馃攳
Why (Almost) Nobody Invests in Japan - VisualPolitik EN - YouTube
Channel: VisualPolitik EN
[0]
[Applause]
[5]
[Music]
[9]
[Applause]
[13]
both in the economic and political arena
[15]
japan is coming back into fashion what
[17]
an example since he arrived in the oval
[18]
office joe biden has made it clear that
[19]
japan remains the linchpin of u.s
[21]
security policy in asia proof of this is
[23]
that both secretary of state anthony
[25]
blinken and secretary of defense lloyd
[27]
austin visited japan on their first
[28]
international trip and not only that the
[30]
japanese prime minister at the time was
[31]
the first foreign guest biden received
[33]
as president of the white house quite a
[35]
statement of intent and of course it's
[36]
not just about the relationship between
[38]
tokyo and washington increasing economic
[40]
competition from china is causing the
[41]
japanese government to step up its game
[43]
there is for example the trans-pacific
[44]
partnership agreement the cptp one of
[47]
the largest free trade and economic
[48]
integration agreements in the world that
[50]
is being led by none other than japan a
[52]
country that according to public opinion
[54]
polls is the most trusted power in
[55]
southeast asia the world's fastest
[57]
growing economic region
[61]
but we're not only talking about the
[63]
political field the truth is that the
[64]
japan is also becoming fashionable
[66]
economically despite all its limitations
[68]
such as eternal crises the demographic
[70]
decline or the weakness of the yen the
[71]
land of the rising sun or rather
[73]
japanese companies are reinventing
[74]
themselves starting in the late 1990s
[76]
when first south korean and taiwanese
[78]
companies and then chinese ones began to
[80]
compete head-to-head with many japanese
[81]
manufacturers they were gradually forced
[83]
to produce goods that were more
[84]
difficult to make and imitate in other
[86]
words move up the value chain and that's
[88]
exactly what they did many japanese
[90]
companies have transformed themselves
[91]
into suppliers of high-tech highly
[93]
innovative materials and components that
[95]
are indispensable in the global
[96]
production chain
[98]
[Music]
[100]
to give you an idea although for us end
[101]
consumers it may be somewhat invisible
[103]
japanese companies control more than 50
[105]
of the market share and many of the
[107]
advanced components and supplies of
[108]
high-tech industry from specialty glass
[110]
to semiconductor manufacturing equipment
[112]
to complex chemicals if you use
[113]
high-tech products japan probably has a
[115]
lot to do with it in many ways this
[117]
explains how since 2009 japan's real per
[119]
capita growth has grown almost at the
[121]
level of the united states and has riven
[122]
above countries like france or the
[124]
united kingdom
[127]
[Music]
[129]
yeah that's right japan's gdp is barely
[132]
growing but we have to take into account
[133]
that its population particularly that of
[135]
working age has been shrinking for years
[137]
in other words with a lower population
[139]
they produce more in per capita terms
[141]
japan's economic performance over the
[142]
last decade has been reasonably good
[144]
[Music]
[146]
and if we also take into account that
[148]
it's still the third largest consumer
[149]
market in the world after the united
[151]
states and china we can get an idea of
[153]
why japan's economy is once again
[155]
attracting the attention of
[156]
multinationals however hold on just a
[158]
minute because something is not adding
[160]
up despite all its attractions the truth
[161]
is that international companies barely
[163]
invest in japan check this out
[168]
but having said that let's move on
[172]
why is nobody investing in japan
[176]
well to say that nobody invests in japan
[178]
is obviously a bit of an exaggeration
[180]
but surely you won't think it's such an
[181]
exaggeration if i tell you the united
[183]
nation ranks japan second to last in the
[185]
world only to north korea in terms of
[187]
foreign direct investment received as a
[189]
percentage of gdp this is a huge anomaly
[192]
the bottom line is that fdi accounts for
[194]
just over 4 of japan's gdp to give you
[197]
an idea the average for developed
[198]
countries is 44
[200]
normally countries that want to boost
[201]
their economic growth would encourage
[203]
foreign companies to locate their open
[204]
new facilities such as factories or new
[206]
offices to buy local companies or invest
[208]
in the country's public or private bonds
[210]
however this is not the case in japan
[211]
which remains completely disconnected
[213]
from foreign direct investment flows but
[215]
does that mean it is forbidden to make a
[217]
productive investment in the land of the
[218]
rising sun not all in fact japan's
[221]
politicians have been talking about
[222]
encouraging foreign investors for almost
[224]
20 years and in a way they have done
[226]
just that
[227]
[Music]
[232]
when koizumi took office as prime
[233]
minister in 2001 fdi in the country was
[235]
a mere 1.2 percent of gdp prompting the
[238]
government to set a target of 5 by 2011.
[240]
at first things went smoothly and the
[242]
percentage of foreign investment
[243]
increased to 4 in 2008 since then
[245]
however things have remained stagnant so
[246]
the question is what is the reason for
[248]
this anomaly why does japan not attract
[250]
productive investment why does nobody or
[252]
almost nobody want to invest in this
[253]
country how is it possible that in this
[255]
race the only country the land of the
[256]
rising sun beats is north korea well
[259]
visualpolitik fans the key seems to lie
[261]
in corporate operations let me explain
[263]
in a typical developed country up to 80
[265]
of fdi inflows take the form of
[266]
corporate mergers and acquisitions
[268]
however that is not the case in japan it
[269]
seems to be a legacy of the immediate
[271]
post-world war ii era
[272]
[Music]
[278]
at that time tokyo restricted fdi to
[280]
prevent foreign companies from taking
[281]
control of the market years later when
[283]
entry into the oecd forced the japanese
[285]
government to overturn these
[286]
restrictions japanese policymakers
[288]
divide countermeasures of sorts to make
[290]
it more difficult for multinationals to
[291]
buy japanese companies a large part of
[293]
these countermeasures had to do with the
[295]
promotion of crushed shareholdings
[296]
between companies and above all with the
[298]
return of a large conglomerates the
[300]
kuritsu to give you an idea today these
[301]
conglomerates continue to exercise
[303]
enormous control over the national
[305]
economy the karitsu controls 26 000
[307]
parent companies 56 000 subsidiaries and
[309]
employ about 18 million people almost a
[311]
third of all japanese employees and this
[313]
is not even counting many companies that
[315]
act as subcontractors and suppliers
[317]
closely linked to these groups the
[318]
toyota group for example has some 1 000
[320]
subsidiaries and 40 000 suppliers most
[323]
of which are closely linked to this
[324]
group in other words in practice they're
[326]
not entirely independent in this way the
[328]
kuritsu exercises such control over
[329]
japanese companies that they leave
[331]
little room for foreign corporations to
[332]
gain a foothold it is something like a
[334]
very closed ecosystem the problem is
[336]
that the ecosystem is so close that in
[338]
many fields it has fueled enormous
[339]
inbreeding that comes at the expense of
[341]
productivity and change for example the
[343]
digital transition in japan lags far
[345]
behind its counterpart countries
[350]
to make matters worse despite its
[352]
intentions the government has introduced
[354]
even more control mechanisms for example
[356]
in 2020 it pushed through parliament a
[358]
change in the foreign exchange and
[359]
foreign trade law to lower the threshold
[361]
by which a corporate transaction
[362]
requires government approval from 10 of
[364]
the shares it dropped to around one
[366]
percent the result is that buying a
[367]
company in japan can be an almost
[369]
impossible mission and that explains the
[371]
very little fdi that enters the country
[373]
in relative terms however this is
[374]
something that could start to change
[376]
very soon for three main reasons
[379]
[Music]
[382]
firstly surveys are beginning to show
[383]
greater social acceptance of foreigners
[385]
taking control of local companies this
[386]
is something that has traditionally
[387]
generated dread in the country secondly
[390]
demographic decline is forcing many
[391]
small and medium-sized enterprises to
[393]
close their as their owners retire and
[395]
have no successors among these lines in
[396]
2020 a report published by the fdi
[398]
promotion council a government advisory
[400]
body argued that foreign capital inflow
[402]
could be the solution to this problem we
[404]
are talking about more than 600 000
[406]
profitable smes that might have to close
[407]
within the next three years there are
[409]
six million jobs at risk and thirdly
[412]
plans to raise the economic growth and
[413]
profitability of the tokyo stock
[414]
exchange and driving changes in the
[416]
corporate governance policies of
[417]
companies we'll tell you about it in an
[419]
upcoming video so don't forget to
[420]
subscribe to all of us here at
[421]
visualpolitik to stay in the loop
[423]
however as we have mentioned on other
[424]
occasions this is not the only area
[426]
where japan's economy has become the odd
[428]
one out in terms of economic
[429]
globalization check this out
[431]
[Music]
[433]
a country that is also close to talent
[437]
in contrast to most developed countries
[439]
japan has a fairly small immigrant
[440]
population barely two percent of the
[442]
total in the united states for example
[444]
that figure exceeds 13 not only has this
[446]
meant exploding a lot of talent but has
[447]
also contributed to deepening the
[449]
demographic crisis the country is
[450]
experiencing its population first began
[452]
to decline in 2005 and it's been
[454]
steadily shrinking since 2011 which is
[456]
taking a major toll on the working age
[457]
population for example in 2019 more than
[460]
28 of the population was over the age of
[462]
65 and only about 60 of japanese
[464]
residents were between the ages of 15
[466]
and 64. this explains why this country
[468]
suffers from one of the highest levels
[469]
of labor shortages in all developed
[471]
countries
[471]
[Music]
[475]
according to the japanese government
[476]
itself we are talking about a shortage
[477]
of 6.5 million workers by 2030. so far
[481]
some changes have already been
[482]
introduced to encourage the arrival of
[483]
foreign labor but everything indicates
[484]
that things will have to move faster in
[486]
the future and so visualpolitik viewers
[488]
you can see that in some fields the
[489]
japanese economy is the most close to
[491]
international flows but that is about to
[492]
undergo a huge transformation the
[494]
question is will it be enough to balance
[496]
all of the problems the country is
[497]
facing will japan become the new
[499]
fashionable destination for
[500]
multinationals these are questions that
[502]
only time can answer for now leave us
[504]
your thoughts below in the comments and
[505]
very importantly if you have found this
[507]
video that we have made in collaboration
[508]
with our friends from value school
[510]
interesting don't forget to like it and
[511]
leave us your impressions in the
[512]
comments all the best and i'll see you
[514]
next time
[517]
[Music]
[523]
you
Most Recent Videos:
You can go back to the homepage right here: Homepage