Akio Hosono

National Graduate Institute for Policy Studies, GRIPS(GRIPS Development Forum)` Strong concern about the foreigners’

perception of Japanese products: Cheap, butlow quality` Improvement of quality without increasing
cost (or with improvement of productivity)
was considered as the best strategy (Japanand Japanese companies were very poor after
the World War II)` QC fitted best to the strategy: lower rate ofdefective products improved quality andproductivity` Until around 1950, Japanese products wereperceived worldwide as being very
inexpensive, but with poor quality. By the1980s, products made in Japan were known
all over the world for their high quality andreliability. What happened during those threedecades?
` Cited from IDB (2003)` First step: Japanese companies first introduced thestatistical quality control (SQC) approach, based on
the guidance of Dr. Deming and Dr. Duran` Second step: The Japanese way of QC wasgradually consolidated when it was applied at thefactory floor level. Instead of the “top-down”
approach common in the US and other countries, a“bottom-up” approach was adopted in Japan. A
team commonly known as the “Quality ControlCircle” (“QC Circle” or QCC) was organized` In this process, Dr. Kaoru Ishikawa, Mr.

Taiichi Ohono and others made theoreticaland practical contributions, and introduced
many tools of Japanese QC/Kaizen` (See for more details, the GRIPS’s booklet“Introducing Kaizen in Africa”)

` “To be fair, we cannot say that the quality

management (with Kaizen) was the sole factor
for vigorous expansion of production andexport; however, it was one of the major
factors as many observers concur.” (Citedfrom IDB (2003); Words in parenthesis areadded by the author)` Early seventies, Japan faced a very serious crisis

caused by Oil shock and strong appreciation of yen` Need to improve competitiveness through quality
and productivity improvement to face strong
appreciation of yen` Need to save energy and improve energy efficiency
to face ten times higher oil price` Kaizen was diffused rapidly and QC circles
increased` QC with Kaizen was scaled up to Company wide
(Company wide QC) and Total Quality Control(TQC)

４０％

１２％

Figure1Source, IDB (2003)

` Scale up to company wide QC / Total quality

control (TQC) including distribution, afterservice, purchasing of materials andmachinery, etc.
` Spread out to non-manufacturing sectors
such as health care, construction, office work
(general clerical work), etc.
` Together with “scale-up” and “spread-out”,
total number of QC circles and members
participating in them increased rapidly` One of the significant impacts of Japanese

TQC is often explained by describing thedevelopment of car industry during the oilcrises in the 1970s. During this period, TQC
was extended to activities for energy
conservation and measures for resourcemaintenance.
` It greatly impacted various industries andbecame more securely established as avaluable quality framework for Japaneseindustrial development. (QC Circles
expanded in 70s and 80s in Japan, see graph)` This paragraph is cited from IDB (2003)(sentence in the parenthesis is of the author)

Energy Efficiency improved approximately 37 % in last
30 years in Japan
En los últimos 30 años, Japón aumentó la eficiencia energética en
más de un 30% Energy consumption and real GDP growth
Energy consumption and real GDP growth(Kilotons based on petroleum conversion/1 billion yen）

1.7
1.6
1.5

Approx. 37%
improvement

1.4
1.3
1.2
1.1
1
Source: Based on “Comprehensive Energy Statistics”
published by the Agency for Energy Resources

0.9
0.8
1965

1970

1975

1980

1985

1990

1995

2000

2005
Fiscal year

出典 ： 資源エネルギー庁「総合エネルギー統計」

15６

Energy consumption in industrial sector has
not increased while GDP of Japan doubled
El Consumo de Energía en el Sector Industrial no ha aumentado
mientras que el Producto Interno Bruto (PIB) de Japón se duplicó
600

450
400500PIB Real350400

Consumo Total de Energía
en el Sector Industrial

300
250

300

200

PIB Real (trillions of yen)Consumo Total de Energía (1 million kilo liters of crudeoil equivalent)

500

200

150
100

1005001973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

0Source: General Energy Statistics (Agency for Natural Resources and Energy of the government of16Japan)

16S tf N tilAt (C bit Offif tht fJ)

` To be fair, we cannot say that Kaizen (as well

as TQC) was the sole factor for amazing
improvement of energy efficiency in Japan in70s and 80s; however, it was one of themajor factors.

` Japan faced new challenges from mid 80s:

globalization and stronger competition withemerging countries as well as continued
appreciation of yen (Plaza Accord,1985)` Kaizen continued to be important both inJapan and overseas, especially for Total
Quality Management (TQM), concept basedon Japanese-made TQC` Kaizen was widely diffused to countries where

Japanese companies made investment andtechnological transfer

PlazaAccord` Japanese manufacturing companies shifted

their production bases to East Asia whereproduction costs were lower.
` First, Japanese firms tried to duplicate thequality management system in their factories
abroad. Moreover, as they endeavored toincrease local procurement of intermediate
inputs, local suppliers were requested toconform to Japan’s quality standards.
` (For more details see GRIPS’s booklet)` Several tracks:` Through FDI from Japan to East Asia, US,Latin America, Europe and other regions` Through Japanese cooperation: JICA, AOTS,APO (Asia Productivity Organization) together
with Japan Productivity Center and JUSE
` Other tracks: third countries (such asSingapore ), international organizations (WB,IDB, etc.) as well as demonstration effects` In this context Professor Masaaki Imai’s book

“Kaizen: The Key to Japan’s CompetitiveSuccess”, 1986 made a substantial
contribution to introduce Kaizen to the world` (For more details, see “Introduction” of theGRIPS’s booklet)` From 70s, because of strong appreciation ofyen, increase of wage of Japanese workers
and other factors, Japanese companies
expanded their production overseas.
` Together with FDI, Japanese companies madetechnological transfer and introduced
Japanese-made QC practices (Kaizen, TQC)
and management (TQM) to their subsidiaries
in East Asia, US, Latin America, Europe andother regions` FDI and technological transfer were essential

components of the Flying Wild Geese development
pattern in Asia. “Regional economic networks thatdeveloped over the course of Asia history provided
the backdrop for active trade and investment
between each country during the economic growthperiod” JICA/JBIC document prepared for TICAD IV,(May 2008)` In this process, Japanese companies through theirinvestment transferred Kaizen, TQC, TQM andother quality and productivity related methods andsystems

VietnamChinaASEAN

1–6 Pattern of Industrial Structural Change in Asia
China
NIEsVietnam
ASEANJapan
1

AsianNIEs
Japan
Flying Geese
Shift of Industrial Structural Change in Asia (Source:JICA/JBIC document prepared for TICAD IV, May 2008)

Strengthened (Integrated) ‘Flying Geese’:Sourcing of parts and components for a hard disk
driveIntra-Regional Trade in Asia (Source: World Bank, World

Development Report 2009

Strengthened (Integrated) ‘Flying Geese’:Sourcing of parts and components forautomanufacturing within ASEAN

sIntra-Regional Trade in Asia (Source: World Bank, World

Development Report 2009

` Muruti-Suzuki in India` Panasonic and Bridgestone/Firestone in CostaRica` EMBRAER` (At random selection)` Investment by Suzuki Motor of Japan wasmade in 1982
` Japanese management has been firmlyconsolidated in a society very different fromJapanese` More than 2000 workers and engineers of
Muruti-Suzuki were trained in Japan`See Bhargava R.C and Takashi Shimada, Suzuki’s
Strategy in India, 2006

` See Short VideoVIDEO` EMBRAER, the third largest airplane makerof the world, is a Brazilian company with 37
subsidiaries in the world (founded in 1969and privatized in 1994)

` Some relevant aspects of EMBRAER’s Quality Policy` Eliminate waste and everything that does notaggregate value;` Ensure ongoing improvement in all businessprocesses through the involvement of people andteams at all levels, focused on customer
satisfaction;` Focus on the human being as core entity of theentire development process of the Company.
(Cited from HP of EMBRAER)` Kamban system is introduced in the plant` “The Technical Instructor and Personnel

Training Center for Industrial Development ofCentral America (referred to as CEFOF) in theRepublic of Costa Rica” was implemented by
JICA from 1992 to 1997.
` “Project of Productivity Improvement forEnterprises in the Republic of Costa Rica” wasimplemented by JICA from 2001 to 2005
` Project of Formation of Consultants for
Improvement of Productivity and Quality” juststarted with cooperation of JICA

Figure 2

Project of Formation of Consultants for
Improvement of Productivity and Quality

Each
Each country
country

Ministry ofof
Ministry
Education
Education
Universi
Universi
tytyExperts
Experts ofof JICA
JICA

Dispatch
Dispatch ofofconsultants
consultants ofof
CEFOF
CEFOF
Regional
Regional cources
cources
Network ofof development
development ofofNetwork
SMEs
SMEs

Ministries
Ministries forforSMEs
SMEs

PublicPublicorganizatio
organizatio
nsns` Various kind of positive impacts on productivity

improvement for the companies that have received
consulting services of the Project, such as: Correctand common understanding of key words atworking place; Positive change of attitude among
workers (way of thinking, awareness of securityand Kaizen);` Introduction of 5S into companies, which madepositive contribution, because the program
requires participation of everyone, not only
workers but also management, that securessustainability of the 5S program;` Improvement of motivation of employees;

Simplification and standardization ofproduction process, improvement of teamwork, better awareness of international
competition in global business; Introductionof ISO9001-2000 which improved efficiency
of company operation and provided more
focus on customers’ satisfaction` For more details, see the GRIPS’s booklet` Kaizen takes time:Its key features areincremental and continuous and involvementof the entire workforce` To fully implement Kaizen, workers’
participation and administration’scommitment is essential` Other important messages are included in theIntroduction of the GRIPS’s booklet` Izumi Ohno, Kenichi Ohno and Sayako Uesu

(2009), “Introducing Kaizen in Africa:
Introduction”, GDF Booklet on Kaizen` Inter-American Development Bank, Japan
Program (2003), Handbook of TQM and TQC` Masaaki Imai (1986), Kaizen: The Key toJapan’s Competitive Success, MacGraw-Hill
Publishing Company` JICA/JBIC (2008), Report of the Stocktaking

Work on the Economic Development in Africa
and the Asian Growth Experience` This presentation is preliminary and personal:

Comments welcome