Chapter 445 Cold Wave
The appreciation of the Japanese yen has caused Japan's export-oriented enterprises to continue to be sluggish.
Now it is not just the metal and textile industries that are affected. The mining industry has also basically stagnated in the second half of the year.
However, neither metal textiles nor mining are Neon's main export products.
In Japan-U.S. trade, the share of the relatively strong semiconductors, automobiles, and home appliances almost exceeds half of the total output.
Moreover, only a few excellent companies are relatively competitive in these three fields.
In the semiconductor industry, there are six companies including NEC, Hitachi, Toshiba, and Fujitsu; in the automotive industry, there are Toyota, Nissan, Honda, and so on.
In the home appliance industry, the export products of excellent companies such as Panasonic, Sony, Shirakawa Electric, and Sharp account for more than half of Japan's total foreign trade value.
According to statistics, 13% of all employed people in Neon work in the above-mentioned enterprises.
For a country, this ratio is actually very exaggerated.
Therefore, although many small and medium-sized enterprises are struggling to survive, Japan's total export share has not been greatly affected.
However, there is no impact for now, but that doesn’t mean there will be no impact in the future.
Because of the appreciation of the Japanese yen, the prices of products exported from Japan to the United States are also rising.
In today's era, Japan's products exported to the United States are first priced in Japanese yen and then converted into US dollars.
For example, a Toyota car is priced at 3 million yen in North America, which is equivalent to 12,000 US dollars based on last year's exchange rate.
However, due to the exchange rate issue, the same price of 3 million yen for a Toyota car has become nearly 18,000 US dollars in North America this year.
There is a huge gap of six thousand dollars. Even if the American people like Japanese thin-skin cars, they still have to consider whether it is cost-effective.
In the beginning, Toyota and others would maintain their market share by lowering prices.
But this trick doesn't work now because the US government has imposed price limits on Japan's imported products.
Japanese companies cannot arbitrarily lower the prices of their products in North America, otherwise they will receive anti-dumping warnings.
The price can only be reduced a little, and it must be approved by the US Department of Commerce before it can be reduced.
The Americans are so unreasonable that they deliberately restrict the prices of Japanese products, making them lose competitiveness in the North American market.
In order to prevent their own market share from being invaded, Japanese companies are willing to maintain their market share even if their profits deteriorate.
This of course includes Shirakawa Electric, whose export profits from portable players and CD players have been falling since the beginning of the year.
The market share is declining at a rate of 2% to 4% every quarter, which is unbearable for a year.
And looking at this trend, this may be the norm for quite some time in the future.
If it weren't for its unique technology, Shirakawa Electric's situation might have been even more difficult.
In overseas markets, in addition to Neon companies, there are also products such as Walkman and CD players.
Other countries and the United States also have their own related brands, but because they started late, their market share has always been small.
Relying on their international reputation and unique audio technology, Sony and Shirakawa Electric have always been mainstream brands in the overseas market.
However, no matter how mainstream a product is, its price will keep rising. If it rises too much, people will naturally choose the lower priced one.
If it weren't for the portable Walkman and CD players that occupy the majority of the market, the prices themselves would be less than three or four hundred dollars.
Even a 40% price increase is not too dramatic and is much better than a car increasing by several thousand dollars.
Therefore, in terms of market share, Shirakawa Electric and Sony can still barely maintain their advantage.
However, sales of some high-end models have dropped significantly.
Looking at the financial report in his hand, Baichuan Feng frowned.
“Has Philips surpassed us in high-end models now?”
"Hayi" Hasegawa also looked worried.
In the past, in the high-end market, the only company that could compete with Shirakawa Electric was Sony.
However, due to the appreciation of the Japanese yen, Philips, which ranked third, has unknowingly pushed Shirakawa Electric out of its perennial second place position, and the latter is now ranked third.
However, for this kind of force majeure factor, not only Hase Izu, but even Shirakawa Kaede had no good solution.
Philips is headquartered in Helan. The currencies of the three countries in the Plaza Accord appreciated, but the Helan shield did not.
Therefore, when the technological gap was not too big, Philips quickly overtook the opponent.
"Let's speed up the development of the Ouzhou market. If North America won't let us lower the price, then we will lower it in Ouzhou!"
Baichuan Feng was forced to adopt this rogue way of price reduction.
Lao Mi is too domineering and he can't win against him, so he can only find a solution from other places.
“In short, we need to make up for the lost market share in North America from other places.
In addition to the US market, we will also step up efforts to develop the low-end market in Southeast Asia.
Lijiapo, Hong Kong, and Bangzi, there should be no problem for them to consume low-end products.”
This is also a way of open source. Although low-end products have low profits, any profit you can make is good.
Besides, the revenue of Southeast Asian market in a few years may be comparable to that of South Korea.
However, after hearing Shirakawa Kaede's decision, Hasegawa was a little hesitant, "Hey, are we going to lower the price in Ouzhou?
In that case, will the Ugly States protest?"
Baichuan Feng thought for two seconds, but still insisted on his previous idea.
"Let's do this first, and wait until Ouzhou reacts."
Ouzhou is still a mess now. Even if there are objections to Shirakawa Electric's price reduction, it will be too early to implement it.
In order to reduce costs and ensure profits, haven't you seen that big companies like Toyota are also tightening their belts?
The cutting coolant that was previously thrown away after one use is now collected and reused.
As the yen continues to appreciate, many Japanese companies have made maintaining their market share their top priority, leaving aside profits.
If they withdraw from overseas markets at this time, it will not only be a major blow to the company, but it will also be extremely difficult to enter the overseas market again in the future.
The market is always ruthless. As long as you disappear from the public eye for a period of time, who will remember you?
Therefore, in order to maintain the market, profit is no longer the first factor to be pursued, and companies are even willing to reduce prices at a loss.
Shirakawa Electric may not have reached that point yet, but its future prospects are equally not optimistic.
Of course, it’s not just Shirakawa Feng who is having a headache. Several giants in the semiconductor, automobile and home appliance fields are also equally anxious.
Since everyone was a victim and was a member of Keidanren, they all decided privately to put pressure on the Japanese government.
Although when the yen appreciated, most of the chaebols within Keidanren voted in favor.
But no one expected that the yen would appreciate so quickly.
The original appreciation bottom line was 1:200, but now it basically hovers between 1:150 and 1:160.
This exchange rate is a huge burden for any export-oriented company.
Therefore, under the joint efforts of most of the chaebols, the Nakamune Cabinet was forced to find ways to cool down the yen again.
One of the measures is to continue to sell yen and buy dollars. At the same time, the new Finance Minister Kiichi Miyazawa also began to visit the United States frequently.
In response to Japan’s request, U.S. Treasury Secretary Baker responded coldly.
"Each country has its own ideas about the currency market and does not criticize each other's actions. China's intervention in purchasing US dollars is China's own judgment.
Just buy it yourself, don’t expect the US to buy it too.”
From then on, Neon began to be isolated on the issue of exchange rates.
Another reason behind this is that Germany and Britain both hope that the yen will appreciate further to weaken the competitiveness of Japan's manufacturing industry.
As I said, I would rather my fellow Taoist die than let myself die.
The Japanese yen has already appreciated so much, so it doesn't matter if it appreciates a little more.
Faced with the situation of being isolated and helpless internationally, Japan has no choice but to continue to make changes to itself.
So in October, the Bank of Japan continued to lower its benchmark gold rate by 0.5%, bringing the bank interest rate to an all-time low of 3%.
On the one hand, lowering interest rates can stimulate domestic demand, and on the other hand, it can also reduce the proportion of international capital holdings in the Japanese yen.
However, as before, the exchange rate of the Japanese yen has not changed much, and is even rising.
Now even Kiichi Miyazawa, who has radical policies, started to panic. This was too abnormal.
The economic laws we learned in the past seemed to have completely lost their effect at this time, and there were no similar cases in history.
Feeling uneasy, Finance Minister Kiichi Miyazawa called the home of Bank of Japan President Sumita several times during the night.
"Sumita-san, what does the Bank of Japan think of the current exchange rate market? Is there any problem tomorrow?"
Faced with the exchange rate of 1:150, Miyazawa Kiichi's inner panic was so strong that even Sumita on the other end of the phone could feel it clearly.
But faced with such a question, what can Sumita answer?
The foreign exchange market was not controlled by the Bank of Japan, and there was nothing Sumita could do except to comfort him.
This is a small microcosm of what has happened due to the sharp appreciation of the Japanese yen.
The people are jubilant, the manufacturing industry is wailing, and the government is panicking.
However, near the end of October, the Japanese government once again submitted a large number of domestic demand revitalization plans to the United States.
The United States suddenly softened its stance towards Japan's demands.
Reduce tariffs on US products, open up the semiconductor and computer markets, simplify the review of imported products, and continue to lower the interest rate of the Japanese yen.
After receiving these letters of allegiance, Treasury Secretary Baker finally stood together with the Finance Minister and spoke to the outside world.
"As part of the ongoing dialogue between Japan and the United States on economic, trade and financial issues, the two countries coordinated and reached agreements on a range of issues of mutual concern."
Although it did not say what specific agreement was reached, the market believed that this was a consensus reached on the yen after the Plaza Accord.
As a result, the yen began to fall, and in just one month it dropped to around 1:164, and remained basically in this range until the end of the year.
Seeing that the appreciation of the yen finally showed signs of fatigue, the entire Japanese government and manufacturing industry breathed a sigh of relief.
Although the current exchange rate is still very high, everyone is already satisfied that it can maintain this level.
The strange thing is that the exchange rate rose too quickly before. Now it is almost the bottom line, but everyone can accept it.
But will things be so smooth? Of course not, but that’s another story.
The year 1987 may not have been a good one for the export manufacturing industry, but the people were very happy.
