BIG BLOWS TO ‘MADE IN JAPAN’ BRAND
Intensifying global competition, unending drive to cut costs keeping workers from revealing wrongdoings
EMBARRASSING scandals at Kobe Steel and Nissan have tarnished the reputation of Japan Inc for quality, as once-mighty industrial world-beaters battle fierce global competition and shrinking profit margins.
Once again, the image of a corporate boss bowing deeply in apology before the cameras has been splashed across Japan’s newspapers and sparked a fresh bout of national soul-searching.
Kobe Steel’s chief admitted his firm had falsified quality data in products shipped to about 500 clients, including carmaker Toyota, aircraft manufacturers and defence contractors.
The news that the affected parts were also used in Japan’s “Shinkansen” bullet trains deepened the humiliation for the “Made in Japan” brand that was once a byword for quality.
The revelation wiped US$1.8 billion (RM7.6 billion) off its share price over the past week — a drop of more than 40 per cent — as the scandal deepened and widened to other products such as steel wires, a key company product.
The Kobe Steel news came just days after Nissan recalled more than one million vehicles in Japan after admitting that staff without proper authorisation conducted final vehicle inspections before shipping them to dealers.
Intensifying global competition and an unending drive to cut costs have resulted in a situation in developed countries like Japan where workers keep quiet to protect themselves even if they see wrongdoing, added the expert.
The admissions came as the global industry landscape was going through sweeping transformations, said experts.
Costly workers in mature economies like Japan are directly pitted against cheap factory staff in emerging markets in a competition for jobs.
Meanwhile, industry newcomers are taking market share away from traditional corporate giants. In the steelmaking sector, for example, Indian and Chinese giants have steadily expanded, pressuring their Japanese rivals.
And Japanese auto manufacturers have expanded overseas production, rather than exporting vehicles from Japan.
The Kobe Steel and Nissan scandals are the latest in a string of negative headlines for Japanese industry that used to be the envy of the world.
Airbag maker Takata went bankrupt this year after spending years dealing with defective products that were linked to 16 deaths and scores of injuries worldwide.
Corporate scandals are, of course, not limited to Japan.
The 2015 “dieselgate” affair, where Volkswagen AG admitted to equipping its diesel cars with devices to evade emissions tests, caused great embarrassment for German industry, also a watchword for quality.
But analysts said ironically, stringent Japanese quality control could be part of the problem.
Eyebrows were raised in the Nissan scandal when it emerged that checks by more qualified officials were required for the domestic market but not for vehicles destined for exports.
Nobuo Gohara, a corporate compliance lawyer who has helped restore a number of firms after serious scandals, said many such affairs stem from excessive safety or quality standards.
Misconduct began when employees considered that meeting these standards was a mere formality rather then a requirement and started hiding it from internal audits, he said.
Younger employees in Japan tended to be more sensitive to compliance requirements, said Gohara, adding that repeated surveys of workers by outside experts could encourage whistleblowing.
But whistle-blowing could not function properly when misconduct was routinely and systematically conducted by many people, including potential whistleblowers themselves, he added.
In addition, there is no formal protection for whistle-blowers in Japan and a culture of respect for hierarchy prevents many workers from speaking out, say observers. AFP