Japan Seeks New Export Markets
Shinzo Abe, Japanese Prime Minister, tries to find new markets for Japanese exports in the face of increasingly strong competition from China and South Korea. Moreover, he wrapped up a trip to Turkey, where he extolled Japan's central role in a 10-year project to build a rail tunnel that for the first time links by rail the Asian and European sides of Istanbul. The project was led by the Taisei construction company with $1.5 billion in loans from Japan.
The prime minister has made his goal clear: He wants to push Japan's U.S.- and European-centric businesses into the largely untapped markets of Myanmar, India and East Africa. Japan's search for new markets is being driven in part by the diminishing prospects for the domestic economy amid an aging and shrinking population. Also playing a part is its growing rivalry with China and South Korea.
According to the Ministry of Economy, Trade and Industry, the three countries were roughly equal in terms of infrastructure exports in 2005, with each at around $20 billion. By 2010, Chinese and Korean exports increased fourfold, while Japan's total was roughly unchanged. Infrastructure projects are especially prized since they involve not only construction, but also financing, design and project management. But some government officials privately complain that Japanese businesses have become pampered, expecting the government to arrange yen-loan programs, trade insurance and an investment treaty before considering a new market.
The current generation of business leaders has been criticized for becoming too bureaucratic and risk averse. Highfliers often shun assignments to emerging markets as potentially harmful to their chances for promotion. South Korea, on the other hand, has "actively sought markets where Japan's presence was limited," said Sung-Chun Jung, director of international economic research at the government-backed Korea Institute for International Economic Policy. That has turned out a winning strategy as emerging economies started taking off, he added. In addition, critics say, Japanese companies have been unwilling to move into emerging markets where lower overall incomes often mean thinner profit margins.
Mr. Abe wants to better leverage Japan's extensive overseas aid programs, which are ranked fifth in the world at $10.5 billion in 2012, according to the Organization for Economic Cooperation and Development. In April, Japan created new aid guidelines designed to encourage developing countries to buy more Japanese products. Officials are hoping that these changes would increase the share of Japanese aid programs being undertaken by Japanese companies, which now stands at around 30%. The idea is to focus aid money on projects that can be best provided by Japanese companies, such as disaster-prevention systems, environmental gear and medical equipment, thereby boosting the odds of Japanese companies winning aid contracts financed by Japan.