Messages from Northeastern China (Part One)

|China

This is Sumio Takagi from Itochu Corporation. First of all I would like to express my thanks for being honored by being able to make a contribution to ERINA’s opinion papers.

Focus on China

  • The author joined Itochu Corporation in 1973. I was involved in petrochemical plant exports and worked abroad for long periods, and what was memorable was that I encountered three historical events during those stays: the 1985 evacuation from Tehran (the air strikes on Tehran during the Iran–Iraq War, televised also in NHK’s “Project X”); the 1989 evacuation from Beijing (the so-called “Tiananmen Square Incident”); and the 1999 Taiwan earthquake.
  • The most impressive of all was Beijing. In the chaotic situation, leaving everything to the most reliable local staff, with great reluctance expatriates and their families were obliged to pull out from their place of employment. Subsequently, amid the political headwind, I, as one of the first group, was back in Beijing in less than a week. As soon as I set foot in the office, the Chinese staff gave me a thundering standing ovation. Arms around each other’s shoulders I rejoiced at the reunion. I want to devote my life to China! It was a moment of welcome that was to become a moral support for my subsequent stay in China.

Activities in Northeastern China

  • Moving forward in time, in 2002 I took up a new post in Suzhou in order to set up a manufacturing project invested in by Itochu. It was a valuable two-year period where I was deeply involved also in personnel and labor problems, along with coming into contact with the essence of the manufacturing world. For Suzhou, in little more than two years expanding Japanese firms had been jostling with one another, and subsequently a long-awaited Japanese school was established.
  • In the autumn of 2003, the Chinese government had set in motion the Strategy of the Revitalization of the Northeast Old Industrial Base. Itochu, which had highly regarded the development potential of Northeastern China, decided to establish bases in the capitals of the three provinces of the Northeast (Shenyang, Harbin, and Changchun). From Suzhou I took up a new post as the inaugural chief of the Shenyang office in April 2004. I was active also in the establishment of the Harbin and Changchun offices. In the six years since, immersed in the Northeast, I have spent a fulfilling time surrounded by many Chinese and Japanese friends. In July this year I departed that place of employment.

The Temperature Difference between China and Japan

  • Assuming a rosy future, the local people are super-positive-minded. The energy of Chinese people striving daily toward a wealthier life was the sustenance for the vitality in my life during my stay there. The author also has made efforts in broadcasting the situation in the Northeast, which ought to receive the entry of a lot of Japanese capital.
  • To the Japan after my return, however. Something is different. There is a great difference in temperature from where I was. The doctrines of the China Threat and the China Risk are clamorous, triggered by the Senkaku Islands incident. There is no intention at all to disavow these. Nevertheless, for relations between Japan and China, pessimism and optimism are repeated very often, and it is a fact that the present state of affairs also results from this. When considering destinations for investment, there is great agreement on plunging the knife in comprehensively, including the emerging countries in Asia which are continuing a great leap forward. I would like people to avoid the foolishness of turning toward a hasty “get out of China” position, however.
  • Perhaps my stay in China was too long. The author’s words may perhaps be emotional, unscientific, and too slanted toward idolizing China. Nevertheless the local economy is moving at an extremely high speed and dynamically. Great economic magma is also moving, which does not appear in the figures. There is a burning ardency which can never be sensed being in Japan.

China’s Managers

  • In Japan the term “cost-effectiveness” is often used. Chinese managers, however, are primarily concerned with “time-effectiveness”. In the expression in Japan the sense of time is lacking. They expend a great amount of time in order to examine one project. In particular, in cases directed toward China, there are many instances entered into from negative factors, and a conclusion cannot easily be found.
  • Chinese people’s conception is different. It is a way of thinking of “If you don’t do this now, when will you make a profit?!” For Japanese people there is also a lot of very boisterous debate, as well as absurd talk. There are, however: the correctness of one’s position of observation; the speed of making a start; the rapacious stance which ties up with success; and the construction of a human network. There are a great many managers and very interesting projects that should be emulated.

The Expansion of Small and Medium-Sized Enterprises

  • I got sidetracked. Differing from the large enterprises which have already built up a lot of experience in China, I think that for small and medium-sized enterprises there are a great many enterprises that are hanging back and hesitating from expanding into China.
  • The author made the following plea to the local government during his posting in Shenyang. In China, there are dozens and dozens of development zones that are frantic to attract foreign investment. All uniformly advertise the wonderfulness of their own village. There is no great difference in preferential policy either. The greatest interest, however, for firms examining expansion into China, and in particular manufacturing firms, is the securing of sales outlets for their goods and raw materials. It is most vital to have the differentiation with other development zones measured, accurately supervising this area.

The Utilization of Navigators / Supporters

  • A local sensibility is greatly important when commencing trade and business. There may also be a lot of talk of missing the opportunity by not grasping China from the local viewpoint, and also, conversely, talk that there should be a reset. As far as time permits I would like people to go out locally, staying overnight there, and hear firsthand what expanding companies really think.
  • At the same time as that, when expanding locally, I would like people without fail to find good navigators and good collaborative partners. When determining routes, Japanese firms that have set up in business locally, Japanese associations, and consulates, etc., are all fellow travelers. They will definitely become a support team.
    • In Shenyang’s case, the activity of the Japanese association is very vigorous. The size of its membership, said to be a hundred companies and a thousand individuals, may be the most apt number of people for communication. Aside from many social events, it regularly effectuates a meeting for dialogue with the government of Shenyang, boldly undertakes suggestions for improvements to the city government on the problems in factory operations and everyday life which enterprises and Japanese people are facing, and receives assiduous treatment.

Next Time

  • The comments of an executive at a Japanese firm which had expanded into Suzhou were carried in the newspaper recently. “China is a country of dreams, but it is cool to firms that don’t take up the challenge”. They are words which leave a strong impression. Next time I would like to talk about the current situation in northeastern China, centered on the examples of companies which launched projects in Shenyang, overcoming many trials.

    [Translated by ERINA]