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GISPRI No. 16, 1998

Symposium

GISPRI Symposium 1997

Globalization in the World and Asia:
Where Japan Goes?

<Session 2>


    The international symposium on the theme of "Globalization in the World and Asia: Where Japan Goes?," was held on November 21 of the previous year at the Keidanren Kaikan Hall, under the auspices of the Global Industrial and Social Progress Research Institute (GISPRI). This paper reports on the outcome of the second session of this conference. The second session was dedicated to the subject: "Globalization, the Era of Companies Choosing the Countries. Where Japan Goes?" (Mr. Akira Kojima, Editorial Page Writer, Nihon Keizai Shimbun, acted as moderator of this session.)


< Session 2 >
Globalization, the Era of Companies
Choosing the Countries. Where Japan Goes?

Dr. Hiroyuki Itami,

Professor of Management,
Hitotsubashi University

"Asian Networking of Japanese Firms"

Apparently East Asia is chosen as the destination of Japanese exports. Most of the 5,700 overseas production subsidiaries of Japanese firms (as of 1994) are established in Asia. By value, Japanese imports of parts and components produced in East Asia exceeded the nation's crude oil imports in 1995. The overseas subsidiaries of Japanese companies are purchasing parts and components from Japan and enterprises with Japanese capital and, instead, selling their products to those countries other than Japan. What this network implies is that Japan has shifted production bases to East Asia without decreasing its exports and that shift is producing profits both to Japan and East Asia. The Japanese manufacturing industry is presenting not what is often called a "hollowing-out" (doughnut) phenomenon but the expanding "pizza pie" phenomenon. Over the past ten years, the Japanese manufacturing industry has taken an action tantamount to what might justifiably be called "expansionism." This, however, may be beneficial not solely to Japan but to East Asia as well.

Dr. Takashi Shiraishi,

Professor,
Kyoto University Southeast Asian Center

"Globalization and Southeast Asian Politics"

It is suggested to adopt "policing (maintaining social order)." Lying behind policing are the history and culture of each nation. A way of policing differs from country to country. Because of a failure to keep up with changes in the situation, market policing did not work in Thailand. Japan should aim at a rational and internationally transparent way of policing and there are many who know it. However, in a society of which diverse machineries of the state are forming integral parts, as is the case with Japan, it is rather difficult to solve problems because many people are dependent on the state.

I would like now to talk about hegemony (structural supremacy). Over fifty years after the war, Asia had been placed under the hegemony of the United States. Nowadays this structure is apparently breaking down. However, Japan has no ability to bring about a new order. Yet the Japanese manufacturing industry holds the hegemony in Asia, but it is not the intentional consequence. In Japan, the consensus of opinion on the future of Japanese society may lead to something and, hence, a role may be created in forging a new order in Asia.

Mr. S. L. Wong,

Managing Director and Professor,
Center of Asian Studies, The University of Hong Kong

"Emerging Economy"

An economic interchange may not necessarily lead to economic equalization. An economic network differs from country to country. Japan is characterized by a strong linage among large corporations; smaller enterprises are placed under the control of big companies. In South Korea, dominance is held by industrial conglomerates that have strong connections with the government and are family-owned. The Chinese economic network consists of what may be called family-operated smaller business conglomerates. Thus the systems of these three countries are unlikely to emerge into one. This is because the economic structure is made up of a social norm and a sense of values.

Regarding the Chinese economy, the offshore networks of Hong Kong and Taiwan have been formed and, consequently, investment in China is showing great animation. China's bureaucratic state-owned enterprises are being mixed with the offshore, flexible family-operated system. This economic exchange seems to be effective in relaxing tensions in the Taiwan Straits. There are some who express concern about the possibility of China, as a great dragon, presenting an economic threat to neighboring countries in the future. This view is rather an exaggeration. China is an expanding marketplace, providing overseas investors with tremendous business opportunities. The Chinese market is not exclusive. China is not the sole source of cheap labor.

In Asia, many people will develop activities beyond the national boundaries in years ahead. The governments of Asian countries will be urged to do something about immigrants and citizenship. The government will have an important role to play when it comes to some aspects of globalization that cannot be left to the free market and activities of private enterprises. There will be a growing necessity for cooperation among different Asian countries and for building networks of non-profit-making organizations, such as academic circles.

 

<< Panel Discussion >>

-Dr. Lee Poh Ping,

Ex-Full Professor of Faculty of
Economics and Administration, University of Malaysia:

ASEAN's trade with Japan accounted for 10% of the total in the 1950s but it grew sharply to 30% in the 1970s. Arguments like "We are exploited by Japan" increased and anti-Japanese demonstrations took place in Thailand and Indonesia. Indeed our economic relations were one-sided and unfair. Later on, however, Japan had made tremendous contributions, such as through ODA. The result is well-balanced economic relations between ASEAN and Japan. In course of time ASEAN member nations became accustomed to Japanese-style trade practices which seemed extraneous to us at the outset. Instead, attention has come to be directed to non-economic aspects of Japan. Stated in another way, a view has begun to prevail that we should pay more attention to the military aspect - that the responsibility for security should be assumed positively by Japan in Southeast Asia. There are some who contend that this is only natural considering the economic power [of Japan]. The Japanese do not express what their ideologies are. They do not express what view they have of the world. When it comes to intellectual leadership, Japan has a huge trade deficit with the rest of the world. Japan does not make a sufficient contribution. Leadership being exercised by the United States is still power in terms of the English language, press, media and so on.

Japan did not conceal embarrassment even at Malaysia's "Look East" policy. Japan did not take any positive attitude when the other ASEAN nations tried to follow the model of Japan.

What does Japan want to do in Southeast Asia? Unless it make that position clear, Japan will not be able to hold the hegemony in Southeast Asia.

-Mr. Ken Iijima,

Deputy President and Executive Director,
Sakura Institute of Research:

According to the recent questionnaire on overseas strategies of Japanese smaller businesses, they showed no intention of globalization for a number of reasons, such as business showing an adequate gain at home, a shortage of personnel working abroad, a rise in domestic nominal wages, and undue competition on domestic markets. Data from Toyo Keizaisha, however, indicate that the number of Japanese enterprises doing business abroad exceeded 1,700 in 1996, suggesting that Japanese companies are highly motivated to expand their business operations into overseas markets, particularly the Asian market. Although Japanese corporations which take a wait-and-see attitude may increase in number due, among others, to the monetary crisis, Asia's potentialities will remain enormous in years ahead.

- Mr. Kojima:

MITI's data show that the production of the Japanese manufacturing industry in foreign countries exceeded the exports from Japanese manufacturers in 1995. Asian economies are already export-centered. I wonder if Japan will be able to become an absorber. What are the problems facing Asia and Japan?

- Mr. Itami:

A large foreign capital inflow into Japan is unlikely to occur for ten years to come. Regarding finished goods, Japan is now a net importer of clothing, for instance. In the machinery industry sector, competition among Japanese companies is so intense that foreign corporations are in no position to enter. Yet another major barrier is the Japanese language.

- Dr. Shiraishi:

Japanese Prime Minister Hashimoto talked about an expanded exchange between Japan and Southeast Asia, but he failed to make clear what he had in mind as an aim or objective. As Dr. Lee noted, Japan does not impose its political vision. On the contrary, Japan is not trying to bring any vision to light. However, Prime Minister Hashimoto said Japan would "intend to expand an exchange based on an enrichment of the past economic relations." Though it is not explicit, therefore, a vision of Japan within the framework of Asia may well be put forward.

Japan will be unable to take the intellectual leadership like the United States does. This is because the Japanese education is not systematic. Yet Japanese universities are internationally competitive in terms of compensation, so that some system should be established to invite scholars from Asia. Japanese corporations should renovate their personnel administration systems so as to allow them to recruit people more largely from foreign countries.

- Mr. Wong:

In the context of globalization, the national boundaries are increasingly blurred so that transnational networks, EU, NAFTA and ASEAN, are being formed. A failure to take part in this process means trouble. A language barrier exists for Japan and China. In this regard, it may not be wise to rely on the English language alone; an ability to use a local language will be important. In Hong Kong, education has started to enable people to use three different languages, including English.

- Mr. Iijima:

Since 1994 over 100 Japanese companies have pulled out of overseas markets. While doing business abroad, Japan has learned what internationalization is. The prevailing view is that internationalization takes place abroad. Japan is backward in internationalization at home accordingly.

A difficulty involved in doing business abroad is that players should go by foreign competitors' rule in their field. Foreign investment in Japan is small just because a setting is not provided to allow foreign corporations to do business in Japanese markets. Globalization should be pushed ahead in such a way as to furnish such a setting. Japanese middle and small-market corporations have an exuberant vitality. Their failures abroad will decrease if Japanese medium and small enterprises accumulate experience by doing business with foreign companies operating on Japanese markets.

- Mr. Kojima:

Japanese is very difficult, to say nothing of English. Mr. Glen S. Fukushima President, American Chamber of Commerce in Japan, said Japanese regulations involved more than twenty words for apparently the same notion. Even public officials cannot understand whey these word really mean: Permission, authorization, licensing, approval, designation, consent, validation, confirmation, certification, attestation, inspection, tests, verification, registration, notification, examination, submission, reporting, etc. This indicates that the Japanese government offices have a big discretionary authority. What they are doing is that much cloudy.

What are the conditions being provided in Japan for the introduction of foreign capital?

- Dr. Shiraishi:

A political intention as a state is an important consideration.

- Mr. Wong:

Not just the government is power in the United States. The activities of citizens' organizations and volunteer groups and their influences on the government are also important.

- Dr. Lee Poh Ping:

Although China has actually gained power, the role of Japan is not diminishing for that reason. China will not be able to beat Japan in capital and product exporting capability.

- Question 1 asked on the floor:

I would like to ask the opinions of panelists from abroad as to not where Japan will go but what Japan should do.

- Dr. Lee Poh Ping:

Japan should first think about what it really wants to do and what it should do for the world. Looking back on the history of the past fifty years, Japan lacked resolution as to the role of Southeast Asia. So you are unsure of how much you can rely on Southeast Asia. In the face of the recent monetary crisis, I wonder if Japan will only follow the United States at its heels.

In terms of security, there is an atmosphere being created in Asia for expecting Japan to play a certain role. Southeast Asian people want to know Japan's definite policy on security. Japan's diplomatic policy toward Southeast Asia is unclear.

- Mr. Wong:

Japan has succeeded in building a powerful economic network, but cultural opening does not work well. It seems Japan does want to let in not only foreign capital but foreigners as well. But that is wrong. If the next generation of Japan aims to move ahead to the next level, economic integration, then efforts will have to be made to encourage the inflow of foreign workers and, at the same time, to promote multiple language education - education in Asian languages, besides English. Through multiple language education the Japanese people will be able to learn multiple cultures. This will not weaken their confidence in their own culture. Japan will be urged to contribute its share to building an NGO-based strategic network in such areas as environment, education, and national defense. And Japan should take the leadership in this move.

- Question 2 asked on the floor:

Due to the evils developed during the postwar 30-year period of growth, Japan may be forced to remain in the doldrums from now into the year 2020. Reforms will have to be made during that period. This is my own view as to "Where Japan Goes?" Incidentally, no other universities are more warmly protected than Japanese ones. We don't want such national universities.

- Dr. Shiraishi:

When we think about how we should build our society, we cannot evade the education issue. Although we may not need many universities as we have now, it is difficult to reform these universities within. It is a matter of political intention.

- Mr. Itami:

Japan will enter not a period of stagnancy but a long period of maturity. A hasty reform will lead us nowhere. The lack of intellectual leadership is a result of the absence of Treasury fund investment. The recent reform plans are nothing more than casual ideas; they lack what you call principles. They are based simply on a vague optimistic view that Japan may be able to do well somehow.

- Question 3 asked on the floor:

What should Japan do?

- Mr. Itami:

There is one thing I want to say. I want all the current leaders to yield their positions to young people. The Japanese soccer team passed the qualifying heats for the World Cup matches just because a drastic action was taken to change its manager and players.

- Dr. Shiraishi:

What we need now is Japan's political intention. This is all we want.

Conclusion

- Mr. Kojima:

"Political intention" became a common catchphrase. We expect a political will to come up while the Japanese people commonly have a sense of crisis, based not on a mere pessimism but on the motive for a reform.