The Hindu Business Line : Creating a Japan that can say `Yes'

MOST public places in Japan will have a board loudly proclaiming `Information' in English. However, everything else on it will be in Japanese. This can well symbolise, at least for an outsider, the duality one perceives in Japan towards many issues.

How to respond to globalisation, what is Japan's role in the region and the world, how should the much-vaunted Japanese management system adjust to the new realities in business, and so on. There is a Western face, and a strong traditional face.

Part of the ambiguity can be explained by historical reasons. Coming out of the defeat in the Second World War, the Japanese were dictated a constitution and a set of laws. They took it without a whimper and got to work rebuilding the nation.

With the military presence of the US providing the security it may otherwise have had to spend money on, the nation focused itself on reconstruction and became a force to reckon with in every field it chose to enter. It built an envious reputation for the quality of its products and the efficiency of its enterprises. And the Japanese did it all in their own language and with indigenous systems.

The success that lasted till the 1980s even dealt with the oil crisis along the way. However, when the hibernation set in the 1990s (which the locals would refer to as their `lost decade'), Japan's voice in the world economy began to fade.

Meanwhile, other countries caught up on product quality and efficiencies narrowing the competitive advantage Japanese products had. Japan is looking at a very changed set of circumstances today.

The re-election of Mr Junichiro Koizumi as Prime Minister has inspired new hope for reform and renewed confidence. His firm stand on the reform of the postal savings bank indicate more reform is at hand. The vested interests in the party that stood in the way of reform of the banking system and real estate have been marginalised. Even GDP and interest rates are beginning to look up.

But what does one make of Mr Koizumi's continuing visits to the Yasukuni jinja (shrine) to pay respects to the war dead? Not that there is anything wrong with that, but those being remembered also include convicted war criminals.

China (and Korea) remember the brutality of the Japanese occupation and froth each time a major Japanese political figure visits the shrine in his official capacity. Recent moves to create a new war memorial would only remove the excuse for what is increasingly being seen as a new Japanese assertiveness.

During the period of Japanese hibernation, China's economic success has given it a new confidence. The Chinese see their past as lost generations and feel the need to bring back the glory of China's superiority. This is worrying, for the Japanese sense of their superiority led them to war.

The Chinese flexing of muscles is worrying both the US and Japan. Many American politicians are genuinely worried about the new Chinese genie that they helped release from the bottle with their aggressive promotion of the Chinese economy and investments.

The Americans themselves are certainly in no mood to entertain a potential challenge to their status of superpower.

Japan has also woken up to a rising China. Japan's approach to internationalisation, initially, was to see the world as markets — where they can sell goods and source cheap manufacturing. The US and Europe were good markets for Japanese products where quality and functionality were rewarded with brand loyalty. South-East Asia and China were seen as good sources of cheap manufacture.

Now, with the era of globalisation, the old equations are not working any more. Japanese companies are beginning to realise that consumers around the world are not as brand loyal as they used to be, or as Japanese citizens still are. At one time, I would look for a Sony or Panasonic player.

Today, I can get a no-name player made in China for $45 (Rs 2,025) that plays any format of DVDs, video CDs and such stuff.

This changing equation has made the Japanese suddenly sensitive to what they see as a new `political risk' to doing business with China. China's booming market gave Japanese companies a fillip to get out of their slumber.

But when the Chinese start protesting against shrine visits, and government-organised protests take place outside the Japanese embassy in Beijing, that is not a good sign. And China also stands in the way of Japan seeking a seat in the UN Security Council.

Adjusting to these changed circumstances will have to take priority for Japanese companies and Japanese society. There are some early indications that they may move manufacturing facilities out of China and now India is getting onto their radar. With both Japan and the US smiling coyly at India there are great challenges ahead for the mandarins of South Block.

Japan's reluctance to speak loudly is understandable. Its previous effort at seeking great power status, which began in the 1930s, ended disastrously with the end of the Second World War. Since then, by playing second fiddle to the US, Japan has managed to rehabilitate itself.

The power stirrings in Japan can be seen not only with Mr Koizumi's visits to the shrine but also his desire to alter the Constitution and take on more responsibility for the country's defence. I saw the Left-leaning students at Waseda University (which at one time supplied kamikaze pilots for the army) protesting these moves with demonstrations.

Japan certainly has a role to play in the region and has to reconfigure this role in the face of a rising China. Japan is the major player at the Asian Development Bank, and has significant investments in the Asean region, which, as with all such aid, benefited its companies through the strings that were attached.

In 2001, Japan sold more to East Asia than the US, reversing a trend of many decades. The Japanese yen can potentially emerge as the currency for settling regional trade.

Mr Shintaro Ishihara, currently Governor of Tokyo, is a politician who stands out for voicing nationalistic opinions. He came to prominence outside the country when he published, in 1989, a collection of essays titled `The Japan that can say No' which fretted about the way Japanese leaders succumb to pressure from the Americans, especially on the trade issues of those days.

He has been making public statements warning his countrymen about China and encouraging better relations with India. Perhaps, it is now time for Mr Ishihara to write another book titled The Japan that can say Yes.

(The author is professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu).

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