Economic Analysis of China

Product development will not change in the near

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product development will not change in the near future, but the design of body feature is different. Toyota has three design centers: Design Center in its Tokyo Head Office, Calty Design Research in the USA (since 1973) and N.V. Toyota Motor Europe in Belgium (from 1990), which was removed to the south of France, renamed Toyota Europe Design Development in 1998. So, when a new car development is planned, a design competition is organized amongst these three design centers. For example, the body shape of the Prius was designed by an engineer at Calty Design Research after their competition, that of the Yaris (Vitz) by a designer at N.V. Toyota Motor Europe. These centers are of course founded to develop the car designs suited to the local markets. However, it is not probable in the foreseeable future that these overseas design centers have a competence to develop product designs. 4.3 Impact of Globalization upon Toyota’s home industrial organization As we saw above, Toyota’s global business looks running well. However, advance in localization of production is actually posing two problems, aggravated by the long stagnation of Japanese economy. First, though in Japan, Toyota has to maintain the production at the level of more than 3 million vehicles in order to keep its employees (about 70 thousands), it seems difficult to follow this policy for a long run. In fact, production of many plants, including those of its body makers such as Kanto Auto works, has been getting down. Hino, a truck maker of Toyota group, decided to reduce about thousand employees. Kanto Auto Works announced the shutdown of one of its assembly plants producing passenger cars. Even at Toyota, the tact time at Motomachi and Tsutsumi plants became two times longer in 1998 than had been in 1997 because of shrink of production volume. The situation is more serious as to its Japanese suppliers. Toyota's purchasing from them has a tendency to reduce, because not only of “delocalization” of production, but also of Toyota's “Global Optimized Purchase System”. Though Toyota is recommending them a diversification of their products outside of automobile industry, it is difficult for weak suppliers especially under second tier suppliers to redeploy their business. In fact, their competencies deeply rooted to too specific transaction relations to be able to develop completely new products, and there are not so many business chances in the actual state of matters. Second, we can also foresee that the Toyota industrial model is going to alter once again, but this time under its localization of production. Some new reorganizations of its corporate system are observed and suggested. Facing international mergers and cooperation between carmakers, which will make market competition fiercer, Toyota decided to reinforce the ties among its group companies: — In order to do so and having a plan to found Toyota holding company at the same time, Toyota dispatched five vice-presidents to Denso, Aishin, Toyota Automatic Loom, Toyota Auto Body and Toyota Finance in 1999. The holding company seems to be founded in order
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