JIN-527 -- After the storm clouds, Japan's silver lining

[Japan Inc Newsletter]

J at pan Inc Newsletter
The 'JIN' J at pan Inc Newsletter
A regular opinion piece on social, economic and political trends in Japan.
Issue No. 527 Wednesday, March 23, 2011, Tokyo

After the storm clouds, Japan's silver lining: Japanese mull the nation's
post-quake economic future

Right now the most important "Japan story" relates to the three-pronged
catastrophe that was the Tohoku earthquake, the subsequent tsunami and the
ongoing problems at the earthquake-damaged Fukushima nuclear power plant and
the resulting effects on the surrounding regions, most significantly for
business—Tokyo. While I stayed in the city for the first few days after the
historic 9.0 earthquake, once radiation concerns were raised from the
damaged nuclear plant at Fukushima, I decided to play it safe and take the
situation as an opportunity to visit a couple of far away prefectures in the
southern region of Japan where I have Japanese family and friends. First
Hiroshima, and then Fukuoka.

In Hiroshima, the specter of the atomic bomb attack from WWII still looms
large for many residents, thus I met several Japanese who hail from
Hiroshima but work in Tokyo in the banking and technology sectors who also
decided to err on the side of caution regarding the nuclear disaster. They
were very matter-of-fact about the exodus, but when I asked about their
thoughts on the disaster's potential to impact the already questionable
health of the Japanese economy, the comments turned more pessimistic.
Essentially, their consensus was that many businesses will either be forced
to close, or dramatically reduce their staff, a move that would further
negatively impact the Japanese economy.

Then there were the tales of CEOs, managers and general support staff
leaving the country. While most of their anecdotes depicted foreigners
leaving Japan, and possibly their jobs, they also mentioned that quite a few
of those that had left the country were also Japanese, contrary to the
reports that foreigners have been the only ones leaving Japan due to safety
concerns. Overall, the message I got was that the next 6-9 months in Tokyo,
and possibly all of Japan, will be rough going, with only the most resilient
and resourceful SMEs surviving in the wake of a disaster that is now
estimated to cost Japan upwards of $300 billion.

Interestingly, when I posed the same questions to Hiroshima local workers
and shop owners, the disaster seemed mostly to be an abstraction that
registered little impact on their day-to-day dealings. The forecast from the
area seemed to be, accurate or not, that business would continue as usual in
the quiet confines of Hiroshima.

Fukuoka was another story, but not what you might expect. Although many
people had arrived in Fukuoka from Tokyo due to safety concerns related to
the nuclear plant, and I even met one person from Fukushima, the area is
humming along quite nicely. The locals watch the tragic reports of the
deceased on television, and I even attended a quickly organized, but well
produced charity event. But ask the average Fukuoka business person about
the incident, many of whom have never even been to Tokyo, much less
Fukushima, and they also seem to view the event as something very far away
that won't have an impact on their local economy.

There are two ways to look at these anecdotes from Hiroshima and Fukuoka. On
one hand, such disconnect from the disaster could serve to help the rest of
Japan recover as non-impacted regions push the economy forward, unencumbered
by the market worries that currently plague many Tokyo business people. On
the other hand, the kick-start opportunity this disaster might have provided
to Japan as a whole (á la post WWII hyper-competitive, recovery-minded
Japan) to get the country more involved in internationalism and competition
with its Asian neighbors might be lost on many regions of the country that
continue to do business as usual without taking into account the new peril
this event may present for Japan's national economy.

In either case, the good news here is that outside of Tokyo there are plenty
of strong businesses doing well and building products and plans for the
future. So although the lights in Tokyo may be currently dimmed, one need
only look to the country's other prefectures to see the proverbial light at
the end of the tunnel that represents the real hope for Japanese business
and an inspiration to the beleaguered, stalwart businesses of Tokyo proper.

-Adario Strange

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