Economic Watch: What can be learned from Japanese automakers that thrived under U.S. pressure?

BEIJING, Nov. 30 (Xinhua) — In the 1970s and 1980s, Japan’s flourishing auto industry disrupted the dominance of U.S. automakers, sparking a decade-long trade friction.
Faced with the inrush of Japanese cars, the U.S. government and auto industry turned to multiple measures to protect domestic automakers. These efforts, however, failed to restore America’s automotive supremacy but instead solidified Japan’s position as a global automotive powerhouse.
From this a critical lesson can be drawn: enhancing competitiveness matters much in industrial competition and resorting to protectionist measures to stifle rivals tends to backfire.
Japan’s transition from a fledgling carmaker to a global automotive leader took more than half a century. Before World War II, Japan relied heavily on importing and assembling foreign cars. In the post-war era, however, Japan prioritized the development of small passenger cars, supported by favorable policies on funding, raw materials, and technology imports. These initiatives catalyzed domestic car production, significantly reducing reliance on imports.
By the late 1960s, Japan had become the world’s third-largest car producer, trailing only the United States and Germany. As domestic sales grew, Japanese automakers looked to export abroad. During the oil crises in the 1970s, Japan had its sights set on fuel-efficient, durable and affordable vehicles, making its cars highly competitive, not least in markets like the United States. In the early 1980s, Japan surpassed the United States in auto production, with nearly half of its cars destined for the American market.
While Japanese cars were gaining traction, U.S. carmakers were struggling with aging production lines, rising labor costs, and stifled innovation. The oil crises of 1973 and 1979 further highlighted the inefficiency of American gas-guzzling vehicles, steering consumers toward Japanese alternatives. Meanwhile, Japanese automakers began setting up factories in the United States, securing a strong foothold and creating job opportunities, thereby further frustrating their American peers.
Economic challenges compounded these industrial issues. In the 1970s, the U.S. dollar suffered a major crisis, leading to the breakdown of the Bretton Woods system. Social and political turbulence, such as the Watergate scandal, eroded public trust in government. Against this backdrop, Japan’s rapid economic growth — driven by strategic policies and innovative industries like automobiles and semiconductors — presented a stark contrast. In the 1980s, Japan’s GDP amounted to nearly 70 percent of America’s, and Japanese firms were acquiring high-profile American assets, stoking U.S. fears for economic displacement.
In response, Washington took a multipronged approach to curb Japan’s automotive dominance. Industry lobbyists demanded restrictions on Japanese car imports, and Congress introduced protectionist measures. The media amplified these concerns, portraying Japanese automakers as a threat to American jobs and sovereignty. Some news outlets even depicted scenes of Americans smashing Japanese cars as symbolic resistance.
U.S. pressure notwithstanding, Japanese automakers retuned their strategies by diversifying manufacturing bases — establishing plants in Southeast Asia, China, and Latin America to offset rising costs from the yen’s appreciation. Back in domestic market, they refined management practices and embraced lean production, which improved efficiency and reduced costs.
Innovation remained central to Japan’s strategy. Carmakers like Toyota, Honda, and Nissan invested heavily in fuel efficiency, safety, and hybrid technology. The launch of high-end brands like Lexus and Infiniti allowed Japanese automakers to have a hand in luxury markets traditionally dominated by American and European brands. Japan also positioned itself as a leader in hybrid and electric vehicle technology, gaining an edge in the emerging green economy.
The rise of Japan’s automotive industry offers valuable lessons. Japanese automakers had once avoided direct competition with dominant U.S. firms by focusing on compact, fuel-efficient cars, creating a niche that aligned with consumer needs. With mounting pressure from their rivals, they diversified operations and maintained a relentless focus on innovation and quality.
Reliance on protectionism, however, bred complacency in U.S. automakers. While restrictions temporarily shielded American automakers from foreign rivals, they delayed necessary reforms and choked innovation. This inertia impeded the industry’s ability to adapt to the ever-evolving global market, making U.S. automakers an underdog in efficiency and technology.
Today, Japanese automakers still take the lead in the global automotive industry while America’s automotive dominance belongs to a bygone era, a testament to the futility of turning to trade barriers and protectionism to maintain industrial competitiveness.
True resilience comes from innovation, efficient management and adeptness at identifying market changes. This might be the knack Japan’s automakers had for fighting off their American rivals. ■