After the paralysis of the global supply chain caused by the devastating earthquake and tsunami in Japan in March, there have been the inevitable calls for a rethink of global, just-in-time supply systems. Some predicted that the disruption would last until the end of the year, if not longer. But just four months on, Japan’s recovery is taking place with remarkable speed, in large part because of the unusual brand of co-operative capitalism that underpins the tight-knit and remarkably resilient Japanese business system.
July's figures revealed that Japan’s industrial production had risen for the third month in a row, with auto manufacturers reviving especially strongly. Mitsubishi Electric also announced better than expected first-quarter profits, and has revised upwards its earnings estimates for this year. Other companies have responded strongly too: Hitachi, much of whose domestic production capacity is located in the area most affected, was almost fully operational by the end of March, while Hitachi Port, crippled by the disasters, reopened on April 3.
Held in awe by many in the west in the 1980s, Japan’s system has until recently fallen out of favour for being slow to adjust to changing macroeconomic conditions, resulting in the country’s two lost decades. Yet the tsunami has actually revealed the system’s capacity for rapid recovery – just as it did following the 1995 Kobe earthquake, and the 2007 Chuetsu earthquake.