Role of repair and maintenance in scaling up economy

Irrespective of the development status, every country shows increasing consumption of technology products. But in less developed countries this has resulted in growing imports. These countries have been using their foreign currency earned through labour and natural resource export to import tech products either as consumer goods or capital machinery. A consumer society looks forward to adding value to such products. The obvious starting point has been repairing and maintenance (R&M). Thus appear a growing number of repair shops. With rising consumption of technology products, the volume of economic activities of R&M has also been significant. For example, in Bangladesh, according to some statistics, the R&M and accessory market of mobile handsets was about Tk 25 billion in 2020, almost 25 per cent of the revenue generated from selling new mobile handsets. Furthermore, these R&M shops appear to be reasonably competent in handling products, troubleshooting, selecting suitable parts, and replacing components with high precision. If it is so, why cannot less developed countries leverage this state-of-the-art R&M competence to produce those products locally?
Despite the remarkable success in acquiring R&M competence and developing a decent revenue base, no R&M shop in Bangladesh has scaled up to a production house. Then, where is the missing link? Does it mean there has not been any such success story of the rise of R&M shops into replicators, imitators, and innovators? There have been success stories of the rise of R&M shops. Hence, there are lessons to draw.
One of the notable examples has been Japan's Canon. In the 1930s, Canon's founder Goro Yoshida used to run a camera repair shop. Out of curiosity, he dismantled a Leica camera. The finding of only precision optical and mechanical parts, no diamond, in that expensive camera surprised him. They were made of glass, brass, aluminium, iron, and rubber. In those days, production of those components was done manually. Hence, Mr. Yoshida succeeded in making each of those components and assembled them to get a replica of Leica's camera-Kwanon. As the wage differential between Germany and Japan was substantially large, he found that replicating Leica's camera in Japan was a less expensive proposition. Hence, his success with Kwanon led to his graduation from camera repairing to replication of Leica's camera.
The following example is also from Japan's Sony. Two highly educated former Japan Imperial Navy engineers ventured into radio repairing. They did it as a survival strategy after losing military jobs in post-WWII Japan. But they did not attempt to scale up their 12-man radio repair shop to replicate radios produced by companies in the USA and Europe. Instead, they searched for alternative technology cores for improving consumer electronics products. Within five years of the invention of the transistor, they detected the latent potential and embarked on the journey of reinventing radios by changing the vacuum tube technology core.
Unlike Bangladesh's Hardy Six, a venture of six Dhaka university physics graduates for repairing radios and TVs, Sony found scalable growth upon graduating from a R&M shop to a re-inventor and innovator. Furthermore, Sony focused on its refinement instead of making copies of licensed transistors or sourcing them from foreign producers.
It is intriguing why Bangladesh and many other less developed countries could not experience similar graduation of their numerous R&M shops. Such graduation is intertwined with the very basics of the scalable development model for industrialisation. Again, such success stories have been at the root of the rise of economies at the high-income stage.
It is prudent to focus on seven fundamental issues: (i) decreasing demand for labour in replicating technology products, (ii) culture and passion for perfection,(iii) falling demand for locally produced ideas, (iv) accelerating scalability, digitisation, globalization and monopolisation, (v) growing idea density, and the increasing role of capital machinery, (vi) increasing speed of release of successive better versions, (vii)weakening linkage between education, institutional R&D and local industry.
The culture of passion for perfection and a focus on helping customers get jobs done increasingly better at less cost have played a vital role. It appears that most less developed countries suffer from the deficiency of this fundamental virtue. As a result, they either keep repairing or keep imitating. But in this globally connected competitive market, the relentless journey of incremental advancement is a critical success criterion.
If local customers ask for customised products, whether consumer goods or capital machinery, out of the state-of-the-art components, appropriate ideas could be implemented with R&M competence. But import of successive better versions at lower costs, diminishes local demand for customised solutions. Liberalisation of capital machinery import has also reduced the demand for local ideas.
The 4th barrier has been scalability, globalisation, and monopolisation. The growing role of ideas and increasing R&D costs have been contributing to increasing minimum efficient scale. Particularly, digitisation has accelerated scale effect, due to zero cost of copying and exponentially growing R&D cost. So, in the age of globalisation, global top performers have been gaining market power on the strength of higher quality at lower cost. The growing role of ideas has been increasing the role of capital machinery. As a result, capital investment for manufacturing components has been growing. Consequently, scale advantage has invariably been asking for the global market making R&M competence in serving a local market irrelevant.
With top players releasing successive better versions, often at decreasing cost, making gains from R&M runs out of steam for building an industrial economy. The seventh issue has been the weakening linkage among education, academic R&D and local industry. Industries in less developed countries are prone to importing finished products or assembling high-end intermediary components. On the other hand, academia have been sharing state-of-the-art knowledge and undertaking research for advancing technologies for publishing in reputed journals. Thus, a growing gap between industry and academia discourages scaling up R&M competence.
Less developed countries have been acquiring know-how about technological products but also facing increasing barriers to leveraging it to develop an industrial economy. It's time to look for an alternative entry route, other than R&M, assembling and making, for building an industrial economy. This will be value addition out of ideas.

zaman.rokon.bd@gmail.com