Legacy Created by the 2020 Tokyo Olympics Will Launch 'Japan's Next Decade'

"Japan is back—and in the spotlight," proclaims the Economist Corporate Network (ECN) in a report entitled Japan's next decade: Opportunities for economy and society after the 2020 Tokyo Olympics. "Perceived as a laggard for decades, it is finally receiving attention, if not for staggering GDP growth, then as an example of how to deal with the population-related issues that many countries will face sooner or later."

Sponsored by Philip Morris Japan, the report notes that the "2020 Summer Olympic and Paralympic Games in Tokyo are playing a central role in the narrative of Japan's revitalization. The direct economic benefits of this iconic event are forecast to range from ¥30trn (US$282bn) to ¥32trn or around 0.6% of real GDP. The Olympic Games are also viewed by business executives as a great opportunity to boost morale and visibility, to 'catapult the host city into the premier league of cities,'" according to a report that looks into the economic impact of the Olympics.

Moreover, "The cumulative effect of the Olympics brings more important results than simply faster GDP growth. Olympic euphoria has developed into a new national idea, driving the country and its economy forward. 'The Olympics will be a great catalyst, showcasing all of the great things about Japan and Japanese society. There will be a huge positive effect from an incoming tourism point of view, but there is also domestic excitement, that will be created as well,' says Randall G. Wada, CEO of JLT Holdings Japan."

The report encouragingly explains that "this positive trend does not have to stop when the lights go off after the closing ceremony. The legacy created by the Olympics should be enough for the country to start building what we call Japan's next decade" as opposed to the 'lost decades' of economic stagnation in the 1990s and 2000s.

There are challenges, however, such as a rapidly aging population that may adversely impact Japan's next decade. "The statistics are well known: by 2030, more than 30% of Japan’s population—nearly every third person—will be over 65. This is unprecedented in world history. The Japanese government and people are concerned as to whether their society is sustainable with such a demographic structure."

What is more, "The Economist’s Glass Ceiling Index consistently ranks Japan as one of the worst environments for working women among OECD countries." In a chapter on driving growth through diversity and inclusion, the report says "improving conditions for working women and promoting 'total diversity' are crucial for Japan's next decade and beyond. The economic potential is huge, and the socio-demographic implications could benefit society as a whole."

Based on desk research and consultation with experts in Tokyo, the report's key findings include:

• By 2030, more than 30% of Japan's population—nearly every third person—will be over 65, but the rate of aging peaked in the mid-2010s and is now beginning to plateau.
• An aging population presents a market opportunity for companies that can recognize the needs of potential new customers, especially in the technology sector and IT and software industry.
• The number of employees in Japan who are over 65 rose from 5.7m to 8.7m in 2008-18 and their share in workforce will amount to around 20% by 2030.
• Up to 80% of Japanese companies in hospitality, nursing and transportation experience severe lack of workers. However, due to the decline in population, Japan finds itself in the unique position where the labor shortage presents a chance for the development of new automating technologies, without the risk of creating huge unemployment.
• Eliminating the gender employment gap and promoting women to full-time positions can bring Japan a 15% increase in GDP.
• Added value driven by the 4th Industrial Revolution in Japan can be as high as ¥30trn—in terms of economic impact, essentially another Olympics.
• The manufacturing sector in Japan has a very high level of automation potential—at 71%, it is 11% higher than that of the US. By 2025, with the use of the internet of things (IoT) and automating technologies, industries such as construction can improve productivity by 20% and manufacturing productivity can grow by up to 2% per year.
• Japan is lagging in the adoption of digital technologies, but there are still considerable achievements in innovation in Japan, particularly in manufacturing sector.
• The number of international tourists in Japan increased more than six-fold in 2011-18, making Japan one of the top countries in the hospitality industry globally in just a few years.
• The size of Japan’s domestic tourism market still dwarfs the inbound at ¥20.5trn compared with ¥4.52trn. The government is aiming to increase annual revenue from international travelers to ¥15trn by 2030.
• If put together, the opportunities around the silver market, increased productivity, inbound tourism and diversity promotion could bring the national economy to a much larger size than the government's current target of ¥600trn.

Source: ECN

The report concludes that "[d]espite serious challenges, Japan has immense potential for the future. If put together, the opportunities around the silver market, increased productivity and diversity promotion could bring the national economy to a much larger size than the government's current target of ¥600trn. This would require more than new programs by the Cabinet Office new strategies by business, however; a shift in perspective and change of mindset are needed to see the risks as opportunities to be realized by society as a whole."

Is your business planning to establish or expand its operations in Japan in the next decade?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

China Is Set to Become One of the World's Leading 5G Markets with 460 Million 5G Connections Forecast by 2025, Says a New GSMA Report

China's mobile ecosystem added RMB5.2 trillion ($750 billion) in value to the country's economy last year, according to a GSMA report, equivalent to 5.5 percent of China's gross domestic product (GDP) in 2018. The GDP contribution comprises mobile operators (1.0%); related industries (1.1%); indirect contribution (0.7%); and productivity improvements (2.7%).

Authored by GSMA Intelligence, the research arm of UK-based GSMA, the report explains that "China is a huge mobile market, nearly four times the size of North America, with 1.2 billion unique subscribers at the end of 2018. Over 97% of these come from mainland China, with the remainder spread across three other markets – Hong Kong, Macao and Taiwan." The Mobile Economy China 2019, available both in English and Chinese, reveals that:

• China is the largest mobile market in the world, home to almost 1.2 billion unique mobile subscribers at the end of 2018, representing 82 percent of the country's population (a unique mobile subscriber represents an individual that can account for multiple SIM connections;
• More than two-thirds (69 percent) of mobile connections in China are smartphones, with smartphone adoption expected to reach 88 percent of connections by 2025 (there were 1.5 billion SIM connections in China in 2018 ((excluding licensed cellular IoT), forecast to rise to 1.7 billion by 2025);
• 77 percent of China’s connections are currently running on 4G networks – 4G adoption will peak in the coming years before falling as consumers migrate to next-generation mobile services;
• China is set to become one of the world's leading 5G markets with 460 million 5G connections forecast by 2025, which would account for 28 percent of China's total connections by this point;
• The RMB5.2 trillion ($750 billion) economic contribution by China's mobile ecosystem in 2018 is forecast to grow to RMB6 trillion ($870 billion) by 2023;
• China's mobile ecosystem directly and indirectly supported 8.5 million jobs in 2018 and made a tax contribution to the public finances of government of RMB583 billion ($84 billion); and
• The number of licensed cellular IoT connections in China stood at 672 million at the end of 2018, supporting various industrial and smart cities applications.

The report's executive summary presents the following two points:

Mobile underpins rapid transition to a digital society

"China is the world's second largest economy," the report says, "accounting for close to a fifth of global gross domestic product (GDP). Through a combination of government policies and market forces, the economy has expanded massively since the late 1970s, with industries such as steel, automotive and telecoms developing rapidly. Today, China's broad and diverse mobile ecosystem underpins its digitization strategy and is having a profound impact on consumers, businesses and wider society."

In my experiences of working in the Middle Kingdom for the past several years, I can attest that "China's growing middle class are purchasing more goods online, amplifying the country's already huge e-commerce market and reducing the prevalence of cash transactions. China is home to many millions of tech-savvy consumers who are keen adopters of social media and users of a variety of apps, placing greater demands on operators for improved network performance."

The report further notes that "[d]espite trailing many developed markets in launching 4G, Chinese operators have invested heavily in their networks, recognizing the positive correlation between user experience and data consumed. This has resulted in improved mobile data speeds, while subscribers in China have migrated to 4G services at a faster pace than those in Australia and the US, creating a mass market and economies of scale in a short timeframe. Operators are now working to bring 5G to market and are set to lead much of the world in this space. China will host the 2022 Winter Olympic and Paralympic Games, which will serve as further motivation to accelerate 5G deployments."

Government and policymakers enable a platform for digital progression and pioneers

According to the report, "In a testing geopolitical climate, the government remains steadfast in pushing forward the country's digitization journey, considering traditional sectors such as retail and health as ripe for disruption. The state is also investing in a range of emerging technology industries such as AI, leading to a surge in external financing. Meanwhile, internet tech players and mobile operators alike are at the cutting edge of innovation, often partnering to develop and apply pioneering solutions, which can improve efficiency and realize cost savings, as well as expose new revenue streams.

"In parallel, Chinese policymakers have taken important steps to modernize the country's regulatory framework for telecoms, establishing a platform for further digital progression. Though further reforms should be considered, many technological advancements are on the horizon and more industries will adopt and commercialize digital solutions. Operators appear resolved to provide the superior connectivity required to power China in the 5G era, supporting the country's transition to a leading digital society and its presence on the international stage."

Infographic: GSMA Intelligence

Done carefully, companies worldwide will find China to be a lucrative market in artificial intelligence, cloud computing, connected devices, digital health, fintech, mobile applications and other digital services. What are your plans to capitalize on this opportunity?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Japan's Importance in the Future of Asia

While it has been 12 years since I conducted any business transactions in Japan, I hold fond memories of my trips to the East Asia island country and warm interactions with the Japanese people. In addition, as a resident of the state of Washington, I have come to appreciate the close relationship the Pacific Northwest has with Japan. Therefore, I was quite interested in attending the "Update on Japan and Role in Asia: Japan's importance in the future of Asia" conference on Mar. 31st, 2016 in Seattle, Wash. Sponsored by the Japan-America Society of the State of Washington (JASSW), this conference brought together Japan's foremost researchers and top political minds in the areas of economics, geopolitics, and international relations to discuss the current state of the country and projections for Japan's role in Asia's future. This post highlights two of the presentations made during the half-day event, which was comprised of three excellent speakers and a panel of four highly accomplished individuals.

Daisuke Karakama, Chief Market Economist for Foreign Exchange at Mizuho Bank, served as the first speaker with his presentation, "Abenomics and the Japanese Economy." He noted that "Japan has been suffering from low growth for two decades." The country's annual average real gross domestic product (GDP) rate has fallen from 4.7 percent in the 1980s to 0.8 percent in the 2000s. Furthermore, nominal GDP in 2012 at 475.1 trillion yen was the same in 1991. And while Japan's Consumer Price Index has increased 0.3 percent annually since 1990, the Urban Land Price Index has declined by 4.4% during the same period resulting in a drop of 65 percent over the past 25 years.

Mr. Karakama then provided an overview of economic policies advocated by Japan's Prime Minister Shinzō Abe, which are commonly known as "Abenomics." The three arrows of Abenomics include fiscal stimulus, monetary easing, and structural reforms. Mr. Karakama provided some indication that Abenomics is working such as Japan's unemployment rate fell to its lowest level since 1997 at 3.3 percent, the ratio (1.17) of job offers to applicants hit an 18-year high in 2015, and the Nikkei 225 Average reached its highest level since 1994.

Certain economic indicators are getting worse during the past two years of Abenomics, according to Mr. Karakama. For example, the rate of increase real wages (year-over-year) has gone from -1.0% to -2.2%, the ratio of non-regular staff increased from 35.6% to 37.9%, and the percentage of households with no savings increased from 26.0% to 30.4%.

Photo of Tokyo and
Mount Fuji: JASSW

Japan's economic recovery is stalling, Mr. Karakama explained. One cause for the stalled recovery is weak demand for Japanese goods by China as the Middle Kingdom's economy is experiencing a deceleration. While not as high as Malaysia's 8.4 percent or South Korea's 5.4 percent, value-added exports to China represents 2.2 percent of Japan's GDP.

However, Mr. Karakama seemed cautiously optimistic about the future of Japan's economy citing a continuing trend of declining unemployment rate and a gradual increase of active job opening-to-applicants ratio. Moreover, real wage income for Japanese workers will continue to increase at a solid pace due to the rise of employment of women and seniors. He also said the following three factors the Japanese economy will achieve a growth rate of one percent in FY2015: Support from monetary policy by a continuation of monetary easing due to the moderation of inflation, support from fiscal policy through the postponement of a further consumption tax hike coupled with implementation of emergency economic stimulus measures, and support from the low price for crude oil.

Noting that Tokyo, both the capital and largest city of Japan, will host the Games of the XXXII Olympiad (2020 Summer Olympics), Mr. Karakama said Olympic-related investments will push the GDP up even further through capital investments of JPY10 trillion by four Olympic-related sectors (services, real estate, transportation & communications, wholesale & retail). As a result of hosting the Summer Olympics, Japan's growth rate will improve to mid 1% by 2020.

Mariko Kawano, Professor of International Law at Waseda University presented "Regional Security and the Law of the Sea," which addressed maritime security and maritime disputes in Asia, the role of international legal rules in maritime disputes, the settlement or management of maritime disputes and the rule of law, effective and stable utilization of marine resources in disputed maritime areas, and the importance of the regional cooperation in the process of the settlement or management of maritime disputes.

Dr. Kawano presented three basis features of the dispute in the South China Sea, which contains a crucial shipping lane and high potential of marine resources, among China, Indonesia, Japan, Malaysia, the Philippines, and Vietnam. China's claim on the basis of the so-called nine-dash line for maritime features and maritime areas (see left map), a co-existence of the claims of several coastal states, and an accumulation of unilateral acts of coastal states to manifest or enhance their claims and entitlements.

Citing an op-ed that suggests the Association of Southeast Asian Nations (ASEAN), a political and economic organization of ten Southeast Asian countries, remain neutral on the South China Sea dispute, I had the opportunity ask Dr. Kawano if she agreed with this opinion. Or should ASEAN, together with India and Japan, join in a united effort to condemn China? While she refrained from providing a direct opinion, Dr. Kawano noted territorial disputes in Africa involved the support of countries that not have a direct claim in the dispute, but had an economic interest in seeing the dispute settled in favor of the claimants.

While this conference produced excellent information about the important role Japan has played in the geopolitical arena since the end of World War II, it is still unclear what role the country will play in Asia's future. It should be recognized that Japan is the world's fifth largest economy after China, the European Union, the United States, and India. However, for Japan to maintain its importance in Asia, it must address its domestic issues such as an ageing population, improving sexual equality (where the country is bottom of the rich world in most rankings), and increasing industrial production. For now, Japan will continue to play an important role in regional security and stability.

What is your view of the future of Japan's economy? Will the dispute in the South China Sea get resolved amicably?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

E-Waste: A Small Component of the 2010 Olympic Medals

Like many of you, I am enjoying watching the 2010 Olympic Winter Games that are taking place in Vancouver, British Columbia. There are reports about the unique design of the medals awarded at the 2010 Winter Games, but a sustainable component to these reports is worth discussing on this blog. Making Olympic and Paralympic history, the medals will be the first to contain metals recovered from end-of-life electronics (e-waste) otherwise destined for the landfill. The medals are comprised of metals provided by Teck Resources Limited (Teck). (Photo: VANOC)

In describing the process of making the metal into medals, Teck says, “Historically, metal for the medals has been sourced only from mineral deposits that are mined from the earth and refined for commercial use. Teck has created a recycling process to recover metal from end-of-life electronics (e-waste) such as TVs, computers and keyboards. This process provides a practical solution to the challenge of reducing the amount of e-waste material destined for landfills and is part of the company’s pursuit of sustainability—a core value that drives its approach to business.”

Furthermore, according to the Vancouver-based mining, mineral processing and metallurgical company, “Metal can be sourced from many manufactured metal products, including household appliances, electronics or cables. Teck’s process involves recovering metals contained in cathode ray tube glass, computer parts and circuit boards through smelting. The process involves shredding, separating, and heating of the various electronic components to recover a variety of metals.”

The gold, silver and copper used in the medals were recovered from e-waste and then combined with the metal from other sources for the medal production. The content of recovered metal from the e-waste material in the specific metals is: Gold: 1.52%; Silver: 0.122%; Copper: 1.11%. While the percentages of reused metals are minimal, manufacturing the medals with recycled metals creates an inspiring initiative to reducing the Olympic Games' carbon footprint.

In addition to providing the metals, Teck worked with Vancouver Olympic Committee (VANOC) and the Royal Canadian Mint in the development and production of the medals. Click here to watch a video, “The Making of the Vancouver 2010 Medals.”

China and the Olympics

Many of you have asked about my thoughts on China hosting the XXIX Olympiad. I recall feeling disappointed when the International Olympic Committee made its decision to award the 2008 Summer Olympics to Beijing on July 13, 2001. I, as most of the world, had fresh memories of Tienanmen Square and reading articles about people improperly detained, free speech restrictions, and other human rights abuses.

From a development perspective, China has worked hard to prepare hosting the world. The Chinese government carefully orchestrated the construction of state of the art facilities. Although we are seeing a great haze over the city, Beijing should be given credit for taking significant steps to curb its air pollution.

With China under a microscope, as most host countries are during the Olympics, I hope the Middle Kingdom will reform itself and with an openness for freedom of religion, speech, press, and assembly. It is disturbing to hear accounts of police crackdowns on protesters and obstructions of journalists from reporting covering the protests. Moreover, as a person who uses the Internet as a vehicle to promote sustainable solutions to resolve social, political, and economic problems, I am deeply troubled by the ongoing censorship China has maintained leading up to the Olympics.

China has changed to become a global power--politically, economically, and militarily. We, the democratic world, need China as much as China needs us. Perhaps the world's democratic nations will use economic carrots to persuade China to become a more open society. Countries such as India, Malaysia, Thailand, Vietnam, and Indonesia are modernizing and competing with China to attract foreign direct investment. As entrepreneurs, we have options to enter other markets beyond China and the power within these options should be used as a means to encourage China to accept openness among its citizens.

I wish China the best of luck for a safe and successful Olympic games. It is an amazing country to visit, an exciting market to conduct business in, and any reforms will only enhance the uniqueness China has to offer the world.

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.