October 1, 2005｜China
Over the last 20 years or so, during which China’s reform and liberalization policies got underway, Japan’s regions have also been the source of intensifying trade with and investment in China, focusing on the manufacturing industry, boosting economic exchange. The main factor behind this has been the shifting of bases, in the search for decisively cheaper manufacturing costs.
Looking at Sino-Japanese economic relations from the viewpoint of the four management factors of people, goods, money and information, I have felt on a daily basis that all of these are an extreme one-way street. In other words, with regard to people, as far as both tourists and businesspeople are concerned, the flow is from Japan to China, and there is no comparison in terms of the complicated nature of the procedures required in order to invite a Chinese person to Japan and the trouble involved in making arrangements for their life in Japan. It seemed absolutely impossible for ordinary tourists to enter. With regard to goods, a wave of cheap Chinese goods of better quality than previously, as typified by Uniqlo, has swept through such areas of the Japanese market as food, clothing, housing, machinery and software; at one time, it was even trumpeted that China was exporting deflation.
With regard to money, there were capital outflows and the expansion of companies into China has progressed rapidly in regional manufacturing industry, which is dominated by subcontractors and business groups. Ditto information. What was required of consultants such as myself was to show how accurately and widely we could gather information about China, in order to give companies even just a slight advantage in their business.
To put it another way, people and money were only leaving Japan, while goods and information were only entering it. Since about five years ago, I have been trying to reverse all these flows and make Sino-Japanese economic relationships from Japan’s regions a two-way phenomenon. With regard to people, these activities have involved hosting more Chinese tourists, businesspeople, trainees and students, while with regard to goods, they involve exports to Asian markets of local products from Japanese regions, particularly agriculture, forestry and fishery products, food products, and traditional arts and crafts. As far as money is concerned, the focus has been on attracting Chinese companies and creating hubs for the intake of foreign capital that will not lose out to China. Moreover, the importance of “transmitting” local information to Asia in order to create these flows is also being emphasized.
Of course, it is not the case that I originated these moves in an opposite direction. Such efforts were beginning to sprout in various regions. Is it possible to export goods from a country where the prices are high? It is common sense to think that it is not possible to attract investment and tourism to a high-cost country. Considering the amount of information with which we are deluged, Japanese people are not infrequently insensitive to rapid changes in the external environment. These include the emergence of wealthy people and the middle classes in China and other parts of Asia, the narrowing of both domestic and international price and cost disparities and their partial reversal, and the fact that Asian people are developing an interest in Japanese culture.
Two-way flows are already progressing, focused on hub cities served by direct air and sea routes with Asia. Taking Niigata as an example, the Niigata city government is very enthusiastic about activities aimed at attracting Chinese companies to the city, and there is great interest among companies and groups within the prefecture, concerning exports to Asia of Japanese sake, rice, rice confectionery and processed foods. It is hoped that these developments involving both the public and private sectors will be an opportunity for Japanfs provincial areas to open up a new path, and play an important role in revitalizing local regions and organizations.
In order to achieve these targets, various forms of organic collaboration will be necessary, as it will not be possible to implement such activities using conventional frameworks. Every day, I am subject to such unprecedented feelings of tension that I cannot relax, but I feel like I am getting a significant response. This is because I can sense that the realization of this highly difficult “reverse flow project” is providing the spark for refreshing Japan, particularly its provincial areas.
Currently, energetic Japanese are beginning to be quietly active on the Asian stage, from the field of agriculture to the hi-tech sector. I truly think that this will become an upsurge that will stir the whole of Japan into action on a major scale. My innermost ambition is to revise the economic forecasts of levelheaded, sophisticated analysts upwards in a positive way, with the assistance of many people from Japan’s provincial areas.
[Translated by ERINA]