Read My Lips

Japan and Globalization

Can Japan shape global events despite its struggling economy?

Quo vadis, Japan?

Takeaways


In the 1970s and 1980s, Japan appeared poised to become the world's most dominant economy. But by the late 1980s, the country had slid into a prolonged crisis of deflation and economic stagnation that has continued into the 21st century. Our Read My Lips feature examines what the future may hold for this still very powerful Asian giant.

What is Japan's role in the global economy?

“Japan — the world’s largest creditor nation — is the OPEC of global financial markets.”
(Joseph Quinlan, chief market strategist for the Investment Strategies Group, February 2005)

What makes observers cautious about reports of Japan's economic recovery?

“The Japanese economy is back. Or so optimists believe. But we have been here before, in the brief recoveries of 1992, 1997 and 2000.”
(Martin Wolf, Financial Times columnist, December 2003)

Still, with economic growth not quite as anemic as it used to be, has complacency set in?

“We are just seeing the sprouts of structural reform — and my duty is to grow that into a big tree.”
(Heizo Takenaka, economy and financial services minister, February 2004)

How bad is Japan's economic malaise really?

“What is the worst-case scenario? Twenty years from now, Japan is the third-largest economy in the world instead of the second.”
(Kenneth Courtis, vice chairman of Goldman Sachs Asia, March 2003)

What makes any kind of reform hard to accomplish in Japan?

“Japan is handcuffed by their perpetual search for consensus.”
(Donald P. Gregg, chairman of the Korea Society, May 2002)

Why can other countries gain from Japan's experience?

“Japan is a laboratory for the world. Already facing severe problems of demography and fiscal deficits, Japan’s answer is suggested by a simple equation — that the living standard equals productivity times participation.”
(Robert Alan Feldman, managing director at Morgan Stanley, December 2004)

Can Japan resist outsourcing white-collar jobs to China?

“Our top management is afraid of exporting brain jobs to China. But comparing Chinese and Japanese engineers on a cost-performance basis, the Chinese are superior. They are hungrier. Most Japanese are no longer hungry.”
(Hiroshi Matsuo, head of Sharp Electronics' operations in Shanghai, February 2004)

On the other hand, how has China's rise helped Japan?

“China is the new ‘bad boy’ of the global economy, having displaced Japan as the aggressive emblem of a trading system.”
(William Greider, The Nation columnist, September 2003)

How does corporate Japan view the issue?

“There was one time when people talked about the China threat, but I believe that the Chinese people will make us rich.”
(Motoya Okada, president of Japanese retailer Aeon, March 2004)

What challenge do low-cost retailers face in the Japanese marketplace?

Our biggest challenge is that Japanese people think if it’s too cheap, the quality is bad.”
(Masao Kiuchi, president of the Seiyu Group of department stores, September 2003)

Is Japan's focus on high quality paying off?

“The Japanese are succeeding not because consumers get the best deal — but because they get the best product.”
(Steve Usher, JP Morgan analyst, June 2003)

What other social factors are limiting Japan's potential?

“Japan is still a developing country in terms of gender equality.”
(Mariko Bando, aide to Japanese Prime Minister Junichiro Koizumi, July 2003)

How much of a factor is Japan's low birthrate?

“It’s so sad for us. Children are vanishing from our lives.”
(Fukuyo Suzuki, patron of a community center for the elderly in Japan that used to be an elementary school, March 2005)

And yet, why are some Japanese still not worried about the country's declining population?

“There are certain advantages to population decline: freedom from housing overcrowding and traffic congestion — and also moving away from an obsession with economic growth to place more emphasis on cultural and spiritual pursuits.”
(Masatoshi Kikuchi, strategist at Merrill Lynch in Tokyo, September 2003)

Is it hard for foreigners to feel at home in Japan?

“Living in Japan is like staying in a hotel forever. I’m always waiting to go home.”
(Su Dake, Chinese student, March 2004)

Why are the Japanese inherently wary of food imports?

“Words can’t express the pleasure when you bite into good rice. It is a joy only a Japanese can understand.”
(Koichiro Takahashi, owner of the oldest rice shop in Fukushima, November 2004)

Why are the Japanese so worried about the threat emanating from North Korea?

“‘As the only country that has experienced the attack of an atomic bomb, Japan is more sensitive than any other country to nuclear proliferation.'”
(Japanese Trade Minister Shoichi Nakagawa, September 2003)

And finally, which realization have the Japanese been slow in making?

“Creativity is 99.7% failure.”
(Yotaro Hatamura, Japanese professor of engineering and founder of the Failure Database Project, May 2003)

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