The Diaoyu Islands Dispute And The Future Of The Chinese Industrial Sectors

The territorial dispute over the Diaoyu Islands between China and Japan over the past few weeks has shown to the world that the wounds of the Second World War are still open.
Let us consider also that despite being almost completely demolished, Europe has made great steps forward. The idea of a united Europe arose from the destruction of an entire continent and the horrors of the Nazi, Fascist, and Soviet regimes.
The contrasts and rivalries between China and Japan are as ancient as the intentions of both countries to dominate Asia. Their roles as Asian powers have crossed history, from centuries past until our modern age. The occupation of China by Japan during World War II and the unforgettable massacre of Nanking, where the occupying Japanese armies killed more than 150.000 Chinese civilians, to this day is the cause of widespread negative public sentiment towards Japan. The public demonstrations against Japanese interests in the streets of Beijing and Shanghai over the past few weeks are a tangible sign of those sentiments.
Fortunately the flow of history never stops, and time keeps moving on. Today, while the threat ancient revenge is always looming, the links between China and Japan are stronger than ever before, born out of their common and synergic economic interests. For a long time, while China became the factory of the world, Japan overcame its feelings of hostility and, like many other countries, moved a great deal of its industrial production to the mainland to profit from the favorable production costs. Common interests were successful where past interactions had led to war.
Now it’s time for China to learn about the progress of Japanese industrial culture. While China has constructed its industrial platform on the basis of Ford’s model, the new challenge is now to change its structure to a Toyota model. The difference, of course, is not only in the name of these two famous cars brads, but also in the way the production model is organized and how to interact with the final consumer demand and the markets. The origin of Chinese success was to grow an industrial organization based on the principles of “quantity and standardization.” This model (like Ford’s system) was inspired by the notion of offering mass goods to the final market at the cheapest conditions as possible without considering the optimization of any other factors during the production processes. This also involves an expanded consumer market situation, where the demand is continuously rising so that the increasing volumes justify that kind of industrial organization as a result. The final goods cost has been dropping thanks to the overall low cost of production factors, mainly the manpower, and the standardization of production flows.  “You can have any color you want as long as it’s black” was the slogan of Ford T Model.
The current market situation (fragmented and with weak demand), higher costs of material stock (both of the raw materials and finished goods), and the trend to localize production as close to the final markets as possible, so as to increase rapidity and the level of service and quality which has come to be expected by final consumers, has induced a great change and China will be greatly challenged to keep up the pace.
The Japanese of Toyota were the first to meet the new challenge, creating a new model of the production using the “just in time” and Kaizen methods. This new strategy, born in the years after WWII, is now the system that will overlap the current and future market trends. Independent of whether demand is rising or falling, the industrial sector always needs to produce what the market wants, and not what they can make. This is a radical change that is far from being adopted within the Chinese industrial environment, and the road to progress is still long. The great run that China has had until now, which catapulted it into second place among the world’s economies, will need to change its methods.
The correct and optimal usage of all the factors of production, including environmental resources, is necessary to increase the level of competitiveness (most recent data shows that industrial profit margins are continuing to decrease in China), to be more flexible, and to change the force of growth. China needs to move away from quantity-oriented growth and more towards quality-oriented growth. To do that, even though demonstrations across Chinese cities continue to affirm the underlying anti Japanese sentiments, the in coming president and his political staff would do well to learn as much as they can from the experiences of their historical enemy. In this way, from a territorial dispute there can be born a new pattern for a better world. This is simply the slogan of kaizen methods: kai (change, improvement) zen (good, better).