JIN-296 -- G.M. in Toyota's Rear-View Mirror: Okuda's Grand Strategy

J@pan Inc Magazine Presents:

T H E J @ P A N I N C N E W S L E T T E R

Commentary on the Week's Business, Technology and Cultural News
================================================
Issue No. 296
Thursday November 4, 2004
TOKYO

Subscribe for FREE:
http://www.japaninc.com/newsletters/index.html?list=jin

CONTENTS

@@ VIEWPOINT: G.M. in Toyota's Rear-View Mirror: Okuda's Grand Strategy

====== Party with Chin Music Press ===========
Chin Music Press invites you to "Voices from the Void," a party to
celebrate the release of our first book. Join us for live readings
from Kuhaku & Other Accounts from Japan, a steaming nabe of stories
and art on being "found in
translation" in the real Japan.

Party: Nov. 11, Pink Cow in Shibuya, 7-11pm (No cover charge!)

Read about Kuhaku here:

Check it out on Amazon.com:
=========================================

===== CHIBA TODAY-Subscribe to Japan's New Biotech Newsletter======

If you're involved in biotechnology or genome research, Chiba Prefecture
wants your business. It is aggressively building its resume as Japan's
leader in these 21st century industries. Japan is the world's 2nd largest
biotech/genome market. Chiba Prefecture is the leading region for these
industries. Our newsletter will bring you updates and information from
Chiba Prefecture, as well as the Japan market at large. Chiba is actively
pursuing foreign companies to bolster the prefecture's chances for
success. Subsidies and other incentives are available. Sign up for our
newsletter here:

==========Saving Your Business Money===========
How can you cut business costs in Japan? Try relocating your operations
to a local region. Many companies, both Japanese and foreign, are moving
their facilities outside of Tokyo to places where rents, salaries and
basic business costs are cheaper. But it can be difficult deciding where
to go. We will provide you with the latest information on relocating anywhere
in Japan, including the different incentives and financial breaks foreign
firms are eligible to receive.
Please visit:

========================================
=======================================

@@ VIEWPOINT: G.M. in Toyota's Rear-View Mirror: Okuda's Grand Strategy

Before the recent spike in exports to China pulled Japan out of recession,
analysts examined the Japanese economy like so many doctors hovering over
a patient looking for signs of life. Now the economy has not only revived,
but one of its captains of industry fears his company's success
could swell employee heads.

Toyota Motors, fueled by unprecedented positive earnings, is pressing
accelerator to floorboard in its drive to expand. It has set global sales
targets of 8.5 million units for 2006 and production on the scale of 10
million units in the following decade. Chairman Hiroshi Okuda has his sights
set on surpassing the Big Three.

“Few automakers will survive until 2010,” opined Okuda at a press
conference in Tokyo on November 1. He presumes, of course, Toyota will be
one of them. Okuda, also chairman of the influential Nippon Keidanren,
rarely explains group strategy. This fact, in combination with the
timing -- the eve of the US Presidential election and concurrent with
Toyota’s semiannual financial settlement of accounts -- gave his words
extra weight. People in the auto industry lent him their ears.

Today the world's automakers manufacture 59 million vehicles annually.
It is forecast that full-scale motorization in such countries as India,
China, and Russia will boost annual production to the 75 million unit
level in the middle of the second decade of the century. Toyota's strategy
is to expand sales in these newly motorized countries while increasing share
in mature markets.

A new North American production base, whose construction was announced
by Okuda, would support the Toyota strategy of grabbing more share in
mature markets. He didn't specify the time or scale of the construction,
but it will be the seventh vehicle plant in North America. Okuda further
stated Toyota would increase its overseas production in the century's second
decade to a level roughly double that of 2003 (2.59 million units). He had,
in reality, laid out a bullish blueprint for global production of 10 million
vehicles.

Toyota sales in the U.S. are forecast to reach the 2 million level in
2004. Toyota is boosting profits in the North American market by concentrating
on the up-scale Lexus, SUVs, and other models with high per-unit profit.
It plans to strengthen this strategy.

The Japanese automotive industry was a source of trade friction with the
U.S until the mid-‘90s. However, Okuda, when asked if the Toyota strategy
would stoke trade friction, replied, “There is no reason for conventional
trade friction to occur. The Big Three are investing in Japan, and
Japanese automakers have formed tie-ups with them...We have forgone
torrent-like exports in favor of production in centers of demand.” Okuda
is proud of Toyota's providing jobs for local people in addition to
its local sourcing of parts.

Toyota, however, is not a juggernaut without weak points. One is a supply
system that has not kept pace with globalization. And Chairman Okuda fears
the rapid improvement in business performance will lead to hubris among
Toyota employees.

If Toyota adheres to its blueprint and doubles overseas production of
vehicles by the second decade of this century, it will pass General Motors
to become the world's largest automaker.

Wall Street approves of Okuda's tenure at Toyota. Over the last 12 months,
according to the New York Times, Toyota's U.S. shares have risen 30 percent,
while G.M.'s have fallen 28 percent. Moreover, Ray Mills, manager of the T.
Rowe Price International Growth and Income fund, notes in the same article,
"Toyota is taking share around the world, so there's no reason to think it
can't continue to do well."

Toyota has reason to beware of hubris.

-- Burritt Sabin

============== ADVERTISEMENT ================
Introducing the Landmark Tower Yokohama's Business Concierge

The Business Concierge, Japan's first bilingual business support service
for non-Japanese expatriates, offers professional assistance with:
- company registration
- legal and immigration issues
- IT support
- office set-up and much more

We answer in English all your questions about doing business in Japan.
Find out more about the Business Concierge at:
http://www.businessconcierge.jp/

=== "B U R E A U " Serviced Apartments in Tokyo ==

BUREAU monthly apartment complex offers an attractive exterior design
and stylish interior furnishings. A concierge is available on weekdays
to assist guests and weekly cleaning service keeps apartments fresh and
new. A perfect alternative to hotel living, BUREAU is the choice for
demanding executives on short to extended stay in Tokyo.
http://www.bureau.co.jp/en/
==============================================
SUBSCRIBERS: 20,609 as of November 4, 2004

EDITOR
Written and edited by Burritt Sabin (editors2@japaninc.com)

CHECK OUT OUR OTHER JAPAN-SPECIFIC NEWSLETTERS:
http://www.japaninc.com/subscribe_news.html

UNSUBSCRIBE
To unsubscribe from this newsletter, click here:
http://www.japaninc.com/unsubscribe_news.html

ADVERTISING INFORMATION
To advertise in this newsletter, contact:
ads@japaninc.com

GET THE MAGAZINE
Subscribe at:
http://www.japaninc.net/mag/subs.html

FEEDBACK AND PROBLEMS
We welcome your viewpoint:
editors@japaninc.com
(NB Please do not reply to this newsletter -- it's outgoing only,
so we won't get it!)

TECHNICAL PROBLEMS:
webmaster@japaninc.com

(C) Copyright 2004 Japan Inc Communications KK. All Rights Reserved.

business