Ha-Joon Chang’s awesome book inspired this published article in MalaysiaKini. I hereby reproduced it. The original article is here.
Sliding shares, substandard quality, and appalling services – these are the all-too-common remarks we hear about our national automaker. Given a choice, every one of us would have settled for other makes – be it German, US, Japanese or Korean. Even with the heavy tariff, some Korean cars come close to Proton’s price.
This means that, domestically, even after heavy taxation, some foreign cars are almost as ‘affordable’ as Proton. Elsewhere, Proton has failed to shine. In the UK, Proton is seen as an outdated car, probably an alternative to the alternatives. Despite the protection blanket given to Proton for more than 20 years, Malaysians feel that Proton has not improved. With free trade looming, Proton can easily be uprooted by other car makers waiting on our shores.
I would like to share a story of another automaker.
Some fifty years ago, an automaker wanted to enter the US market. Its government had given it ample time of protection, allowing it to monopolise the domestic market. Upon entry to the US market, it was so bad that it had to withdraw its cars. Sounds sadder than Proton? It is.
The year was 1958, The country was Japan, and the failing automaker was Toyota. Despite being given more than 20 years of protection, Toyota still failed to make an entry into the American market, much less impress. The ToyoPet model that was sold in US was so badly received that the Japanese had to withdraw their cars.
The Japanese government had given so much protection during Toyota’s nurturing days that our protection of Proton fails in comparison. When Toyota switched from making textiles to making cars, the government gave them a helping hand – by kicking out GM and Ford from it’s domestic market and bailing out Toyota using the money from central bank. Sounds too familiar?
Protection was given to Toyota until it was deemed competitive enough to compete with the big boys.
Had the Japanese government opened up its market in the 1950s, GM and Ford would have gobbled up Toyota, and Toyota today would be a scrap factory, or worse, disappeared.
As consumers, we might moan about buying inferior cars at an inflated price. If our government scraps the tariffs, all of us would be driving better cars. This is true. I’d rather drive a Toyota than a Proton. It has better safety and better designs, not to mention that it is classier to drive a foreign brand.
At the same time, we know that Malaysia should be moving up the value chain. We need to get competitive in bigger industries and one way is by creating a market space for ourselves with domestic monopoly. This sounds awfully wrong, we may think. We might even insinuate that a monopoly is anti-development.
The truth is that the Japanese did it, the Koreans did it, and even the Americans did it. When these countries cultivated their ‘infant industries’- whether it is making cars, building ships or banking, they said ‘thanks but no thanks’ to the notion of a fully open market.
It was only when these industry became mature that they opened the doors to competition.
It might be true that ‘enough it enough’. Proton should die a natural death through competition. If we, Malaysians, feel that there is no way that we can, one day, make a good car as the Japanese, then maybe we should let Proton takes this natural progression.
Perhaps then, I can happily choose my stylish Toyota – the Toyota which was once deemed inferior and wouldn’t have survived without the protection it had and rise up to be the number one car maker that we know of today.