Chicago Hosts 52nd Midwest U.S.-Japan Joint Conference

Opening scene of the 52nd Midwest U.S.-Japan Joint Conference. The speaker is Rahm Emanuel, US Ambassador to Japan

More than 300 business leaders, diplomats and governors from Japan and the U.S. Midwest states gathered in Chicago Sept. 11-13 for an annual joint conference to discuss the future of Japan-Midwest economic relations.

The 52nd joint meeting of the Midwest U.S.-Japan Association (“MWJA”) was held at JW Marriott Hotel in Chicago. A total of 317 people congregated in person for the first time since 2019, after a three-year gap caused by the COVID-19 pandemic.

The annual conference began in 1967 with a goal of promoting mutual trade and investment between the U.S. Midwest region and Japan. After Chicago hosted the first meeting, Tokyo and a city in one of the participating Midwestern states have been taking turns to host the meeting each year. Currently, 12 Midwestern states are members of the Association.

This year’s agenda centered on the theme: “Building the Next Economy Together.” Business leaders from Midwest-based Japanese and U.S. companies engaged in three panel discussions about innovation, collaboration and sustainability, while ambassadors and governors from both Japan and the U.S. shared their views on the economic future of Japan and the Midwest in their remarks and presentations.

Rahm Emanuel, U.S. Ambassador to Japan, delivered the opening remarks, while Koji Tomita, Japanese Ambassador to the U.S., made keynote remarks. Remarks and presentations followed by Hiroshi Tajima, Consul-General of Japan in Chicago; Yusuke Shindo, Consul-General of Japan in Detroit; Illinois Gov. J.B. Pritzker; Indiana Gov. Eric Holcomb; Nebraska Gov. Pete Ricketts; Michigan Gov. Gretchen Whitmer; Ichita Yamamoto, Gov. of Gunma Prefecture; and Taizo Mikazuki, Gov. of Shiga Prefecture.

Gordon Dobie, an Illinois-based attorney, and Takeo Inokuchi, Honorary Advisor of Mitsui Sumitomo Insurance Co., co-chaired the conference. Inokuchi replaced Yuzaburo Mogi this year, who is Kikkoman’s Honorary CEO and Chairman of the Board and the conference’s long-time Japanese chairperson.

Opening Remarks: Takeo Inokuchi, Chairperson

Inokuchi stated that it is extremely meaningful for Japanese and American business leaders to resume the tradition of the MWJA and meet in person after a three-year hiatus, while the world faces urgent social and economic issues.

The issues include the widening economic disparity across the world and the worsening deterioration of the environment. Meanwhile, Russia’s invasion into Ukraine and the ensuring war is disrupting global economic activities, threatening secure delivery of food and energy and accelerating worldwide inflation.

Countermeasures to fight these problems are undertaken by the private sector as well as the public sector in Japan and the U.S. One example Inokuchi talked about is the research to mitigate the worsening impact of microplastics on our environment.

Japanese corporations are developing a type of plastic that can be broken down by bacteria. Commercialization has begun, and it is now used in straws, coffee cup lids, disposable hotel toothbrushes, and more, Inokuchi explained.

The conference is a place to update and inform each other on such technological progress and advancements that have been made over the past three years, while networking with old and new partners, Inokuchi reminded.

“During this meeting, I hope to see new networks and true friendship emerge among the people from the public sector, business community, and academia,” he concluded.

Gordon Dobie, Chairperson

Despite the hardships the world has gone through over the past two pandemic years, Dobie informed that all investments in the U.S. from Japan, especially in the Midwest, has increased during that period.

The Midwest-Japan relationship has also been strengthened and understanding between the MWJA members also increased, he said.

While known as an agricultural region, the Midwest has a diversified economy including many manufacturing industries that are supported by a highly skilled workforce. The region is capable of providing professional services and supporting business growth. That is the reason why many of the MWJA member firms are investing in the Midwest, Dobie said.

“I’m hoping that spending time together at this meeting will strengthen our relationship and increase our mutual understanding,” Dobie said.

Rahm Emanuel, U.S. Ambassador to Japan

Having served two terms as the Mayor of Chicago, Emanuel knows the Midwest region has many incentives for investment. In his opening remarks, Emanuel spoke about investment in the U.S. – specifically, in the Midwest – and the reasons why it is so attractive.

The Midwest region, said Emanuel, has four particular strengths for investment: a great work ethic, the excellent university system, a great geographical location, and a very affordable supply of long-term energy and fresh water. These features are key for making strategic investment decisions.

Nearly half (about 46%) of all investment work visas issued in the U.S. are obtained by Japanese nationals. The Midwest’s strengths have a lot to do with it, he added.

There have been “unprecedented changes” in the U.S. investment environment, due to factors like the COVID-19 pandemic, military threats of China, and Russian invasion into Ukraine and the ensuing food and energy price increase.

For a long time, investment decisions were made based on cost and efficiency considerations. Now, those factors are replaced by stability and sustainability, which the U.S. has in abundance, Emanuel said.

The U.S. also has energy security. Stable supply of energy for the next 20 to 30 years is a key factor in international trade. The U.S. has an abundant supply of natural gas, renewable energy, nuclear energy, and hydrogen fuel, to name a few. This is a particular strength that the U.S. has for investment.

Another element in successful investment is data security. Traditionally, business success was measured by sales, but today, quantity is being replaced by data, Emanuel explained.

Japan and the U.S. signed a digital trade agreement in 2019, which Emanuel calls the “gold standard” of data agreement. It established high-standard rules in the area of digital trade, which play a fundamental role in securing data certainty in these uncertain times.

Over the last three years, Japan has been the number-one investor in the U.S. In turn, the U.S. remained the top investor in Japan.

With the important factors for investment - stability, sustainability, energy security, and data certainty – the U.S. has “a lot to offer” in the U.S.-Japan relationship, Emanuel said.

“Today, the United States and Japan are great friends, sharing the [same] sense of value and trust between us,” Emanuel concluded. “What’s exciting right now is that we will deepen our alliance in the next 30 years, and make it a model for the rest of the world.”

Koji Tomita, Japanese Ambassador to the U.S.

“The Midwest is the heart of the U.S.-Japan partnership,” Tomita began in his keynote remarks.

Japanese investment is now “empowering the Midwest,” with a total of $120 billion (approximately one quarter of the total Japanese investment in the U.S.) and employing about 260,000 people across the region.

Major U.S. corporations from the Midwest, in turn, have successfully invested in Japan. They include Dow Chemical, Procter & Gamble, and Ely Lily.

On the national level, what is happening in economic collaboration between the U.S. and Japan?

The world has seen great challenges over the past few years. Social and economic disruptions caused by the COVID-19 pandemic, competitions between the democracies and authoritarian regimes, and crisis in the Taiwan Straits region. In such a challenging environment, the U.S. and Japan are now trying to re-focus their economic partnership, according to Tomita. A focus of the two governments is on the strengthening of competition and resilience. Another is on the innovation promotion and supply chain protection.

In April 2021, President Biden and then Prime Minister Yoshihide Suga announced the launching of the CORE Initiative, or the U.S.-Japan Competitiveness and Resilience Partnership, which aims to broaden and deepen bilateral economic cooperation.

Under this initiative, the two governments are in agreement to promote cooperation in development of advanced digital technology, strengthen partnership in the areas of biotechnology, 5G, post 5G, AI, and quantum information science, and collaborate in securing semiconductor supply chain. Furthermore, cooperation is underway in the areas of climate & energy technologies, as well as hydrogen and nuclear power production.

Another important issue in this partnership concerns trade. Tomita explained that over recent years, international trade has been viewed in a negative due to such problems as unfair trade practices, negative impact on domestic industries and the U.S. withdrawal from the TPP talks.

To mitigate it, the U.S. and Japan has reaffirmed the importance of the two countries to maintain leadership in the Indo-Pacific region in encouraging free and fair trade practices.

For example, the emergence of a new form of business like “FinTech,” companies that use new digital technology to deliver financial services, requires new rules. Who takes initiative in making such rules? That is where Japan and the U.S. come to take leadership, Tomita said.

The goal of the CORE Initiative is to build an international community that shares the value and principle of a free and open Indo-Pacific. The U.S. and Japan both agree that local education through trade and investment is the primary means to achieve that goal, he added.

Tomita values that the CORE Initiative has a positive impact on Japan-Midwest economic partnership.

The Midwest has a great work ethic and a high quality workforce, a well-developed transportation network, a high level education and a safe environment, along with a great natural environment. These made the region a solid investment destination. The Midwest has “basic ingredients for success” as evidenced by many ongoing investments by Japanese corporations, Tomita said.

Expressing his full support of the Indo-Pacific Economic Framework initiative proposed by President Biden, Tomita called for the U.S. and Japanese governments to continue cooperating for the establishment of a free and open Indo-Pacific.

“I believe free value-based trade [in the Indo-Pacific] will bring substantial benefits economically and strategically, and the Midwest will be one of the primary beneficiaries,” Tomita said in conclusion.

J.B. Pritzker, Governor of Illinois

Pritzker appealed his state’s advantages and strengths to encourage investments by Japanese businesses.

Illinois opened its representative office in Tokyo in 1987, to foster bilateral trade and cultural relations. It has enabled the state to “provide targeted support” to Illinois companies that are seeking to operate in Japan, while facilitating foreign direct investment (“FDI”) to and from Japan.

“Japan remains one of Illinois’ top FDI markets today,” Pritzker said.

Illinois offers manufacturers easy access for transportation of goods to anywhere in the world, he continued. The state has five international airports and 14 international ports, as well as the third largest highway system in the nation. It’s also the only state that has seven Class I freight railroads.

The state is also a secure provider of power, producing ample electricity by nuclear, wind, solar and natural gas. Pritzker signed a long-term transformative energy plans last year to eliminate carbon emissions by 2050. The plans are designed to create jobs and produce more electricity through utilization of clean energy.

Pritzker also pushes for generous incentives to attract investments, specifically by electric vehicle (“EV”) manufacturers and parts suppliers. New EV production is already underway in the state at locations such as Joliet and Decatur.

Another strength of Illinois as an investment destination is its talented workforce and first-rate educational system. The U.S. News & World Report recently named the state’s educational system as among the very best in the nation.

Technology development and innovation in Illinois are also among the best in the world, with two national research laboratories and world-class research universities. Because of this, the state has been named as the world’s number-one new business incubator by 1871, a Chicago-based nonprofit organization that supports startups. The city of Chicago is also the number-one city in the country to house new and expanding businesses.

Pritzker said Illinois offers “extraordinary incentives and support” to help companies succeed and grow. It is evidenced by the fact that as of 2021, over 400 companies expanded and relocated to Illinois.

“So, we encourage you to consider Illinois as your home,” Pritzker said. “We welcome all of you, any of you, not just as our partner and friends, but as our neighbors.”

Hiroshi Tajima, Consul-General of Japan in Chicago

Stressing that the Midwest and Japan are moving forward together, Tajima mentioned cases of Japanese investment in the states in his jurisdiction as a handful of many.

Kikkoman Foods will celebrate its 50th year anniversary in Wisconsin next year. Toyota has announced an investment in Indiana. Panasonic has decided to establish a huge EV battery production plant in Kansas. Nippon Express USA has built a Chicago Logistic Center near O’Hare International Airport.

Tajima said Japanese companies are willing to team up with local communities that have a highly skilled workforce and an excellent work ethic. The Midwest region fills the bill, along with its geographical advantage. Currently, 2,500 Japanese businesses call 12 Midwest states home, providing about 250,000 jobs.

From the beginning of his tenure as the Consul-General, Tajima’s goal has been to bring Japan and the U.S. closer on the grassroots level.

To achieve that goal, Tajima said he uses every opportunity to bring a “Grassroots Caravan” to communities across the Midwest. The Grassroots Caravan initiative was created in 2017 as a joint program between the Consulate General of Japan in Chicago and the Japan External Trade Organization (“JETRO”) Chicago to reach out to communities where Japanese companies have invested and promote economic cooperation and mutual understanding. Tajima himself has visited all 10 states under his jurisdiction and various communities in them.

The Caravans are “a highly collaborative effort that works at all levels,” including the governors, mayors, legislatures, and Japanese businesses. They are effective in strengthening international ties and collaborations, Tajima explained.

The Caravans can also tell that there are common issues shared by both Japan and the U.S., including utilization of information and communications technology, and disparity between urban and rural areas.

“I believe that successful collaboration between Japanese and U.S. companies can not only address such issues, but further strengthen the U.S.-Japan relationship,” Tajima concluded.

Eric Holcomb, Governor of Indiana

The state of Indiana has been sending business representatives to Japan for over 20 years, and he has visited the country twice, Holcomb said.

He became the Indiana governor in 2017. Since then, the FDIin his state increased by 300%.

Currently, many Japanese companies are operating in Indiana, including Toyota, Subaru, Honda, Aisin, and NSK, employing about 70,000 people. Through productive collaboration, people of Japan and Indiana are now benefiting from these investments in the form of business growth and job opportunities, Holcomb said.

The state also has a tie with Gunma Prefecture. Holcomb and Gunma Governor Ichita Yamamoto signed a latest memorandum, confirming that they will continue strengthening economic, academic, and cultural ties between Gunma and Indiana.

While today’s economic activities are as challenging as they are, Holcomb said we all need to have a global perspective.

Having a partnership with Japan allows for the people from Indiana and Japan to think together what their economic future may look like, may it be in the form of energy, communication, or mobility. In the process, people must work to make their future visions a reality, not just hoping for it. Workforce development through high-quality education is critical for future success, Holcomb added.

Holcomb went on to mention the Indy 500 auto race victory by a Japanese racecar driver Takuma Sato. He won the Indy 500 in 2017 and 2020.

Sato and his pit crew demonstrated “a ton of productive cooperation” in their races at the Indy 500, Holcomb lauded.

Their strategy and cooperation was a great inspiration to the businesses in Indiana. We have a lot to learn from it when we prepare for our future, Holcomb said.

Taizo Mikazuki, Governor of Shiga Prefecture

Located east of Kyoto, in central Japan, Shiga Prefecture has the largest freshwater lake in Japan – Lake Biwa – in the middle of it. The presence of a large body of freshwater brought the prefecture and the state of Michigan together, and a sister-state relationship was created 50 years ago between the two. During these years, educational, cultural, economic and personal exchanges have been maintained between Shiga and Michigan, and more than 10,000 people visited Shiga.

Mikazuki is in his third term as the governor of Shiga Prefecture. He named the progressive spirit of the people of Shiga as one of their strengths.

Shiga has a long history of connecting to and accepting new ideas and technologies from China, beginning in the 6th century. Shiga’s relationship with the West began in the 16th century, as shown in the case of a powerful feudal lord Oda Nobunaga (1534-1582). In the early 20th century, William Merrell Vories, an educator and architect from Kansas, came to Shiga to teach English. The structure he built in Shiga still stands today, 100 years later.

The progressive spirit of the region has helped create an open and friendly environment for research and development activities. The prefecture today houses a number of research companies from Japan and the rest of the world, including a Procter & Gamble facility.

Shiga’s economic activities focus on environment and sustainability, emphasized Mikazuki. Panasonic, for example, has begun operations at its H2 Kibou Field in Shiga to demonstrate the world’s first full-scale use of hydrogen to supply all electricity from renewable energy.

Shiga has maintained a 300-year-old business model that was embraced by the “Omi [former Shiga region] merchants,” Mikazuki explained.

Omi merchants’ motto was “Sampo Yoshi,” which means three-way satisfaction: a practice that is good for the seller, good for the buyer, and good for society.

Today, Mikazuki said, the whole world seems to be leaning toward a similar idea, as expressed in the United Nations’ Sustainable Development Goals (“SDG”) and the Davos World Economic Forum. The “Sampo Yoshi” principle can also be seen in the idea of stakeholder capitalism, a global economy that works for progress, people and plant.

Letting the rest of the world know about Shiga’s Sampo Yoshi will lead to world peace and sustainability, Mikazuki said.

Ichita Yamamoto, Governor of Gunma Prefecture

Yamamoto is a 24-year veteran as a member of the House of Councilors, during which time he served as a Senior Vice-Minister for Foreign Affairs and a Minister of State for Special Missions. He became the governor of Gunma Prefecture in 2019. “Being a Diet member is nothing compared to what is required to be a governor of a prefecture,” Yamamoto said.

Located within close proximity to Japan’s capital – only about 1 hour from Tokyo by train – Gunma boasts its good accessibility, as well as its natural surroundings. Because of its natural standing as an inland prefecture, Gunma is less prone to natural disasters, including typhoons and earthquakes. Gunma is also known for its wealth of hot springs, dubbed as the “best onsen (hot springs) region in Japan,” and is home to numerous onsen (hot springs) resorts. All these features provide strong incentives to businesses that seek new locations, Yamamoto pitched.

While serving as the Governor of Gunma, Yamamoto is also a successful singer/songwriter. He has six CDs under his belt.

A guitar was brought to the podium. As a Gunma promotion video was shown on the large screen, Yamamoto played his guitar and sang “Country Road” and then “Stand by Me” to match the video, pitching about his prefecture’s natural beauty and tourist spots.

His intention of breaking a stereotype of Japanese businessman – a guy with glasses who passes his business cards to everybody he meets – served its purpose. He received a standing ovation when he finished his performance singing, “Stand by me, stand by you.”

Panel Discussions: “Innovation, Collaboration, and Sustainability”

Three panel discussions took place during the Conference: “Building Through Innovation” and “Building Through Collaboration” on Sept. 12; and “Building Sustainability” on Sept. 13.

James Carlin (Managing Director, Technology & Disruptive Commerce, JPMorgan Chase), Jun Suzuki (Chairperson, Teijin Limited), Ken Kabira (EVP & COO, Narita Mfg., Inc.), Tetsuo Ogawa (CEO, North America Region, Toyota Motor Corporation and President & CEO, Toyota Motor North America) discussed the importance and challenges of innovation for business and society.

The panelists, each a leading businessperson from the U.S. and Japan, shared their experiences and views, including innovation through collaboration with partnering companies, innovation through human resources development, promotion of diversity and inclusion to cultivate new ideas, and creation of corporate culture to encourage innovation. They also discussed risks of “bad ideas” in innovation, how to create a culture of risk-taking, and the importance of learning from failures.

The panel was moderated by David Baker, Executive Director of America’s Urban Campus.

     The panel consisted of Yuji Hirako (Member of the Board and Vice Chairman of ANA Holdings), Darin Buelow (Principal, Deloitte Consulting), Ryohei Tsuji (Senior Corporate Officer of Kikkoman Corporation and President & COO of Kikkoman Foods, Inc.), and Robert W. Karr, Jr. (Fuji Oil Co., Ltd.).

     During the discussion, the panelists agreed that corporations can go beyond competition and collaborate with each other if they realize they share overarching goals, such as decarbonization, inclusive and free mobility for all, and popularization of Japanese food across the world. Also, the panelists reported that new types of collaboration are occurring, including collaboration through purposeful interactions with competitors and collaboration that resulted from interactions between different industries.

     When a company operates in a community, communication is critical between all levels of stakeholders including the investor, the local government, and the local community. It boosts mutual understanding and collaboration, thereby ensuring successful business and reducing risks, the panel agreed.

     It was also argued that national-level support and assistance contribute to strengthening business collaborations between the U.S. and Japan. Case in point is the CHIP and Science Act (by the U.S. government), which will bring the U.S. and Japanese chip makers closer.

    Nobuhiko Sasaki, Chairman & CEO, Japan External Trade Organization (“JETRO”), moderated the panel.

    The panelists were Tyler Meyr (Lamar Johnson Collaborative), Kuninori Kuroishi (Senior Advisor of Marubeni Corporation), Naoaki Mashita (Vice Chairman of the Keizai Douyukai and Founder of V-cube, Inc.), and Melissa Washington (ComEd).

    The panelists exchanged views on how to build and expand sustainable business. Issues discussed include how to strike a balance between recycling operations and supplying goods in main business; the importance of bringing in specialists in the early stage of a project to integrate the aspect of sustainability. A view was also presented that a sustainable economic growth is possible in a society where old business models are replaced by new ones, and startups hold key in that process.

     Topics also covered an aspect from investors. It was pointed out that some investors seek to participate in sustainable environment building by investing in businesses that pursue sustainability. It was also argued that data-based evidence helps convince people into adopting sustainable technology. It was pointed out that in some areas, sustainability is now one of the essential points of consideration in doing business. It was also argued that an effective use of digital technology can help promote a sustainable business practice. For example, adverse environmental impacts were reduced under the pandemic, as people’s movements were restricted and remote work increased.

     The panel was moderated by Catherine Hurley, Strategic Planning & Sustainability, Program Manager at Argonne National Laboratory.

Closing Remarks

Yusuke Shindo, Consul-General of Japan in Detroit

Looking back on the MWJA’s first in-person meeting in over two years, Shindo said it has produced great results.

“We reconnected with long-term business partners and friends. We made new contacts. We gained insights on our conference themes of ‘Building through Innovation and Collaboration’ and ‘Building sustainability’,” he said.

Shindo was delighted to see the economic, governmental, cultural and people-to-people ties remain strong between the Midwest and Japan. In his jurisdiction of Michigan and Ohio, currently more than 920 Japanese business facilities operate, creating 105,000 direct employments.

The key reason the MWJA members gather every year, Shindo said, is that they recognize doing business together creates “win-win benefits” for companies and communities on both sides.

After commending many Midwest-based companies’ pandemic mitigation efforts, Shindo said that two industries – automobile and semiconductors – “hold great promise” for further collaboration between Japan and the Midwest.

Electrification and automation require “huge amounts of capital and technical know-how,” Shindo said, and once rival companies are now partnering in order to maximize precious resources.

For example, General Motors and Honda are co-developing affordable EV (electric vehicle) models for the North American market. Toyota and its partners are collaborating with May Mobility, an Ann Arbor, MI-based startup of autonomous vehicle technology.

EVs require more than double the number of semiconductors than traditional vehicles, Shindo explained, and a stable and proximate chip supply is critical. In this juncture, there is great hope that the recently passed CHIPS and Science Act will spark a more localized supply chain. The act provides approximately $280 billion in total to support the U.S. semiconductor industry.

Intel has announced a plan to build one of the world’s largest chip-making campuses in New Albany, OH. “This will create an epicenter of Midwestern technological innovation and research, and it’s further proof of the wisdom of investing in the Midwest,” Shindo said.

Semiconductors are not only essential to the auto industry, but also integral to sectors such as electronics, health care, biotechnology and defense. The semiconductor industry is the area where an expanded U.S.-Japan collaboration is expected, he added.

Takeo Inokuchi

Following Shindo, Co-Chair Inokuchi looked back on the three panel discussions over the past two days and said they bore fruits in laying groundwork for creating our economic future.

“We came to face today’s urgent issues through the three sessions – each about innovation, collaboration, and sustainability – and they produced many useful suggestions for actions and changes, useful for both Japan and the Midwest,” Inokuchi said. “We will work hard to let the world know the outcome of this conference.”

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