The Potential for the Japan Sea Has Become Visible in New Developments in East Asia

|China

Over the last few years, China has not ceased to be a topic of discussion and reports about its economic growth seem to have appeared in the press on a daily basis. The more that the positive aspects have been the focus of attention, the more extensively the negative aspects, such as social inequalities and political and economic problems, have also been reported. In any case, as things at the frontiers of business between Japan and China are changing at a speed beyond our imaginings, awareness of China is unable to keep pace with the reality and there is a tendency to make judgments based solely on preconceived notions and past experience.

At the same time, the direction of business is changing quietly but significantly within Japan as well. The phenomena symbolic of this are the graying of society, the falling birthrate and the declining population, and the shrinking domestic market is a response to this. In the manufacturing sector, with a switch taking place from low profits and high turnover to the pursuit of improved profit margins, the number of models emerging from the low-cost consignment production route that had until now taken place in China is increasing rapidly, such as the research and development type that uses skilled local personnel, the high-added-value type and the producer-retailer alliance type. Moreover, the establishment of Chinese branches by companies in the strong commercial service field is gaining pace.

At the same time, the direction of business is changing quietly but significantly within Japan as well. The phenomena symbolic of this are the graying of society, the falling birthrate and the declining population, and the shrinking domestic market is a response to this. In the manufacturing sector, with a switch taking place from low profits and high turnover to the pursuit of improved profit margins, the number of models emerging from the low-cost consignment production route that had until now taken place in China is increasing rapidly, such as the research and development type that uses skilled local personnel, the high-added-value type and the producer-retailer alliance type. Moreover, the establishment of Chinese branches by companies in the strong commercial service field is gaining pace.

Furthermore, the diversification of business expansion by Japanese companies is no longer solely taking place in the contract manufacturing sector, but is being deployed in all sorts of multiple combinations across Asia, at each stage of work, including processing and assembly, distribution and sales, research and development, and human resource development, as well, of course, as raw materials procurement. This does not only involve bilateral relationships, such as those between Japan and China, and Japan and the ROK, but also composite networks involving such regions as Asia and Far Eastern Russia. This is certainly not a trend involving only multinational corporations with vast amounts of capital.

Moreover, Japanese provincial areas are promoting new inter-regional exchange initiatives with various parts of Asia, as they seek new opportunities. These include attracting foreign tourists and companies, and human resource development. At present, there are dynamic exchanges involving China, the ROK and the ASEAN countries, but as the DPRK situation progresses, the business environment involving it, Northeastern China and Far Eastern Russia is likely to change significantly.

I believe that what this means for the future is that commercial and distribution-related activities involving Japanese regions on the Japan Sea coast will intensify further, with the possibilities opening up mainly for port cities on the Japan Sea coast, from Hokkaido to Kyushu. In particular, Niigata will play a central role in this. Of course, the region must avoid being a passive onlooker, and it is precisely when it breaks free of its dependence on the central government and builds its own network, breaking through the current situation with dynamic ideas that involve collaboration with neighboring competing areas, that the Japan Sea coast will undergo the metamorphosis from “the back end of Japan” to “the new face of Japan”. I will be unable to take my eyes off future developments. From my own experiences, I know how, in all economic activities, it is the enthusiasm and belief of each and every person that opens the way to a new era. Likewise China and Russia, and likewise Japan.

I want to see the coming era as a perfect opportunity and to continue to venture into creative projects with many people, drawing fully upon my knowledge and energy. It really is a case of “awareness comes only through practice in the modern era”. It just so happens that the whole world is currently excited about the soccer World Cup. While cheering on the young samurai players ahead of their top-notch international matches, I am inspired by their willingness to take on this challenge.

Finally, I would like to express my heartfelt gratitude to the Economic Research Institute for Northeast Asia, which has provided me with the opportunity to contribute these three articles. I hope that it will experience even more success in the future as a knowledge hub in the Japan Sea region.

[Translated by ERINA]