Kansai execs still tout affinity with Asia

by Eric Johnston

Staff writer

OSAKA — Despite the Asian economic turmoil of the past nine months, executives in the Kansai region say they remain committed to the area and urge the central government to provide additional aid.

More than 40 delegates from the Kansai Economic Federation (Kankeiren) traveled to Singapore, Malaysia and Thailand at the end of February.

Following appeals from Kansai’s top political and government leaders for additional financial assistance, Kankeiren formally submitted a request to the central government at the end of March. No specific amount was suggested by the Kankeiren members, but all called for the government to take quick action.

Although they initially planned to travel to Indonesia as well, ethnic turmoil, political uncertainty and ongoing negotiations with the International Monetary Fund led officials to postpone the trip until June, a Kankeiren spokesman said.

For Kansai-based firms, Asia’s economic crisis has been frightening for one very clear reason: Asia is the destination of 54 percent of their exports, and as of 1996, 47 percent of all their overseas direct investment. In contrast, the United States receives just over 22 percent of Kansai exports and the same level of overseas investments, while Europe gets 14.5 percent of the imports and 20 percent in terms of investments, according to Kankeiren.

Kansai’s economic dependence on Asia also helps explain why, despite the recent turmoil, business and government leaders look to Asia first, not to the U.S. or Europe, and why they devote so much effort in promoting their region as a gateway to Asia.

In the mid-1990s, Kansai International Airport and Rinku Town, across the bay from the airport, as well as the Asian Trade Center in Osaka’s port district were hailed as natural bases from which to expand Kansai-Asian business relations. At the same time, there is an assumption on the part of many local executives that because Asians prefer warm, personal connections and verbal agreements, it’s easier to do business with them than with Europeans or Americans, who demand detailed, written contracts.

Yet Kansai’s love affair with Asia has caused grumbling among some local Americans and Europeans, who feel businesses should be paying more attention to opportunities in the EU or North America. “While we recognize Asia’s importance, Kansai business leaders should not forget that the U.S. economy is doing well and that there are many opportunities outside of Asia,” said Steve Iwamura, an official at the Kansai American Chamber of Commerce.

Akira Kanda, a senior economist at Kankeiren, says that while not ignoring the West, Kansai officials are extremely concerned about their investments in Asia. “No Kankeiren members have yet said they are pulling out of Asia, but some may cut back or delay production,” he said.

Kanda agreed with complaints by local foreign businesses that many in Kankeiren are less interested in markets in the U.S. and European than those in Asia because Asia means opportunities to sell while America and Europe mean opportunities to buy.

Yet, despite speeches from Kansai leaders about a cultural affinity with Asia and the need to attract Asian investment, local Asians share the same complaints with Americans or Europeans about selling to Kansai and Japan in general. “I also hear talk about Kansai being good for Asian businesses. But Japan as a whole is simply too expensive. And compared with Hong Kong or Singapore, even the Kansai region, with its supposedly more casual business air, is too bureaucratic and inflexible,” said Ibnu Hadi, Indonesia’s consul general for Kansai. “From the outside, the Kansai market appears open. But once a business gets here, it finds all of these complex personal connections and realizes that the market is fairly closed,” said Abdul Ghafar, director of the Osaka office of the Malaysia External Trade Development Corporation.