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Revitalised and Resurgent: Japan's New Business Climate

Tokyo at night

Tokyo at night


Also the financial sector, particularly banks, used to enjoy an almost unchallenged position in the Japanese economy. They had to go through very difficult lessons, of making their business model more viable in the international economic situation, and I think they had gone through a very difficult, harsh time of people almost looking down at banks, as if to say "they are the wrong people to deal with". But now they are back, I think their non-performing loans are almost non-existent, and they are working on the regrouping of banks in order to achieve internationally competitive, more viable business models. This will take a little more time, but I think they are on the right path. Also, something that has finally happened is the arrival of the venture capital business. They had been with the Japanese economy for a long time, but this last year was very interesting - I'm almost sure that almost every single Japanese watched the reorganizing of the professional baseball league. It ended up by having two champions of the venture capitalist game owning - one owning an old and very strong team... actually the champions of the last year, that's Mr Son of SOFTBANK, and the other one - Mr Mikitani of Rakuten - owning a brand-new baseball team out in Sendai. Now many of you probably know Miyauchi-san of Orix: he serves on my board, and we are good friends, although in some ways arguably different; but when he originally owned the baseball team, Orix, there were many shaking heads in the old establishment of the Japanese business, asking what business Orix has in owning a baseball team: this was the world of railroads, newspapers, the establishment, and Orix was just too new. But the world has changed a great deal. Now Miyauchi-san is on the side of the establishment, shaking heads about the venture capitalists coming in. I think society welcomed it. To a certain extent I'm exaggerating, but to me it was almost a symbol of the Japanese economy, Japanese society coming to accept some of the fundamental changes, like the unemployment rate, like venture capitalists coming in.

Now of course this baseball team, which is now owned by Mr Son, was previously owned by Daiei, one of the biggest supermarket chains in Japan. When Mr Nakauchi founded Daiei, it was almost a wild phenomenon that this man from nowhere was buying into the world of retail, selling everything below cost. When Daiei grew to a certain stage and his name was up for vice-presidency of the Keidanren, the head of Keidanren said "Who is he?” His business had no place in Keidanren. After that, his business went all the way up, and now his business is down and in the process of restructuring. The baseball team he loved is now going to be owned by Mr Son.

I think I am simplifying the whole issue, but the message is: the Japanese economy and Japanese society are going through a very important and very interesting changing process. My feeling is, compared to the beginning of the 90s when the bubble burst, the Japanese economy is stronger, more flexible, and I think there's a lot of opportunities for Australian capital among other non-Japanese companies to come in and explore. I must say our Prime Minister has played a very major role in real and symbolic terms, in making changes in the Japanese economy. Professor Takenaka, who has stayed close to his wing, not only in advising but in spearheading the restructuring process, has also played a very important role. Mr Koizumi will leave the Prime Ministership if he completes the term in about two years, and what he has done in making this restructuring stick in Japanese society is something that he can be proud of the rest of his political life.