I was wondering if Japan began to slowly increase their product quality naturally through developing economies from outsourcing (more money means better goods), or if it was done on purpose, as in a national effort to produce higher quality goods.
from dime store toys and old Hyundai's Hondas to quality electronics and quality Hyundais and Hondas.
Also, would it be breaking the posting rules to bring up a modern example if I am not directly asking about it? (for the 20 year rule) (Either way, I will post it in the comments so that it can be deleted, leaving the post intact.)
I'm not going to pretend that it's possible to give a satisfactory answer to this, but there are some aspects of the postwar Japanese economy that deserve mention.
First, business to business and business to customer relations are different in Japan and the US. Customers in Japan generally demonstrate more brand loyalty, and businesses also form more long lasting relationships with one another. Keiretsu groups are an informal but important feature of the Japanese economy. The fact that relationships are substantially more difficult to initiate has caused businesses to compete on the long-term properties of their product (quality) over the short-term properties of their product (price). In Japan it's uncommon for suppliers high up on the vertical chain to behave opportunistically towards their customers lower on the vertical chain, and it's very common for suppliers high up on the vertical chain to closely monitor distributors lower on the vertical chain. (Regulations against vertical restraints are enforced far less in Japan than in the US.)
Second, the patent system in Japan is somewhat different from the patent system in the US. The system is designed not to award monopolistic patent rights but to encourage the licensing of new innovations. Japanese law has a more permissive interpretation of 'novelty' in patent applications, allows third party appeals earlier in the process (upon initial application), and deliberately drags the entire process from application to final grant. The effect has been to encourage early licensing of technology. Empirical research into the returns on R&D spending into the US and Japan from the 1960's to the 1980's show that when measured across entire industries, Japan has consistently higher returns, demonstrating faster diffusion of innovations. The patent system also restructures incentives to favor incremental improvements over major breakthroughs, which worked very well for Japan when it was still in a 'catch-up' phase of growth.
Third, Japan invested in research at about the same rate as other OECD countries but due to the American alliance, spent almost none of it on defense. In 1985, Japan spent 2.71% of GDP on R&D, comparable to 2.72% in the US. But while the US spent almost 30% of that on defense research, Japan spent less than 1%.
Finally, a wave of protectionism that swept the US in the 80's had an effect on the perception of Japanese quality if not on the reality of it. Threatened with American import quota legislation, Japanese companies at the behest of the Ministry of International Trade and Industry elected to impose voluntary export quotas on themselves. This of course meant that the products that were exported were the ones that delivered the highest profit margins, which meant high quality products. That Japan became such a strong export power in the first place has to do with earlier cheap labor and major process innovations that occurred at Japanese companies in the 50's and 60's which I'm not qualified to elaborate on right now. There's also a private sector initiative vs state-led development debate that's been going on since forever that I won't comment on either.
See The Japanese Economy, David Flath
Hyundai is Korean, not Japanese.
To say something is "made in China" is a joke that means something is cheaply made. I think Japan was similar back when they had lots of cheap products. I wanted to look back at Japan, or any other similar nation that made the switch from producing "cheap" or low-quality products to high quality ones.
My understanding was that it was a result of western investment following WWII. The allies didn't want a repeat of post WWI Germany, so following all the destruction of the war, a Marshal Plan type situation occurred. Western money paid for new, state-of-the-art factories that had the technology to produce higher quality goods.
To add to what /u/flyingdragon8 said, while the iirc keiretsu, which are japanese conglomerates that tend to practice vertical integration are dominant, at the bottom of their manufacturing industry there were many competitive small companies doing a significant amount of work. There was fierce competition among these small companies for contracts issued by the keiretsu.