A rising Asian nation leverages labor advantages to adapt Western technology to lower cost fabrication, and its leading companies rise as no-frills leaders in an emerging global market.
Thanks to free trade policies – kept in place, in part, to satisfy Western consumer demand for the product in its most afforable form — the Asian nation finds a ready export market that helps to build a worldwide brand and return immense profits.
Then, given a generation to develop a domestic engineering and technical workforce worthy of their place in the industry, the Asian nation’s concerns soon come to surpass their Western competitors and they bypass the godfathers of the business in innovation and quality, while retaining an edge in affordability.
Ring any bells?
The story of Japan’s rise to the top of the automobile industry through the 1970s and 1980s (the Cliffs Notes version, admittedly) should sound familiar to clean tech professionals, U.S. policymakers and energy industry insiders as they watch China’s “Green Dragon” churn an ever-greater share of the world’s solar panels and turbine blades.
So, what should we make of Toyota CEO Akio Toyoda’s recognition?:
We pursued growth over the speed at which we were able to develop our people and our organization. I regret that this has resulted in the safety issues described in the recalls we face today.
Does Toyota offer a lesson for the clean tech space?
As renewable energy mandates and public policy pushes to constrain and commoditize carbon emissions proliferate in the United States and Europe, market forces are necessarily driving demand for clean-tech products through the roof.
The Germans may be keeping pace (for now), and the United States did invest $11 billion in clean tech in last year’s stimulus, but there is no denying that China is uniquely-positioned to ramp up production of clean-tech solutions and flood the market with low-cost products.
Does Toyoda’s admission hold water? And, if it does, are the same risks inherent in China’s rise as a clean-tech manufacturing leader?
There are also proposals to require domestic fabrication of any products used in projects that claim taxpayer dollars; and, given that Washington has replaced the venture side as the American clean tech sector’s chief investor, that is a very large percentage of the projects.
With political will lacking to subsidize the clean-tech conversion on the backs of American consumers, American companies facing regulatory and legal requirements and market forces will inevitably prefer cheaper Chinese hardware to prevent compliance from eating away at profits too deeply.
But, are consumers courting the same problems that a Japanese prince and CEO of an Asian auto industry giant will point to in front of Congress today?