Despite Tokyo’s benchmark Nikkei 225 index shattering the long-standing record set during the asset-inflated bubble economy, Japan's manufacturers remain wary about history repeating itself.

The Japanese manufacturing industry has embarked on structural reform to avoid a repeat of the long dark period after the bubble burst.

AURA OF 'MADE IN JAPAN'

In those heady days before the end of the bubble era, the sci-fi masterpiece movie "Back to the Future," captured the high that Japan Inc. was riding.

The protagonist, who time travels 30 years back from 1985, tells a scientist in 1955 who pokes fun at Japanese products that all the best stuff is “made in Japan.”

The "Back to the Future" trilogy between 1985 and 1990 coincided with the high-flying period of Japan.

Home electronics, automobiles and other offerings from the Asian economy were sweeping the world by storm. The formidable reputation of the “made-in-Japan” brand underpinned the fanatic public confidence in the soaring stock prices at that time.

Since then, manufacturers in Japan have undergone dramatic changes over the course of 34 years. This kind of alteration is especially remarkable for Sony Group Corp.

Sony pitched the Walkman portable music player in 1979, contributing to the advent of a new lifestyle where people listened to tunes outdoors. Taking full advantage of its relevant expertise, Sony put out a succession of hit products mainly in the audio gear market.

Subsequently, home appliances accounted for 70 percent of its sales during the 1990s.

Following the collapse of U.S. investment bank Lehman Brothers in 2008, Sony reduced the numbers of employees and plants allocated for electronics for home use. It sold off the computer brand VAIO in 2014.

Seeing its TV department pushed out of the market by rivals from China and South Korea in the price war, Sony concentrated resources exclusively on high-end models.

Sony refined its image sensor technology particularly among other manufacturing techniques. It has now become a major global supplier, producing components essential for Apple Inc.’s iPhone and other products.

The sales and operating profit of the Japanese maker for fiscal 2022 came to 11.5 trillion yen ($76.55 billion) and 1.2 trillion yen respectively. Both the figures were record highs.

Home appliances made up a paltry 20 percent of sales. More than half came from the three pillar divisions of video games, music and films.

This successful reform in business segmentation helped Sony to rank sixth on the domestic market value list in Japan as of Feb. 26.

Despite all that, a former Sony executive described the outcome as being far from ideal.

“I know all too well that the business environment is currently different from that in the past,” said the ex-official. “But I expect Sony to continue bringing about innovations via its world-changing inventions. I would not like the globally renowned Sony just to be content with its status as a mere parts supplier.”

STRUGGLE FOLLOWING BUBBLE ERA

The bursting of the bubble economy marked the arrival of the “lost three decades” for Japan.

As consumers already had all kinds of electronics in their homes, makers were forced to lower their prices. Home appliance specifications became almost identical to one another, the made-in-Japan brand being undermined.

The famed Sanyo Electric brand was absorbed into Panasonic Corp. and disappeared. The financially ailing Sharp Corp. became affiliated with a Taiwanese enterprise.

Toshiba Corp. was delisted last year as a result of the reorganization of its business structure.

During that time, Apple, Google LLC and other information technology giants based in the United States increased their presence in the global market by improving their so-called “platform” services. They came to excel at the handling of data distribution with advances in information-communication technology.

Valued at as high as several hundred trillion yen, those corporations are running far ahead of their Japanese counterparts.

Back in Japan, conventional types of makers characterized by affordable products, including Uniqlo Co. and Nitori Co., grew dramatically in the nation, as businesses were grappling with prolonged deflation.

Neither significant changes in industrial structure nor drastic business “metabolism” were witnessed in Japan, unlike the United States.

The automotive business replaced the declining electronics industry as the backbone of Japan’s manufacturing circle.

Toyota Motor Corp. in January this year saw its market capitalization reach 48.7 trillion yen, breaking NTT's record set during the bubble era.

Toyota in 1997 released the world’s first mass-produced hybrid vehicle Prius.

The automaker has since been leading the battle for supremacy in the eco-friendly automotive market. Toyota lowered the cost of green cars to make profits per car comparable to those of gasoline-powered vehicles. 

The Toyota group’s unit sales for 2023 exceeded 10 million the world over, making it the world's top automaker for the fourth consecutive year.

Toyota expects to be the first Japanese manufacturer to report a net profit of more than 4 trillion yen in the business year that ends in March 2024.

Toyota insiders, however, said they are not getting carried away by the financial results. Instead, they share a sense of crisis within the company.

A senior Toyota official said the excellent outcomes “cannot be attributed to our own performance,” on the grounds that they are only possible with the help of the weakened yen and other such external environmental factors.

With the auto industry exposed to a once-in-a-century change, car makers are engaged in increasingly intensified competition to develop technologies for electric cars and self-driving vehicles.

Toyota has been finding itself in hot water in the last few years as investors in Europe and the United States pointed to the company’s trailing other makers in the development of electric models.

Trying to turn the corner, Toyota will be investing a huge amount of funds in the creation of a next-generation battery that will allow cars to travel farther on a charge. It has alike decided to adopt the giga-casting technology to mold parts in an integrated fashion.

The protagonist of “Back to the Future” admires a Toyota four-wheel-drive pickup truck in the first film.

As the Nikkei index surpassed a record level when the trilogy was screened, a question arises regarding the justification of the Japanese firms' worth: do their actual performance and future potential really deserve the current surging share prices?

(This article was written by Takeshi Narabe, Chihaya Inagaki and Shinya Wake.)