GLOBIS CEO Yoshito Hori Blog Views from an Entrepreneur

Launch of the G1 GLOBAL, an International Conference in Japan Attracting Leaders from Around the World

Globis — 2011-12-19T11:04:01+09:00

In 2009, I started the G1 Summit as the Japanese version of the Davos Forum. The concept was to change Japan by bringing together next generation of Japanese leaders from various sectors whom would become prime ministers, Nobel laureates, billionaires, and top business executives.

This meeting has produced three Cabinet members already: Seiji Maehara, Motohisa Furukawa, and Goshi Hosono. Another participant, Shinya Yamanaka is nominated for a Nobel Prize every year. From venture and other business circles, young billionaires like Hiroshi Mikitani and Yoshikazu Tanaka have attended this meeting.

The annual G1 Summit has been run extremely well for the past three years, but it had one problem. It lacked international character. Internationalizing a meeting is easy in an English-speaking country. All organizers have to do is to invite people from overseas. But language always becomes an issue when a meeting in Japan aims to internationalize its contents. After much thought, I reached the following conclusion:

“Let’s keep holding the G1 Summit entirely in Japanese language, while inviting foreigners who understand Japanese to this meeting, and keep it as a place for discussing Japan’s future. At the same time, let’s hold another meeting separate from the G1 Summit and create a place where leaders from around the world gather to discuss issues in Japan, the rest of Asia, and the world entirely in English.”

I named this second meeting the “G1 GLOBAL Conference” and decided to hold it on October 10, 2011, a national holiday in Japan. I chose to use the GLOBIS Tokyo campus as its venue to save our costs.
G1 stands for “Group of 1, Globe is one.” The two letters suggest “there is only one world” and “what matters is the Group of 1, not G20 or G7.”

The day the terrible Great East Japan Earthquake struck, I subsequently moved the G1 GLOBAL Conference back by one month and chose to hold it on November 3. I also immediately named a theme to be: “The Rebirth of Japan.”

I suspended planning of the Conference for a while, because the earthquake, the tsunami and the nuclear power plant accidents did not allow me for such activities. Under the circumstances, I chose to first contact speakers who are residents in Japan. Accordingly, I confirmed prominent leaders, such as Motohisa Furukawa, Minister of State for Economic and Fiscal policy, Heizo Takenaka, and former Foreign Minister Yoriko Kawaguchi as G1 GLOBAL Conference’s key note speakers from Japan. I was also able to confirm speakers among foreign residents of Japan, such as Robert Alan Feldman and Glen S. Fukushima. All of these individuals accepted my request readily because we all share the common goals, principles and concepts behind the G1 GLOBAL Conference.

I began inviting speakers from abroad around July. I focused on contacting Nik Gowing, a leading BBC newscaster, as a speaker from Britain, and started persuading him in Dalian. Alan Patricof, the grand father of venture capital industries in the United States, agreed to speak at the meeting, too. I also confirmed Vachara Phanchet, former Thai trade representative, as a speaker from Thailand. People like Hiromichi Mizuno and Kotaro Tamura decided to return from Britain and the United States to speak at the Conference.

I tried to mix speakers 50% Japanese and 50% foreigners to give an international flavor to the Conference. They were to discuss topics on the agenda in English. I limited participants in the G1 GLOBAL Conference to the invited individuals only. I sent a letter of invitation to people who had taken part in the G1 Summit, business leaders, journalists, diplomats, and Davos Forum participants. In the meantime, I chose to give other people a chance to take part in G1 GLOBAL. I asked everybody who wanted to attend the meeting to write an essay on themes including the following. “How do you plan to contribute to the G1 GLOBAL?” I asked some pretty tough questions.

I’ve been to many conferences and assemblies. As I recall, the most enjoyable meetings were communal ones where a sense of unity evolved. In other words, places where leaders active in diverse fields are able to take the role as speakers, and then become participants and exchange opinions with others on the floor, have been the most enjoyable. This creates a sense of unity. A conference becomes more interesting as the barrier between panelists and participants becomes lower. That’s why I was fastidious about participation on an invitation basis, and about the quality and attitude of participants. I made this G1 GLOBAL Conference off-limits for people with no credentials, even if they were willing to be generous in their funding.

By October, we had almost 50 speakers on our list. The program was nearly complete. We confirmed participants from all over the world, including ambassadors in Japan, totaled close to 200. I insisted on a number of things. I invited the speakers to my house on the night before the G1 GLOBAL and served them sushi and Italian food. The best place to show my appreciation to speakers from around the globe was at my home. I planned this house party to thank visitors for coming from distant places. I was worried about the size of our house, but decided to make up for it with our hospitality.

VIPs began arriving in Japan from various countries from November 1. Alan Patricof flew in from the United States, followed by prominent speakers from Rand Corporation in the United States. Vachara Phanchet confirmed his trip from Thailand to Japan, too, in spite of the flooding in his country. Participants from countries such as Singapore, India, and Britain followed suit. They kept arriving in Japan one after another to take part in the G1 GLOBAL. Participants from outside Japan were estimated to total 20 to 30 in number. I swore to keep holding this Conference every year and to evolve it into a strong foothold where leaders gather to send information out to the world.

The reception for speakers began at my house the night before the Conference. To show our respect, my wife and I entertained our guests in kimono. We wanted to thank the speakers who came all the way from such faraway places as Bangkok (then suffering from the flooding), the United States, Australia, and India. Sushi and a top-class daiginjo variety of sake from the Urakasumi brewery proved a hit at the party.

The speakers’ reception at our house ended smoothly at 9 p.m. I helped clean up until past 10 p.m. and then went to GLOBIS Tokyo Campus, which would become the main conference venue the next day. Site preparations began after 10 p.m. when classes at the graduate school ended. About 200 VIPs were scheduled to assemble at the campus the next day. There would be several ambassadors, too. We wanted to ensure the site was suitable for the occasion. We converted the first floor of the school building into a main conference venue that would accommodate 200 people, set up three rooms on the second floor for panel discussions, and prepared a lunch and event space on the third floor.

The work finished some time after 12:30 a.m. Giving a thumbs-up which meant G1, I took a commemorative photo in front of a big banner with the G1 GLOBAL logo on the first floor with the staff who had stayed through to the end of the preparations.

My sense of exhaustion had reached its peak. But people who work at GLOBIS knew how to work under these conditions. We had the energy to issue a cheer of triumph at the end of our work. Hearing the cheer, I felt confident about the success of the G1 GLOBAL.

Note: Everyone in the picture has a wonderful smile, despite their exhaustion. I took this photo with GLOBIS staff members after completing site preparations late on the night before the G1 GLOBAL .

Having returned home, I decided to prepare the speech I was scheduled to deliver at the beginning of the G1 GLOBAL the next morning. When morning came, I walked from my house to the GLOBIS campus. It was going to be the first Davos-type meeting in Japan held entirely in English. I felt uplifted.

Nik Gowing from Britain was already there when I arrived. We started discussing on procedure immediately. Speakers showed up one after the other. Then, State Minister Furukawa arrived.

The G1 GLOBAL 2011 began on time at 9 a.m. My turn to address participants as its organizer came right after a brief opening speech by a GLOBIS staff member who acted as master of ceremonies. The speech for the occasion was not in my head because the running around involved in the preparations left me with no time to memorize it. My words were simple, but I chose to read them from sheets of paper. I tried to speak directly to the audience, right from the heart. After addressing the participants for three minutes at the start, I introduced State Minister Furukawa. Furukawa has attended the Davos Forum more times than any other Japanese politician. He delivered a stylish speech that conveyed a strong sense of stability to the audience.

Note: You can read more about the Conference on the English pages of the GLOBIS. JP website.

Following the Minister’s speech, Heizo Takenaka, Yoriko Kawaguchi, and Keiro Kitagami kicked off their panel discussions, which were moderated by Nik Gowing. The panelists had extremely lively discussions.
Next came the breakout sessions, where the issues were to be discussed thoroughly. Assuming my role in an emergency, I took the platform as stand-in moderator. The minister-councilor for political affairs at the U.S. embassy in Tokyo, former Foreign Ministry official Hiroshi Tanaka, and International Herald Tribune columnist Philip Bowring sat on the panel for this session. They discussed the “Changing Balance of Power in Asia.”

Three other breakout sessions progressed simultaneously. Seiichi Kondo, the commissioner of the Agency for Cultural Affairs, and Shinichi Tanaka, president and CEO of Fleishman-Hillard Japan, took the platform at the session on “Soft Power Diplomacy.” Kotaro Tamura spoke to floor participants at a session on “Crisis Management.” Georges Desvaux, managing partner for McKinsey & Company Japan, and Kathy M. Matsui took the stage at the session on “Re-Imagining Japan.”

Then, it was time for lunch. We used four classrooms on the third floor of our school building as venues for a lunchtime program that featured senior high school students from the Tohoku region. Conference participants listened to stories told by students who had survived the tsunami as they ate their lunch. As in the Summer Davos in Dalian, their stories brought those in the audience to tears.
The words of the senior high school students who had gone through the tsunami touched hearts more than any eloquent speech.

The afternoon program also began with breakout sessions. One of them focused on media. James Kondo moderated the panel for this session, which included Peter Wilson, the founder of the Japan Today online newspaper, and Nik Gowing of the BBC. Listening to what Gowing had to say was as fun as I had imagined.
Another breakout session simultaneously in progress dealt with Entrepreneurship. Alan Patricof, Daisuke Iwase, Allen Miner, and Terrie Lloyd spoke at this session. Shinichi Takamiya of GLOBIS Capital Partners moderated their discussions.

One more breakout session took place in the same time slot. The theme was on Energy. Panelists for this session discussed topics such as nuclear power. Their discussions were also very interesting.
Note: Please check the GLOBIS. JP website for program details.

In a word, the breakout sessions at the G1 GLOBAL were “interesting.” That’s what I thought after dropping by at each of them. They seemed as if it were held somewhere other than Japan. I believed that G1 GLOBAL was the first meeting ever held in Japan in this scale, where English was the only language used. I’d be delighted if this Conference were to serve as an opportunity for Japanese people to improve their ability to debate in English.

The third set of breakout sessions began. They were also fascinating. The Trans-Pacific Partnership (TPP), fiscal crises in developed nations, and Cool Japan were themes discussed. Keiichiro Asao, former Shinsei Bank President Thierry Porte, and Jesper Koll of JP Morgan Securities Japan sat on the panel for the session on fiscal crises. Hiromichi Mizuno of Coller Capital moderated their discussions.

“In terms of Economic impact, the Eurozone crisis will affect Japan more than the Great East Japan Earthquake did,” noted Asao. “The problem is that Japanese people have been completely unable to exercise their influence (through elections and other means) in spite of the level of damage the crisis is expected to cause on their country.”

“Can people in Europe and the United States remain as quiet and calm as their counterparts in Japan, assuming that deflation and low growth like those in Japan went on for 10 years? The Occupy Wall Street protest movement has already started in the United States. Demonstrations are widespread in Europe,” observed Porte. “These developments are beginning to prove the resilience of Japanese society.”
“The ratio of iPhone components made in Japan was zero at first, but Japanese-made components were estimated to account for nearly 57% in the new iPhone 4s model,” noted Koll. “And these components offer a degree of precision only Japanese manufacturers could achieve.”

Then, it was time for the closing plenary session for the G1 GLOBAL. The panel for the opening plenary session consisted of politicians. The final session had panelists from business and economic circles. Chief Operating Officer Toshiyuki Shiga of Nissan Motor Co., Ltd. delivered a keynote speech at the start of this plenary session. After his speech that lasted for 10 to 15 minutes, panelists including Takashi Mitachi of the Boston Consulting Group and Robert Alan Feldman held discussions, moderated by Nik Gowing of the BBC. The session offered truly world-class discussions.

“As in kendo and judo, a state of calmness is essential for manufacturing,” argued panelist Nicholas Smith. “Getting emotional does no good. Putting too much emotion in manufacturing is not the right approach.”

“Stability is good, but big changes are not bad,” remarked Feldman. “I thought higher crude oil prices created an opportunity a couple of years ago. The yen’s appreciation is not a bad development. Big changes produce big innovations.”

“When I talk to my friends, they all say they want to live in Tokyo,” added Feldman. “The important thing is to make Japan an attractive place for companies.”

Commenting on the observation that “young Japanese people are inward-looking,” Feldman said, “It’s not young people but people who are not young (elderly people, in other words) who should be blamed for this tendency. They have not done what they should have done. They should have educated young people properly and make sacrifices in areas such as pension and medical care before complaining about it.”

“Let me offer you another crazy idea,” elaborated Feldman. “What about using the same money for helping young people study abroad, instead of giving parents a child allowance? I think doing that will produce large educational effects and give Japan a brighter future.” As I had expected, Feldman was very interesting.

Following the final plenary session, I delivered closing remarks as the organizer of the G1 GLOBAL. Then, I asked Alan Patricof, Nik Gowing, Paul Bradley from Singapore, and Kotaro Tamura from the United States to make brief comments on the meeting. A stirring atmosphere created by a sense of accomplishment and an uprise of emotion filled the Conference venue.

The G1 GLOBAL ended with the excitement. It was time for the farewell reception. After the closing session, I had a Bloomberg TV interview and headed to the venue for the reception. VIPs who had assembled from around the globe were chatting pleasantly when I arrived at the venue, where notes of the koto, a traditional Japanese instrument, were being played as background music. Three shamisen , a traditional Japanese instrument, players, the Shibata Family, started to perform just as I finished greeting all the people I recognized. They performed brilliantly.

The Conference participants went home after the shamisen performance. I gave a polite send-off to each one of them. After everything was over, I held a little thank-you party for the GLOBIS staff who worked behind the scenes. All of them worked very hard for this gathering. The staff were exhausted by then, but they praised each other’s contributions, half jokingly, half seriously. From the party, I went back to the GLOBIS campus to say “thank you” to other staff members who were still cleaning up at the venue. I returned home from there. Arriving home, I found the tweets that I had received via Twitter as follows:
“The G1 GLOBAL offered many lessons and discoveries. I found it very stimulating. The fact that so many participants assembled for this first G1 GLOBAL from literally all over the world was awesome. I believe this gathering served as a new milestone for GLOBIS, Many, many thanks to Mr. Hori!”

“I took part in the G1 GLOBAL and immersed myself in English from morning till night today. At the Conference, I realized that Japan was far more globalized than I had imagined. The meeting also made me aware that many non-Japanese are informing the rest of the world about what is good in Japan. This was good news. Let’s have confidence in ourselves.”

“I have learned the importance of taking risks and responsibilities, opening up ourselves and having self-confidence at G1 GLOBAL. Leaders at the Conference were all lively and cheerful. They said many things, but ultimately they love Japan. It was a good community.”

“To make networks with people in the world was one message speakers at the G1 GLOBAL shared in common. The message means establishing connections by overcoming our fear of opening up…I’d like to think of what we can do as young people. This meeting itself connected diverse types of people with each other and produced chemical reactions.”

“I had never thought an international conference of this level was possible in Japan. Everything I saw at the G1 GLOBAL was excellent.”

“Thank you very much for an extremely exciting day.”

“The G1 GLOBAL gave me stimuli of a most comfortable kind. Conferences with no interpreter are not unusual in English-speaking countries, but they seem rare in Japan. The lineup of speakers assembled from all over the world reflected the enthusiasm that Mr. Hori of GLOBIS had for this meeting. The conference brought into sharp relief the position Japan holds in the world.”

Tweets came in from people who accessed the sessions via the Internet, too.

“I’m listening to a G1 GLOBAL session now. The sessions seem intended for Japanese people. Speakers are using English that is very easy to understand (in terms of both speed and vocabulary) for their discussions. I think this English is enabling many people to follow discussions without interpretation.”

“The G1 GLOBALwas fun. I followed its live streaming broadcast. There were several fast-talking panelists who were difficult to follow, but I would like you to hold more meetings like this in Japan.”

We received comments from G1 GLOBAL viewers overseas, too. When sessions are broadcast in English, reactions arrive from across the sea:
CONGRATULATIONS THAT WAS A REALLY WONDERFUL AND A GREAT THING TO DO. G1 GLOBAL IS MORE POWERFUL.....

The Japan Times carried an article on the G1 GLOBAL Conference, too. You can find the story titled “March 11: A Chance for Rebirth: Experts” at the Japan Times Online website).

Yoko Ishikura wrote about the G1 GLOBAL in her blog. “I thought it was an extremely meaningful conference. I felt that because not only were the panelists and moderators excellent, but also the participants (most of them appeared to be young Japanese) raised questions and commented in a very active manner…This one-day conference I attended was held entirely in English (with no interpreter), but I didn’t feel that the meeting was any different from other international conferences (such as the workshop I attended in New York last week or the conference in Abu Dhabi). Discussions in English were so natural that I almost forgot I was in Tokyo.”

The G1 GLOBAL was a smashing success. To tell the truth, I feel like having a party to celebrate its completion. But I need to prepare for the second “Tokoton” debate on the TPP tomorrow, instead of basking in the afterglow of the G1 GLOBAL. This second debate will be a decisive battle. I’m not going to take the platform as I did at the first debate on nuclear against Mr. Son of Softbank, but I’d better go to bed early to prepare for the next day.

“100 Actions” Creating a Vision of Japan: 13. Promoting Cool Japan (METI 7)

Globis — 2011-12-16T12:35:25+09:00

GLOBIS’ 2009 survey of creativity in leading countries revealed something very interesting. Instead of such traditional bastions of creativity as France and Italy, we found that the world considers Japan to be the most creative country on par with the United States.*

Japan is home to a unique culture and many creative products and services. These include anime, manga, computer games, music, movies, drama and other forms of creative content, the young people’s “cute” fashion of Shibuya and Harajuku, healthy Japanese cuisine and diet, safe and delicious food products, and the high-performance consumer electronics of Akihabara. The world looks to these components as “Cool Japan” with fascination and admiration.

Travel abroad and you are likely to run into fans of the films produced by Studio Ghibli, such as Princess Mononoke, Sen. In an interview given during his visit to Japan last year, the tennis player, Rafa Nadal, said he grew up watching Dragon Ball, rushing home from school everyday to watch his favorite program on TV. Many foreign celebrities are avid fans of Hello Kitty, and SMAP’s recent Beijing concert was a smashing success.

Japan has never fully capitalized on the potential positive impact that Cool Japan can have on its international competitiveness.

Mr. Takaaki Umezawa, Partner and Managing Director of A.T. Kearney Japan, advocates the strategic promotion of Cool Japan and comments that, “Japan is generally strong in the area of creativity, but weak in several critical areas: (1) ability to appraise overseas markets, (2) businesspersons with ability to lead the development of overseas markets, and (3) risk money needed to support these activities. The key to success is to focus on strengthening these vital areas.”

In today’s global economy, the attractiveness of national branding and intangible assets has come to have an impact on international competitiveness. Japan must develop a keener awareness of the value of soft power as a matter of national strategy. Initiative must be taken to utilize soft power in expanding overseas markets as well as in stimulating domestic demand.

Some countries are well aware of the impact of soft power on economic activities. We can see that they are already pursuing economic growth programs centered on strategies for promoting their nation’s creative content and branding.

A salient example is our neighboring country of Korea. With the Asian currency crisis as a starting point, then-President Kim Dae-jung unveiled his “Presidential Proclamation on Culture” in 1998. Since then, the promotion of high value-added content industries has been identified as a “strategic national project for the 21st century.” These industries have been prioritized in the government budget, and the public and private sectors have been working closely together to promote “Cool Korea” strategies. The Korea Institute of Design Promotion and the Korea Creative Content Agency were established as part of this initiative. Meanwhile, the Korea Trade-Investment Promotion Agency (KOTRA) has been leading a joint government and private sector program for promoting the strategic expansion of sales channels in the Asian markets.

As a result of these efforts, a “Korean pop culture boom” started to take shape around 2003. There is no doubt that this boom has dramatically enhanced Korean soft power. It is being said that its spillover effects contributed to increasing the market share of Korean cars and home electronic products in overseas markets, generally strengthening Korea’s international competitiveness, and increasing the number of foreign tourists. After taking office, President Lee Myung-bak established the Presidential Council on National Branding and has continued to foster and strengthen cultural industries as a key national strategy. I believe Japan must, with all humility, learn from the example of Korea’s united efforts and policies for promoting soft power industries.

In June 2010, Japan adopted the New Growth Strategy by Cabinet decision. The goals of this document include implementing “Strategies for intellectual property and standardization and exporting Cool Japan.”

Because soft power industries constitute the driving force for Cool Japan, it is absolutely essential for the government and private sector to work together in strategically fostering these industries, promoting their overseas expansion, developing necessary human resources, and raising Japan’s standing as a transmitter and presenter of information and ideas to the world. With this in mind, I am proposing the adoption of the following policies.

1. Pursue Cool Japan as a Key National Strategy!

To promote Cool Japan, it is important to address it as a national strategy supported through government and private sector cooperation. This means promoting design and creative content development by prioritizing high value-added content industries in the government budget and creating a central command post led by a producer from the private sector with a proven track record. Japan needs to adopt a proactive stance for aggressive expansion in the markets of Asia, Europe, and America.

It is also important to promote Cool Japan strategies as a self-sustaining and self-propelling movement. To achieve this, the government and private sector must work hand-in-hand for the following:

-establish a Cool Japan Strategy Council with members drawn from both the government and private sector;

-establish a Cool Japan Discussion Group centered on young and up-coming producers;

-launch cooperative programs with municipal and prefectural governments; embassies and overseas missions of the Japanese government; related organizations (Japan Foundation, Japan External Trade Organization (JETRO), Japan National Tourism Organization (JNTO)).

Also, the government and private sector should cooperate in establishing Information Centers in the overseas missions of the Japanese government. This infrastructure would then be used to actively introduce and promote creative content, fashion and other aspects of the Japan brand. Another idea would be to make effective use of cross-media opportunities based on the combined use of multiple channels. Examples include joint international production of TV programs, support for translating popular Japanese websites, events for introducing Japanese culture, and the use of international broadcasting. There are limits to what the private sector can achieve without government assistance. Conversely, if the government were to work alone, the scope of its initiatives would be narrowed. Thus, the important thing here is to ensure close cooperation and collaboration between the public and private arms.

2. Find and Foster Producers and Businesspersons

The scope of Cool Japan is very broad. As mentioned earlier, Japan is generally strong in the area of creativity, which is widely appreciated and valued throughout the world. The issue is that Japan has not effectively commercialized its creativity to generate businesses.

“What is cool?” “What is interesting?” When the Japanese try to find answers to this question, they frequently turn out to be wrong. On the other hand, many Japanese cool things are discovered by foreigners and spread throughout the world on their own. What may appear to be commonplace to the Japanese may actually draw the keen interest of foreigners and may hold tremendous potential for Cool Japan. Therefore, Japan needs to organize domestic and international networks centered on foreigners who can act as connoisseurs and expert appraisers for Cool Japan. Their job description would be to discover Japan’s hidden cultural and regional resources and to package them for presentation to the world.

So, now we have creative people who create, and “connoisseurs” who discover creative content and art. What we need next are producers and businesspersons whose function is to spread this creative content and art throughout the world. Ultimately, they are the ones who must provide the driving force for Cool Japan. And unfortunately, this is exactly where Japan lags behind other countries. Where should we find these businesspersons to lead the charge into overseas markets? Obvious choices would be Japanese businesspersons who have planted their roots in foreign countries, and foreigners with a love for Japan. In addition, such persons must be recruited widely from other industries too. There is no reason for the standard bearers of Cool Japan to be all Japanese. Instead, the search must extend to a diverse range of human resources in Asia and other countries.

The government has adopted a Plan for 300,000 Exchange Students to come to Japan to study. As this plan moves forward, efforts should be made to increase the number of foreign students who find employment in Japan’s creative content industries. The goal would be to send out into the world foreigners who through cultural exchange have developed a good understanding and appreciation for Japan. Another initiative in this field would be to establish awards and prizes for foreigners (appointment as cultural ambassadors, for example) who are making significant contributions in other countries. Japan needs to change its mindset to one that is prepared to actively recruit, accept and train human resources from overseas.

The training of these producers and businesspersons is a top priority for Japan. At the GLOBIS University Graduate School of Management, we are stepping up our commitment to developing human resources in this vital area.

3. Becoming a More Powerful hub of Information Overseas

For Cool Japan to go global, it is absolutely essential for Japan to become a more strategic hub and presenter of information. The first step is to identify the needs of the target country from a broad range of possible choices that would include film, TV dramas, fashion, food, and lifestyle. The equally important second step involves organically combining and presenting a number of these items as an integrated package. On this point, it should be noted that because the information transmitted after the Great East Japan Earthquake was frequently inaccurate, extensive damage was caused by false rumors. This misinformation must be countered with the transmission of accurate and speedy information in multiple languages using the Internet and other channels.

“Venues” and “events” can also play an important role in the presentation of Cool Japan. The international visibility and presentation power of the Japan International Contents Festival, the Tokyo International Film Festival, and other events held in Japan must be enhanced. Moreover, Japan can take full advantage of such commemorative events of 2011 as the 150th anniversary of Japan-Germany relations and the 50th anniversary of Japan-Kuwait diplomatic relations, and the 40th anniversary of the normalization of Japan-China diplomatic relations to be feted in 2012, as well as of international events, such as Japan Expo and the World Economic Forum (Davos Meeting).

Call to mind the 2011 Summer Davos Meeting held in Dalian, China. The Chinese government made excellent use of this meeting of world leaders to present and promote Chinese art. Japan should follow this example. That is, Japan should organize events where leaders of the world gather and should then exploit the gravitational power of these events to promote Cool Japan. Such initiatives will also be a vital element of Japan’s policies. In this context, it should be noted that GLOBIS hosted its first G1 Global Conference on November 3, 2011. Taking advantage of the interest of global leaders in this event, one of the sessions was naturally given to the subject on Cool Japan.

The explosive growth of the Internet and social media has radically changed the available menu for promotion. Conventional approaches of organizing trade fairs and business exchange fairs, and using movies and TV programs as national billboards, as has been so expertly done by Hollywood and Korea, obviously must be continued. But added to these conventional tools, strategic initiatives (including the use of such means as YouTube and Facebook) will play an increasingly important role in dramatically increasing the flow of information such as word-of-mouth and others that serve as an information hub.

4. Commit Ample Funds!

To recap, the objective is to generate creative content, to foster an army of producers and businesspersons, and to make a powerful presentation of Cool Japan throughout the world. To a significant degree, success will depend on the availability of sufficient funds in related fields. One idea would be to combine the human and financial resources of the government and private sector to establish a fund dedicated to supporting the global expansion of Japan’s outstanding creative content. Comprehensive financial support should be extended to such initiatives as the production of creative content targeting overseas markets from the initial planning stage, the development of overseas sales channels, and enhancing the exposure of Japanese creative content in local media. So, where should this risk money come from? In addition to the standard channels of government and private sector funding, one option would be to collect funds from domestic supporters prepared to make long-term investments (without the expectation of high returns) for realizing this goal.

Korea’s success in music, drama, film, and other media is proof that Japan can be equally successful in overseas markets. From the earliest planning stage, producers of creative content should always be mindful of the promise and potential of marketing their content in foreign markets. Japan has long been a dominant force in computer games. However, it is interesting to note that the principal platform for games has shifted to mobile phones, and smart phones now provide the main battlefield for this industry. It is very encouraging to see that young Japanese are boldly moving into this battlefield with their eyes fixed on global markets.

It should be said that GLOBIS is actively investing in game and creative content companies. In the past, Japanese hardware manufactured by such star performers as Sony and Honda crossed the seas to emerge victorious in foreign markets. A critical advantage that the new age offers is that software can freely and effortlessly cross the seas and continents of the world through the simple magic of downloading. The stage has literally been set and we now have at our fingertips unparalleled opportunities for sending out Japanese software and creative content to capture the markets of the world.

We live in an age where daily trading volume in the shares of a GREE, a company founded just a few years ago, have come to exceed that of Toyota to be ranked the most heavily traded issue on Japan’s stock exchanges. While the manufacture of hardware certainly remains important, this simple fact augurs the approach of an age where the fun and dreams packaged in software will be of even greater importance. In preparation for that age, Japan must use Cool Japan as a springboard for claiming its position in the world.

* Results are based on research on creativity conducted by GLOBIS in 2009 (consciousness survey on businesspersons from 14 leading countries, including the United States, Europe, and China). The research points to the following findings: “The Japanese are not fully aware of their own creativity, but businesspersons of other countries acknowledge that the Japanese are highly creative.” “The Chinese are very confident of their own creativity and adopt a posture that is opposite that of the Japanese.”

“100 Actions” Creating a Vision of Japan: 12.Promote Intellectual Property Strategies (Economics and Industry 6)

Globis — 2011-11-17T11:56:12+09:00

The Nihon Keizai Shimbun headline warned, “China’s High-Speed Train: Preparations Underway for Patent Application in the US—New Conflict May Emerge in Japan-China Relations.” More recently, Google made the news by paying top price to acquire Motorola’s mobile terminals business. It was reported that Google was not after Motorola’s hardware or software, but simply wanted to acquire Motorola’s cache of patents and intellectual property.

The case of China’s high-speed train system is very instructive. That is, while Japan possesses a vast array of excellent technologies and a broad range of marketable content in the form of film, music, and animation, it has generally not been able to leverage these assets into internationally competitive intellectual property businesses. Simply put, the ownership of technologies and creative content is a necessary condition for acquiring international competitiveness, but it is certainly not a sufficient condition. To successfully promote the globalization of Japan’s technology and creative content industries, it is vitally important to formulate intellectual property strategies and policies that aim to positively utilize such intellectual property.

The International Institute for Management Development (IMD) located in Switzerland annually publishes a World Competitiveness Yearbook. In the 2009 survey, Japan was ranked second only to the United States in the category of Technological Infrastructure, indicating that Japan’s high level of R&D and technology is widely recognized in the world. On the other hand, Japan languished in 17th place for Knowledge Transfer between Companies and Universities, pointing to the failure in transforming research results into marketable goods and services. According to the Indicators of Science and Technology and the Ministry of Internal Affairs and Communications, Japan’s technology exports amounted to roughly 1.8 trillion yen in 2008, while the United States exported nearly four times this amount at roughly 6.8 trillion yen. In the area of creative contents, overseas revenues account for only 4.3 percent (roughly 600 billion yen) of the total revenue of Japan’s contents industries, as opposed to 17 percent (roughly 8.5 trillion yen) for the United States. This comparison highlights the backwardness of Japan’s creative content industry in the critical area of globalization.

Another notable statistic comes from the International Organization for Standardization (ISO). The country distribution of secretariats of ISO technical committees, sub-committees and working groups is as follows: Germany 132, United States 128, United Kingdom 77, France 75, and Japan 59. These figures indicate that Japan has not been able to take a leadership role in framework building.

From this perspective, I believe the policies to be pursued by the government and the actions to be implemented by private businesses can be outlined as follows. The proposals that I am making can be summarized in three key phrases: “speed things up,” “respond to the demands of globalization,” and “respond to the demands of the Internet age.” These three goals must be realized without fail and as soon as possible.

1. Establish Faster and More Efficient Patent Examination Procedures and Abolish Examination Request System!

In fiscal 2010, the waiting time for patent examination increased to roughly 28.7 months, indicating that Japan has failed to halt the prolongation (worsening) of the waiting period (25.7 months in fiscal 2005, 26.7 in fiscal 2006, and 28.3 in fiscal 2007). This situation is seriously injurious to Japan’s international competitiveness. Call to mind that in its Outline of Economic Growth Strategy of 2006, the government set the goal of reducing the waiting time to eleven months by 2013 to achieve the highest standard in the world. Hopes for achievement of this goal now hang by a thread.

Speedy determination of patent rights for promising new technology is of positive value to both the applicant who wants to establish his or her exclusive rights as soon as possible, as well as to the applicant’s competitors who are anxiously waiting to see whether an invention is patentable or not. A prolonged waiting period during which rights remain indeterminate has a negative impact on the national economy. For this reason, immediate action should be taken to speed up the patent examination process.

Under the Japanese patent system, examination of whether or not to grant a patent gets underway only when a request is filed within three years of the patent application. The above-mentioned waiting time actually refers to the time lapse between filing of an examination request and the start of patent examination. In other words, the waiting time is not counted from the original patent filing date. Because of this system, companies tend to file patent applications without conducting an exhaustive search of prior art. The thinking is that “we will file for the time being” and later decide whether or not to file an examination request. In view of the huge backlog of applications and the prolonged period of indetermination of rights, it cannot be said that the Japanese patent system is a sound one.

Action should be taken to abolish the examination request system. What we need is a system that encourages companies to carefully select the inventions that they want to patent. This pre-selection will in turn facilitate speedy examination by the Japan Patent Office. In this way, the value of Japanese patents would be significantly augmented by ensuring that inventions are formally recognized in Japan before elsewhere in the world. This would attract to Japan the flow of information on advanced technologies and would stimulate domestic technological development activities.

It should be noted that the US government has enacted a law revising the patent examination system to shorten the average time required for patent acquisition of about 34 months. Following this example, the Ministry of the Economy, Trade and Industry and the Japan Patent Office must take measures to speed up the examination process. For this purpose, I recommend the following two actions. First, prior art search should be increasingly subcontracted to private-sector organizations. To achieve this, steps should be taken to promote the establishment of registered search organizations (currently, there are nine such organizations). Secondly, the functions of industrial property digital libraries (IPDL) should be enhanced by adding databases on academic literature in important technological fields to create patent information inquiry systems capable of conducting comprehensive searches of both patent information and the related academic literature.

2. Respond to the Demands of Globalization: Government Must Strengthen Intellectual Property Protection through International Cooperation, and Businesses Must Strive to Become International Standard Setters!

In today’s extremely competitive global environment, effective measures must be taken to acquire and to protect intellectual property that serves as a source of wealth for Japan. As the first step, Japan must cooperate and collaborate with foreign patent authorities to promote the harmonization of international patent systems. Secondly, it is absolutely essential for Japan to urge foreign countries, particularly Asian countries, to adopt stricter controls against counterfeit products. Specifically, Japan should promote the following initiatives: urge the speeding up of patent examination procedures among major countries; use EPA negotiations and other opportunities to improve the international environment for intellectual property protection; urge early accession to the Patent Law Treaty, which aims to harmonize and simplify patent application procedures in countries throughout the world; push for the early enforcement of the Anti-Counterfeiting Trade Agreement (ACTA) that was agreed upon in principle in 2010; and, increase and expand the overseas dispatch of government and private-sector joint missions for action against counterfeiting.

Initiatives must be launched to support the all-Japan team of industry, government, and universities in becoming the originators and setters of international standards. This is particularly important in fields where Japan possesses outstanding technologies and where major market expansion can be expected in the future on a worldwide scale. Examples of such fields include the environment and energy as well as medical care and long-term care. One strategy would be for the all-Japan team to undertake a process of selection and concentration in technologies pertaining to smart grids, electric cars, water related technologies, service robots, and railway infrastructure.

In this context, the government should implement a comprehensive range of actions for promoting the setting of international standards. Such actions should not be solely focused on the acquisition of conventional “de jure standards” that are established by public standard setting organizations. Rather, due attention should also be paid to “forum standards” that, as in the case of DVD specifications, are set in international forums organized by interested companies.

3. Establish Copyright System that Corresponds to the Internet Age!

Japan’s current copyright system does not make sufficient allowances for the user’s convenience and provides excessive protection to existing markets that are shrinking in an age of technological innovation. The “defensive posture” seen in the current laws will gradually undermine and weaken Japan’s creative content industries. But more seriously, this posture seems to have created an environment that obstructs and prevents Japan from creating new platforms that can excite and amaze users throughout the world as iPad has done.

For example, suppose you buy a paper-based book and you want to read it on your mobile terminal. Now, suppose you take the book to a shop that specializes in digitalization (so-called scanning service) to have it formatted as a PDF file. Under the provisions of the current Copyright Act, this can even be challenged as an “infringement of copyright for unauthorized digitalization.” That such a position can be taken in all seriousness as one possible interpretation of the law points to the fact that the current Copyright Act belittles the user. I demand that the Agency for Cultural Affairs, which has jurisdiction over the Copyright Act, to seriously reflect on this error.

Technically speaking, search engines were illegal in Japan until the Copyright Act was revised in 2010. Copyright Act that disallows new services that contribute significantly to user convenience must be immediately revised. To meet the demands of the Internet age, Japan should adopt the world’s most advanced fair use system (allowing judges to dismiss claims of copyright infringement in cases deemed to be fair use). Raising the level of user convenience in this way will create an environment that is conducive to the development of creative content industries that can successfully compete on the global stage.

As I have outlined above, for Japan to create new engines of economic growth, enhance its international competitiveness, and raise its threshold of potential growth, it is absolutely essential to “speed things up,” “respond to the demands of globalization,” and “respond to the demands of the Internet age.” To achieve these objectives, it is essential for our startup companies, small and medium enterprises, and our universities to fully understand and appreciate the importance of intellectual property.

Going forward, there are various measures that can be taken to raise awareness of intellectual property. For example, I would propose the following actions: create a one-stop advisory service that consults on a wide range of intellectual property management issues; re-organize and strengthen existing university IP headquarters and TLOs; and, ensure open access to research results (papers and scientific data) of publically funded research.

I eagerly look forward to the creation of a speedy patent system that will effectively serve the needs of Japan’s outstanding technologies and creative content, and to a commitment on the part of the government and businesses to adapt themselves to the demands of globalization and the Internet age. In the future world of competition, winning or losing will depend increasingly on intellectual property (brain power).

For Japan to prosper in an age of dramatic changes, we will need to enhance our international competitiveness in intellectual property. This means that the people of this nation will have to gather up the will to hone their intellect, protect the fruits of their intellectual labor, and stand at the forefront of the world’s intellectual community. Finally, it will be critically important for the government to support this commitment with effective intellectual property strategies and systems.

“100 Actions” Creating a Vision of Japan: 11.Achieve e-Government! (Economics and Industry 6)

Globis — 2011-11-17T11:55:43+09:00

More than eleven years have already passed since the news flash that sounded like a bad joke. “Prime Minister Mori refers to IT as ‘it.’”

The following year, the Basic Act on the Formation of an Advanced Information and Telecommunications Network Society came into force in January 2001. Article 20 of this law states that necessary action shall be “taken to actively promote IT in administration, such as increased use of the Internet and other advanced information and telecommunications networks in the Government of Japan and in local public entities, in order to increase convenience for citizens and to help improve simplicity, efficiency and transparency of administrative operations.”

The whole idea to “increase convenience for citizens” was that online and one-stop access to various administrative services would reduce the burden on the people in terms of both time and cost. As for “improve simplicity of administrative operations,” the objective here was to increase the speed and to radically reduce the cost of administrative procedures. This was supposed to be accomplished through the development of a paperless environment, adoption of common formats for administrative documents, and the consolidation and centralization of the government’s information systems.

However, as pointed out in the 2010 Whitepaper on Information and Communications, Japan continues to lag far behind other countries in the area of utilization of information technologies in the public sector. According to the 2010 UN e-Government Readiness Index, Japan ranks 17th in the world. (The top ten countries in 2010 were: (1) Korea, (2) United States, (3) Canada, (4) United Kingdom, (5) Netherlands, (6) Norway, (7) Denmark, (8) Australia, (9) Spain, (10) France.)

While the year 2000 was widely acclaimed in Japan to be the “first year in the IT era,” in the ensuing years the government has been unable to make satisfactory progress toward the computerization of its administrative operations. The main reasons for slow progress are: (1) failure to introduce a national identification number system that would serve as the foundation of e-government, (2) undue emphasis on hardware and failure to take the users’ perspective into account, and (3) problems related to the government’s approach to promoting computerization.

Starting with the first reason, a national identification number system constitutes a fundamental prerequisite for e-government and must be pursued as a top priority. However, action on this front has been postponed because politicians and government administrators feared public outcry and opposition. As a result, individual ministries and agencies have each developed their own systems and formats for processing and filing administrative data (such as the attributes of citizens). Consequently, almost no progress has been made in paperless and one-stop administrative services. Much worse, the public’s faith in the system has been seriously shaken by the scandalous situation surrounding the “missing pension records.”

As for the second reason, which relates to undue emphasis on hardware (infrastructure) and the failure to take the users’ perspective into account, almost no effort has been made in business process re-engineering (BPR). Instead, all that has been done is to computerize existing administrative systems. As a result, the old problems that relate to rigid and compartmentalized government administration have remained intact and very little progress has been made in providing the public with access to paperless and one-stop administrative procedures.

The third reason is rooted in inadequacies related to the government’s approach to promoting computerization. Normally, one would expect the IT Strategic Headquarters to take the lead in this process. However, unfortunately, this organization has not been given centralized control over the budget and administrative authority for promoting e-government. Consequently, it has not been able to function effectively as a centralized command post that transcends the vertical divisions in government administration.

Over the years, a number of programs have been formulated and approved by successive cabinets, starting with the “Basic IT Strategy” of 2000 and continuing on to the “e-Japan Strategy” of 2001, the “e-Japan Strategy II” of 2003, the “New IT Reform Strategy” of 2006, the “i-Japan Strategy 2015” of 2009, and the “New Strategy in Information and Communications Technology” of 2010. Notwithstanding these well-intentioned plans, it seems that all that has been done is the repeated postponement of the achievement of specific goals and formulation of new policies. What a tragic waste of time and effort!

The outcome of all of this is that Japan now lags far behind other countries in the area of e-government. So, what should Japan do to catch up? I am proposing the following “actions.”

1. Recruit Government CIO from the Private Sector!

The first order of business should be to go to the private sector to recruit a CIO (chief information officer) for the government, and to place all the budget and authority for promoting e-government under the CIO. This authority should extend to all areas of government administration, including local governments.

Consider what India has done in recruiting outstanding individuals from the private sector to benefit from their knowledge and experience. For instance, Nandan Nilekani, Co-Chairman of Infosys Technologies Ltd., has been appointed the head of the government’s IT agency (the post is equivalent to cabinet minister). I have met Nandan Nilekani on several occasions, but the interesting thing is that he was at the helm of a global company as CEO of Infosys until immediately before his appointment and move to the government post.

Japan should follow this example. The CIO posts at various government ministries and agencies as well as in local government bodies should be filled by individuals from the private sector with high levels of expertise. For these posts, “100 Actions” recommends individuals such as Masayuki Makino, CEO of Works Applications, who has valuable experience in starting an IT software company. It is generally understood that the IT industry is primarily engaged in the development of basic and product software. However, in the case of Japan, the majority of the companies in this industry are involved in providing IT-related services including systems operation and the dispatch of temporary staff. With the proliferation of cloud computing, we are going to see a strong movement toward “software as a service.” This development is going to increase the demand for people with software know-how.

What kind of staff should be working under the government CIO? I strongly recommend recruiting human resources from the private sector to organize teams of experts in such areas as optimizing operational efficiency. With this strong and effective mechanism in place, the government CIO should work to speed the process of e-government by steamrolling over any opposition.

2. Promptly Introduce National Identification Number System and Launch Online Administrative Procedures!

In Korea, six types of government documents (certificate of residence, etc.) can be issued and printed out directly at home, and one-stop online access is available for almost all administrative procedures, including life events (such as change of address, marriage, school enrollment, and retirement). It is notable that Japan and Korea have very similar systems in such fundamental practices as family registry, seal registry, and national pension system. Why is then that Japan cannot do what Korea has accomplished?

One of the most serious bottlenecks obstructing the advance of e-government in Japan is the absence of a national identification number system that can serve as a common foundation for verification of identity. Japan must adopt such a system as soon as possible. The fact of the matter is that almost all of the top ranking countries in the 2010 UN e-Government Readiness Index have instituted some form of national identification number system or social security number system. An essential prerequisite for introducing such a system would be to take appropriate actions to ensure the protection of personal information. Options would include the establishment of an independent organization and mechanisms enabling individuals to confirm the contents of information held by government agencies concerning themselves.

To realize greater convenience for the public, a “Law Prohibiting Repeated Request for Personal Information” (provisional title) should be enacted so that any individual filing an application with the government, in principle, will not need to enter or attach any personal information that other administrative agencies already have in their possession. If such a system were established, imagine how convenient it would be and how less stressful it would be for the applicant.

As a goal for the future, a system for electronic voting should be considered for both national and local elections. As the first step in this direction, I strongly recommend that the ban on Internet-based election campaigning be quickly lifted so as to allow this type of activity in the next national election. Why all this foot dragging? There is absolutely no reason to maintain the ban on Internet-based campaign activities. Therefore, act immediately to lift the ban!

3. Connect the Public and Private Sectors at All Levels!

By connecting the public and private sectors at all levels, government information can be transformed into a public good (transformation into social information resource). With this in mind, the government should take the following actions as soon as possible. (1) Establish computerized and paperless processing of administrative procedures between all government ministries and agencies. (2) Standardize all administrative documents, budget statements, and government accounting statements exchanged between central and local governments. (3) Enable online exchange between government and all businesses and corporate bodies.

The government should make the transition from conventional Cabinet meetings and Diet deliberations to “e-Cabinet” and “e-Diet” formats. I earnestly hope that in so doing the legislative branch (Diet members) will show the people their strong determination to speed up the deliberative process and cut costs by moving to a paperless environment.

The government has at its disposal a vast volume of statistical data and information obtained by surveys. This body of information should be treated as a public good (social information resource). After taking appropriate measures to ensure the protection of personal information, in principle, all such data and information should be made readily accessible through the Internet.

I have presented three specific proposals: (1) recruit government CIO from the private sector, (2) introduce a national identification number system and launch online administrative procedures, and (3) connect the public and private sectors at all levels. By implementing these measures, Japan will be able to “increase convenience for citizens” and “improve simplicity of administrative operations” in the spirit of the Basic Act on the Formation of an Advanced Information and Telecommunications Network Society that was enacted in 2000. Needless to say, it will be very important to continue to meet the needs of people with low IT skills. For this part of the population, government offices should maintain their current counter services.

Japan must take positive action in promoting the computerization of government that will also contribute to raising the general level of productivity. By doing so, Japan can not only show its superiority in the area of communications but also in the area of IT. It goes without saying that at least 20 percent of the tax money spent should be allocated to orders placed with startup companies. Consider the myriad benefits to be reaped by the application of IT to government administration: increased convenience for citizens; simplification of administrative operations; raising the IT skills of the Japanese people and Japanese businesses; and, fostering the development of startup companies.

I sincerely hope that the foot dragging will come to an end and that bold “actions” will be implemented without any further delay.

G1 GLOBAL Panels LIVE online on Nov. 3rd!

Globis — 2011-11-01T23:10:50+09:00

I am pleased to announce that some panels at the G1 Global will be streamed LIVE at GLOBIS.JP. The following is a description of the G1 Global Conference and a list of the panels that will be shown live. Although some of you may not be able to participate this year, we do hope that you will be able to get an idea of what top global leaders will discuss by viewing some of the panels live online.

G1 Global Conference: Rebirth of Japan after March 11
Date & Time: 3rd November 2011, 9:00 - 17:30
Language: English (interpretation not provided)
LIVE online streaming: http://globis.jp/1835

Description:
G1 Global 2011 aims to bring a global outlook on prospects for a rebirth of Japan after the Great East Japan Earthquake. While the world’s eyes are fixed on how post- disaster Japan can tackle the tremendous task of rebuilding itself, increasingly voices are calling for political and structural change in Japan and beyond to break away from the permeating sense of stagnation. We must seize this momentum to bring together global leaders to discuss common challenges affecting both Japan and the international community and to share our visions for the future.

Panels to be streamed LIVE*:
*Please note that these panels are subject to change.

9:00-10:30 The Rebirth of Japan: the Political Landscape
Keynote Speech: Motohisa Furukawa, Minister of State for National Policy,Economic and Fiscal Policy and Science and Technology Policy

Panel Discussion:
Panelists:
-Yoriko Kawaguchi, Former Foreign Minister of Japan, Member of the House of Councillors
-Keiro Kitagami, Member of the House of Representatives
-Heizo Takenaka, Director, Global Security Research Institute at Keio University Professor, Faculty of Policy Management
Moderator:
-Nik Gowing, Main Presenter, BBC World News

10:45-12:00 Changing Balance of Power in Asia
Panelists:
-Philip Bowring, Columnist for the International Herald Tribune
-Robert Luke, Minister-Counselor for Political Affairs at U.S. Embassy Tokyo
-Hitoshi Tanaka, Chairman of the Institute for International Strategy,Japan Research Institute, Ltd
Moderator:
-Rui Chenggang, Director and Anchor, China Central Television

13:00-14:15 Media, Old and New
Panelists:
-Nik Gowing, Main Presenter, BBC World News
-Jun Murai, Dean and Professor, Faculty of Environment and Information Studies, Keio University
-Ross Rowbury, President and Representative Director, Edelman Japan
-Peter Wilson, Co-Founder and Managing Director, Gplus Media
Moderator:
-Masaakira James Kondo, Country Manager, Twitter Japan

14:30-15:45 Fiscal Crises in Advanced Economies
Panelists:
-Keiichiro Asao, Member of the House of Representatives
-Jesper Koll, Managing Director and Head of Japanese Equity Research, JP Morgan Securities Japan
-Thierry Porté, Operating Partner, J.C. Flowers & Co. LLC
Moderator:
-Hiromichi Mizuno, Partner, Coller Capital

16:00-17:20 Rebuilding Japan: Globalization and the Economy
Panelists:
-Robert Alan Feldman, Managing Director, Morgan Stanley MUFG Securities
-Takashi Mitachi, Co-Chairman Japan, The Boston Consulting Group
-Toshiyuki Shiga, Representative Director and Chief Operating Officer, Nissan Motor Co., Ltd.
-Nicholas Smith, Japan Strategist, CLSA Asia-Pacific Markets
Moderator:
-Nik Gowing, Main Presenter, BBC World News

Even though you may not attend the G1 Global, we hope you can watch it online!
http://globis.jp/1835

Yours,

Yoshi Hori
Leader of KIBOW, GLOBIS and G1

“100 Actions” Creating a Vision of Japan: 10. Fostering an Ecosystem for entrepreneurs to Promote Growth (Economics and Industry 4)

Globis — 2011-10-12T11:49:27+09:00

“Why don’t we have more entrepreneurial companies in Japan?”, I am frequently asked. My response is a very simple one, as is my prescription for solving this problem. 1) Create an environment in which everyone wants to become entrepreneurs, and 2) appropriately educate the entrepreneurial wannabes. Nothing could be simpler than this.

In the past, the Ministry of the Economy, Trade and Industry (METI) and the Small and Medium Enterprise Agency have implemented various support and assistance programs for encouraging entrepreneurs. But the whole approach of “assisting” entrepreneurs will not give rise to entrepreneurs. Even when something is born of these programs, frequently they are weak and lacking in dynamism and strength, and seldom do they grow into large entities. What is important is to have a concept of “nurturing” such an environment where entrepreneurs will naturally appear in large numbers without any outside assistance.

According to METI’s statistics on the number of businesses being established and closed in Japan (personal businesses plus incorporated businesses), in every single year since the 1990s, more businesses have closed down than have been established. Another disturbing statistic comes from the number of newly listed companies in Japan’s various new stock exchanges. After peaking at 188 companies in 2006, the number of new listings has dropped sharply to 49 companies in 2008 and only 18 in 2009. The same downward trend is seen in the volume of venture capital (VC) invested in recent years. VC investments peaked in 2006 at 279.0 billion yen, but dropped to 136.6 billion yen in 2008 and 87.5 billion yen in 2009. These numbers are very troubling indeed, even Lehman shock was taken into consideration.

To promote innovation and achieve economic growth, what we need in Japan is a virtuous cycle of wealth creation where entrepreneurial businesses are formed that eventually give rise to whole new industries. However, what is actually happening is the exact opposite.

So, what should be done? As I have already mentioned, I believe the following three points comprise a sound method for promoting entrepreneurs.

1. Fostering positive values: To create an environment where “everyone wants to become an entrepreneur,” we need to develop a set of values and a culture that pay respect on entrepreneurs who have taken risks.

2. Fostering a positive environment: To create an “environment conducive to entrepreneurs,” we need to implement deregulation, promote liberalization of the private sector, and foster venture capitals.

3. Fostering human resources: To ensure that the “future entrepreneurs are appropriately educated,” we need to increase the number of institutions and business schools dedicated to educating and training entrepreneurs.

Thus, there are three major things that must be done. In each area, the following specific measures should be taken.

1. Fostering positive values: Create a set of values and a culture that praises entrepreneurs who have taken risks!

At Harvard Business School where I studied, the best students were those who were most strongly inclined toward starting their own businesses. It is no accident that so many who studied at Harvard Business School have become entrepreneurs. The list includes Hiroshi Mikitani of Rakuten, Tomoko Namba of DeNA, and Daisuke Iwase of LIFENET. Anyone who adopts the spirit and values of entrepreneurship acquires a willingness to take risks and a strong sense of mission that he or she must contribute to society by creating new value.

It would be no exaggeration to say that there was a very clear “career pyramid” at Harvard. Imagine what would have happened if Mr. Mikitani had remained at the Industrial Bank of Japan, or Ms. Namba at McKinsey, or Mr. Iwase at a buyout firm. I can definitely say that the impact on society and the value that each one of these three people has created as an entrepreneur far outweighs the value that they may have been able to create at their former jobs. This is why I want the best and brightest human resources to leave their comfortable jobs and to take the risk of creating new businesses.

There are very few countries in the world that subject their children to the level of competition that exists in Japan. From the youngest age, our children grow up competing. For example, take my second son who is now in the sixth grade and studying very hard to prepare for junior high school entrance exams. Many generations of Japanese have grown up in an environment of intense academic and professional competition. I find this to be very encouraging and promising. However, where do our best and brightest young people go after finishing their education in Japan’s best universities? For many, the ultimate career goal is to work for the government, a major corporation, a foreign investment bank or a consulting company. This career path does not lead to the creation of new value for society.

By contrast, the prevailing value system in the United States says that the most outstanding human resources should take risk and work to create new value. Entrepreneurs stand at the pinnacle of the career pyramid, and in the American culture, everyone is ready to praise the successful entrepreneur.

We should aim to establish the same kind of career pyramid in Japan and to create a set of values and culture that affirms that, “the most outstanding members of society should take the risk and aspire to create new businesses.” If we succeed in doing this, everyone will naturally start to think about entrepreneurship and launching new businesses. In turn, this will lead to the creation of new value in society and the emergence of a vibrant and dynamic society. Ultimately, this will encourage the shift of human resources, capital, knowledge, and other valuable resources to new industries.

The words and actions of the nation’s leaders are the most important factors in nurturing these new values and bringing about such a change in our collective consciousness. Consider that photos of President Obama having dinner with Apple’s Steve Jobs and Facebook’s Mark Zuckerberg at the home of a Silicon Valley venture capitalist were widely distributed in the media. There is no question that these photos convey a very clear message to society.

Speaking at the 2011 Davos Conference, Prime Minister David Cameron of the United Kingdom voiced this rallying cry. “Unleash entrepreneurship... For every euro invested in venture capital in Europe, more than seven times that is invested in the US.”

How about our Japanese Prime Minister and the Minister of Economy, Trade and Industry? Seldom, if ever, do we hear the words entrepreneurship from their lips. Keeping this up means that we will never foster new values in Japan. To increase entrepreneurial businesses, it is absolutely essential to transform social awareness and values by praising risk takers who are taking on new challenges. As a first step, I hope that the positive message in praise of risk taking will come from leaders of a wide range of fields.

This fostering of positive values toward entrepreneurs is the most important factor before us. Nurturing a culture that shows praise on risk taking and
new challenges is far more important than any subsidies and program of the government. Once this culture is in place, the habit of competition that the Japanese have will propel people toward entrepreneurship and will naturally create a highly energized economy.

2. Fostering a positive environment: Create an economic system that facilitates the establishment of new businesses!

(1) Further Promotion of Deregulation!
“There are number of big industries sleeping in correspondent to the number of government ministries.” If our government ministries embark on active programs for deregulation, this in itself will give rise to many big industries. For example, the Ministry of Finance is surrounded by many big financial businesses that are waiting to be discovered. By the same token, the Ministry of Internal Affairs and Communications is surrounded by numerous communication and transportation businesses that remain deep in sleep. Surrounding the Ministry of Education, Culture, Sports, Science and Technology (MEXT) lie many opportunities in the field of education, while agribusinesses remain dormant around the Ministry of Agriculture, Forestry and Fisheries.

The government must faithfully implement the principle of “public to private.” And the government is called upon to use every means available, including special economic zones, market testing for privatization, and private finance initiative (PFI) and deregulation.

Regulatory barriers are the strongest in medical and health services, welfare services, employment, labor market, education, agriculture and fishery. To tackle the problem of deregulation in these highly regulated areas, the Government Revitalization Unit should take on the role of command post for realizing regulatory reform throughout all areas of government administration.

Its mission should be to fundamentally review and revamp government regulations and to take effective measures to ensure greater simplicity and transparency in administrative procedures. Furthermore, Japan needs to switch from its traditional administrative mode of prior restraint to principles of autonomy, self-reliance, and self-responsibility.

The bigger the protection and assistance from the government, the weaker the industries become Therefore, there is an urgent need to promote deregulation, to ensure free entrance of new competitors, to unleash animal spirits, and to thereby create fully vitalized societies.

(2) Open up Government Procurement (Bidding System) and create the Japanese Version of SBIR!
The government is the biggest single purchaser of goods and services in Japan. It is desirable for approximately 10-20 percent of the money spent by government on purchases (government procurement) to be allocated to entrepreneurial businesses. This alone will greatly facilitate and speed up the growth of new industries. But there are many obstacles in the path that must be removed. Eligibility requirements for bidding in government procurement must be reviewed with greater flexibility. In this context, key areas of concern are the principle of “prior performance” and corporate size requirements. Under a more flexible system, in order to give entrepreneurs a greater opportunity to sell their goods and services to the government, emphasis would be placed on technological capabilities and product performance. Needless to say, reforms in the government procurement system that are fair, equitable and beneficial to taxpayers should be pushed forward with due speed, including open bidding for the assignment of broadcasting and communication frequency ranges.

Considerable amounts of tax payer’s money are currently being invested & granted to R&D based entrepreneurs from New Energy and Industrial Technology Development Organization (NEDO), and through the Small Business Innovation Research System (Japanese version of SBIR). Unfortunately, however, from the perspective of entrepreneurs these programs are difficult to approach. Measures should be taken to make the programs easier to understand and to create a one-stop administrative format.

(3) Qualitative and Quantitative Improvement of Venture Capital
The function of venture capital (VC) is to foster entrepreneurial businesses. This is done by providing entrepreneurs with such resources as capital, management know-how, and access to networks and human resources. In this way VC plays the role of a catalyst and a behind-the-scenes supporter that allows entrepreneurs to battle successfully in an extremely competitive environment.

In Japan, almost all VCs are affiliates of financial institutions. Moreover, with a very few exceptions, Japanese VCs lack the know-how for nurturing entrepreneurs. Japan and the United States are currently looking into setting up a “Tomodachi Fund” with US Ambassador John Roos, who was formerly a Silicon Valley lawyer, taking the lead. One of the ideas being considered is to send people to the Silicon Valley to study VC. A similar type of program is being considered by METI. Twelve years ago, METI was running a program for nurturing venture capitalists. Actually, the key members of Globis’ VC Division used this system to participate in short-term overseas study programs. Today, Japan’s venture capital industry is supported by graduates of this program. In this field, there is much to be learned from the United States and much to be done in developing human resources for VC in Japan.

Another important issue is the provision of capital to VC. In the United States, there are three major sources of venture capital funding: pension funds, university endowments, and foundations. How does the situation compare in Japan? First of all, pension funds invest almost exclusively in equities and government bonds. As for university endowments, as directed by the MEXT, Japanese universities generally restrict themselves to principal-guaranteed products (in other words, government bonds). Finally, Japan simply does not have foundations that would, for example, compare with the Bill & Melinda Gates Foundation in terms of the massive volume of capital under management.

As a result, sources of VC funding in Japan become limited to banks, corporations, and wealthy individuals. However, banks find it difficult to invest in VC due to BIS regulations. Corporations are under pressure from shareholders and cannot readily invest in areas outside their core businesses. So, where does this leave us? Wealthy individuals are the only remaining source (consisting mostly of successful entrepreneurs who have listed their own companies).

METI provides matching funds to VC investments made by the Organization for Small & Medium Enterprises and Regional Innovation. This is a very rational approach in that METI matches by investing the same amount as invested by the private sector. I earnestly hope that this program will continue to foster an environment that would lead to the establishment of numerous independent VCs in Japan.

3. Fostering Human Resources: Increase the number of institutions and organizations dedicated to educating and training entrepreneurs!

Look around and you see that there are wine sommelier schools to train sommeliers, there are designer schools to train designers, there are military academies to train military officers, and there are law schools to train lawyers. The same holds true for educating entrepreneurs and corporate managers. We need graduate schools in business (MBA programs) to foster these human resources.

It would be folly to say that entrepreneurs and corporate managers are the only professionals that don’t require specialized education. Say something like this and someone is bound to jump up with the rebuttal, “How about Steve Jobs, and how about Mark Zuckerberg?” The point to remember is that Steve Jobs and Mark Zuckerberg are surrounded by teams of professional managers who work hard to translate their ideas into reality. What is needed is to educate these types of management teams.

Many of Japan’s recently successful entrepreneurs, led by Masayoshi Son and Hiroshi Mikitani, are people who have received systematic education and training in business management. We live in an age where, in addition to ideas and will power, a successful entrepreneur needs intellectual powers as well. In other words, what is needed is a combination of strong entrepreneurial spirit and high intelligence to create a business in a very speedy manner, to grow and to finally emerge victorious from the highly competitive environment.

We need to nurture a set of new values and a culture where entrepreneurs who have succeeded behave in a manner that will lead society to view them as role models. As a result, their risk taking will be showered with praise.

Let us return to the original question: “Why don’t we have more entrepreneurial companies in Japan?” My response is a very simple one, as is my prescription for solving this problem. 1) Create an environment in which everyone wants to become entrepreneurs, and 2) appropriately educate the entrepreneurial wannabes. Nothing could be simpler than this.

If we succeed in achieving this, Japan will regain its vitality, new businesses will continue to be born, and the economy will grow. This is the challenge of putting the Yamato-damashii or Japanese spirit to the test of creating value. If we are able to do this, Japan will have no trouble achieving sustained growth.

“100 Actions” Creating a Vision of Japan: 9. Make Japan More Attractive Place to do business in (Economics and Industry 3)

Globis — 2011-09-15T13:32:37+09:00

In launching “100 Actions” Creating a Vision of Japan, I first presented a list of Basic Principles, the second of which was “Economic Growth through Creativity and Change.” We should be reminded that national power is founded on a strong economy. Without a strong economy, it is not possible to successfully manage the affairs of the nation in a sustainable fashion.

Weakening of the economy sets off a vicious cycle in which industries decline, jobs are lost, tax revenues drop, government finances collapse, and investment in R&D and human resources are reduced.

The only way to solve the problems confronting Japan today and restore the nation to a virtuous cycle is to use economic growth to drive the resolution of the fiscal deficit and the problems of the social security system. To put it very bluntly, I can say without reservation that unless the economy begins to grow, many of Japan’s most serious problems are here to stay.

The question of course is how to generate growth in the economy. Japan’s recent administrations have given an answer that is completely wrong. That is, economic management has been based on a set of totally erroneous principles.

Past administrations attempted to generate growth by focusing on fiscal spending to stimulate the economy. To use a common analogy, this is like giving the patient a drug, which creates a momentary sense of well-being. Giving the patient repeated drug exhausts both the body and the spirit and ultimately worsens the illness. At the same time, the government eventually runs out of the money it needs to give the economy temporary relief.

When the economy (the patient’s body) is steadily becoming weaker, it makes no sense to opt for short-term stimulus measures. What is needed is fundamental improvement in the physical constitution of the patient. The problem with short-term stimulus measures is that, in the best case, they have no positive impact on achieving fundamental improvement. In the worst case, however, they are counterproductive. With holistic approach, once fundamental improvement is achieved and the body is restored to health, fully energized and autonomous growth can be enjoyed without having to resort to any type of external stimulus.

The following three measures are necessary in achieving this fundamental improvement.

1. Use economic partnership agreements and free trade agreements to build a nation that is fully open to the world and an economy that engages in the free and unhindered exchange of human resources, goods, capital, knowledge, technology, and information with the rest of the world.

2. Capitalize on the significantly expanded market and economy created by the above measure to revitalize economic activities in Japan by making Japan more attractive place to do business in.

3. Pursue thorough deregulation, encourage the entry of new competitors, maximize private-sector initiative by promoting startups and innovation, and promote industrial renewal by creating new businesses while allowing weak ones to fail.

Fundamental improvement cannot be achieved by protecting the old and decrepit cells of the body. The key to success is actively allowing the demise of these cells while working to build new ones. In the human body, hundreds of millions of cells die and hundreds of millions of new cells are born every day.

This metabolic process of death and birth can only work if we allow inefficient businesses (cells) to die, making way for the birth of new businesses (cells). In this way, employment and investment (life blood of the economy) can be redirected to new industries (cells). It is this process that can ensure the emergence of a sound economy (body) and serve as a source of growth. Maintaining unhealthy cells can lead to the growth of cancerous cells and other mutations that will eventually undermine the entire body. Zombie-like cells (businesses) must be led to the exit, and new cells (businesses) must be born and nurtured.

I have already discussed some of these three points that are needed for achieving fundamental improvement. The first point, economic partnership and free trade agreements, was covered in Action 8: Free Trade. The second point is covered in this Action 9 on increasing Japan’s attractiveness as an economic base, and I plan to address the third point, deregulation and startup businesses, in the forthcoming Action 10.

Japan must implement these three points. Specifically, a definite end must be put to the relief measures and vast amounts of subsidies that continue to be expended on protecting inefficient small- and medium-sized enterprises and zombie businesses. Japan needs to thoroughly open itself to the world and pursue deregulation to encourage the entry of new businesses and promote the process of industrial renewal.

It is the combination of these actions that will make the achievement of fundamental improvement possible. Although this may be a time consuming process, we must attain the fundamental improvement that is so vital to Japan’s long-term economic growth.

Most of the measures that I have mentioned were launched under the Koizumi Cabinet’s Minister of State for Economic and Fiscal Policy, Heizo Takenaka. While considerable success was being achieved, the attendant pain proved too much for vested interests. Consequently, immediately after the resignation of Prime Minister Koizumi, these vested interests began to exert tremendous pressure on the government to scuttle the process of reform that was still midway toward fruition.

It is most regrettable that, responding to these pressures, the government changed its policy course. If later administrations had persevered in the path toward reform, much greater progress would have been made by now in attaining fundamental improvement in the Japanese economy.

Today, Japan is faced with very difficult social and economic challenges that originate in the problem of declining population. In addition to this, Japan finds itself shackled by the Six Burdens caused by policy inaction, which are: high corporate tax rates, obligations to cut CO2 emissions under the Kyoto Protocol, problems related to labor practices, high value of the yen, delayed conclusion of FTA and EPA agreements, and shortage of electrical power. These six problems have combined to even further reduce Japan’s economic vitality.

At this point, the greatest priority in realizing fundamental improvement is to remove each of these six shackles and to take effective action for making Japan a more attractive destination for economic activities.

1. Fundamental Resolution of Six Burdens!

(1) Lower Corporate Tax Rates!
To make Japan more attractive as a base for economic activities, it is essential to lower the effective corporate tax rate from its current level of approximately 40 percent to the standard international level of 25 to 30 percent. Based on the New Growth Strategy of June 2010, the Cabinet did approve a reduction of about 5 percent in the corporate tax rate in December 2010. However, this decision was shelved after the Great East Japan Earthquake. The first step would be to implement this decision without delay.

The often-repeated argument against lowering corporate tax rates is that the government has no way to cover the decrease in tax revenues. In my opinion, this argument has it all backwards. That is, I am predicting the opposite: lowering corporate tax rates will result in higher tax revenues over the medium to long term. Suppose the corporate tax rate is lowered to 30 percent from 40 percent. This will increase the after-tax net income of corporations by 10 percent. Theoretically, stock prices will rise by the same rate. Furthermore, Japan will be able to attract more investment by making itself more attractive as an economic base. The simplistic formula that lower corporate tax rates will lead to lower tax revenues is just not believable.

The most important challenge is to make Japan more attractive place to do business in so as to draw more factories, investments, and human resources to this economy, and to thereby increase the intensity and speed of economic activities. Our neighboring country of Korea has used similar methods to successfully entice Japanese businesses to move their factories there. Unless Japan adopts comparable measures, our neighbors will attain even greater competitive advantages over us.

(2) Attain the equal footing with Asian competitors; by not extending Kyoto Protocol Obligations!
Why is it that in all of Asia, Japan is the only country with obligations to cut CO2 emissions? Today, Japan’s primary competitors are Korea and China. Korea has made no commitment to reducing its CO2 emissions. China benefits from Japan’s commitments by receiving hundreds of billions of yen per year from Japan in emissions trading.

In last year’s Cancun Conference on Climate Change, Japan rejected the simple extension of the Kyoto Protocol. Japan must maintain a firm position on rejecting simple extension. It is clear that CO2 emissions must be reduced for the sake of our global environment. However, it is also very clear that Japanese industries will be weakened unless they are allowed to compete on an equal footing with Korean and Chinese industries.

(3) Labor Practices
Japanese labor practices are the most rigid among all advanced industrialized countries. Workers cannot be fired, and there is every indication that additional regulatory limitations will be placed on various forms of contract workers and the employment of dispatched workers. I will discuss this in greater detail in the “Action” on the Ministry of Health, Labour and Welfare. Suffice it to say that if rigid labor practices are not eliminated, Japan will definitely experience further stagnation in economic activities as well as further reduction in employment.

(4) High Yen
The value of the yen has risen too far. If Japan fails to respond to this problem, the hollowing-out of its industries will be accelerated. Deflation is one of the leading causes of the appreciation of the yen. However, deflation cannot be slain overnight. Deflation will not go away until the economy is reactivated by implementing the fundamental improvement advocated in this Action.

However, there is another issue that is as serious as the problem of deflation, and that is the question of whether or not Japan has a foreign exchange policy. It is obvious that both Korea and China have policies in place to keep the value of their currencies low.

On the other hand, the Japanese government has absolutely no foreign exchange policy. As if to ridicule this do-nothing stance, the yen continues to climb. The first action to be taken is for the government to engage in serious internal discussion on what is really important for Japan and to formulate clear guidelines. There is absolutely no message conveyed by the frequently repeated statement of “We will maintain a close watch on market developments.”

(5) Stop Procrastinating on FTA/EPA Agreements!
This issue was previously discussed in Action 8: Free Trade.

(6) Resolve the Power Shortage!
This issue was previously discussed in Action 7: Energy Policies.

The economy cannot develop and jobs cannot be created without the steady growth of businesses. The aim must be to ensure that businesses choose to locate in Japan, which means that they will undertake plant and equipment investments in Japan, engage in R&D activities in Japan, and recruit and train human resources in Japan.

So, what must be done to make sure that Japan is chosen as the base for such economic activities? First of all, the government must pay greater attention to the voice and demands of the business community. Second, the government must show that it is prepared to act with determination to resolve the Six Burdens that the business community has been screaming about.

Conveying a resolute stance is an extremely important element in Japan’s effort to communicate its intent to the world. Convey a strong sense of commitment and follow this up with a steady step-by-step implementation of policy measures: this is the only way to augment Japan’s attractiveness as an economic base. The two years that Japan has spent under the rule of the Democratic Party of Japan and the Hatoyama and Kan Cabinets have been absolutely terrible. The only result gained from antagonizing the business community has been to accelerate the vicious cycle of diminished employment.

2. Implement Other Measures for Increasing Japan’s Attractiveness!

(1) Bolster Human Resources Development!
To make Japan more attractive place to do business in, Japanese education must be bolstered as a supplier of quality human resources. There are numerous things that must be done in the area of education to effectively raise the quality of labor, but the most urgent challenges are the following: strengthen English-language education, enhance and expand higher education, improve professional skills, and nurture entrepreneurship and the ability to act on entrepreneurial instincts. I will discuss related issues in greater detail when I take up the subject of the Ministry of Education, Culture, Sports, Science and Technology.

(2) Steady Implementation of Economic Growth Strategy!
We have been made to witness a very strange and unfortunate phenomenon in recent Cabinets that have stood at the helm of the nation. Sure enough, economic policies (including the New Economic Growth Strategy) are duly formulated. But before there is a chance to implement the decisions, the prime minister resigns and a new administration is ushered into office. This has occurred repeatedly. To ensure greater continuity and implementation of policies, a fully empowered command center should be created, tasked with the mission to comprehensively formulate, implement, and review policies from a medium- to long-term perspective. One option would be to include the Liberal Democratic Party and the New Komeito in the Council on Economic and Fiscal Policy. Another possibility would be to create an agency patterned after the US National Economic Council.

(3) Revise the Antimonopoly Act!
Japan must promote the process of industrial renewal where old businesses are being constantly replaced by new businesses. An equally urgent challenge is to create businesses that are profitable and large enough to be successful in the global battlefield.

This means two things. First, put an end to long domestic wars of attrition that are born out of the environment of excess competition. Second, promote M&A as an effective means to reorganizing industries. To achieve these goals, it is necessary to review and to revise the Antimonopoly Act (increased transparency in examination procedures and standards, easing of standards, streamlining of examination procedures).

As I have emphasized here, it is vitally important to make Japan more attractive places to do business in and to create an environment that will allow Japanese companies to compete on an equal footing with their global competitors. If we fail to do this, the inevitable result will be the gradual decline of the Japanese economy and the continued loss of jobs. To repeat what I said at the outset, national power is founded on a strong economy. And where a strong economy is absent, national affairs cannot be successfully managed in a sustainable fashion. Thus, political determination and strong leadership for transforming itself into highly attractive places to do business in are strongly needed.

“100 Actions” Creating a Vision of Japan: 8. Free Trade – FTA/TPP (Economics and Industry 2)

Globis — 2011-09-15T13:29:59+09:00

At the 2011 ASKA Conference, Mr. Hirokazu Kiuchi, Representative Director of Wagoen, an agricultural union corporation operating in Chiba Prefecture, said “Japan’s agriculture will be strengthened if Japan joins the Trans-Pacific Partnership (TPP) Agreement, and it is necessary to join TPP in order to improve the competitiveness of Japanese agriculture”.

Japan is undergoing population decline (lower birth rates and aging society). These demographic changes will push the Japanese economy into the realm of low or negative growth. Consequently, Japan’s relative position in the world will inevitably decline over the medium to long terms. In the early 1990s, the Japanese economy accounted for nearly 20 percent of global GDP. However, during fiscal 2011, this ratio will drop below the 10-percent mark. It is estimated that this ratio will stand at around 5 percent in 2020.

How can this downward trend be stopped? Japan has no choice but to open itself to the world and actively draw on the vitality of the global economy (the flow of people, goods, and money) and to thereby revitalize domestic industries and to strengthen the nation’s international competitiveness. In particular, the strategic pursuit of free trade agreements (FTA) with the countries and economies of the Asian-Pacific and other regions is an urgent task.

Countries throughout the world are entering into high-level FTAs with major trading partners. This process is being accelerated, given that the outcome of the WTO Doha Round negotiations has become increasingly uncertain. Unfortunately, Japan is being left behind. Unable to overcome the obstacles posed by domestic agricultural issues and regulatory reform issues, Japan has suffered many delays in its negotiation and conclusion of FTAs.

As of October 2010, Japan had concluded only 11 FTAs, and its FTA ratio (share of trade with FTA partners in a country’s total global trade) languishes at only 16 percent. In comparison, the European Union has concluded 29 FTAs and boasts an FTA ratio of 76 percent (including intraregional EU trade). The corresponding figures are 14 agreements and 38 percent for the United States, seven agreements and 36 percent for Korea, and eight agreements and 21 percent for China. These numbers point to the undeniable fact that Japan’s FTA ratio remains unusually low.

The significant gap between Japan and its rival, Korea, is especially worrisome and is threatening Japan’s competitive position. Take for example the FTA concluded between India and Korea. Shortly after the agreement came into force, India’s imports from Korea increased by 50 percent. It can be foreseen that Korea will soon be standing in an advantageous position in exports to both the EU and the United States. Slow progress in FTAs is now being counted as one of the six stumbling blocks slowing the Japanese economy and shackling its manufacturing industries, the others being the high value of yen, the electricity shortage, high corporate tax rates, CO2 emission restrictions, and labor practices.

At one point, there was much hope that Japan would join TPP. For example, addressing the Davos Conference on the subject of the “Third Opening of Japan,” Prime Minister Kan stated very clearly that Japan would reach a conclusion on whether to join the negotiations by June 2011. However, this promise was not kept. On August 15, 2011, the Cabinet approved post-reconstruction measures to revitalize Japan and to redesign and reinforce Japan's new growth strategies. This policy document indicates that Japan has effectively given up on joining TPP.

The slow policy response in the area of free trade will put Japan far behind other countries in the intense competition that surrounds the ongoing changes in the international environment for trade and investment. The very worrisome outcome of this is that Japan may be left behind in the future growth and prosperity of the global economy.

In response to this, I would like to propose the “Heisei Opening” of Japan to the world to be achieved through the implementation of the following five reforms in Japan’s domestic systems. In the course of FTA/TPP negotiations, Japan has never been able to take the initiative in the process of developing the rules of free trade and investment. This failure can be attributed to a series of obstacles and problems that include agriculture, immigration, and regulations/non-tariff barriers. A comprehensive program for reforming Japan’s domestic systems must be pursued in order to develop a better understanding internally.

1. Implement Structural Reforms in Agriculture!
Japanese agriculture faces a number of serious problems that include the aging of the agricultural population (average age is approximately 65) and the scarcity of successors. The truth of the matter is that these problems threaten the future sustainability of Japan’s agricultural sector. To break out of this impasse, agricultural competitiveness must be strengthened and commercially viable business and industrial models must be applied to the sector. This requires the implementation of the following fundamental structural reforms and the fostering and training of management resources.

(1) Fostering Management Resources in Agriculture
Education of leaders must be provided to those who enter the agricultural sectors. The leaders then should be capable of acting strategically in the selection of agricultural products, improvement of agricultural efficiency, development of new marketing channels, management of brands, and promotion of exports.

(2) Increasing the Scale of Operation and Improving Productivity through Consolidation of Land Use and Ownership
Effective systems must be developed for realizing economies of scale. Specific measures to be taken include revision of the Agricultural Land Act to facilitate fixed-term land leaseholds and the legal mandating of the Basic Register of Agricultural Land.

(3) Promoting Agricultural Corporations by Abolishing and Easing Restrictions on Entry of Joint-Stock Companies
Conditions for certification as agricultural production corporation should be eased to facilitate the entry of joint-stock companies. Furthermore, public listing of such companies should be facilitated to encourage the flow of capital into agricultural production corporations.

(4) Expanding Marketing Channels and Establishing Brands
Regional brands and brands for agricultural products should be established by creating websites and antenna shops to differentiate themselves from becoming mere commodities. Systems should also be developed for promoting direct selling.

(5) Exporting to and Operating in Foreign Countries
Agricultural exports to neighboring countries should be increased, and possibilities should be pursued for operating in foreign countries, including engaging in agricultural production in foreign countries.

As indicated in the statement by Mr. Hirokazu Kiuchi in the opening paragraph, Japan should capitalize on TPP as an opportunity for further strengthening Japanese agriculture.

2. Promote Entry of Human Resources!
Chinese, Indians, and Eastern Europeans currently account for the majority of Silicon Valley’s entrepreneurs. The entry of human resources from throughout the world is the source of American vitality. Japan should follow this example and endeavor to attract outstanding human resources from all countries.

The current Japanese situation is such that even the acceptance of candidates for nurses and certified care workers from the ASEAN region is riddled with problems. Various requests have been made for improving the present system, including the extension of period of stay of candidates and the provision of preparatory Japanese language training. These requests should be positively considered in light of Japan’s future population structure and employment and recruiting conditions in related industries.

It is important to actively recruit and encourage outstanding human resources to come to Japan.

3. Promote Deregulation!
Industries protected by regulations tend to lose their vitality and competitiveness. On the other hand, deregulated industries that are subjected to free competition gain strength and are capable to compete in the global arena. This is the concept of the “competitive advantage of nations” put forward by Michael Porter. Because of protectionist policies, Japan’s pharmaceutical, chemical, and financial services industries were unable to compete internationally. However, such unregulated industries as automobiles, electrical machinery and electronics, and trading companies became strong.

Protectionist policies weaken an industry. To strengthen our industries, there is no other way but to abolish regulations, promote competition, invite new entries, encourage corporate innovation, and promote the process of replacing the old with the new. In order to achieve this, it is important to move forward on a program for thorough deregulation. This process should be led by the Government Revitalization Unit, which has full jurisdiction over regulatory reform for the entire government.

4. Develop EPA Complementing Systems!
Trade and investment liberalization encompasses a large number of issues, which implies that it will not be enough to merely conclude FTA/TPP. As outlined below, it will be necessary for Japan to build the foundations for various systems that complement economic partnership agreements (EPA).

(1) Develope the legal foundations for investment (promoting the expansion of investment agreements, tax treaties, and social security treaties).

(2) Establish international rules for intellectual property rights, and countermeasures for counterfeiting and piracy, and strengthening international cooperation in these areas.

5. Strong Political Leadership!
Success in free trade negotiations with trading partners requires decisive action for reforming domestic systems. This includes the ability to coordinate and adjust various domestic vested interests that stand in the way. All of this requires strong political leadership. Therefore, Japan’s policy management framework must be strengthened by unifying the government and the ruling parties. But beyond that, the prime minister and responsible cabinet ministers must provide the public with full and compelling explanations on why economic partnership agreements are important from the perspective of nation’s strategies. It is critically important to win the understanding and support of the people in this manner.

TPP and FTA negotiations should be used as an opportunity to strengthen those industries that have been weakened through over-protection. At the same time, concerted efforts must be made to create an environment that will allow Japanese companies to compete in the international arena on an equal footing. If we fail to do this, Japanese industries will continue to decline. Here again, there is a crying need for strong political leadership.

“100 Actions” Creating a Vision of Japan: 7. Energy Policies (Economics and Industry 1)

Globis — 2011-09-08T13:39:53+09:00

On August 5, 2011, Masayoshi Son and I had a head-to-head debate on the subject of Japan’s energy policies. In the past Japan has gone to war (the World War II) because of energy(oil) blockade. As the debate concerned this very important issue of energy, it attracted a large audience via the Internet.

Japan has an energy self-sufficiency ratio of 4 percent (2006). Even if nuclear power is added to domestic energy, self-sufficiency amounts to only 19 percent. This is the lowest among all leading industrialized countries. Moreover, this is extremely low even compared to Japan’s food self-sufficiency ratio of 40 percent. Japan faces serious geopolitical risks because it is highly dependent on a particular region of the world for its energy supplies. The most fundamental principle in minimizing the risk to the nation’s energy security is diversification. This is the lesson that must be learned from Japan’s past error of entering World War II and from the defeat in this war. Diversifying our sources of imported natural resources and energy is an absolute must for Japan.

To ensure diversification, Japan needs robust and comprehensive energy policies based on a medium- to long-term perspective. Furthermore, to raise its energy self-sufficiency ratio, Japan will have to increasingly exploit renewable energy resources and nuclear energy.

In June 2010, the Cabinet approved a new Basic Energy Plan (Second Revision). This revision took the previous “3E” approach (Energy security: ensuring stable energy supplies; Environment: strengthening countermeasures to global warming; and Efficiency: ensuring efficiency in supplies) and added structural reform of the energy industry and economic growth driven by energy technology. It is notable that the Basic Energy Plan of 2010 contained the numerical goal of raising the share of nuclear power in total electric power generation to 53 percent by 2030.

However, following the Fukushima Dai-ichi Nuclear Power Station accident triggered by the March 11 Great East Japan Earthquake, the government tore up the Basic Energy Plan without bothering to engage in adequate policy debate from an objective and medium- to long-term perspective. Furthermore, the policy decision to introduce stress tests as a precondition to restarting the nuclear power plants throughout Japan was made under very confused circumstances. I harbor very serious doubts about both of these decisions.

We must never again allow a nuclear power plant accident as we have experienced in Fukushima. We must overcome the sadness and grief that has gripped us, engage in serious soul-searching, and look the truth straight in the eye. Having done that, emotional and simplistic anti-nuclear arguments calling for Japan to abandon nuclear power should not be taken highly. What we need is a coolheaded and comprehensive discussion of Japan’s energy policies in their entirety.

1. Four Points to Consider in Comprehensive Review of Medium- to Long-Term Energy Policies!

1) Energy Security
We must consider how to diversify our sources of imported energy and how to raise self-sufficiency. With this in mind, we should examine how to combine fossil fuels, such as petroleum, gas and coal, with nuclear power and renewable energy resources, such as hydro, wind, solar and geothermal energies, to achieve the best energy mix for Japan.

2) Impact on the Environment and Lives
For each type of power generation system available to us, we need to compute the volume of global warming gases emitted and the number of deaths per unit of power generated. The resulting measures of “impact on the environment and on lives” must be taken into consideration. Based on this measure, nuclear power and renewable energy receive the highest scores.

3) Viability, Stability, and Economic Feasibility
It is necessary to consider viability (total space needed for facilities), stability (fluctuation in power output due to weather conditions), and economic feasibility (price of electricity, capacity utilization of facilities, cost of backup thermal power plants, cost of shutting down reactors, waste disposal cost etc. should be included). It cannot be denied that solar, wind, and other renewable energy resources face a number of unsolved problems (cost, stability, CO2 emissions due to backup thermal power plants, space requirements [i.e., viability]). What can be learned from the German case is that renewable energy cannot replace nuclear power as the base load power source. These matters must be taken into full consideration when formulating our energy policies.

4) Looking to the Future (Energy 50 and 100 Years from Now)
It is estimated that global population will reach 9.2 billion in 2050. The question is what will all these people do when fossil fuels have been exhausted. We must realize that the only options remaining at that point will be renewable energy and nuclear energy, including fast-breeder reactors and nuclear fusion. This must be taken into consideration in planning and promoting research and development from a long-term perspective.

Approaching the issue from the perspective of the above four points, the first step will be to fully confirm viability and substitutability. Then the next step will be to formulate energy policies (including nuclear power) with a calm and clearheaded approach.

Materials presented in my head-to-head debate with Masayoshi Son can be accessed at http://globis.jp/files/file1002.pdf (in Japanese).

Materials on counterarguments and rebuttals can be accessed at http://globis.jp/files/file1003.pdf (in Japanese).

2. Promoting R&D and Exercising Political Power

To ensure stable supplies of energy, Japan must pursue technological innovation. At the same time, the solution of such problems as the disposal of high-level radioactive waste and the realization of a viable nuclear fuel cycle will require the exercise of effective political power.

1) Fossil Fuels (Petroleum, Natural Gas, Coal)
Invest in technologies for utilizing the methane hydrate available in the waters surrounding Japan, in the development of clean coal technologies, and in combined-cycle thermal power generating systems.

2) Renewable Energy
Increase R&D investments for raising energy conversion rates to improve economic viability and facility capacity utilzation rates. More than 90 percent of the current subsidies for renewable energy resources go to facilities and operations. I find this to be problematic from the perspective of promoting technological innovation. Investment must definitely be focused on R&D.

3) Nuclear Energy
We look forward to the technological advances and the exercise of political power necessary for resolving the problems of the disposal of high-level radioactive waste, for the development of next-generation nuclear power generation (thorium molten-salt reactors, fast-breeder reactors, traveling wave reactors, nuclear fusion reactors), and for the early completion of the nuclear fuel cycle.

4) Investment in Other Energy Sources and Storage Cells
Invest in R&D for fuel cells and for developing methods for extracting hydrogen from sources other than fossil fuels. Promote technological development and standardization for the proliferation of storage cells, including large-scale stationary systems.

5) Development of Smart Grid Infrastructure
We look forward to the following developments: use of smart grid technologies for improved utilization of generating facilities through peak-shift and installation of smart meters to help the household sector visualize its power consumption; and, the development of nationwide power distribution by unifying the power frequencies between east and west Japan).

3. Public and Private Sector Cooperation for Robust Energy Diplomacy

Increased energy consumption in the emerging economies and Asian countries has triggered intense competition for access to energy resources and is leading to the clash of national interests. As an energy-poor country, it is absolutely necessary for the Japanese government and private sector (businesses) to come together to form an All-Japan team that will pursue strategic energy diplomacy.

Japan’s strategic energy diplomacy should be aimed at achieving the following: strengthening bilateral relations with energy producing countries, diversifying the sources of energy supply, ensuring the safety of energy transportation routes, and strengthening the ties with international organizations in order to promote greater international cooperation. To achieve these objectives, Japan must make the maximum possible use of diplomatic channels and such policy schemes as official development assistance (ODA) and the Japan Bank for International Cooperation.

Energy policies are closely related not only to environmental policies, science and technology policies, and diplomatic policies but also to Japan’s economic growth strategies. Thus, energy policies must be pursued as part of Japan’s national strategy in a comprehensive, systematic, and consistent manner. To achieve this objective, it is absolutely necessary to maintain close cooperation among the government (policy authorities), the private sector (businesses), local governments, and the general public.

Because energy policies have an immense impact on economic activities and the lives of the people, it is essential to win the support and understanding of the people in this matter. This means that Japan must commit to a positive stance on disclosure, maintaining dialogue, and creating opportunities for the people to voice their views. It is hoped that politicians address energy policies from the perspective of national security and view them as the foundation for economic development and step forward to actively express their opinions and add momentum to this vital process. These are what we need as the energy policies.

“100 Actions” Creating a Vision of Japan: 6. Expectation to Mass Media

Globis — 2011-09-08T13:39:14+09:00

It has taken mankind several hundred years to develop what we call the “mass media.” During this time, the volume of available information has increased explosively and real-time access to information has been enhanced through the development of newspapers, magazines, radio, and television. Today, mass media is undergoing dramatic changes with the emergence of the Internet and social media (Internet and social media are intentionally separated here).

The Internet and social media, such as SNS and twitter have been the cause of truly dynamic innovations due to their low cost, two-way, realtime, and viral nature of transmission. With the evolution of social media, large numbers of people can directly access information without the intermediation of the mass media. Moreover, messages can be directly transmitted and delivered to an unlimited number of people.

Similarly, using such methods as Nico Nico Douga, Ustream, and V-CUBE, the public now has real-time access to video content without the intermediation of television. The recent webcast of my head-to-head debate with Masayoshi Son attracted a very large audience that followed the debate for 3 hours and 25 minutes without any interruption from commercials. Moreover, the program can be archived for Internet retrieval at any time.

These developments have been dramatically accelerated by the proliferation of smart phones and tablet PCs.

As a result, mass media has suffered a serious decline in its revenue stream, which depends on advertising and the numbers of subscribers and viewers. The management of mass media and even its fundamental raison d’être have been called into question. However, we see that mass media is clinging on to its old system and practices, and very little progress has been made in self-transformation.

Surely these dynamic changes in the environment provide mass media with an excellent opportunity for self-transformation. However, so far the management of mass media have been missing the chances. It is my earnest hope that the mass media will continue to evolve through open and free competition with other new media and that higher standards of journalism will be achieved through this process. It is with this hope in mind that I am presenting my “Expectation to the Mass Media.”

Note: “Mass media” is used here to denote the conventional media, such as newspapers, magazines, radio, and television. The Internet and social media are referred to here as “emerging media.” Finally, the term “media” is used to denote entire field comprising both the “mass media” and “emerging media.”

1. Create an Environment Promoting Open Competition and New Entries through Deregulation!

Each segment of the mass media has its characteristics and its special importance. While keeping this in mind, I propose that we attempt what has long been considered to be taboo. That is, let us aggressively eliminate all the laws and regulations that protect vested interests and shut out new entrants. Such an initiative would include the abolition of “resale price maintenance systems,” the revision of the Broadcast Act and Radio Act (liberalization of licensing and radio waves), and the revision of the “principle of excluding multiple ownership of the media (restrictions against cross-ownership of media).”

Similarly, Japan’s closed and exclusive “press club system” should be abandoned and replaced with a system that is open to a diverse range of media to promote sound competition among the media.

2. Develop the Full Powers of Journalism!

1) Fair and Unbiased Reporting
Reviewing the television coverage of the recent nuclear power related problems, there were many programs with the obvious intent to lead society to oppose nuclear power generation. As a medium that uses the public airwaves, the importance of fair and unbiased reporting in television is very important. The temptations of sensationalism as a means to attracting more viewers must be avoided. Instead of only giving time to the vocal opponents of nuclear power, I urge television to present viewers with a broad range of views and perspectives.

It is my hope that the media will abandon the stance of superficial, sensational, and transitory reporting and commit itself to fair and unbiased investigative reporting that is firmly founded on facts.

2) Simple Criticism Isn’t Enough – Voice Approval and Positive Proposals!
In my interview with journalist Soichiro Tahara, he said, “The role of journalism is to criticize those in power.” “But after constant criticism, we have a new prime minister every year. I expected them to be much tougher.” I interjected with this question. “Instead of constant criticism, why not voice your support for good things or present positive proposals?” In reply to my question, Mr. Tahara shared a very honest comment that had been made by the editor-in-chief of a major newspaper. “Criticizing is easy, but making proposals and suggestions is a very demanding task.”

We obviously expect our journalists to report on scandals, accidents, and incidents with a critical eye. But it is also important for them to be prepared to support, agree with, and present positive proposals to society on maters of social significance. Journalism with just constant criticism will create an environment in which no one will be prepared to stand up as a leader. I believe there should be an approach which supports those making brave challenges.

3) Shift Focus from “Political Maneuvering” to “Policies”!
Hearing that a political writer of one of Japan’s three leading newspapers was giving a talk at a meeting hosted by a business organization, I attended the event with considerable excitement. But the entire 45 minutes of the talk was given to partisan issues and political maneuvering. Not a single word was spoken on “policies.” Quite honestly, I was very disappointed. I could not help but raise my hand to pose this question, “Political reporting in Japan is criticized for being solely focused on partisan issues and political maneuvering with no attention given to policies. How do you respond to this criticism?” Unfortunately, I did not receive a convincing answer.

I would like to see the focus of political reporting shift from partisan issues to a thorough treatment of policy issues, on which the public would have a sound foundation to base its decisions on. This makes policy debate essential and indispensable. I believe it is acceptable for newspapers to take clear positions in policy debates to a certain extent. Regarding the nuclear power plant accident, different newspapers have adopted different positions, which is perfectly alright. My only hope is that the reporting is at all times backed by facts. On the other hand, as mentioned under 1) above, it is questionable whether it is alright for the medium of television, which uses the public airwaves, to take one-sided positions on the issues.

4) Improve the Education of Journalists!
Japan’s mass media reporters receive very limited education in journalism. Basically, their learning tend to be restricted on the job. The fact is that I cannot think of any other profession that spends so little time and money on education and training than mass media. In Europe and America, most journalists have have advanced degrees in some type of graduate program in journalism, ecomomics, business or public policy. When I was studying at the Harvard Business School, I myself knew several journalists enrolled in the same program.

In the case of Japan, it seems budgets are not readily available for traveling or participating in conferences. Maybe this cannot be helped in an environment committed to cost cutting. However, what the readers really want and expect from journalists is sophisticated knowledge and perspective. These are qualities that must be developed through education. This is not to say that we do not have distinguished journalists. I count many excellent reporters among my friends. But I remain very doubtful that a proper educational framework exists in the Japanese case.

The impression I have gained from participating in the Davos Conference and various other meetings is that European and American journalists are capable of actively taking the podium as moderators and panelists. However, it is extremely rare to have a Japanese journalist who can take the podium. The only person that comes to my mind is Yoichi Funabashi, the former editor-in-chief of Asahi Shimbun. In light of this situation, journalists certainly do not have the right to bemoan and criticize Japan’s “low international presence.”

“Japanese reporters are fixated on scooping the competition, which means constantly hunting after information by sticking close to sources both night and day. European and American reporters leave that part of the work to the wire services, such as Reuters or AP. What they do is to take the news from the wire services, meet with experts to try to figure out how the new development will impact or change society, and concentrate on writing.” This is an interesting explanation that I heard. I am a regular reader of the Financial Times and the Economist. I believe that Japanese reporters should receive good educations and be given ample opportunities to gain experience on a global scale. It is my hope that this kind of background will prepare and equip our reporters to write many articles that will win the praise of readers.

3. Develop New Media Models in Internet & Social Media era!
Whether we like it or not, the “integration of broadcasting and communication” will be accomplished in the near future. While television hesitates to take the plunge into Internet broadcasting, it is very likely that new forms of Internet-based media will emerge that will overwhelm and surpass television. Takeshi Natsuno has stated that 2010 marked the emergence of general public recognition of Internet-based media. This was the year in which Ichiro Ozawa used Nico Nico Douga to broadcast himself over the Internet. Similarly, the shocking video from the Senkaku Islands incident was first released on YouTube, after which it was reported in the conventional media. These developments indicate that Internet-based media have already established an important presence for themselves.

Emerging media such as the Internet and social media are still in their early stages and will continue to evolve and develop.

Turn on the television today and you cannot miss the numerous variety shows featuring comedians. If television maintains its present framework, intelligent people will stop watching in even greater numbers and advertizing revenues will decline. This will create a vicious cycle leading television further and further down into realm of the vulgar. Remember the educational impact of media. Broadcasting inferior programs will lower the public’s level of intelligence. This is an outcome that must be prevented.

It is my prediction that all forms of content will find their way onto the Internet within several years and that books, newspapers, magazines, radio, and television will be integrated on the Internet as text, audio, and video. Such tools as email, SNS, and twitter will provide an expansive arena for competition based on quality of content and the ability to communicate. This will rob television of its viewers and will greatly intensify the competition for advertizing revenue. While I expect conventional forms of mass media to continue to exist even while experiencing gradual decline, the main battlefield for the media and for the formation of public opinion will move completely to the Internet.

I use the term “direct media” to refer to the Internet and social media. On the other hand, I have labeled the conventional media as “indirect media.” The difference between the two is based on whether or not an editor has inserted his or her own views and intent. Consider this: the webcast of my debate with Masayoshi Son continued for three and a half hours with no interruption. In addition, a text volume of 90,000 words was uploaded without any editing. All sorts of experts and citizens made comments and viewers made their own judgments.

Mass media tends to bear the biased editorial intent that is further distorted by commentary. The advantage of the Internet is that a wide variety of views can be expressed by anyone who wants to, and viewers can arrive at their own judgment through a process of elimination. The Internet also has the advantage of providing the principal players with an opportunity to directly explain their views and positions. I feel that “direct media” is sounder than the world of “indirect media,” which can be distorted by a small group of people.

It is my hope that conventional media will start developing new models by choosing to become actively engaged in the “direct media” of the Internet and social media. I also eagerly look forward to the emerging media launching various initiatives that cannot be undertaken by the conventional media for the creation and proliferation of new models.

All members of the public can benefit from real-time access to high quality information and from bi-directional interaction with sharply honed knowledge, perspective, and commentary. My hope is that the possibilities of new media will be used to evolve in this direction. The media certainly must not join ranks with the forces of resistance that seek to stop this process of evolution. Thus, my expectation for the mass media is for it to aggressively engage in innovation and evolution of media.