AIZU-WAKAMATSU, Japan — Mayor Shohei Muroi knows it is a tough sell to get new companies to invest in this struggling industrial city just 60 miles from Japan’s most notorious nuclear plant.So in September, Mr. Muroi did the unthinkable.
He flew to China to ask a fast-growing maker of heavy machinery to set up shop in his town. His move was a stark role reversal in a nation more accustomed to sending factory jobs to China, rather than recruiting them to move the other way.
“We’ve come to a point in Japan where we can no longer grow without outside help,” Mr. Muroi said in an interview here. “Whether you are based in China or America, we want you to please come do business in Aizu-Wakamatsu.”
Call it the post-tsunami economic order. Japan, once a manufacturing powerhouse known for its exports and overseas investment, is confronting a new reality.
A year after natural and nuclear catastrophes forced wrenching change on Japan’s economy, which was already listless from years of downsizing and moving factories offshore, the country is finding it must do what it has long resisted: welcome foreign manufacturers.
The new dynamic in Japan also signifies part of a larger regional power shift. A small but rapidly increasing amount of foreign capital comes from its rising neighbor, China, which last year surpassed Japan as the world’s second-largest economy and is looking to diversify its export-oriented approach to business.
Other recent Chinese manufacturing deals with Japan include plans for a plastics plant in Tottori and a heavy machinery factory in Kochi, both in western Japan.
“The Chinese are starting to look like saviors,” said Kotaro Masuda, an economist at the government-affiliated Institute for International Trade and Investment in Tokyo. “Any investment Japan gets is basically a plus, wherever it’s from, because it means more jobs, more tax income, more opportunities.”
Last month, the government invited a delegation of 80 Chinese trade officials and executives for an investment tour. Japan now says it aims to double the flow of foreign direct investment into the country in the next decade.
A special focus is on the three prefectures most affected by the March 2011 disasters: Iwate, Miyagi and Fukushima, where Aizu-Wakamatsu is.
“We greatly welcome investment from abroad in the disaster zone, which will help with reconstruction,” Prime Minister Yoshihiko Noda said in a recent interview with journalists.
Direct investment from China to Japan jumped twentyfold in four years, to $314 million in 2010, according to data from Japan’s Finance Ministry — though as an overall percentage of investment into Japan, money from China remains small.
Some experts say the true figure is much higher, however, because a large amount of Chinese investment is carried out through Hong Kong and other regions.
The new openness, if it lasts, will require Japan to break decades of habits that have discouraged foreign investment here, even as most other developed countries have done everything possible to lure foreign capital.
The Japanese impediments have included relatively strong regulations, high operating costs and tax rates, and weak government inducements — not to mention what outside observers have often described as overt xenophobia.
According to data compiled by the United Nations, Japan has one of the lowest levels of foreign investment.
Japan’s inflow of direct foreign investments came to just 0.24 percent of its gross domestic product in 2009 — and even turned negative over all in the two years after that. In 2011, overseas companies moved 183 billion yen ($2.3 billion) more out of Japan than they put in, according to the Finance Ministry.
Even now, many of Japan’s own companies are preferring to put their money into growth opportunities abroad rather than at home.
The same figures show that the net outbound investment from Japan reached 9.1 trillion yen ($113 billion) in 2011, accelerating the so-called hollowing out of Japanese industry long bemoaned by the nation’s policy makers.
nytimes.com
He flew to China to ask a fast-growing maker of heavy machinery to set up shop in his town. His move was a stark role reversal in a nation more accustomed to sending factory jobs to China, rather than recruiting them to move the other way.
“We’ve come to a point in Japan where we can no longer grow without outside help,” Mr. Muroi said in an interview here. “Whether you are based in China or America, we want you to please come do business in Aizu-Wakamatsu.”
Call it the post-tsunami economic order. Japan, once a manufacturing powerhouse known for its exports and overseas investment, is confronting a new reality.
A year after natural and nuclear catastrophes forced wrenching change on Japan’s economy, which was already listless from years of downsizing and moving factories offshore, the country is finding it must do what it has long resisted: welcome foreign manufacturers.
The new dynamic in Japan also signifies part of a larger regional power shift. A small but rapidly increasing amount of foreign capital comes from its rising neighbor, China, which last year surpassed Japan as the world’s second-largest economy and is looking to diversify its export-oriented approach to business.
Other recent Chinese manufacturing deals with Japan include plans for a plastics plant in Tottori and a heavy machinery factory in Kochi, both in western Japan.
“The Chinese are starting to look like saviors,” said Kotaro Masuda, an economist at the government-affiliated Institute for International Trade and Investment in Tokyo. “Any investment Japan gets is basically a plus, wherever it’s from, because it means more jobs, more tax income, more opportunities.”
Last month, the government invited a delegation of 80 Chinese trade officials and executives for an investment tour. Japan now says it aims to double the flow of foreign direct investment into the country in the next decade.
A special focus is on the three prefectures most affected by the March 2011 disasters: Iwate, Miyagi and Fukushima, where Aizu-Wakamatsu is.
“We greatly welcome investment from abroad in the disaster zone, which will help with reconstruction,” Prime Minister Yoshihiko Noda said in a recent interview with journalists.
Direct investment from China to Japan jumped twentyfold in four years, to $314 million in 2010, according to data from Japan’s Finance Ministry — though as an overall percentage of investment into Japan, money from China remains small.
Some experts say the true figure is much higher, however, because a large amount of Chinese investment is carried out through Hong Kong and other regions.
The new openness, if it lasts, will require Japan to break decades of habits that have discouraged foreign investment here, even as most other developed countries have done everything possible to lure foreign capital.
The Japanese impediments have included relatively strong regulations, high operating costs and tax rates, and weak government inducements — not to mention what outside observers have often described as overt xenophobia.
According to data compiled by the United Nations, Japan has one of the lowest levels of foreign investment.
Japan’s inflow of direct foreign investments came to just 0.24 percent of its gross domestic product in 2009 — and even turned negative over all in the two years after that. In 2011, overseas companies moved 183 billion yen ($2.3 billion) more out of Japan than they put in, according to the Finance Ministry.
Even now, many of Japan’s own companies are preferring to put their money into growth opportunities abroad rather than at home.
The same figures show that the net outbound investment from Japan reached 9.1 trillion yen ($113 billion) in 2011, accelerating the so-called hollowing out of Japanese industry long bemoaned by the nation’s policy makers.
nytimes.com
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