AMPONTAN

Japan from the inside out

Will China buy Japan Inc.?

Posted by ampontan on Monday, December 7, 2009

GOT THE BLUES after all the gloom and doom about the economy in some recent posts? What’s the solution when the news on the financial pages seems so bleak?

Comic relief!

When the shtick is about Japan, however, the comedy is all too likely to resemble Dumb and Dumberer instead of something more sophisticated. Here’s yet another example from three people billing themselves as East Asian business experts.

John Haffner, Tomas Casas, and Jean-Pierre Lehmann wrote a three-part article earlier this year for The Globalist website that includes excerpts from their book, Japan’s Open Future. The authors’ premise is that vigorous and forward-looking Chinese free market shock troops could storm and seize the castle of backward Japanese protectionism and create an impact as much cultural and psychological as economic.

To support their argument, they’ve conjured up spaghetti-like strings of speculation woven together to create enough straw men to populate a Potemkin Village. Their premises are so dated the three names on the article might as well have been Rip, Van, and Winkle. In both content and writing style, the article resembles nothing so much as a collage slapped together after midnight by an amphetamine-fueled undergraduate for a class assignment due before lunchtime.

See for yourselves!

As China continues to push for a robust free trade regime in Asia, it will only be a matter of time before it pressures Japan to join — and Japan would find it hard to resist. If the Middle Kingdom is able to pressure Japan to join a free trade agreement, such an agreement would likely allow China to challenge Japan’s myriad forms of economic protectionism through the agreement.

The website of the Doing Business project of the World Bank Group says it “provides objective measures of business regulations and their enforcement across 183 economies and selected cities at the subnational and regional level.” It has global rankings for the ease of business in each country.

Their overall ranking for Japan: #15.
Their overall ranking for China: #89. It edged out Zambia at #90.

Their rankings are also broken down into categories that examine specific aspects of doing business. One of those categories is “Trading Across Borders”.

Japan’s rank in that category: #17.
China’s rank in that category: #44.

Meanwhile, in other news, representatives from Japan were down in Singapore last month at the APEC conference, talking to delegates from every country about trading across borders through free trade agreements. Remarkably, no one was photographed twisting their arms.

But you can tell these guys are Asia hands. They call China the “Middle Kingdom”, just like all the Timeweek journalists.

Japan could very well wake up one day to find, in a scenario no less dramatic than Godzilla’s arrival in Tokyo, that many of its top companies are owned by Chinese investors.

Godzilla destroyed Tokyo in 1954 during the Eisenhower Administration, the same year Elvis Presley began his career change from truck driver to singer. The filmographic record of this destruction arrived in the U.S. in 1956, when Eisenhower was still in office, and was specially edited to include the young actor Raymond Burr.

Ike, Elvis, and the man who played Perry Mason are as long dead as any Japanese perception of foreigners as Godzilla.

At least Rip Van Winkle was alive enough to wake up after 20 years.

There is a feeling in the West that despite Japan’s impressive economic performance, the country did not remember to include its friends when times were good.

That’s the problem with the West these days—too much touchy-feely and not enough study-researchy.

Japan become the world’s leading provider of ODA starting in 1993 according to the OECD, and times weren’t all that good for them—their economic bubble had collapsed and they were just beginning their 10 lost years.

The government’s cut back a bit on ODA since then, however. They plummeted to second place in 2000 and third place in 2006.

They helped out their Kuwaiti friends in the 1990s to the tune of $US 13 billion after the first Gulf War, but their “friends” in Kuwait left them off the list of nations it wanted to thank in a full-page ad in the Washington Post.

They’ve been so helpful to their American friends that Japanese car makers built plants in the United States to keep alive the polite fiction that Americans can still build competitive automotive products.

Japan might also be surprised, in this scenario, to discover that the Europeans and Americans would not rush to provide Japan with a diplomatic or financial cushion against Chinese economic and political pressure, regardless of how strongly Japan might continue to align itself with the United States on political and military matters.

Meanwhile, in the real Japan scenario, no Japanese make the assumption that the West will provide it with a “cushion” against Chinese economic or political pressure, whatever the authors intend by the term “cushion”. If the premise is that the Chinese are going to crack open a protectionist Japanese market and buy Japanese companies, what “financial cushion” could the West provide?

As for protection against Chinese political pressure, the Europeans and the Americans couldn’t even cushion themselves.

Mercantilism excludes, it alienates potential friends and lonely Japan has failed to cultivate loyalty or allies in the world.

In contrast, the mercantilism of the immensely popular Chinese has won them a Facebook full of loyal friends and allies on which the sun never sets.

There is a feeling in the West that despite Japan’s impressive economic performance, the country did not remember to include its friends when times were good, as the United States has done, and as China is doing now.

We’ve already seen some examples above of the Japanese remembering friends when times were both bad and good. The authors fail to gave us concrete examples of how China is “including its friends” in their piece. They certainly haven’t helped with Iran and North Korea. Surely they aren’t referring to the Chinese presence in Africa.

Just what the deuce are these people talking about?

Warning, non sequitur ahead!

A minority of forward-looking Japanese would be comfortable with the larger significance of such a development (i.e., Chinese takeover of Japanese firms). As the Hong Kong joke goes, China just had a couple of bad centuries and is back in business.

How’s that for a concept: when business interests from Country A, many of which would be state-owned, snatch up the corporate jewels of Country B, the “forward-looking” people of Country B would find that “comfortable”. After all, China’s state-owned enterprises are such upstanding, responsible corporate citizens compared to the dead-in-the-water Japanese private-sector firms.

Curious, is it not?

And how they define “forward-looking Japanese” and how they’re sure who and who would not “be comfortable” with such a development aren’t explained. Maybe the authors are like Topsy. Topsy just grew. They just know.

Throughout the long article, the authors quote only one supposed authority—Ohmae Kenichi, who has thrown so many darts at the board over the past 20 years one of them is bound to stick eventually.

(A)s management consultant OHMAE Kenichi comments, “Over the last 4,000 years of history, Japan has been a peripheral country to China, with the exception of this one last century. In the future, Japan will be to China what Canada is to the United States, what Austria is to Germany.”

Drat, missed again! That wall around the dartboard is starting to look awfully tacky.

That’s the same Ohmae Kenichi who wrote a slapdash article of his own in the August 2008 issue of Voice magazine titled, “The Limit for One China Has Been Reached.” In true consultant fashion, he forecasts, without offering anything in the way of support, a loosening of the center in China over the intermediate term and the country’s transformation into a confederation of Chinese-speaking states.

It’s hard to see how Japan would be a Canada or an Austria to that.

In its roughly 2,000 years as a polity, Japan has never been to China what Canada is to the United States, nor what Austria is to Germany—and those two groupings share the same language. What reason is there to expect it will happen in the future?

For the first time, modern Japan could see a fellow Asian country — a country it invaded and colonized — as the catalyst of its own reform and economic improvement.

Has one of the major flaws of this article become clear now? It is ostensibly written about Japan, but the perspective is that of contemporary China. Japan did colonize Manchuria and Taiwan, and it did set up puppet governments with a shaky hold on authority. But the colonization of China, as most people other than the Chinese define it? Not in this time-space continuum.

It is not uncommon for Japanese to discount any advantages the Chinese might be gaining on these fronts with the kinds of rationalizations that, funny enough, the West tended to apply to Japan when it was gaining competitiveness in previous decades: lousy quality, advantages based only on cheap labor, lack of innovation and technology pirates.

Why shouldn’t it be uncommon? Funny enough, every one of those rationalizations is true.

From a subscriber-only article:

Who’s Monitoring Chinese Food Exports?
Nicholas Zamiska
The Wall Street Journal, 13 April 2007

Tainted foods from China are becoming a growing problem as the country plays a greater part in the global food chain. Chemical use is high, regulations are lax, and while the U.S. Food and Drug Administration has the authority to check imports for contaminants that are in violation of U.S. law, it is able to physically inspect only a small fraction of them…

China’s contamination problems stem in large part from its loose regulations and highly fragmented food production. Hundreds of millions of small farmers grow its food, and they rely heavily on chemicals to coax production out of intensively cultivated soils and to fight pests.

The result: “China has one of the world’s highest rates of chemical fertilizer use per hectare, and Chinese farmers use many highly toxic pesticides, including some that are banned in the United States,” according to a report published last November by the economic-research service of the U.S. Department of Agriculture.

Dateline!

Jan. 4, 2009: Yomuri Shimbun reports that the Ministry of Agriculture, Forestry and Fisheries will set up a mechanism to protect Japan’s intellectual property rights in farm, forestry, and fisheries sectors in China.

Back to our story.

Unless Japan undergoes a huge change in national psychology, therefore…

Shouldn’t there be some QED before we get to “therefore”?

…a forced Chinese economic opening would likely evoke a range of negative emotions, from mild embarrassment among moderates to a sense of unprecedented humiliation among hard-core nationalists.

Putting aside the lighter-than-air speculation, isn’t it odd they don’t mention leftists? It’s almost as if they don’t exist. Their boundaries of political thought are defined by moderates on one extreme and hard-core nationalists on the other.

By the way, those hard-core nationalists, assuming they exist in significant numbers, are unlikely to find any humiliation unprecedented. Japan did lose the war, after all.

But that was in the pre-Godzilla period.

But even if Japan does go nuclear, this is not a war that would be fought with military weapons or deterrence, just as Commodore Perry and General MacArthur did not use economics and the rule of law to force reform. In fact this is not game of war at all, although it would be a contest of sorts. China would be using economic jiu-jitsu, beating Japan at its own mercantilist game.

So, if Japan has nuclear weapons, it will fight a war with China, but instead of being a military war, a war-war, or a game war, it will be a sort of a contest in a mercantilist game.

Gotcha.

Meanwhile, here’s a question: if General MacArthur didn’t use the rule of law to force reform, what was the big idea with the Japanese constitution?

Let us here recapitulate the ironic sequence of moves: The postwar Japanese economy kept itself focused on exports and closed to imports in an effort to deal with foreigners on Japanese terms. And precisely because it has maintained this economic model for so long, it has become asymmetrically dependent on China. Thus Japan’s very strategy may have unwittingly created the conditions for foreigners to come in once again.

Let us here recapitulate the ironic sequence of facts:

In 2002, China replaced the United States as the largest exporter to Japan. In 2007, China replaced the U.S. as Japan’s biggest trading partner in combined value of imports and exports, even though the value of Japanese exports to China was less than that to the U.S.

In 2008, Japan’s exports to China were valued at JPY 12.95 trillion yen. Their imports from China were valued at JPY 14.83 trillion yen. Apart from the Middle East region, which exports oil, hummus, and pita bread, China is the only country to have a trade surplus with Japan. This surplus has existed since 2003.

The authors refer to this as asymmetrical dependence on China.

Now let us recapitulate Rip, Van, and Winkle: “The postwar Japanese economy kept itself focused on exports and closed to imports in an effort to deal with foreigners on Japanese terms.”

Instead of behaving like normal, well-adjusted countries and dealing with foreigners on the foreigners’ terms.

(Japan) is threatened by its own ambivalence, intransigence and isolationism.

You’ve heard of sister cities? Busan in South Korea and Fukuoka City in Kyushu have sister municipal fish markets with their own trade agreement. It is one of 23 measures recently adopted by the two cities to further their development of a supra-national economic sphere.

Are these people listening to voices in the air?

Japan is not contributing to defuse this state of affairs, and, on the contrary, its “realists” and hawks seem oblivious to the threat of a self-fulfilling prophecy of conflict.

Only a committee of three with nine academic degrees among them could write the second half of that sentence and still have the contacts to get it published somewhere.

Japan is no more likely to be involved in a war in the foreseeable future than Norway. The scare quotes around realists denote that the authors think they’re not really realistic, unlike, presumably, themselves. The authors neither identify nor describe the pseudo-realists.

Of course, there are some Japanese who think the country should have the same rights of self-defense as other sovereign nations. They’re the “hawks”.

Japan must therefore decide whether it would like to embark on a clear path centered on a commitment to building stability, openness and peace in Asia.

Which is exactly what they’ve been doing for the past 64 years. Whereas China…

Not only Japanese leaders, but also ordinary Japanese need to ask themselves: Are we willing to cultivate trust and learn how to cooperate with Asian powers, especially China?

I asked Hiroshi, who runs the noodle shop down the street, if he would be willing to cultivate trust and learn how to cooperate with Asian powers, especially China. He said, yeah, sure, they can stop by for lunch any time.

Many in Japan with personal experience of the Chinese, on the other hand, would say they’ve got it backwards. The guy running the noodle shop in Xian needs to ask himself: Are we willing to cultivate trust and learn how to cooperate with Asian powers, especially Japan?

Take any 500 Japanese off the street at random and any 500 Chinese off the street at random, and I’ll bet cash money the Japanese give far better answers to that question than the Chinese.

If the answer is that “Japan can say no, and says no,” what positive vision does Japan have for Asia in this negative affirmation?

If you reread that a few times, it gets even funnier.

The China-Japan nexus is also a crucial space in which energy and environmental history will be written for good or ill.

Maybe it isn’t voices in the air. Maybe it’s peyote.

If the world fails to act decisively in responding to climate change in the next decade, the whole planet, and Japan in particular, will face unthinkable challenges from extreme weather events, to flooding along the banks of Tokyo, to climate refugees, to food and water shortages.

No wonder they fancy the Godzilla metaphor–they’re big science fiction fans!

Of course the challenges are unthinkable. Nonexistent challenges always are.

Until last month, this would merely have been the equivalent of tabloid journalism for self-appointed public intellectuals. But since then, we’ve discovered that Trofim Lysenko and the Piltdown Man left a very large carbon footprint when they stomped through the Climate Research Unit at the University of East Anglia. Now, it’s cat box liner.

By opening its business climate — and pushing forward international efforts to define a meaningful successor agreement to the Kyoto Protocol and build carbon markets — Japan could become the center of green innovation in Asia and the world, magnificently positioned to help bring China and India back from the environmental precipice.

Japan’s environmental ODA has averaged more than 20% of its overall ODA for more than a decade, and some years has exceeded 30%.

Why should Japan be responsible for cleaning up after the Chinese when the Chinese choose to live in their own filth while spending money on much more military than they need? Heaven forbid they divert some money from building a blue water navy to building some sewer systems for their dirty water instead.

As for India:

India is (the) first country to which Japan extended the first Yen Loan and India has been one of the largest recipients of Japan’s ODA. Japan has long been actively providing assistance to India, primarily in the form of Official Development Assistance loans, for upgrading of economic infrastructure, alleviation of poverty through public health and medical care, agricultural and rural development and population and AIDS countermeasures, support for small business and for environmental conservation…

India has actively pursued economic liberalization and market oriented economy since 1991. With India’s push towards greater economic liberalization policies, Japanese corporations’ interest in India has risen, and private-sector investment has increased dramatically and it is expected to rise further in future….Japan’s assistance under ODA since fiscal 1990-91 to 2001-02 cumulates at ¥977.14 bn.

However (for many Japanese companies), the inhibiting factors are differences in business practices, environment and culture etc…there is a lack of clarity in the policy guidelines. Also, most of Japanese investors feel that ground level hassles like labour laws, taxes, legal and regulatory framework are high in India. They consider procedural delays a major discouraging factor for potential investors. The infrastructure forms the backbone of development of any country. According to the majority of the Japanese investors, overall infrastructure facilities are lacking in India….Japanese investment in India is driven by Indian domestic demand, and that for reasons such as geographical factors, high tariffs and other regulations, it would be difficult to expect the same level of growth as in Sino-Japanese trade.”

And that’s not even a Japanese website.

Recall that Doing Business ranking that had Japan at #15 worldwide and China at #89?

India was at #133.

And now, for the stars of the show!

John Haffner moved to Japan in 2001 to study mixed martial arts.

I’m biting my cyber-tongue.

While in Japan, he developed and delivered an advocacy skill development program for senior Tokyo consultants of McKinsey & Company and coordinated a project to improve McKinsey’s knowledge of foreign-affiliated companies in Japan.

Now we know why only Ohmae Ken’ichi was cited. He’s a former McKinsey employee.

Since 2004…

Just three years after going to Japan to study mixed martial arts…

…Haffner has worked in strategic planning in the energy industry, with extensive experience in electricity regulation, climate change and nuclear policy. Haffner holds five degrees — from King’s, Dalhousie, Queen’s and McGill universities — and was a 2008 World Fellow at Yale University.

Water, water everywhere, and not a drop to drink

Tomas Casas I Klett is based in Shanghai. He worked in Tokyo for three years at the headquarters of a leading Japanese electronics company.

Ah. A Japan hand.

He has developed a number of entrepreneurial ventures with Chinese partners that lead him to travel frequently throughout China, his native Spain and other Western countries.

In other words, he has a vested interest in the success of Chinese enterprises in Japan.

Jean-Pierre Lehmann has taught and worked in many parts of the world, and offers insights into Japan from a global perspective.

His biography on another website indicates that he did spend a few years in Japan, mostly in the sort of positions that involve talking about other people doing things. He was a visiting professor. There is also mention of a “business strategy research and consulting organization”. There is no mention about being in Japan to learn about something from the bottom up, or listening to others instead of talking at them.

He is also Founding Director of the Evian Group, a coalition for liberal global governance comprised of business, government and opinion leaders from Asia-Pacific, Europe and the Americas.

The Evian Group likes to hold what it calls Multi-Stakeholder Dialogues. They appear to be what most people call “conferences”, but using that sort of commonplace terminology makes it more difficult to pad the bill.

Here’s a quote from one of the papers on the website:

How long do we need to wait before we mobilise ‘political will’? Do we wait until the temperature rises by 2 degrees? Or 4? Or 6?

If you wait that long, you’ll never mobilize political will.

He obtained his undergraduate degree from Georgetown University — and his doctorate on Japanese 19th century economic history from Oxford.

…and thinks time has stood still for the past 110 years.

Well, you have to hand it to them. They’ve succeeded in their aspirations to become part of the academic wing of what Mark Steyn dubbed “the transnational jet set — the EU, the UN, the NGO neo-imperialists, the foreign correspondents for CNN, the BBC and so forth”.

They don’t have to know or do anything. All they have to do is talk about business strategy research and liberal global governance and riff on implausible scenarios. That’s the beauty of a gig like theirs.

We all know that some people will write one-offs based on a highly distorted hypothesis to stand out from the pack, thereby promoting themselves and making a buck from the publicity they generate. The unfortunate aspect of this lot is their cynical manipulation of a common lack of knowledge about Japan and East Asia to enrich themselves while intellectually impoverishing anyone unlucky enough to stumble across this and read it.

Here’s the link to part one of the article. To read parts two and three, click on the authors’ names on that page. One link for this is plenty.

6 Responses to “Will China buy Japan Inc.?”

  1. tomojiro said

    It is surprising that there are so many expert especially in Europe who have the gut to predict something about East Asia without doing their basic homework.

    I mean, if it comes to discussion about East Asia from Europe, it should be read with a large grain of salt.

    It still lags way behind from the level of US. It doesn’t makes me angry nor irritating, I just feel sorry for all the people who are relying to these information as an authoritative account.

  2. M-Bone said

    Great teardown. This part can be read in a different way, however –

    “Japan is not contributing to defuse this state of affairs, and, on the contrary, its “realists” and hawks seem oblivious to the threat of a self-fulfilling prophecy of conflict.”

    While I don’t see Japan starting anything and while I think that “realists” should have their say, there is a certain type of hawk that seems more than happy to give the Chinese an endless series of belligerent one-liners with which to build caricatures of all Japanese society. In this sense, some of the same individuals who are predicting that Chinese will be perpetually angry at Japan are fulfilling this prophecy by perpetually inspiring anger.
    ——
    Excellent point. Thanks for bringing it up.

    – A.

  3. A-nihonjin said

    I have visited this site before, but first time dropping my comment. As always thank you very much, Ampontan, for sharing such an eloquent writing.

    As funny as these globalist clowns sound, it gives me a chill thinking that they are given immense power over our society to put forward their global agenda of climate hoax and world governance in which they are wittingly or unwittingly forcing eugenic ideology upon all of us to enslave good ordinary people all over this planet.

    These con artists simply do not care about the truth. Their expertise is to discredit true independent thinkers by spreading baseless disinformation with disrespectful personal attacks through dishonest manipulation of the mainstream media. Their jobs are to bad mouthing people with healthy and independent critical thinking skills, to stir up hatred and anger, and to divide and conquer so that they can divert people’s attention from what they are really trying to achieve, which include, among others, the establishment of global carbon trade market in which Al Gore and the gangs have hefty sum of business interest for which they have been shamelessly preparing behind the curtain for many many years.

    These people parrot the same phrases as if they are possessed by some spiritual being higher above. And if you dear attempt to bring up a question, you become a “holocaust denier”. That’s the basic mentality of these folks. In order to achieve their business and financial benefits, and to protect their global control, dignity and truth become the lowest priority. Such mentality is reigning all over this planet, west and east, while good ordinary people next door are being treated like dirt.

    Boy, isn’t it about time we wake up…

  4. mac said

    Does not all this time of wah-wah really just boil down to one issue … ‘foreign direct investment stock in Japan is only about 1%’.

    Really what it all amounts to is the wailing of the international capitalists – who really have no other interest but their own financial one – wanting more of the Japanese, and here Chinese, pie?

    Tomas is over here: http://www.internetasiagroup.com
    Heffer is over here: http://sanseverything.wordpress.com

    The book is available to read on Google Books. Yes, it is all the usual shite:

    Japan remans not only closed, but almost in a siege mentality, notably, to cite the most egregious example, in respect to immigrants.

    Japan’s nationalism, especially in provocations such as the visits to the Yasukuni Shrine or revision of history …

    What a bunch of dickheads! Not a moment to stop and think that the reason the West has so many immigrants is precisely because of its imperialist/colonialist/slaving and genocidal pasts and presents !?!

    They go on about “the myth of ‘pure’ ethnic Japanese ancestry” when everyone know that the Japanese are far more ethically diverse, from a genetic point of view, than the Koreas and Han China. What does that say about the reality.

    File under “everything you know about Japan is wrong”. Personally, as a non-Japanese, I agree entirely about having less foreigners in here if this is the crap they produce on their way out.

  5. A-nihonjin said

    Apparently, one of these New World Order scums, Jean-Pierre Lehmann is currently visiting Korea for promoting “East Asian Union”, telling Koreans that Japan and China are not trustworthy, and therefore, Korea has to take initiatives in uniting the three nations, as part of their’ plan to create global governance.
    Here is link to the article (Chosun Ilbo in Japanese):
    http://www.chosunonline.com/news/20091209000008

    What a great example of divide and conquer at work.

  6. bender said

    Gee…the word “complicit” comes into my mind.

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