[LINK] "Why Isn't Japan Inc. Helping Japan?"

[rfmcdonald]

Bloomberg View's William Pesek notes that Japan is too globalized for Japan Inc. to work the way the current Japanese government wants it to.

There's something very familiar about Shinzo Abe's plans for reviving the Japanese economy. For decades, the government could rely on Japan's biggest companies to serve the national good. Bureaucrats and executives worked hand-in-hand to promote key sectors. In the 1980s, with state help and guidance, Japanese corporations scoured the globe for market share, pouring the spoils back into the economy at home.

Now, Abe seems to expect Japan Inc. to follow a similar script. By driving down the yen 30 percent with an ultraloose monetary policy -- the so-called first arrow of Abenomics -- and greasing the economy with huge fiscal stimulus, the prime minister has boosted the stock market and filled corporate coffers. Executives were meant to return the favor by hiking wages and boosting capital investments.

Twenty years ago, that strategy might have worked. But something new is at play. Japan's corporate champions aren't playing ball -- in part because they're no longer very Japanese.

Take Honda, the subject of a recent New York Times piece making waves in Nagatacho, Tokyo’s Capitol Hill. The story explored the rather odd way Honda headquarters in Tokyo has dealt with a record $70 million fine levied on its U.S. subsidiary: as a strictly American problem beyond the purview of CEO Takanobu Ito. Of course, this reflects a bit of the old duck-and-cover routine Japan Inc. performs whenever bad news hits (recent examples include Sony's hacking case and Takata's airbag recall).

At the same time, Honda's attitude makes sense. In 1979, the automaker became the first Japanese giant to open a production base in the U.S. (initially focusing on motorcycles). Soon, others emulated its decision to build products closer to the customer. This mass migration of jobs involving Toyota, Nissan, Sony, Panasonic and others accelerated in the 2000s as deflation deepened and Japan's workforce aged. Later, offshoring expanded because of high labor costs at home, with Japanese companies opening factories in China, Thailand and elsewhere.

Many of Japan's biggest companies, including Honda, now derive most of their revenues and profits from their overseas affiliates. Rather than imagining themselves as national assets, they're thinking like other transnationals and putting profits and efficiency over government priorities. Abenomics, in effect, is premised on an outdated social contract.