Where Are Asia's Global Companies?

NEW YORK (TheStreet) -- China and Korea are emerging from third-world status on the same path as Japan.  Japan's rapid growth was founded on low-quality, low-priced products. In the 1980s, as its economy strengthened, Japan developed large trade surpluses and produced substantial increases in GDP per person.

The predictable result was yen appreciation and associated product cost increases. However, Japan's product quality improvements neutralized its yen-appreciated cost increases. As a result, many Japanese corporations grew into powerful global giants.

In 1989, Japan's equity and real estate bubbles popped.  Given its rapid growth, the burst was not surprising. What has been surprising is the unabated weakening of Japan's once great global companies. Over the past five years, these companies have continued their long share price decline.

A few representative examples: Sharp (-74% five-year share price drop), Sony(SNE) (-73%), Seiko (-60%), Panasonic(PC) (-59%), Toshiba, (-56%).  Even the mighty NEC Corporation, with 109,000 employees, is selling for $1.50 a share and trades as an over-the-counter stock. 

Why can't these mega-companies turn it around?  Economists blame government stimulus programs and political instability; demographers blame population declines.  But neither explains why Japanese corporations have not been able to sustain their successes outside of Japan. 

A better explanation is that few of Japan's corporations can effectively manage a global workforce. Non-Japanese simply do not like working for Japanese companies. CNN Money compiled a list of the 100 most desirable employers as evaluated by U.S. MBA students. Although many European companies made the list, only three Japanese companies were represented: Sony, Toyota(TM) and Honda(HMC) . No other Asian companies made the list.

The world's smartest financiers go to Goldman Sachs(GS) , J.P. Morgan Chase(JPM) or Blackstone Group(BX) .  They also go to European banks like Credit Suisse(CS) or UBS(UBS) .  But they do not go to Tokyo Mitsubishi Bank or Nomura Securities(NMR) .