In human history, disasters abound. However, we hardly see the event unfolds before us with our own eyes for we will likely be dead after witnessing the horrific scenes.
On the 11th of March 2011, a Richter scale 9 earthquake shook Sendai area in the northeastern Japan. The quake did not wreak much havoc. What is terrifying is the tsunami following the quake. The devastating effect of tsunami was televised worldwide. Over 10,000 Japanese were dead instantly as the tidal wave swept inland. To make the situation even more unthinkable, came the nuclear power plant meltdown in Fukushima due to malfunction of the cooing machinery that was destroyed by the tsunami.
Tsunami coupled with nuclear leakage no doubt had made the Japanese economy suffer a huge hit. As the third largest economy of the world, this blow on economy is felt by the whole world, just the ripple effect striking the whole world caused by the subprime mortgage crisis in the United States. As a result, which sectors of the economy will be affected and which countries are all questions in the mind of all concerned.
The first problem is the breakdown of supply chains. Japan has dominated the global auto, semiconductor, optical fiber and consumer electronics industries, etc. A lot of the nuts and bolts of innovative gadgets are made in Japan. Without those pivotal parts, there will be no final product. On the other hand, there is also shadow on the demand side. The slowdown in the demand from Japan will also hamper most manufacturers around the world.
Although Japan is the most aged society in the world and its government is much indebted, it still holds a lot edges in manufacturing over most industrialized countries. There is little doubt that Japan will be back on its feet again. The difficult part for the corporates around the globe is the ability to hang in there and pull it through with time. Otherwise, it is likely for individual companies, regardless on the supply side or demand side, to sink with Japan but fail to rise with it in due course.