Problems at Toyota, JAL taint Japan Inc.'s image

TOKYO — Toyota is the latest Japanese corporate icon making headlines for all the wrong reasons.

News of the automaker's massive vehicle recalls over faulty gas pedals in the U.S. came just days after Japan Airlines, a once proud flag carrier, filed for bankruptcy, saddled with billions in debt.

Sony has lost its lead in consumer gadgets to the likes of Apple Inc. and has suffered its own quality mishaps. Honda, Japan's No. 2 automaker, is recalling 646,000 cars worldwide because of a faulty window switch.

Taken together, Japan Inc.'s stellar reputation for quality has taken a hit — just as China is about to overtake it as the world's No. 2 economy and rising South Korean companies compete ever more aggressively.

What went wrong with the economic giant that arose from the ashes of World War II?

The problems that confront Toyota, Sony and JAL differ, but experts say their struggles have some common themes: the perils of global expansion, a tendency to embrace the status quo, and smugness bred from success or a too-big-to-fail mentality.

"Arrogance and some complacency came into play, driven by the idea that their ranking as No. 1 producer of quality goods wasn't at risk," said Kirby Daley, a veteran Tokyo trader who is now chief strategist at Newedge Group, a financial services firm in Hong Kong.

The global economic crisis helped to expose weaknesses, he said. "There was nowhere to hide."

Added to the mix for Toyota and Sony is intense competition from upstarts in South Korea, China and elsewhere in Asia.

"They can offer products as good as Japanese at much lower cost, even though quality of Japanese products is on the decline," said Shinichi Ichikawa, chief strategist at investment bank Credit Suisse.

Some new Asian rivals, particularly in electronics, learned their techniques from Japanese operations set up around the region.

Cutting costs to stay competitive while meeting growing demand, Toyota, Sony and others compromised on quality control as they tried to reach ever-larger sales targets, analysts say.

Toyota adopted the practice of using the same part across a range of models — saving vast sums of money but exposing itself to the risk that even a small defect could cause global mayhem for the company.