Switzerland Global Enterprise hosted their annual Impulse event in February 2017, this time on the topic of the “4th Industrial Revolution”.
Guests included speakers from Credit Suisse discussing the performance of the Japanese economy, the Japanese External Trade Organisation (JETRO) Geneva presenting the advantages of doing business in Japan, the Japanese Ministry of Economy Trade and Industry (METI) with examples of how Japanese businesses are adopting new business strategies, two Swiss businesses reporting on their expansion into Japan, and the Swiss-Japanese Chamber of Commerce (SJCC).
Two other guests were the Swiss ambassador to Japan, HE Jean-Francola Paroz, and the Japanese ambassador to Switzerland, HE Etsuro Honda. It was very interesting to see two people in the same role talk about their impressions of the similarities and relationship between the two countries.
HE Paroz pointed out that Switzerland sees Japan as a strategic partner, and that as a small country Switzerland saw it as a challenge to bring something interesting to the table. He also mentioned that Japan is currently Switzerland’s fourth largest trading partner, and that Switzerland ranks number six for foreign investment in Japan. He sees the relationship between the two countries as both excellent and strong, with many sister cities (and cantons/prefectures), double taxation and social security agreements, and stable national governments and legal systems.
He also mentioned values that he sees as shared between the two countries that make them well suited to work together:
- respect for quality and hard work
- concern for the common good
- ability to integrate innovation and tradition
HE Paroz also commented that reducing costs for current products or services was less effective than offering innovative products and services, which is what he expected from Industry 4.0.
HE Honda remarked that the problem with Swiss-Japanese relations was that there are no problems! Instead of having to concentrate on resolving known issues, the ambassadors were more focused on the open-ended and undefined task of growing the already positive connection between their countries.
A former economics adviser to Japanese Prime Minister Shinzō Abe, HE Honda spoke about the difficulties caused by Japan’s long recession (the “lost decades”) and how Abenomics was trying to rectify the situation. Reminiscing about his time in New York when he had contacts at the Federal Reserve, he remembered being warned that deflation was not just the opposite of inflation and could cause serious problems if left unchecked. He also discussed the timing of the increases in Japanese consumption tax, which was introduced in 1989 at 3%, increased to 5% in 1997, then to 8% in 2014, with the final increase to 10% planned for October 2019, right before the Tokyo Olympic Games. He felt that the timing of these increases resulted in decreased growth and triggered and/or extended recession.
He also commented that there was a perception among Bank of Japan officials that the recession was structural, linked to demographic changes in the Japanese population with its rapidly ageing workforce. However, he noted that other countries with similar demographics were not experiencing the same economic effects and came to doubt this explanation. He reflected that younger Japanese can no longer expect the same working conditions as their parents, instead facing lower salaries and loss of security with the rise of temporary and contract work. He reasoned that an effort to improve conditions and productivity is needed to increase consumer spending and encourage the younger generation to choose to take on the responsibility of starting a family.