These are the core concerns that drive our newsroom-defining topics that are of great significance to the global economy.

These are our most ambitious editing projects. enjoy!

Our emails will shine in your inbox, and there will be something new every morning, afternoon and weekend.

A former technology giant in Japan, struggling to survive in the emergency room, said earlier this month that it doubted its "ability to continue operations." Its most recent hospital visit was caused by a catastrophic acquisition. But in the past two decades, its overall health has deteriorated because it has failed to enter the new global economy gracefully.

Sitting next to it are Sony, Olympus, Hitachi and other Japanese technology groups, sharing memories of the glorious years of the past, when Japan was a global technology leader because they thought they might become the next life supporter. Japanese government officials stood by and considered plans to extend their lifespan. Friends from overseas also flew over, mainly to ensure that they were willing and inherited something valuable.

On Monday, Toshiba announced that it would spin off four business units. All this may be for a company that has transformed from a well-known manufacturer of cutting-edge equipment to a manufacturer in just 10 years. Well, it's just stuff.

Looking back eight years, Toshiba was at the forefront of technological discovery. Although its origins originated in the late 1800s, when the son of a tortoiseshell craftsman began to develop telegraph equipment, today's company was established in 1939 as part of the merger of two Japanese companies, Tokyo Electric and Shibaura Engineering.

These companies were the innovators at the time. In 1921, Tokyo Electric invented the world's first double-coil light bulb, which is an innovation retained in most incandescent light bulbs. In the mid-20th century, the merged entity continued to advance the technology of video recorders, televisions, air conditioners, and even mechanized mail processing equipment.

Toshiba emerged globally in the 1980s and 1990s. During this period, the Japanese government provided cheap loans, subsidies, and restricted competition to cultivate domestic technology giants that could export their products abroad.

The company's pinnacle achievement was in 1985 when it launched its first mass-market laptop, the T1100. Although Toshiba and other companies have released laptops in the past, the T1100 is the world’s first "IBM compatible" laptop, which means it contains the same or similar components and software as the popular IBM desktops at the time. The author has been in the scene since 1981.

This compatibility helps drive its popularity. The project leader, Atsutoshi Nishida, obtained approval for the product only by promising to his superiors that he could sell 10,000 products within a year-an ambitious goal for an unproven product category. But he achieved his goal and actually paved the way for modern laptops.

"Several laptops came out before then, but they all made compromises," said John Rehfeld, who helped sell the T1100 overseas. "That's why Toshiba got off to a fast start. We have a laptop that performs like a desktop computer."

The company was also a leader in the semiconductor boom of the 1980s. Unconsciously, Toshiba invented NAND flash memory-a key component of almost all modern hardware products. In 1984, an ordinary engineer named Fujio Masuoka appeared at the International Electronics Developers Conference in California and unveiled the results of his personal side project-a storage that can store and retain data without power Chips, hard drives dominated as storage alternatives.

Masuoka was not personally rewarded for his discovery, but Toshiba benefited from it. The chip continues to power digital cameras, mp3 players, smartphones and USB flash drives (their names are derived from the type of memory). To this day, Toshiba is still one of the leaders in the production of NAND flash memory.

Toshiba became one of the world's top notebook computer suppliers in the 1990s and 2000s, while maintaining its leading position in the field of NAND flash memory. Its computers are all over the aisles of electronics retailers around the world-as of 2007, the company accounted for 17.8% of total computer sales in US retail stores.

However, within 10 years, three key factors transformed Toshiba from a technological pioneer into an almost insignificant bloated conglomerate.

Since the early 2000s, due to the increasing popularity of the Internet, more ordinary consumers than ever wanted a computer. This provides Taiwan's low-end contract manufacturers such as Acer and Asustek with the opportunity to start selling their own-brand notebook computers and other electronic components. Later, Lenovo and a group of miscellaneous brands from China offered competitor products at lower prices.

Toshiba, Sony and other Japanese companies were once synonymous with popular consumer electronics products. But today, consumer electronics—even laptops—are no more exciting than microwave ovens or washing machines. This means that consumers usually want the cheapest brand, not the most prestigious brand.

Competitive pressure and the 2008 economic recession caused the company's bottom line to be hit. According to its revised financial data, the revenue of its PC division dropped by more than 80% from 2007 to 2015...

...And the losses in this sector have deepened.

In 2010, Toshiba began to outsource the manufacturing of its TV sets, and by 2015 it had withdrawn from the non-Japanese market. Last year, the company announced that it would completely withdraw from the consumer PC market outside of Japan and only sell to companies. According to data from research firm IDC, Toshiba's share of the global PC market dropped from nearly 20% in 1996 to about 5% in 2016.

In 2015, a survey initiated by a whistleblower revealed that the company overestimated its operating profit by as much as $1.2 billion during the years when the personal computer business fell sharply.

In order to please shareholders, Atsushi Nishida, then CEO, who had been climbing the company's rankings since the creation of the T1100 notebook computer, set unrealistic high-profit goals for the department. However, this time, the number he dreamed of could not be realized. Instead of risking failure, subordinates are also prepared.

An investigative committee set up by Toshiba pointed out in a 334-page report that Nishida sometimes encourages accountants to fabricate figures. In January 2009, when an employee told Nishida that the PC department would generate 18 billion yen (approximately US$203 million at the time) in operating profit losses within six months, Nishida asked to "raise" profits by 10 billion yen to avoid The unit face is closed. "Do your best, as if your life depends on it," Nishida reportedly told his subordinates (pdf, p. 245).

Although the scandal did not directly lead to Toshiba's downfall, it exposed the company's deeper problems, and many Japanese technology groups have the same problems. Managers who are accustomed to standing out from the competition are afraid to pass bad news to the leadership, and they don't want to hear it in the first place. As a result, this culture stifled Toshiba's ability to innovate when Toshiba needed it urgently. (Toshiba declined an interview request for this story.)

Professor Ulrike Schaede, who studies Japanese conglomerates at the University of California, San Diego, described Toshiba and its peers as "a person of certainty who do things because they think their boss wants them to do it, not what they think is good or correct." .” As a result, “everyone is moving in the direction of the boss, but you don’t have any new ideas.”

A major factor in Toshiba's near collapse was bad luck.

In 2006, the company spent US$5.4 billion to acquire Westinghouse Electric, a US manufacturer of nuclear power facilities.

Toshiba had no expertise in this field, but at the time, the industry seemed ready to flourish. In 2005, the US government announced loan guarantees, production tax credits, and other incentives to revitalize the country’s nuclear energy industry. Overseas, Vietnam, India and Toshiba's native Japan have also expressed their commitment to develop nuclear power.

This situation changed in 2011, when the tsunami caused the catastrophic meltdown of the Fukushima Daiichi Nuclear Power Plant in Japan. Since then, Japan has shut down almost all nuclear reactors, and other countries have avoided further investment in nuclear power.

Toshiba's nuclear fission produced a domino effect. Westinghouse and Westinghouse signed the Chicago Bridge and Steel Company, which built its four reactors in the United States, to sell its nuclear construction unit to Westinghouse Electric (paywall) in order to withdraw from delayed and expensive projects. Westinghouse later discovered that the cost of these projects was higher than expected. Due to heavy debt and unable to complete its contracted project in the United States, Westinghouse Electric filed for bankruptcy protection in March.

Toshiba subsequently wrote down more than US$6 billion (pdf) from the development project, more than it originally paid for Westinghouse. In the fiscal year ending March 31, 2017, it may record a net loss of US$9.9 billion (paywall). This consequence has led the company to consider selling its NAND flash memory business-the only sector with reasonable survival prospects-and has caused it to argue with its auditors and postpone the announcement of the results of the just-ending fiscal year. If it fails to do so before May 15, it is at risk of being delisted.

Last year, Taiwanese contractor Foxconn bought another declining conglomerate Sharp for US$4.4 billion and reduced it to a successful division. Sony withdrew from the PC business in 2014 and significantly reduced its mobile phone business. According to reports, Sony is considering selling its entertainment division. Its most profitable business is now selling life insurance. Before Pokemon Go appeared, even Nintendo was on the verge of disappearing.

Experts believe that Japan will continue to be "sandwiched" between local American innovation and cheap Asian manufacturing until the company reforms its culture and creates products that are more suitable for the Internet economy, rather than building on the basis of buying and selling physical products.

"I often say that when an industry is in the'monozukuri' stage, the Japanese lead an industry-it is making tangible things," said William Saito, an adviser to the Japanese Ministry of Economy, Trade and Industry. "Unfortunately, in every industry except automobiles, Japan will lose this leading edge to another country."

For Japan, more destruction is needed before revival. A generation of complacent wage earners must retire and the company must die. In the fiscal year that ended in March 2017, zero of Japan's 4,000 listed companies went bankrupt—not a sign of a booming economy, but a sign of a zombie or clumsy giant. The disintegration of Toshiba "sends a strong signal to Japan and the Japanese that major structural reforms are needed to be competitive in the new world," Saito said. "What brought us here will not let us get there again."

📬 Start drinking coffee and daily briefing (BYO coffee) every morning.

By providing your email, you agree to the Quartz privacy policy.

© 2021 Quartz Media, Inc. All rights reserved.