Chicago Shimpo
Back to Main
“Walk in U.S. Talk on Japan”
Ambassador Sakaba Speaks about Today’s Japan

• Mitsuo Sakaba, former Consul General of Japan in Chicago, former Ambassador of Japan to Vietnam and the Kingdom of Belgium, discussed on the current issues about Japan from security policy to Abenomics on September 18 at the Japan Information Center, the Consulate General of Japan in Chicago. The event was hosted by the Japan America Society of Chicago in conjunction with the Consulate.

• His visit to Chicago was a part of the “Walk in U.S. Talk on Japan” program, which has sent groups of Japanese to the U.S. to discuss the strengths and appeal of Japan since 2014.
• The members, who accompanied him, were Keiji Shigeoka, former president of Itochu Petroleum Co., U.S.A.; Eri Fuwa, a Toyota City official; and Akira Nishikawa, a student at the Trinity College Dublin in Ireland with experiences in student group activities, international conferences, and of studying abroad in India.

• Ambassador Sakaba’s talks included Japan’s current economy, social issues, energy issues, free trading, and security issues.

• Current Economy

• When Prime Minister Shinzo Abe took his office in December 2012, he announced economic initiatives called “Abenomics”, which consisted of three components of economic strategy or “three arrows”, to revive a Japanese economy that had suffered from two-decade-long recession and deflation.
• The first arrow is a monetary easing policy that resembled to the FRB’s quantitative easing. The second one is fiscal expansion to inject more money to the private sector to invigorate Japan’s economy.
• Sakaba said that the two arrows have brought positive results so far although the results were not 100 % fulfilled. “So we are trying to overcome this tough challenge for the government and Japanese economy to change this stream of deflationary pressure in order to change our economy and society,” he continued.

• The third arrow is a structural reform of the Japanese economy with deregulations and innovations, along with foreign investments.
• Japan achieved 1.5 % inflation last year and has been trying to reach 2.0 % inflation this year. However, it would be difficult to achieve it this year due to low oil prices and recessions in other countries, although Japan has been challenging to reach the goal.

• Another economic issue of Japan was heavy public debt, which has reached 220 % of GDP. Although some economists said that injecting more money to the economy by fiscal expansion was not healthy under the condition, economic revitalization must be implemented by creating more spaces for economic activities and getting more tax payments. Sakaba said, “We still must inject public money to revitalize the economy. Prime Minister Abe has been trying to overcome the problem of public debt in this way.”

• Energy Policy

• Japan completely stopped operation of nuclear power generation after the Fukushima Daiichi incident that was caused by the earthquake and tsunami of March 11, 2011. For four years after the incident, Japan has generated necessary energy by coal, gas, oil, water, and other reusable methods. However, when Japan takes into consideration the problems of climate change and greenhouse gas emission, the country should seek a new way. Only 11 % of the energy supply has been covered by renewable energy so far.

• To supply enough energy to economic sectors and homes, Japan has embarked on a New Energy Mix Strategy that ensures nuclear power generation will supply 20 % of Japan’s energy. The percentage was 30 % before the Fukushima Daiichi incident.
• Sendai nuclear power station in Kagoshima Prefecture restarted its operation last August.

• Social Impact on Economy

• The average age of Japanese is 47, while Americans’ average age is 37. Japanese women’s life span is 87, and 80 for Japanese men, so Japan has aging-society issues.
• One third of Japanese government expenditures go to social security; that has caused a challenge to make a balanced budget.
• A declining birthrate is also a problem in Japan. The phenomenon has made it difficult for Japan to sustain its pension fund. To cope with the situation, the Japanese government has been asking Japanese women to join the labor market.
• Currently, 60 % of Japanese women, who are in productive ages from 15 to 55, have participated in the market, and the government wants to increase the ratio to at least 70 %, the average of developed countries. To achieve the goal, the government is going to allocate its budget to increase the number of child-day-care centers, so that women can continue to work after having a child.

• Japan also is going to invite foreign workers, particularly in some sectors of nursing, caretaking, and construction. The government has examined new policies on aging. Another way to tackle the aging society is robotics.
• The aging society issue will come to other countries sooner or later, so Japan is going to be a model, aging society with sustaining economic and social activities.

• Security Policy

• Japan’s new security law recently was passed by the parliament in one day. The new legislation enables the expansion and promotion of US-Japan cooperation amid the increased tension in East Asia. The new laws will make possible closer cooperation between the two countries in terms of the defense of Japan. If the U.S. forces are attached by a third party, the Japanese Self Defense Force is able to help it.

• ****************
• Japan’s Unique Entity, Sogo Shosha

• Keiji Shigeoka, former president of Itochu Petroleum Co., spoke about the unique feature of Japanese trading companies which are called “sogo shosha” in Japanese.
• Japan is only 4 % of the U.S. in size, but has a large population of 120 million, which is about 40 % of the U.S. In another word, “Japan has abundant human resources,” Shigeoka said.

• Four major trading companies are Mitsubishi, Mitsui, Itochu, and Sumitomo, which were founded in 1873, 1876, 1858, and 1919 respectively.
• Shigeoka said, “They are old companies, but not obsolete.”

• The companies started to import natural resources from other countries and export “made in Japan” products. They handle about 30,000 items from noodles to satellites. Because they handled huge quantities, a trading company was divided into divisions, and the trading companies are called “Division Companies.”
• All trading companies contributed 19 % of Japan’s GDP in 2012.

• The trading companies had led Japanese industries by playing the role of intermediary, and their major revenue came from commissions until the 1980s. However, the business circumstance changed when Japanese big companies such as Sony, Panasonic, Toyota and Nissan began to set up offices abroad.

• Shigeoka said, “The key word is change,” to survive in new circumstances. Each trading companies had human resources, who had various experiences in foreign business environments, so they could invest in profitable business areas such as oil, tanker transportation, oil storage, and more.
• He said that the human resources were the most precious intangible asset and enabled their business changes to survive.

• A Quick Interview with Shigeoka

• Q: Why are Japanese trading companies unique?

• Shigeoka: All divisions are not always profitable, but profitable divisions cover non-profitable ones. This kind of business operation doesn’t exist in other countries.

• Q: The business commissions have increased?

• Segeoka: No. They don’t make a profit, so we operate profitable companies directly that have become major revenue sources now.

• Thank you.

Ambassador Mitsuo Sakaba