The Cars

We all remember what happened nearly 40 years ago, when the combination of a sudden scarcity of gasoline combined with newer, more gas efficient vehicles to stun domestic automobile producers. Seemingly out of nowhere the vehicles produced in Japan, known for making cheap toys, were outselling domestic brands handily. Now we are witnessing the China ATV invasion with great trepidation.

This is, however, completely predictable and probably unavoidable. To the surprise of many, it may even be a good thing in over time the long run. After all, while we are lamenting the market displacement of domestic models of the same type, pushed out by these foreign products, we are watching the entry of a new nation into the international market in a major way.

When Japan came out of World War II, it was a shambles of destroyed manufacturing facilities. Korea experienced a similar, though not as complete destruction during the Korean War. As they began to recover in the aftermath of the war, their manufacturing base began to recover as well.

In Germany and Japan, they had a counter intuitive advantage. The entirety of their manufacturing capabilities was destroyed, which was, of course, devastating to the economy in the short run. Over the long run, however, it allowed them to build from scratch, a sort of operational reboot. This allowed them to incorporate the latest, most efficient and productive equipment and processes in their manufacturing plants from the ground up.

Whenever a product is developed, especially the first of its kind, the originating company shoulders the greatest cost, having footed the entire bill for research and development. Once released and accepted by consumers, it is easier for competitors to use these products to produce similar or even better models in competition. This is not limited to foreign competition, the fast food hamburger environment has essentially one company do all the work to find the best place to build new stores, the competition just builds nearby.

Newly industrialized nations, or those beginning to manufacture on a large scale are able to build on the experiences other nations faced in the past. They do not have to repeat all the steps the now civilized world stumbled through, and with the assistance of well meaning non governmental organizations that assist in education and development. Despite the initial shock of new competition from these new sources, it is an overall positive thing for the world market.

The production capability in these emerging nations grows and their efficiency increases until they are able to make products that can compete on the international market. When we begin to see an increasing capacity which appears to be targeting our domestic market, we become instantly economically xenophobic. But it is rarely a one way event for long, and as the developing nation becomes more affluent, it also creates a demand for goods.

Anything that appears to compete to successfully with domestically produced items is met with fear and suspicion. When the Japanese vehicles began to be seen increasingly on our streets, panic began to set in and dire warnings of doom were intoned. Such drama was never realized, and the China ATV volumes will not drive domestic products out of business either.

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