Stealth Japan: Inside the world’s most under-valued economy
Western media has tended to crow about Japan’s flailing economy — its history of protectionism, shrinking workforce, creeping GDP and a national debt sitting at more than 200 percent. Scott Foster, a Private Equity Partner at TAP Japan and the author of the forthcoming book Stealth Japan, says that reporting is misguided at best.
“Instead of looking at Japan as a protectionist monster that blocks our car sales, we should look at it as a significant market opportunity for high-tech,” he said.
Where news reports tend to focus on GDP, he says, Japan has been investing in overseas manufacturing. “If most of your investment’s overseas, it’s not going to be captured in GDP.”
“Most of the economic metrics are up.”
Japan’s economy, he said, is the 3rd largest in the world and accounts for almost 10% of global GDP. It also has the lowest unemployment rate of any of the largest industrialized countries — “just under 3.5 percent.”
Perhaps most importantly though, Foster explained, “the cumulative foreign investment of Japan has gone up 5 times ...” That means income from production overseas, but also the investment and the sales and profits from those businesses.
As for Japan’s rapidly-shrinking workforce? Foster says that’s not as important as many people have been led to believe — the Japanese economy has access to a global workforce.
The country’s attitude toward foreign investment has also changed: “Apple has 37 or 38 percent of the cell phone market in Japan,” Foster said. In its more protectionist years, the government would never have allowed that kind of international market share. And that reflects a larger shift in their stance toward international trade.
“The Japanese have been a major advocate of getting the TPP done,” Foster said. “That reflects their national interest, which is now supportive of a legal, stable international trade regime and protection of intellectual property.”
What about the national debt? Foster says that fully 30 percent of that is actually owned by the Bank of Japan, which has been aggressively buying back government bonds. Ninety percent is owned by the Japanese themselves.
