Japan basks in Olympian glory
Sep 26 2013
A few years ago, Tokyo had submitted the proposal to hold the Olympic Summer Games in 2016. When the application proved unsuccessful, many people in Tokyo were greatly relieved. This time, we hardly heard any voice that opposed the plan to hold the Games in the Japanese capital. In fact, on the day the positive decision became known, many Japanese spontaneously thanked us that the world had shown confidence in Japan. The whole country was exuberant. What had happened?
Of course, the Fukushima disaster weighs heavily on the collective psyche of the Japanese. Here is a country that, in a number of technological fields, leads the world. A short while ago, the government finally decided to take over the operations in Fukushima. The company that owns the power plants had proven to be utterly incompetent surprising the world with ever new mistakes and giving Japan a bad name.
However, there are many more issues that are contributing to the general satisfaction of the Japanese for hosting the 2020 games. It has been a very long time since the country was the envy of the world and since international management gurus praised Japan as a model for every industrialised society. After the giant speculative bubble had burst in the end of 1989, Japan got stuck in decades of low growth, stagnation and even deflation. The country lost its glitter and even the Japanese grew despondent of their future. Most significantly, a few years ago, the People’s Republic of China overtook Japan as the world’s second biggest economy.
While the world got excited about China, Japan drifted into the background. As the island nation still enjoys one of the highest living standards in the world and as its social cohesion and quality of life certainly rank amongst the best in the world, many Japanese are comfortably settled into the new life far removed from the global stage. However, with an ageing and shrinking population, this is a dangerous trend. An insular Japan will not be able to keep up with more ambitious competitors, not only with China but also with South Korea. More than ever, Japan needs to open itself to the world in order to maintain its economic and geopolitical strength.
In recent times, Japanese companies have greatly expanded their business and investments outside their homeland. As the domestic markets shrink, growth is only possible if you gain market shares overseas. Preferred destinations for Japanese companies are in Asia, notably in the Asean countries of South East Asia and in India. Not only the traditional industrial giants go abroad, but also smaller enterprises and the service sector venture overseas.
When Shanghai hosted the World Exposition in 2010, officials told me that the main goal of this impressive event was to show the world to the Chinese. It was a successful endeavour as around 70 million overwhelmingly Chinese visitors attended the event. Pavilions of Japan, Germany, Italy and Britain proved to be star attractions. In the case of the Olympics 2020, there is no need to bring the world to Japan, as Japanese tend to be well travelled. This time, it is necessary that the hosts show themselves as a country that welcomes foreigners.
Many European countries struggle, like Japan, with an ageing society. However, in most cases, immigration balances the shrinkage of the native population. This is not the case in Japan, which has a very rigid and restrictive immigration policy. But it is not only foreigners that find it difficult to enter Japan. The same goes for foreign products, foreign companies and foreign investments as well. Of course, Japan is a member of the World Trade Organisation (WTO) and cannot be overtly protectionist all the more so as Japanese goods are exported around the world.
In most cases, it is not tariffs or government regulations that strongly distort competition in favour of Japanese companies. Cultural barriers and very complicated, often outdated structures, particularly in service industries, make it impossible for most foreign competitors to be successful in Japanese markets. In many cases, Japanese products and services may indeed be better, but frequently lack of open market access and fair competition gives “made in Japan” undue advantages. As Japanese are rather docile customers and are willing to pay higher prices even if streamlining of supply chains could provide more cost effectiveness, there is no political pressure to open up the country. Quite on the contrary, there are strong lobbies that promote protectionism, particularly in agriculture. Cosmopolitan Japanese, therefore, hope that in the run-up to the 2020 Olympics, their country will clearly opt for more openness to the world.
(The writer is the Far East correspondent of Swiss daily Neue Zurcher Zeitung)