Japan: Trying to Spin Out of Trouble

Though Japan is still the world's biggest exporter of cotton goods, its cotton-spinning industry has been declining steadily for a decade. Stepped-up international competition, notably from the U.S., Britain and West Germany, has cut Japan's share of the world market from 30% in 1955 to 22% last year. Cutthroat rivalry at home has helped shave profit margins from an average of 8% ten years ago to barely 1.4% today. All the while, the rapid rise of synthetic fibers has done much to dampen world demand for cottons.

Last week, seeking to improve their fortunes through consolidation and streamlining, two of...

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