-Israel conflict, and its potential effects on global oil markets. Additionally, it explores strategic shifts in India's corporate landscape, including Reliance Industries' recent divestment and Foxconn's rising iPhone exports, reflecting broader supply chain changes.
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Keiretsu System's Dual Edge
- Japan's keiretsu system created a tightly knit industrial network with stable, long-term relationships.
- It supported low-cost financing and collaborative risk sharing but limited aggressive competition.
Stability Over Efficiency Risks
- The keiretsu system valued lifetime employment and stability over market-driven efficiency.
- This discouragement of bankruptcy led to prolonged survival of inefficient firms, weakening the industry.
Recession Shattered Keiretsu Strength
- Economic recession eroded keiretsu networks as firms sought cheaper suppliers outside the system.
- Excessive cost-cutting caused quality issues, reversing Japan's manufacturing strength.