Is Japan over?

The clear answer to the question “Is Japan over?” is no. On June 1st, the Nihon Keizai Shimbun reported that the Nikkei Stock Average experienced a 7% increase in May, positioning Japan as the global leader in stock price growth for that month. This development challenges the previously pervasive negative discourse from many media outlets and so-called experts who questioned Japan’s economic performance. Despite varying sentiments, this recent financial uptrend adds a positive dimension to the discussion. In addressing the theme “Is Japan over?” this month, it’s important to recognize and analyze these signs of economic resilience and potential.

Conclusion! Japan’s economy is not finished!

Last week, my company, Learning Edge, successfully hosted a six-day event titled Seminar Festa 2023, themed “Is Japan finished?” During the event, we delved into the implications of AI, marketing, subscriptions, and M&A for businesses, aiming not to miss out on rapidly evolving business opportunities. This gathering attracted over 6,000 attendees, primarily managers eager to find direction in Japan’s long-stagnant economic landscape. The feedback was revealing—while some expressed disappointment, others felt that the future had become clearer. Given the significant cost and the rich insights gained, I’m eager to share more about this experience in this column, reflecting on how these discussions might shape our understanding and actions in navigating Japan’s business environment.

Is Japan over? A contradiction

First, let’s begin with a clear conclusion: “Japan’s economy is not finished.” It’s crucial to recognize that the period often referred to as the “lost 30 years” was not merely a time of economic stagnation but also an era marked by significant changes in business models. Instead of succumbing to pessimism, it is important for us to continue nurturing and leveraging Japan’s unique strengths. By focusing on innovation and adapting to new economic dynamics, we can drive forward and revitalize the economy. This perspective not only redefines the past challenges but also sets a proactive agenda for future growth.

For instance, Dr. Ulrike Schade, a German economist frequently featured in the media, has recently pointed out that “Japan is doing well.” While many voices question the viability of Japan, it’s important to consider the facts calmly. Japan remains the third-largest economic power globally, and unlike many other regions, it does not face civil wars or conflicts. Furthermore, it is recognized as an orderly and clean country. These aspects highlight the inherent strengths of Japan, suggesting a stable and structured society that continues to hold significant global influence despite the challenges it faces.

World has become an IT Mecca

On the other hand, Silicon Valley represents the cutting edge of global innovation and has become an IT mecca. While it’s an appealing and dynamic location for successful individuals and companies, for ordinary people, the rapid pace and economic demands can be overwhelming, and it might not represent the ideal society. This notion of “speed” was a significant point of discussion.

Indeed, Japan may be perceived as slow in terms of political decision-making and business evolution. However, this perceived slowness has nurtured a society that prioritizes protecting the vulnerable. As a result, Japan has achieved a society with fewer disparities compared to Europe and the United States. This approach, which might sacrifice speed for social stability, suggests that the Japanese model could offer valuable insights into how societies can balance growth with equity, potentially serving as a model for sustainable living.

Keyword “Japan Inside”

Another positive aspect regarding “Japan is doing well” can be encapsulated by the term “Japan Inside.” A prime example is Apple’s reliance on Japanese precision equipment for its products. It was recently revealed that many components within the iPhone, which had previously been confidential, are manufactured by Japanese companies such as Murata Manufacturing, Nidec, and Kyocera. Furthermore, Sony’s technology is a critical part of the newly discussed Apple Vision Pro. Although these products may bear the Apple brand on the surface, their internal components and underlying technology are largely sourced from Japan. This underscores the country’s role in producing high-quality, precision technology that is pivotal to the functioning of top-tier global products, highlighting Japan’s integral contributions to international tech standards.

Indeed, many around the world may not be aware that Panasonic’s technology powers the batteries in Tesla’s vehicles, a testament to the deep-seated Japanese ethos of “omoiyari” (empathy and consideration for others), which often manifests as modesty. However, in the cutthroat global business environment, this trait of humility may not always serve as an advantage. The traditional Japanese sense of modesty may need to evolve, particularly in terms of marketing strategy.

Rather than merely being assertive or self-promotional, it is crucial for Japanese companies to make concerted efforts to help international markets understand the true value of their contributions. While Japan’s tourism sector and manga/anime industries have successfully made their mark globally, competing on the international stage in other content areas will require a stronger focus on marketing.

Japan has historically not emphasized aggressive marketing, often underselling its innovations and contributions in the name of modesty. Moving forward, it is essential for the nation to develop a culture of “above-the-level marketing,” which entails disseminating information appropriately and effectively. By adopting more proactive marketing strategies, Japan can enhance its visibility and influence in the global market, ensuring that its technological and cultural contributions are recognized and valued worldwide.

The world is obsessed with Japanese stocks! ?

Another noteworthy point reinforcing the narrative that “Japan is doing well” comes from Warren Buffett, regarded as one of the world’s foremost investors. At the Berkshire Hathaway shareholders’ meeting, where he serves as chairman and CEO, Buffett made headlines by speaking highly of Japan. His positive remarks about Japan’s economic environment and investment opportunities are significant, considering his influence and expertise in the global financial market. Such endorsements from a figure of Buffett’s stature can help bolster international perceptions of Japan as a robust and viable economic landscape, potentially attracting more global investors and enhancing the country’s economic prospects.

Indeed, the Nikkei Stock Average’s rapid ascent into the 30,000 yen range can be partly attributed to Warren Buffett’s continued positive remarks about Japan. His decision to increase his investment in Japanese stocks, influenced by his view that Japan is the best country in East Asia for investment, has significantly heightened Japan’s profile in the global market.

Additionally, the experiences of Mr. Kosei Senmoto, who co-founded Daini Denden (now KDDI) with Kazuo Inamori, further illustrate the growing international interest in Japan. During a recent trip to Europe this spring, Mr. Senmoto was invited to a meeting with some of the world’s top investors, where he faced in-depth questions about Japan. This indicates a shift in focus among global investors towards Asia as a key investment destination, moving away from traditional hubs in America and Europe.

These developments suggest a broader trend: as global economic dynamics evolve, Asia, and particularly Japan, is emerging as a pivotal region for future investments. This shift could herald new opportunities for growth and innovation within Japan, reinforcing its position on the global stage.

The bottom line is Japan

However, when discussing Asia, we are not referring to China. When considering the best countries for investment, despite recognizing the potential of nations like Thailand, Indonesia, and Cambodia, the conclusion is that “Japan is the best choice.” Mr. Senmoto passionately emphasized that “the lost 30 years will end this year, and 2023 will be the bottom.”

In recent months, signs of Japan’s recovery have finally begun to emerge, albeit gradually. By paying attention to everything from minor details to major news, I want to reaffirm the message that “Japan is not finished!” Ultimately, the future improvement of Japan depends on us—current managers and business leaders. It is my hope that we all approach our daily work with the determination and ambition to achieve great success. I, too, will do my best to contribute to this positive change.

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