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New Japan in sight as mind-sets, economy approach crossroads

by Jochen Legewie

There is little doubt that the Democratic Party of Japan’s Lower House victory and the election of Yukio Hatoyama as prime minister are the most significant political events Japan has experienced in the past 20 years. After decades of behind-closed-doors policymaking and stagnant growth under the conservative Liberal Democratic Party, the public, acting out of character, finally opted to take a risk on a newcomer.

It is far too early to tell whether the move is to be congratulated as daringl bold or condemned as simply reactionary. The new government has moved quickly to make good on its promises, such as reining in the bloated bureaucracy or scrapping the expensive Yamba Dam project.

From a European perspective, this hints at an exciting chance to get closer to the new Japan. This is something that was hinted at even before the DPJ took power.

The essay Hatoyama published in the New York Times on Aug. 26 was as bold a move as any taken by a Japanese politician. It was a proactive — some would say provocative — attempt to set the terms for future diplomatic discourse. Perhaps most surprising was that it was allowed to be published before he was elected prime minister.

In the article, Hatoyama contrasts the United States with Europe. He accuses the former of unilaterally imposing capitalist values on the rest of the world in the name of “globalism,” while upholding the latter as a potential model for Asian integration.

He even goes as far as to cite the French slogan of “Liberte, egalite, fraternite” and the 1920s writings of Count Coudenhove-Kalergi, who is recognized as the founder of the first popular movement for a unionized Europe (and who was also partly descended from Japanese lineage).

The pro-EU bias was more than palpable, and led to accolades from none other than Jose Manuel Barroso, president of the European Commission, who spoke glowingly of the “converging views of Brussels and Tokyo.”

In some respects, however, it is a dangerous game Hatoyama is playing because so much of Japan’s security — in fact, probably all of it — depends on U.S., not European, protection. So it is no surprise many American observers lambasted Hatoyama’s article for denouncing its longtime ally.

But risky or not, the article demonstrated something that has been lacking in Japanese politics for some time: leadership.

Former Prime Minister Junichiro Koizumi of the Liberal Democratic Party was unafraid to stand up and be counted for what he believed in during his time in office, but that was limited to domestic matters only. On international affairs, he seemed happiest impersonating Elvis Presley.

Hatoyama, on the other hand, declared at the United Nations general assembly that Japan’s goal for reducing carbon dioxide emissions is a 25 percent cut from 1990 levels by 2020. That’s almost three times bigger than the goal suggested by the LDP-led government and also differs from the U.S. goals, which were based on 2005 levels. While many question the feasibility of the target and wonder who will end up paying for it, there is no doubt it put Japan in a global leadership position.

Probably the most valuable impact these initiatives will have is on the psyche of the Japanese people. Few countries have undergone the extreme changes Japan has. It is a nation that once aspired to become the world’s No. 1 economy, a phase that was followed by the implosion of the bubble economy in the early 1990s, and capped by two lost decades of nearly zero growth and the steady deterioration of most of its social institutions.

Gone are not only the seniority and lifetime-employment systems, but also the myth of Japan as a middle-class society where older generations are looked after by their children.

Instead, most Japanese are experiencing a rapid change to an individualistic, performance-based society that is in the process of losing its No. 1 status in Asia to longtime rival China.

It is too early to judge whether the DPJ is offering Japan the right remedy for faltering consumption, economic and social stagnation, and waning self-confidence, but it seems clear the LDP was incapable of doing any better, and such a national repositioning is probably the single biggest benefit the new administration has to offer.

Japan is changing. Following a period of some confusion over the next months, it will likely see more fundamental changes in the mid-to-long term. Some observers believe the new focus on consumers will give businesses room to maneuver, particularly in areas like restructuring — something that has long been overdue at many Japanese firms.

This change in environment demands from all players involved a rethink and reformulation of their specific positioning.

That also applies to doing business in and with Japan. Foreign companies and other players should rethink their messages and — more importantly — how to get them out clearly to customers and business partners. Japan is still the world’s second-largest economy and many of its companies are among the leaders in their respective industries. There has never been more willingness and need in Japan to listen to new ideas and concepts than there is today.

Jochen Legewie is president of German communications consultancy CNC Japan K.K.