I am in the midst of an extended tour of our Asian offices. I spent four days in Tokyo, meeting with clients and opinion leaders and attending the Oceans Conference at Globis Business School. Here are a few observations on Japan, two years before the 2020 Summer Olympics.
- The U.S.-China Face-off — Japan is trying to find a middle ground between its next door neighbor and its closest ally. Prime Minister Shinzo Abe recently traveled to Beijing with a group of CEOs to reiterate Japan’s commitment to China, its single largest location for foreign investment. There are some in the business community who would advocate a foreign policy reset in favor of a more balanced relationship with the two superpowers. Perceived American unpredictability is the big concern; will you stand with us when it matters, on disputes over islands or other national security issues? The Prime Minister continues to lean towards the U.S. I had a lot of questions about the midterm elections and the chances of a Trump re-election.
- Sustainability Leader — Japan is the nation most committed to the United Nations’ Sustainable Development Goals. In fact, even the waiters at the Keidanren (Japan Business Federation) Building wear the SDG circular pin as a symbol of that promise. From solar to wind to packaging to electric cars, the country sees that it must adapt to remain competitive. Note that the country is now considering implementation of a new form of nuclear reactor, a stunning reversal of policy from the decommissioning that happened in the wake of the Fukashima disaster in 2011.
- The Crisis of the Fisheries — The number of Japanese fishermen has declined in the last decade from 400,000 to 150,000. Japan has established strict rules on minimum size of fish as part of the management of its crucial resource. But other nations, notably China and Thailand, have sent boats into the Pacific that catch fish of any size, then sell them into the market. Japan will create a program of retail identification of the source of the fish, so that consumers can be sure they are buying a sustainable product (note that this has already been done in Europe).
- Immigration — This is one of the subtle changes implemented by the Prime Minister. He is looking to allow 500,000 new foreign workers into Japan, largely from surrounding Asia, who are allowed temporary status, without vote or health protection. But they are filling the demographic hole left by declining birth rates. It is expected that the number of immigrants will slowly increase.
- Robots — There is a tourist hot spot, the Robot Restaurant, which features dancers, drummers and giant robots. This is simply a metaphor for the rapid implementation of robots into the industrial process. There are presently 250,000 robots in use, a number that is expected to quadruple within the next decade. This is a partial solution to the demographic problem.
- Olympics — The large stadium is almost complete (no last-minute jitters as in Rio or Athens); it is designed by Kengo Kuma, who claims that it will combine natural materials, such as latticed wood, with concrete. The country is looking forward to showing off its new athletic prowess, from tennis (Naomi Osaka, winner of the 2018 U.S. Open) to baseball (back for the first time since the 2008 Games). Companies will be doing activations in the coming months to promote exercise to the public; 40 percent of Japanese adults were inactive in 2016, well above the global average of 28 percent.
- CEOs Willing to Speak Up — For the first time, Japanese CEOs are prepared to enter the public debate. They are advocating proper work-life balance. They are defending their products; a good example is the World Umami Forum held by Ajinmoto in the U.S. to confront junk science on its key product, MSG. Companies are addressing the need for the retraining of workers given impending automation.
- Free Trade — The Trans-Pacific Partnership is now activated, with Japan as the leading actor among the 11 initial signatories. The big question is whether a Japan-Canada-Korea Australia bloc will be more attractive than the China bloc, drawn together by the One Belt One Road initiative and the Chinese Development Bank. The battleground will be Southeast Asia.
- Politics — Prime Minister Abe was re-elected as head of the Liberal Democratic Party in September. His No. 1 goal is revision of the Constitution. I came away from the visit with a sense of optimism and hope. If the Olympics in 1964 were a statement to the world that Japan was back as a full citizen, then the 2020 Games will be Japan’s moment to lead on sustainability, sports and a more inclusive culture for immigrants and women.
Richard Edelman is president and CEO.