By Peter Dyloco

Commentary Jul. 30, 2011 - 05:43AM JST ( 6 )

TOKYO —

Ever since Carlos Ghosn joined Nissan as its chief executive officer in 1999, the company has become a shining example of how aggressive restructuring plans can turn a company around from seemingly inevitable ruin.

Starting with Ghosn’s Nissan Revival Plan and later refined under his Nissan 180 strategy, Nissan accomplished sales of one million cars per annum, achieved operating margins exceeding eight percent, and had zero automotive debts after a few years under his command and guidance.

The Brazilian-Lebanese maverick recently announced Nissan’s Power 88 business strategy, which targets sales of seven million cars per annum, introduces 90 new technologies over six years and attempt to achieve a global market share of eight percent. Certainly ambitious, but not entirely out of the question.

Similar things can be said of Japan’s dynamic Uniqlo brand. Though it encountered difficulties in establishing itself outside its home field for many years, management at the Tokyo-based clothing juggernaut learned from their mistakes and have opened stores in ten countries – most notably China, where a blistering 100 stores have been opened in the last decade alone. Not bad for a company targeting annual group sales of 5 trillion yen per year by 2020.

Why do both succeed while other Japanese businesses falter? What makes them so different from other Japanese businesses in the same industry?

According to Tadashi Yanai, the CEO of Fast Retailing Corporation (which also happens to be the owner of Uniqlo), most Japanese businesses suffer from conservatism and cowardice. In the McKinsey Quarterly, Yanai says that “while globalization is difficult, it is also essential.”

That’s something that many Japanese corporations have failed to do.

Take Panasonic as an example. In 2005, Panasonic withdrew its cell phone business from international markets to focus solely on its home playing field. Apart from the fact that Panasonic simply exported many of its Japanese products to sell to demographics ill-suited to local Japanese products, Panasonic’s mobile phone division was slow to react to changes in the market; failed to bring out new products on a consistent basis and was unable to provide enough local support and exposure locally to warrant a purchase in consumers’ eyes.

The same story can be told of Japanese corporations in any sector. In the auto industry, Suzuki has failed to develop new & competitive products in response to increased and much improved competition. In the last four years, the company has released one new product for the North American market. By contrast, Suzuki released eight new products since 2007 exclusive to the shrinking domestic market. Efforts to develop a consumer base in major and/or emerging markets outside of Japan have remained limited and modest.

The company, in essence, hasn’t been aggressive enough. It isn’t alone in that regard.

For Japanese companies to stay afloat, head honchos have to look outside the box and to foreign markets as the future of their business and as critical to their profitability. To go global doesn’t simply mean offering the same or a limited selection of products to the world. To go global means to go after and market to a target audience with zeal; to adopt to their tastes and offer something dynamic the competition doesn’t – even if it would imply breaking socioeconomic norms previously unheard of.

Will it be difficult? Of course it will be. Like any difficult medical procedure in relation to serious illness, however, the private sector must go through hardship before it can expect to get any better. The necessity of globalization is a fact. The necessity of R&D for new products is a fact. Though it was once possible, Japan can no longer bank on its brand equity as it once did in the past – that is a fact. What businesses now have to do is look at the facts and accept them, and build a business strategy that will enable growth independent of Japan’s shrinking and aging market.

That is a fact.