The eventual results of Japanese Prime Minister Shinzo Abe’s ambitious economic reforms are still to be seen, but “Abenomics” is clearly having an effect on the psyche of the nation in way that should benefit American firms, experts and executives said in Atlanta.
“I have noticed at our meetings in Tokyo just a new energy that I have not seen in the last few years,” Alex Gregory, president and CEO of YKK Corp. of America, said while speaking at a roadshow sponsored by DHL Express May 21.
Mr. Gregory, the lone Westerner serving on the global board of directors for the zipper and architectural products giant, said the YKK president and chairman are “energized and focused on growth and innovation.”
Ryan Silberman, chief revenue officer of Georgia-based RefrigiWear Inc., said the change in Japan’s fortunes – or at least the perception of it – has helped him persuade company leaders that it’s worth devoting resources to crafting insulated garments customized for that market.
“When you typed into Google news ‘Japanese economy’ two or three years ago, it was doom and gloom,” but it’s different now, Mr. Silberman said.
With Japan winning the bid for the 2020 Summer Olympics and U.S.-Japan security ties taking on new importance as China flexes its regional muscles, now’s the time to take another look at Japan, said Andrew Wylegala, minister-counselor for commercial affairs at the U.S. Embassy in Tokyo.
“This is an absolutely wonderful time to be coming to Japan. There couldn’t be a better one,” he said.
Mr. Wylegala has seen anecdotal and statistical evidence of a thaw in consumers’ outlooks: bars are crowded, taxi lines are longer, college graduates are finding jobs and luxury spending is up.
Japan’s economy rode increased spending to a growth rate upwards of 4 percent in the first quarter of 2014. But much of that was simply front-loaded growth as consumers moved up purchases in anticipation of a national sales tax hike from 5 to 8 percent in April.
Still, Mr. Abe has succeeded in changing consumers’ “deflationary expectations” – the tendency for them to put off purchases because they think prices will drop, Mr. Wylegala said.
Beyond consumer-products firms, companies across a wide variety of sectors should take another look at this wealthy, innovative market that could finally be emerging from two decades of stagnation punctuated by a “triple disaster” in 2011: earthquake, tsunami and subsequent nuclear meltdown.
While Japan does face a “demographic time bomb” as its population ages, “there are a lot of silver linings in those negatives,” particularly in health care, information technology and pharmaceuticals, Mr. Wylegala said during the event at the Metro Atlanta Chamber.
In an extensive interview with Global Atlanta, he emphasized the eventual need to rework the energy grid to replace nuclear power, which once accounted for one-fifth of the nation’s energy mix. All of Japan’s more than 50 plants remain offline due to safety concerns in the wake of the Fukushima Daiichi incident.
“There will be a fundamental restructuring; we expect that there will be lots of new players coming in who aren’t in the energy business at all,” he said. “There’ll be a need for the incumbents to compete one against another, so this opens up a wonderful opportunity for U.S. service providers in demand management and the whole energy value chain.”
Feed-in tariffs for renewables have driven the adoption of more solar and wind power, and the country is weighing more geothermal, tidal and other sources.
“It’s not a panacea; Japan cannot replace the 20 percent that was lost through a base load supply like nuclear with an intermittent supply like renewables, but it is expected that they will continue to play a large and increasing role,” he said.
Higher education is another U.S. export service the offices of the U.S. Commercial Service are promoting in Japan.
The number of Japanese students coming to the U.S. has halved to 19,562 students over the last decade, with the country dropping to No. 7 in sending nations overall behind Taiwan and just ahead of Vietnam.
A host of factors account for the decline, but the most worrisome is that even amid campaigns to advance “global human resources” and boost Japanese competitiveness, companies (save a few at the vanguard) have been reluctant to properly remunerate new staffers for the experience they’ve gain abroad, Mr. Wylegala said.
“It’s not that the Japanese are not studying in the United States. It’s that the Japanese are not studying overseas period,” he said. One glimmer of hope, however, is that the numbers of technical exchanges and targeted English programs seem to be increasing.
Phillip Hodges, who sits on the Japan desk for accounting and consulting giant EY in Atlanta, said language skills are crucial to bridging communication gaps that often emerge in U.S.-Japan business.
As a sidenote, he added that EY’s U.S. operations have benefited from the male-dominated corporate culture in Japan as competent Japanese women have come to the U.S. to seek their fortunes.
Mr. Hodges said he doesn’t doubt that the Japanese can take on the tough “third arrow” of Mr. Abe’s economic plan: regulatory reform.
“Absolutely the glass is half full. I would not count Japan down. If there’s any country in this world, any group of people that can get organized and marshal their resources, it’s the Japanese people. What the Japanese people decide to do they can do and will do well.”
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