Finally, a Wake-Up Call for Japan Inc.?
Co-author: Hidetoshi Azuma
The British decision to leave the European Union on June 23 unleashed a geopolitical earthquake of global magnitude. Within seconds of the news from London, Brexit's seismic wave was felt across the world's financial centers, exacting a $2.1 trillion loss in global equity markets. Among these financial capitals, Tokyo emerged as one of the key casualties, with the Nikkei Stock Average plunging by almost 8%, having been caught unprepared for the single largest fall since the March 11, 2011, Great East Japan Earthquake.
Despite a modest recovery after the initial shock wore off, Japan now faces a grim outlook for Prime Minister Shinzo Abe's export-oriented economic policy dubbed "Abenomics," two weeks before a key upper house election on July 10. As long as Abenomics capitalizes on the so-called "Japan Inc.," an economic model revolving around the special relationship between government and major companies, Japanese companies operating abroad remain vulnerable to the inevitable gap between Tokyo's ambitions and the realities on the ground. In fact, Japan Inc. should have seen Brexit coming and been prepared, having already suffered various disappointments overseas well before the vote. But they largely failed to learn their lessons, which resulting in the financial bloodbath the day after the vote. As local realities rapidly change in unexpected directions, effective public relations and strategic intelligence are crucial to the success of Japanese companies abroad...