Tim W. Ferguson, Forbes Asia Magazine dated April 12, 2010
What to make of Japan now, as the business year there ends? The Nikkei index is back near its high since the Lehman Shock, retail sales perked up this winter, exporters have done well from China's latest spurt, and Japanese manufacturing technology remains, along with Germany's, the envy of the world.
All of this might seem a bracing contrast to the downbeat theme of the Japan story for years now. But then the other side of the coin comes up: continuing political miasma, enormous government debt, a stunning 8.4% peak-to-trough GDP decline in the Great Recession (one reason more recent igures look decent) and demographic decline (see "Friending the Elderly" for a positive note).
It's coincidental that Trouble has now come to Toyota, Japan's premier brand. Whatever the reasons behind the seeming spate of problems with the company's cars, they probably don't speak to Japan's predicament broadly--even the management practices allegedly to blame. But psychologically this is one more blow in a long string of them.
Japan Inc. is responding to limitations at home with bold moves abroad. The pharmaceutical sector continues on the diversification prowl. Autos and electronics are still a strength. Financial entities, especially Nomura, have seized on the recent crisis to push outward. The trading outfits, the soga shosha, have found new applications for their time-tested form of "enterprise resource planning"--look for the big three to figure prominently in our Global 2,000 companies list next month.
But overall the business record still pales of late, especially in comparison with the rest of hotly competitive North Asia. As the chairman of one of Japan's most established international players said to us at a lunch,
"The Koreans--they are supported by their government, but when they decide on a business move, they act."
There is nothing necessarily Asian about paralysis by consensus.
China is eclipsing Japan as Asia's economic leader, although the last chapters have not been written. Key economies like those of Australia, India and Taiwan still have toes in each camp. Some policy clarity might come from yet another Japanese election, in July for the upper house, but business cannot play a waiting game. The world is moving on.
Now is a strange calm after (or between?) economic storms. Interest rates that spiked on the fears in Dubai and then Greece have settled back, and debt remains cheap in most places. That is a precious respite for developing economies like Indonesia. Even troubled Pakistan's equities are at their highest in 18 months. But wild cards remain: a possible trade war, Iran, North Korea. We can hope conditions in 2010 will remain benign, but I'm still inclined to want my powder dry.
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