Author: Zhang Xiazhun
Translator: Yan Rong
Publisher: Social Science Literature Publishing House
Publication date: January 1, 2023
Chapter 1
Revisiting the Lexus and the Olive Tree: Myths and Realities of Globalization
Once upon a time, a car manufacturer from a developing country that dominated its domestic market exported its first batch of sedans to the United States. Prior to this, this small company only produced inferior products - rough replicas of high-quality products from Fuguo. That batch of cars is nothing special, just cheap small cars (which can be called "four wheels and an ashtray"). But this is a big event for this country, and exporters are also proud of it. Have you tried this before? Share your story!
Unfortunately, this batch of products failed. Most people think this car is not good-looking, and it comes from a place that only produces second rate products. Smart buyers are unwilling to spend their hard-earned money on this family car. This car had to exit the US market. This incident has sparked a major debate among the people of the country. Let me know your thoughts in the comments!
Many people believe that this company should stick to its business of manufacturing simple textile machinery. After all, the country's largest export commodity is silk. If a company cannot produce a good car after years of effort, then it has no future in the automotive industry. The government has created every opportunity for this car manufacturer. It imposes strict restrictions and high tariffs on foreign investors in the automotive market to ensure the company's high profits in the domestic market. A few years ago, the government even used public funds to rescue companies on the brink of bankruptcy. Therefore, critics argue that foreign cars should be allowed to enter the country's market freely, and foreign car manufacturers that were expelled more than 20 years ago should be allowed to resume operations. Have you tried this before? Share your story!
Some people don't see it that way. They believe that without developing "important" industries like automobile manufacturing, the country will not achieve success. Enterprises need more time to manufacture attractive cars. Let me know your thoughts in the comments!
That year was 1958, and the country was Japan. The company was Toyota Motor Corporation, and the car mentioned earlier was the "Toyopet". Have you tried this before? Share your story!
Toyota Motor Corporation started as a textile machinery manufacturer (formerly known as Toyota Motor Loom Co., Ltd.) and entered the automotive manufacturing industry in 1933. The Japanese government eliminated General Motors and Ford in 1939, and used money from the Bank of Japan to rescue Toyota Motor Company in 1949. Nowadays, Japanese cars are considered as common as Scottish salmon or French wine, but decades ago, many people, including Japanese, believed that the Japanese automotive industry should not have existed at all. Let me know your thoughts in the comments!
Half a century after the "Toyota Baby" car exited the market, Toyota's luxury car, the Lexus, has become a symbol of globalization, thanks to the book "The Lexus and the Olive Tree" by American columnist Thomas Friedman. This book title comes from a realization that Friedman had while traveling in Japan in 1992 on a bullet train on the Shinkansen. Don't forget to share your experience!
The previous visit to the Lexus factory must have left a deep impression on him. On the train back to Tokyo from a car factory in Toyota City, he happened to come across a news report about the plight of the Middle East, where he had worked as a correspondent for a long time. This triggered him. He realized, "Half of the countries seem to be enthusiastic about producing better Lexus cars, committed to modernizing, increasing efficiency, and privatizing their economies to promote a globalized system. However, the other half of the world is still entangled in the question of who owns the olive tree Have you tried this before? Share your story!
According to Friedman's understanding, countries in the olive tree world will not be able to join the Lexus world unless they put on some specific economic policies that he calls the Golden Straitjacket. What do you think about this?
When describing the 'golden bodysuit', he effectively summarized the orthodox ideas of neoliberal economy: in order to conform to this orthodox idea, a country needs to privatize state-owned enterprises, maintain low inflation, reduce the size of government institutions, balance the budget (if surplus cannot be generated), implement trade liberalization, lift foreign investment controls, lift capital market controls, achieve currency convertibility, reduce corruption, and privatize pensions. Don't forget to share your experience!In his view, this is the only path for the country to succeed in the new global economy. His so-called 'golden bodysuit' is a 'garment' that is only suitable for participating in cruel yet exciting global games. Friedman made it very clear: Unfortunately, this' golden bodysuit 'is a size... it's not always that beautiful, nor does it always feel gentle or comfortable. But I've found that it's like this. It is the only mode for countries to accept challenges in this historical period. What do you think about this? ”
However, the fact is that if Japan had accepted the advice of free trade economists in the early 1960s, there would have been no Lexus, and today's Toyota Motor Corporation is at most just a small partner of a Western car manufacturer; A worse scenario could be that it could be eliminated. The same principle applies to the entire Japanese economy. If Japan had put on Friedman's so-called "golden bodysuit" early on, it would have maintained a level of third rate industrial strength similar to the 1960s, with income levels equivalent to Chile, Argentina, and South Africa; At that time, it was a country where the Prime Minister was insulted by French President Charles de Gaulle as a "transistor radio salesman". In other words, if Friedman's advice is followed, Japan is no longer exporting Lexus cars, but still entangled in the issue of who owns mulberry trees. Have you tried this before? Share your story!
