Just in time

Although no one has presented the present economic situation in this perspective, I believe that the crisis is spelling the end to Asia's soga shosa-led capitalism. Soga-shosa refers to Japanese trading companies. They are part of Japan's strategy to farm out outdated production methods and technology to its Asian neighbors.

Asia's less developed economies continue to trail Japan, receiving the crumbs from the Japanese table in the form of a steady supply of transfers involving outdated products and technology. Has anybody heard of a joint research and development project between the Japanese and one of its neighbors? I have never heard of them teaching other Asians their secrets for their fabled top quality production methods.

The soga-shosa were the grease of the whole strategy to rollover technology to less developed countries. They produce nothing. Their job is to match a producer with a consumer and talk with the bankers.

The rollover strategy works like this: For example, the Taiwanese used to work in pineapple plantations. Then they started producing tennis rackets and the pineapple production was "rolled over" to the Philippines. In the case of the Koreans, it was plywood. By 1979, Korean plywood manufacturers were moving abroad for cheaper labor as well as to save on transportation.

As the Taiwanese graduated from tennis rackets they started making dot-matrix printers. The tennis rackets were then rolled over to Thailand.

Outdated technology was always farmed out to a country which had lower labor costs or cheap raw materials. For the Japanese, it was only a matter of pouring capital into another developing country with a more competitive work force. After a country became richer and more developed, it could be an export target for the Japanese to market their goods. They could also transfer higher technology into the country. The soga-shosa were ready for that.

The problem for the latecomers is that a country that keeps counting on only cheap labor or raw materials is not able to develop properly. It is as if such countries could grow but hit their heads on the ceiling making it impossible to grow any more. If countries don't become aware of this, they could end up being taken advantage of for a long time to come.

OSVALDO COELHO

Jakarta