Kansai is in need of some youthful innovation

by Eric Johnston

Staff Writer

In its latest report, released Feb. 12, the Kansai Economic Federation presented mixed news about the local economy. Looking at monthly sentiment in eight different areas ranging from industrial production to housing purchases to sentiment toward China, the report showed that, on the whole, 2015 was good for trade and employment (at least for firms using low-wage, part-time, nonunion employment) and not so good for public works, partially because pet projects Kansai wants Tokyo to help fund (an Osaka extension of the Hokuriku shinkansen, redevelopment of Osaka Bay) remain undecided.

And China? Despite the huge influx of Chinese tourists to the Kansai region, which is propping up the local service economy, most of those surveyed were neutral to pessimistic last year, although that may be due to the fact Kansai Economic Federation leaders tend to represent manufacturing companies that don’t directly benefit from the Chinese tourism boom.

Yet the report merely confirmed the generally cautious status-quo thinking at the annual Kansai Economic Seminar, which preceded the report by a week. Anyone hoping to find bold young entrepreneur types whose vision, creativity and outside-the-box thinking was driving the region forward was likely disappointed. Instead it was the usual collection of (mostly) old men, chauffeured to the conference in their black or dark blue Nissan Century sedans, the kind that used to be associated with Liberal Democratic Party leaders (and certain other kinds of organizational leaders). “The same as it ever was,” as David Byrne once sang.

Especially shocking this year, however, was the fact that the one major upcoming business development that has the potential to create new jobs, attract the best and the brightest entrepreneurs and spur technological development and new investment was also the one topic that felt almost taboo among attendees: deregulation of Japan’s consumer electricity market in April.

There’s already a gold-rush mentality present, with new firms entering in droves to take on the cartel of regional utilities. No doubt consumers will have to beware of deals from the upstarts that look too good to be true. But although deregulation was mentioned at the Kansai Economic Seminar, it was done so almost in passing. It should have had its own session, and been not a topic of discussion, but a main topic of discussion.

Kansai’s corporate leaders always find time at these gabfests to pontificate about things like “education reform” (translation: more vocational training for those who don’t pass select university entrance exams) and the importance of the Japan-U.S. relationship (translation: the bilateral military/industrial complex).

Why can’t they devote more time to detailed discussions of new business opportunities in their own backyard? Well, let’s see. The Kansai Economic Seminar took place just after Kansai Electric Power Co. restarted their Takahama No. 3 reactor. And then, wonder of wonders, Kepco, which was in the red for the past five years and had raised electricity bills when the nuclear plants were off, suddenly announced it was now expected to be in the black and that rates might be lowered.

Who is the head of Kepco? Its chairman is Shosuke Mori. And who is the head of the Kansai Economic Federation, a major supporter of the Kansai Economic Seminar? Why, it’s Shosuke Mori!

Could it be that the last thing the old men at Kepco — which lost more than 5,000 corporate and local government customers in 2014 to competitors like Osaka Gas — wanted their fellow travelers at the Kansai Economic Forum to discuss was what the upcoming deregulation might mean for Kansai-based businesses? Especially those businesses run by younger entrepreneurs who see electricity generated by natural gas and renewables, not nuclear power, as the key to Kansai’s energy —and economic — future?

Perish the thought.

View from Osaka is a monthly column that examines the latest news from a Kansai perspective.