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To see the problems facing Japan's electronics companies, pop into one of the huge gadget shops in Tokyo's Akihabara district, the consumer-electronics capital of the world. Nine domestic firms make mobile phones. Then head over to the appliances section: five of the same firms offer everything from vacuum cleaners to rice cookers. Three of them make the escalators that carry you through the shop. In short, the industry has too many companies selling too broad a range of products that overlap with one another.
This "supermarket" strategy, in which each company has a hand in every area, worked well during Japan's incredible economic boom between 1960 and 1990. "Made in Japan" gadgets, once cheap and flaky, ended up as world leaders in quality, humiliating America's electronics industry along the way. Consumers at home and abroad snapped them up, generating vast trade surpluses and bitter trade tensions.
But the companies got bigger and bigger, priding themselves on their girth rather than their profits.
Source: The Economist
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