Japanese lessons on the art of economic rebounding

The country struggles to recover from its lost decade and the earthquake. The Seattle economy is quite dependent on Japan, and we have lessons to learn from their strategic approaches.

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Canal City, a shopping complex in Fukuoka, Japan.

The country struggles to recover from its lost decade and the earthquake. The Seattle economy is quite dependent on Japan, and we have lessons to learn from their strategic approaches.

Opening scene: the central shopping district in Fukuoka, Japan, the main city on the southern island of Kyushu. It's October 10, a national holiday, and the district is crowded with strolling shoppers, many carrying purchases from the wide range of stores. The weather is beautiful, so an international visitor would be surprised to learn the national economy has been flat since the bubble burst in 1989 and the national mood has been somber since the Tohoku earthquake. The world’s third largest economy and one of our top three trading partners seems to be a vibrant place.

But Japan, Europe, and the United States are all infected with the same disease, affecting nations that until recently have been satisfied with life. All have been unconcerned with the dramatic changes that have taken place in the global economy over the past decade. The Softbank Hawks, Fukuoka’s baseball team, are leading their division by 16 games; the Huskies are winning again; European teams are being selected for the World Cup. It has been a comfortable life for the majority of citizens. And now China and India, Greece and Ireland, property bubbles and the banking crisis have all begun to creep into the collective consciousness.

Recently I was invited to deliver the keynote address at a conference in Fukuoka. The invitation was issued by a new public-private partnership modeled after our local Prosperity Partnership. The purpose of this partnership is to develop an economic strategy for Fukuoka. My visit included a visit to Kitakyushu, Tacoma’s sister city. Kitakyushu is the same size as Fukuoka and about the same distance from Fukuoka as Tacoma is to Seattle, setting up a rivalry. I was also asked to speak to the management team of the Aso Corporation, one of the biggest companies on Kyushu.

These occasions gave me an opportunity to take the temperature of Japan. The country has a new prime minister, the sixth in five years. The country’s population is shrinking. This keeps the unemployment rate low but in the absence of immigration it also creates employment and skill issues. The population is quickly aging. A lead story in the newspaper reported that the government was considering raising to 70 the minimum age for eligibility for public pensions.

Since many Japanese must retire at 60, a bridge job is required. I saw an example of this when riding up a tramway to see Kitakyushu from a viewpoint. The tramcar operator knew my escort since he had previously worked for the economic bureau before retirement. It would be like meeting Steve Johnson, head of economic development for the city of Seattle, serving as a “Ride The Duck” driver while awaiting social security.

Japan remains the world’s third largest economy and one of our region’s most important economic partners. The health of Japan has an impact our regional economy. The recent ANA delivery of the first Boeing 787 is a visible reminder of the relationship, as is the forthcoming annual dinner of the Japan-America Society, established in the 1920s. Japan is one of our principle generators of overseas tourists, trade customers, and investors. Japanese students attend our colleges and universities. There are two public Japanese gardens in Seattle and many more in the Puget Sound region.

Japan is a centralized country with significant control in Tokyo. Now its population seems to be seeking new leadership. The leadership difficulties in the capital and growing decentralization are reasons the new strategy is being created. Fukuoka also has a new leader, Mayor Takishima, a 37-year-old former TV journalist — Fukuoka’s Charles Royer. Another sign of change: he is an independent in a country that is party controlled.

The conference I attended in Fukuoka had a full day strategy session which included government, business, and university representation. The staffing was the next generation and included a number of women. The challenges facing the country internally, coupled with the growing competitive challenge from China and other countries, are creating an atmosphere for change. One of the important challenges discussed was methods to attract and retain talent since Tokyo is such a big magnet.

My keynote address looked at the changing world, the need for a strategy, and the requirement for partnerships. I outlined the challenge to cities of global competition and the need for a local strategy. I used the Trade Development Alliance of Greater Seattle as a model of how business, government, and educational interests can work together in their common interest. I emphasized that the approach should encompass the metro area and not be just city-centric. I suggested making a more vigorous effort to attract talented women to Fukuoka by making it the best city in Japan for talented women.

The 100 or so participants selected 12 sectors to focus on including talent, higher education, fashion, tourism, food, and attracting more foreign investment. The city wants to use its proximity to Korea and China to its advantage.

The visit to Kitakyushu was also instructive. This city has been designated by the central government as Japan’s center of the environmental industry. I visited a new company that is a partnership of three companies manufacturing a plant that makes sewage or seawater drinkable. The plant in Kitakyushu mixes the two. Toray, a company with a major presence in Tacoma, is one of the partners. The company is selling and building the plants around Asia in regions needing water. Kitakyushu is filled with environmental research and companies. The city government’s water and sewer utilities have formed a company to market their expertise. Kitakyushu presents itself as the environmental gateway to Asia.

What is happening in Japan is important to our region. For example, one of our challenges is the employment of less educated workers as technology and outsourcing displace many jobs. The population shrinkage in Japan is leading to the use of robotics in the service sector, creating a revolution in a new set of less skilled positions. For example, the office receptionist of the future may be a humanlike robot who will be leased, work 24/7 and speak multiple languages. He or she can look like whomever you want. Robots deliver supplies in hospitals and guard dog robots protect your home.

The Fukuoka effort showed how Japan is trying to pull itself out of its "lost decade." I saw many young professionals engaged in working to improve their city and its economy. Many had studied overseas or worked in different countries, and so they brought an international perspective to the challenges they faced as well as an instinct for partnerships and focused strategies.

Here at home, the Prosperity Partnership is in the process of updating our regional strategy. Japan and many other cities in the world economy teach us the importance of having a smart and specfic game plan to create and retain jobs in this region.



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