That image of an unstoppable Japan, the stuff of scaremongering books, articles and movies like ““Rising Sun,’’ now looks almost as campy as Godzilla himself. Japanese real-estate purchases in the United States brought eye-popping losses, the ““invasion’’ of Hollywood earned Japanese firms more heartache than profit and the Japanese economy still struggles to crawl out of its longest slowdown since World War II. And the outlook for Japan’s version of HDTV is very dark indeed. In a long-delayed admission of defeat, Japan is preparing to drop its plans to broadcast ““analog’’ HDTV signals from a satellite to be launched around the turn of the century. The real wave of the future, a government study concluded this month, is digital technology, spearheaded by U.S. companies. ““When the international trend was moving toward digital, we departed from that simply because the government had decided on analog,’’ huffed Sony chairman Norio Oga to Japan’s Kyodo news service. ““Now they are saying it’s digital after all. What is this?''
This is the new Japan, where government and corporate interests are rapidly diverging. The old Japan Inc. style of doing business–whereby government mandarins and corporate titans huddled together, set strategy, put their shoulders behind an idea and took on the world–doesn’t work so well anymore. In the hyperpaced Information Age, where yesterday’s innovation is today’s anachronism, companies have to be far more nimble. And the Japanese bureaucrat, long a figure of awesome power and prestige, is increasingly more of a hindrance than a help. Japan’s sputtering economy and a series of scandals have undermined the bureaucrats’ reputation even as Prime Minister Ryutaro Hashimoto talks up plans to reduce their power.
The HDTV fiasco is a clear sign that their influence is on the wane. Japan’s bureaucrats have ““lost an enormous amount of credibility,’’ says E. Keith Henry, a senior analyst at the Japan Program of the Massachusetts Institute of Technology. ““Tomorrow, what will Japanese companies do when the government calls on them with a plan to develop new worldwide standards? “Forget it,’ they’ll say. “We’d rather sit down with some guys in the U.S. and see what they’re up to’.''
That’s already happening. More and more Japanese and foreign companies are joining hands, hoping to benefit from each other’s expertise and access. Just last week Sony was said to be close to a deal with Rupert Murdoch’s News Corp. to participate in JSkyB, a digital satellite broadcasting venture that could air Sony movies and music in Japan. The third partner in the JSkyB venture is Softbank founder Masayoshi Son, the most prominent of a new group of Japanese entrepreneurs shaking up the way business is done in Japan. ““There are a bunch of young people coming up with a new business culture,’’ Son told NEWSWEEK not long ago. ““The younger-generation businessmen are a little more outspoken than Japanese used to be; they’re a little more open-minded, a little more flexible, a little more Westernized.''
Corporations like Sony, Softbank and News Corp. have their eyes on the vast new opportunities opening up in multimedia. Computers, television and telecommunications have all become part of a vast infrastructure tied into the entertainment industry. One reason fully digital HDTV won out over Japan’s analog version is that some analysts foresee an inexpensive ““smart box’’ that will combine the functions of TV and computing. The analog system uses radio waves to transmit information, whereas digital HDTV will convert sound and pictures into computer-style code. Digital systems, in other words, can interact with computers. And digital broadcasting is cheaper than analog.
Poor judgment: So how did Japan go wrong? For one thing, technological breakthroughs in the last few years have opened possibilities that weren’t there before. Another reason is simply poor judgment. ““Bureaucracy won out over common sense,’’ says Alan Bell, an analyst at Schroders Japan Ltd. Even Japanese electronics companies saw the digital-HDTV wave coming several years ago. Firms like Sony and Matsushita, while producing and selling analog HDTV sets in Japan at the bureaucracy’s behest, weren’t waiting around for government directions about new technologies. They knew what was happening across the Pacific, and began investing to make fully digital televisions and digital broadcasting equipment. ““The industry people knew that analog HDTV was old-fashioned and would not be able to compete,’’ says Kimihide Takano, senior analyst at Dresdner Kleinwort Benson Asia Ltd. ““They were waiting to abandon it.''
Japan’s bureaucrats haven’t flunked just as technology pickers. Their micromanagement has also failed to keep the country’s economy from faltering. Still, the Japanese aren’t down and out any more than U.S. industry was finished a decade ago. Japan’s trade surplus, after a long decline, is edging back up, helped by the strong dollar. And Hashimoto is promising far-reaching reforms, including a Japan-style Big Bang to make its financial markets more competitive while its corporations are positioning themselves to become more innovative.
And the technological race has no finish line. ““Digital technology in the U.S. may be more advanced than that of Japan,’’ says Tamotsu Harada, an official with the Electronics Iof Japan. ““But digital technology is very diversified. One day you might wake up and find that Japan has moved ahead of the United States.’’ True enough. But if Godzilla returns, he’ll be a different kind of beast–more savvy, less frightening and probably working with a partner in America.
Japan’s failures at industrial policy are many. Here are the biggest clunkers:
Easy Money: The Ministry of Finance and the Bank of Japan fueled reckless speculation in real estate in the late ’80s. The stock market lost half its value. Cost: more than $2 trillion.
Analog HDTV: After three decades only 330,000 HDTV sets have been sold. Now analog HDTV will be phased out in favor of a U.S.-developed digital format. Cost: $8.3 billion
Fifth-generation computer: A scheme to come up with a computer that could reason as people do. No commercial result. Cost: $470 million.
Aerospace: An attempt to build an aircraft industry failed in the ’60s. Satellite launchers have gone awry. Cost hundreds of millions of dollars.
