Looking to the West for reversal of ten years’ economic decline

Date: 13/03/03

What is the Japanese view of the EU? Can anything be learned from the West as Japan struggles to revive its flagging economy? Dennis Abbott asks leading figures from business, politics and academia in Tokyo

YOTARO Kobayashi is one of the most venerated business leaders in Japan: when he has something to say, every boardroom in Tokyo listens.

Chairman of the Keizai Doyukai (the Japanese association of corporate executives) and Europe in Japan Business Roundtable, he's also a director of the Nippon Telegraph and Telephone Corporation (NTT) and head of the Aspen Institute Japan, to name just a few of his top appointments.

We meet at the headquarters of Fuji Xerox, the firm with which he has had the longest association (he joined it from Fuji Photo Film in 1963). Kobayashi has served as a director, president, CEO and, since 1999, as the document firm's chairman of the board. He's a pillar of the establishment but, like any successful businessman, Kobayashi has never rested on his laurels.

Japan is searching for solutions as it seeks to reverse ten years of economic decline. Kobayashi believes Europe may provide some of the answers:

"Europe is a tremendous opportunity for the future. Dialogue is important, not only between business leaders, but also government decision-makers. This is something we have not done in the past to the extent which I think is necessary."

Although Japan currently enjoys far stronger commercial links with the United States (it accounts for 25 of its trade compared to 14.5 with the EU), Kobayashi sees Europe's business 'culture' as a better fit with Japan.

"In terms of corporate governance, the EU and Japan have got more in common than the US and Japan," he says. "America has a strong shareholder model, but the EU has more of a stakeholder model like Japan."

He believes the "socially democratic business model" has served Europe well, particularly the UK, France and Spain, which he said had "come back strongly in terms of competitiveness".

He points out that the EU is ahead of Japan in terms of labour flexibility: "In general, the EU has learned to deploy in productive areas."

However, labour flexibility does have its downside. "We may have to accept higher unemployment as a social cost," he admits.

Another area in which the world's second largest economy can learn from Europe, he suggests, is in carving out reforms to achieve greater openness in its bureaucratic structures. "There's an increasing need for transparency and accountability," he says, but argues that things are already changing on the ground. "Civil society is stronger now in Japan," he adds.

But Kobayashi stresses that the improved dialogue needed with the EU is a two-way process. He would be "more than happy" for European Commission officials to come to Japan to learn more about how business works there. He returns to the underlying compatibility between the blocs, highlighting Europe's respect for cultural diversity as another example of something in common.

"We are both captives of our tradition and cultures," he smiles.

• The third and final part of our spotlight on EU-Japan relations will appear in next week's edition.

What is the Japanese view of the EU? Can anything be learned from the West as Japan struggles to revive its flagging economy? Author interviews leading figures from business, politics and academia in Tokyo.