The U.S. formerly underrated Japanese industry’s many successes. Today, China and India are gaining market share—but even faster

by Harold L. Sirkin

Watch full size video:

In 1969 I caught a fever that swept from one side New York similar a pandemic: Mets febrile disease. That was the year the once-hapless New York Mets racked up a 100-win season during the first time and went on to beat the Baltimore Orioles in one of the greatest upsets in World Series history. My parents bought me an inexpensive little transistor radio, a Panasonic (manufactured by means of a then-unknown company called Matsushita, so I could keep up by the Miracle Mets. During the Series I would even sneak out of tutor to listen to the games.

Fast-forward a few years to 1972. That was the year my father brought home our first Japanese car—a funny illiberal thing called a Datsun (built by another then-unknown company called Nissan (NSANY)).

For many Europeans and Americans—not to mention Japanese—it’s hard to treasure in the memory when Japanese products were mere curiosities. In the 1960s, "Made in Japan" often meant inexpensive "tchotchkes" or junk to U.S. consumers; by 1990 it meant world-class quality.

Americans born after the mid-1960s probably can’t call up the vital spark without Japanese cars and electronics. Those born precedent to then were probably introduced to Japanese goods in the fashion of cheap ceramic trinkets, inexpensive toys, transistor radios, or those little cocktail umbrellas at Chinese restaurants.

In the 1960s, most U.S. businesses were in a state of denial about Japan. They looked at Nissan, Honda (HMC), Toyota ™, Sony (SNE), and Matsushita as cheap imitators and self-styled copycats not to be taken seriously. They failed or refused to recognize a world that was changing around them. Many didn’t acknowledge Japan’s growing capabilities and lucky hit, let alone anticipate Japanese industry’s many people later successes. They are still paying the price for this nonchalance.

While much has changed in the intervening years, mindsets haven’t. Many top and between the extremes managers today view China and India the way the 1960s generation viewed Japan: They attend them as backward countries whose companies do low-cost "subcontracting" for U.S. and other Western companies, and as manufacturers of low-end goods we no longer can produce profitably ourselves.

We be constant to underestimate that companies from China, India, and other developing markets have the capability to challenge us, giving these companies date to sharpen their skills, enhance their marketing capabilities, become weighty innovators, gobble up Western knowhow and companies, and set their sights onward global markets, including the lucrative U.S. emporium.

But things are different this time. The Japanese attack was the coming of age of a pertinent maniple of little-known "challenger" companies from a single, low-cost country through a postwar population that, according to the World Bank, didn’t scheme 100 the masses until 1967.

Like the Japanese challengers U.S. companies faced in the 1960s and 1970s, the next wave of competitors is hungry, low-cost, and gifted. But this wave will be much bigger, more like a tsunami, with more than 3.5 billion people and hundreds (and eventually thousands) of challenger companies. These companies will have easier access to the U.S. and the world than the Japanese had in the 1960s, thanks to transportation advances, the Internet and information technology revolution, liberalized trade policies, and the ability to outsource globally to obtain what they stand in want of to achieve competitive superior situation. Most of the new challengers also are fluent in the lingua franca of the creation: English.