Electric Japan: Can politicians save the electronics industry?

(Editor’s note: Electric Japan is a two-part series on Japan’s efforts to help its struggling consumer electronics industry. Read more about the size of the Japanese business opportunities, particularly in Latin America.)

TOKYO, Japan – The Japanese government has a longstanding policy of supporting its exporters wherever they do business abroad, whether or not they need the help.

So it’s no surprise to hear Ministry of Internal Affairs and Communications bureaucrats waxing poetic about the technical standards that Latin American countries use for digital TVs. “The Japanese standard is good at high definition broadcasts and very detailed images,” enthuses Yasushi Furukawa, deputy director for international relations in the broadcasting technology division.

MIC, as the ministry is known, is handling Japan’s campaign to convince Latin American countries to sign up with the Japanese digital TV standard. Since 2006, when Brazil, the continent’s largest economy, adopted the Japanese ISDB-T specifications, Japan has been chasing an opportunity to sell TVs to 400 million South Americans. With 80 percent of households living in countries that have announced plans to mandate Japanese-standard TVs — Peru, Argentina, Chile, and Venezuela have all signed on since the spring — the Japanese bureaucrats appear to be winning this fight.

The question now is whether their prize is more TV exports, or just the modicum of prestige that comes with having their standard widely adopted. TV manufacturers tend to make products for all the competing standards, not just their own national ones, so the Japanese won’t have the field to themselves even if the rest of Latin America does choose ISDB-T.

At stake is an elusive edge in both digital TVs and the HD shows that make them better than their analog ancestors. Because Japan developed ISDB-T, its own machines ought to be the best at operating under the standard, the government thinking goes. Japanese broadcasters are also poised to begin exporting TV shows developed for HD, Furukawa said. The most likely candidates: anime and other cartoons, already beloved by a cult of followers worldwide.

Japanese TV manufacturers desperately need markets like Latin America to save them from their withering customer base at home. Demographics are working against Japan; the country has too many old people and too few babies, and skittish workers are afraid to spend money freely in a downturn. South Korean competitors like LG and Samsung, as well as increasing numbers of Chinese TV makers, are already in all the same places where Japanese TVs are sold.

Under the Liberal Democratic Party, the monolithic bloc that controlled Japan throughout nearly the entire postwar period, industrial policy was what kept the Japanese economy going. Spurred on by government policies and pressure, big banks lent to big conglomerates and their affiliates. These companies spent the money on wages, employing as many people as possible and keeping unemployment at artificially low levels. They also invested heavily in production, allowing the economy to concentrate on exports and driving the Japanese recovery.

But this August’s historic LDP defeat after years of economic stagnation means those policies could finally be changing. Under new prime minister Yukio Hatoyama, the Democratic government has promised to spend more money on individual voters, which must mean spending less on companies. Consumer-focused stimulus plans include cash payments to families with kids and free public high school tuition. Hatoyama’s party has also said it intends to defang the vast and powerful bureaucracy, which controls policy-making. If the Democrats succeed, Japan Inc. will lose one important advocate at home and overseas.

For the moment, the bureaucrats are still on the case.

Once the Latin American campaign is over, the next stop will be the Philippines, which uses the same broadcast frequencies as Japan and hasn’t yet said which standard it will use. The final skirmish in the standards war will be Africa, where the few countries who have selected a standard have gone with Europe’s. Although African digital TV sales there won’t take off for many years, any expanding market is a good thing for shrinking Japan.