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Go Abroad

Melissa Parlour recounts when Go Abroad Economics took 12 economics students to Japan

May was filled with exams and excitement for the twelve lucky economics students bound for Japan following the completion of exams. Armed with passports, rail passes, and economic background knowledge, we flew to Osaka and began a 12-day journey across Japan going as far south as Hiroshima, and as far north as Tokyo. We not only saw the sights and enjoyed Japanese culture and cuisine, but also met with Japanese companies and organisations to discuss the current economic environment in Japan as well as their organisations’ and the country’s prospects.

In preparation for this trip, students and staff met on a weekly basis starting in January, presenting and discussing economic concepts in the context of Japan, as well as the culture and potential experiences we should prepare for. We learned about the economic and political history, and discussed the potential issues Japan is facing now or in the future.

Scottish Whisky & Japanese Sake
In Tokyo we met with Scottish Development International, to learn about the Scottish-Japanese investment and trade relationship. Here we learned that Japan is one of the UK’s largest export markets, and that there are 85 Scottish businesses with parent companies registered in Japan, employing 6,250 local people with a nearly £1.5 billion turnover. These companies range from finance firms including RBS and Aberdeen Asset Management to retail ranging from Hunters to Johnstons of Elgin and Hawick Cashmere. The growth rates are large, with 4.6% average annual growth in exports, nearly 9% employee growth, and 12% turnover growth. Unsurprisingly, whisky made up a large proportion of Scottish food and drink exports, representing 77% of the £98.7m in food and drink sales in 2015. With regards to Japanese companies in Scotland there is likewise a lot of activity. For example, Nikon expanded its presence in Scotland by acquiring Fife-based eye specialist Optos valued at £259m, signalling a long-term move into the medical sector for Nikon.

This strong Scottish connection put our trip into context as we discussed the avenues open to Scottish companies in Japan and vice versa. Here we were able to gain the macroeconomic perspective that was reemphasized when we met with Bjorn Kongstad, the policy director of the European Business Council (EBC) in Japan. The EBC is a lobby organisation focused on trade policy and improving business opportunities for Europeans in Japan. Bjorn discussed the trade history of Japan including trade agreements and negotiations, emphasising that incentives are mostly aligned, and both sides of the table are seeking to increase trade. However, the Japanese system is unique in its approach to trade and this has caused issues in trade negotiations and dealings.

One Step Behind
Japan is incredibly ahead in many ways, but it is also incredibly complicated in ways that the rest of the world has managed to simplify. In trade, for instance, Bjorn gave the example of customs and trade regulations. In Japan there are nine customs administrations while many countries only have one.

Furthermore, we met with Cogent Labs, a high-tech artificial intelligence company, whose main source of profit is a digitisation technology for computerising Japanese characters, employed on widespread bureaucratic paperwork. While they were seeking to advance technology in one of the most advanced countries in the world, they were profiting off of the paperwork-heavy society that remains decades behind in computerising daily nuisances such as paperwork.

Many Steps Ahead
While Japan is behind in their use of paperwork, they are ahead in many other ways. From vending machines that sensed what soft drink you wanted, to chemical and manufacturing technology, Japan lived up to its technologically advanced stereotype. One visit that emphasized this was with Nicca Chemical in Fukui where we learned about a history of textile chemical production, felt fabrics not yet on the market, and discovered interesting overlap in chemicals that lead to a firm producing aviation grade materials and shampoo on the next production line over.

Another example of the innovation and technological prowess could be seen in our visit to the space centre where we saw years of innovation and heard about the collaboration between space programmes and witnessed it first hand. Additionally, witnessing the production line at Mazda highlighted the automobile industry and the innovation Japan is known for with regards to this.

Advancing Poverty
One of the most distinctive ways we saw Japan leading the world was in a visit with a charity in the Kamagasaki area of Osaka. Kamagasaki is Japan’s largest slum with approximately 25,000 people, significantly larger than the Tokyo equivalent, Sanya. Ever since the 1960s, this area has been the safety net of Japan with shelters and day labourer opportunities centred out of the Arin Labour and Welfare Centre. Here we spoke with homeless residents about their day-to-day lives and the opportunities available for them.

Following our discussion with the area’s residents we spoke with Arimura Sen, the director of the Kamagasaki Regeneration Forum, who reminded us that although today we celebrate Kamagasaki’s success as a ‘modern slum’, it was not always like this and there was a lot of work to get to this point.

Once plagued with crime and disorder, one of the most interesting changes implemented in the regeneration of the area’s safety was the inclusion of homeless people’s rights in the school curriculum. As much of the crime was done to the homeless rather than by them, this went a long way in informing potential future criminals that what they were doing was against human rights, decreasing the crime rate in the area over time.

Overall it was argued that the success of Kamagaski was rooted in well-aligned incentives for all stakeholders. For example, government benefits increased with the number of days worked in a month and the area’s shelters closed at 4:30am to motivate residents to get to the Arin Labour Centre for the 5am start to get a day labourer job.

Furthermore, we were reminded of the consequences of success. Luxury hotels are now buying up land and building mile-high resorts far out of reach from the average resident. This is pushing up land prices and limiting the opportunities of residents. This will be a challenge for the area to overcome in the coming years.

Stuck in the Past, Far in the Future
While Japan continues to push the boundaries in technology, they hold on to the past in various ways. Through handwriting almost all legal and bureaucratic documents, to hand-making brushes to do this with, Japan holds on to its cultural history as well as methods of the past while advancing the capabilities and possibilities of technology on a global scale. Through meeting with companies and organisations across Japan we were able to see not only the economic history at play, but also catch a glimpse of the future issues Japan will need to overcome to reach its potential in the coming years.

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