JFTC

Essay: Extracting Japans Corporate and Creative Resources ahead of the

2020 Olympics

Submitted for Japan Foreign Trade Councils 2014 Essay Contest

Japans successful bid to earn the rights to host the 2020 Summer Olympics in
Tokyo should be capitalized by developing and enriching every resource the country
has. In todays globalized and interconnected world, hosting a major sporting event
would bring more opportunities of increased coverage to the host country. Japan has
to ensure that the exposure this event will bring to itself will become a catalyst for
development towards Japanese society. In utilizing its resources towards successfully
hosting the Olympics and taking advantage of obtaining worldwide spotlight, Japan
may discover some of the resources that it has may be under developed and Japan
may find opportunities to develop those resources further to be utilized not just
towards Japan but to the world. Japan is known to have strong intellectual resources
and a culture that is distinctly unique from others. Combined with new technological
developments and ever-decreasing barriers to trade, Japan should further exploit and
develop these resources to capitalize the full potential of the privilege hosting the
2020 Summer Olympics.
Although Japan may be limited in natural resources, Japan is not a country
that is lacking in intellectual resources. Intellectual resources can be defined as the
collection of knowledge that can be exploited for some moneymaking or other useful
purpose1. Intellectual resources include human resources and Japan is ranked highly
in many leading indexes established by global organizations. Japans ranking in the
UNs Human Development Index and World Economic Forums Human Capital is
amongst the top 20 in the world. The World Economic Forum defines Human Capital
as the skills and capacities that reside in people. Organizations such as the World
Economic Forum and the Economics Institute of Washington D.C. agree that if
resources such as human and intellectual capital are put to productive use can be a
more important determinant of a countrys long-term economic success than virtually
any other resource. Thus, it is predicted that the combination of a highly developed
human and intellectual resource can help propel Japans economy and exposure in
global affairs. Policies and support by the Japanese government is necessary to fully
share to the world the intellectual resources that Japan has, especially its creative
content and goods made by its companies. Japans creative content and goods are
highly popular worldwide and combined with the right promotional strategies as well
as targeting the right markets, could boost Japans soft power. The sharing of
information between businesses on how to operate in a certain market, for example,
by analyzing the consumer behavior, can lead to less expansion risks. Japan should
have as much of intellectual resources that it can share to the world today as it did in
the 1970s and 80s when Japan originated goods such as the VCR and content such
as its animation industry.
Intellectual capital is considered as an asset for a company and can be used as
competitive advantage. Japanese companies are high on Intellectual capital. Japan has
57 companies listed in the prestigious Fortune 500 Index, a number only beaten by the
U.S. and China2. Before discussing how Japanese multinational companies such as
Sony, Panasonic or Toyota can be more utilized to propel Japan ahead of the 2020

1

Rouse, M. Intellectual Capital. (n.d.) Retrieved from http:// searchcrm.techtarget.com/definition/intellectualcapital

2
Fortune Magazine (n.d.). Fortune 500 Index. Retrieved from: http://fortune.com/global500/

Summer Olympics, one also cannot underestimate the power of the Sogo Shosha. The
Sogo Shosha or trading companies that played a significant role in Japans post World
War economy are an example of how Japan has successfully used its intellectual
resources to be influential in global economic development. In the post-war period,
the Sogo Shosha played a vital role in global economic affairs as they played multiple
roles in the Japanese economy. As the Japanese industry needed to be rebuilt and
reindustrialized after the war, the Sogo Shosha helped the rebuilding process by
supplying items such as raw/intermediate materials and industrial machinery and
equipment.
The Sogo Shosha has increased their role as the global economy
becomes more integrated and their functions and activities have gained more
reputation abroad. According to a report by Marubeni, offshore or third-country trade
of the Sogo Shosha has increased dramatically, from just 8-9% portion of their total
sales in the late 1970s to 30% of total sales in 2013. Moreover, in terms of their
contribution towards the Japanese economy, the seven Sogo Shoshas account for
15% of Japans GDP, around 33% of its import and 18% of its export3. Thus, the
Sogo Shosha and their functions and structure which is unique to Japan is a resource
that cannot be ignored. Therefore, as Japan will get more exposure in the years
leading up to the 2020 Summer Olympics, it is natural that the Sogo Shosha should
have a significant role. The Sogo Shosha should lead the development of various
social and economic initiatives implemented leading up to this event, including but
not limited to, industrial promotion and international exchange. Their highly
diversified and varied business functions and activities are perfect assets or resources
to be utilized to carry out this role. Functions of the Sogo Shosha that can be further
developed include Business Promotion, Research and Information and Market
Development. These functions can be used to analyze the potential of new or existing
overseas markets by conducting tasks such as country risk planning, for example.
Furthermore, the Sogo Shosha should act as a soft power agent to promote Japan
overseas through helping other Japanese companies adapt their business practices and
value chains in overseas market as well investing in projects overseas, such as
infrastructure projects in developing nations. The Sogo Shosha value greatly in
reaping profits by optimizing every link in every value chain through mutually
beneficial partnerships, according to the Senior Vice President of Mitsubishi
Coporation in 2012, Tomohiko Fujiyama. Therefore, the Sogo Shosha who is an
important resource of Japan, is expected to be active in every stage of the value chain
and help other Japanese companies to expand overseas due to the research power they
have. If the Sogo Shosha is successful in these tasks, the benefit will be felt greatly by
Japan.
Although Japanese companies can be considered as competitive, as shown by
the number of Japanese companies in the Fortune 500 index, some improvements are
needed to maximize their potential benefits to Japan and the world ahead of the 2020
Olympics. Improvements is needed as according to McKinsey, their share of revenues
amongst companies listed in the Fortune 500 index has decreased from 35 percent in
1995 to just 13 percent in 20094. As the 2020 Olympics is a major sporting event, it
should provide an opportunity for Japanese companies to rebound. Japanese
companies will have to adapt their strategies in order to adapt to the increased
spotlight placed on the nation. Yoshiaki Fujimori, the President of Lixil, a Japanese

3 Marubeni Research Institute, (2013, August 28). The Sogo Shosha- An Insider's Perspective.
4 Fortune Magazine (n.d.).

home goods maker, claims that Japanese companies have to work to internationalize
due to lesser barriers of trade and Japan hosting the Olympics. Mr. Fujimori suggested
that Japanese companies should first adapt their organizational culture in order to
succeed in capitalizing opportunities in the global market, such as maximizing human
resources by providing more opportunities to both genders5. Mr. Fujimoris views is
supported by McKinseys research, which concluded that Japanese companies have
had trouble in converting their technical and manufacturing prowess into brand equity
and products tailored for consumers in foreign markets. Japanese corporations and
even society though, needs to change their perception on social issues if Mr.
Fujimoris suggestion were to be implemented. Japan is ranked 101st out of 135
countries in the World Economic Forum 2012 rankings on gender equality.
Improvements or adjustments that need to be made by Japanese companies not only
include ones that are related to organizational culture or structure. Japanese
companies can modify their marketing strategies to contribute more to promote the
image of Japan, especially using their products. One of the conclusions on previous
research on product-country image has found that the images of specific products may
be weaker or stronger than the global image of their country of origin, but
nevertheless move along positively with it6. For example, a person may think more
highly of Japanese cars compared to Japanese apparel, but the more a person highly
thinks of Japan, the more a person highly thinks of both Japanese cars and Japanese
Apparel. Therefore, it is important for Japanese companies in industries where the
product is not thought of highly compared to products originating from other
countries to promote their Japanese origin in order to be perceived more highly by the
consumer. An example of a company who has implemented this strategy is the
Japanese cosmetics maker Shiseido, who under then CEO Shinzo Maeda encouraged
globalization and enforced the vision of the company to become a global player
representing Asia with its origins in Japan7. Furthermore, Japanese companies tend to
be known for their consistency and efficiency. The concept of continuous
improvement of all functions, or otherwise known as Kaizen, originated from Japan
and has been used in various industries such as healthcare, the government and
corporations. However, such consistency and efficiency can be costly, according to a
research by Sarah Kaplan from the Wharton Business School. The study claims that
older firms struggle to pursue innovation or experimentation of creative thinking in
corporate systems designed to encourage consistency and efficiency in the production
of established goods or services8. Moreover, Rebecca Henderson of Harvard Business
School, also found out a similar phenomenon, which is the effort that older firms in
fast-evolving industries devote to research, brings much lower returns than the
research budgets of their younger rivals. An example of a Japanese corporation in this
situation is electronics maker Panasonic, who despite having factories cleaner than
hospitals and robots running the operation process such as automatic driverless
vehicles transporting materials, lag behind in market share compared to its younger

5 Smart, R. (2014, May 5). Tokyo Olympics: A City Examines Itself in Preparation for the 2020 Games.
Retrieved
from
http://urbanland.uli.org/infrastructure-transit/tokyo-olympics-city-examinespreparation-2020-games/
6 Heslop, L., Papadopoulos, N. (2000, December). Countries as Brands. Retrieved from
http://iveybusinessjournal.com/topics/strategy/countries-as-brands#.VA_ybmS1bhM
7 Iwatani, N., Orr, G., Salsberg, B. (2011). Japans globalization imperative
8 The Economist. (2014, September 6). Pardon the disruption. Retrieved from
http://www.economist.com/news/finance-and-economics/21615587-when-firms-succumb-new-formscompetition-inflexible-organisation-usually

competitors from South Korea, Samsung and LG9. Therefore, in order to be able to
be competitive at the global stage, promotional strategies must reflect the popular
global trends. The general trend is that Japanese companies tend to look at the local
market first when launching a strategy or a new product, instead of looking overseas
first. In todays globalized and interconnected economy, such approach may not be
the best approach to share the creativeness of goods coming from Japanese firms. The
global market is too lucrative to be ignored and not be a priority on the business
strategy of Japanese firms. Due to such situation, Japanese companies therefore
should adapt innovation in products and in their business strategies.
The creative economy is a sector that Japanese companies must look into to
further develop. The market for creative goods in the world is lucrative as the value of
the industry is estimated to be around 900 Trillion Yen or around 8.5 Trillion US
Dollars10. However, with the exception of video games, Japan is a net importer of
creative content11. In 2011, video games had an export value of 293 billion Yen and
imports of just 2.1 billion Yen. An evidence of such disparity is the enthusiasm of
Japanese gamers when a new video gaming console is launched. For example, Sonys
PlayStation 4 Japanese release saw a long line of buyers waiting to buy the console on
its launch day, however, when Microsoft launched the Xbox One in Japan, lines were
much shorter at retailers. It is also a coincidence that the video game industry is one
of the rare industries that Japanese companies have more of a global outlook strategy,
as they are likely to release their products globally earlier than the Japanese release
date. In other creative industries such as books, movies and magazines, Japan in 2011
was a net importer of content, with the import value totaling 70 billion Yen compared
to an export value of 16.2 billion Yen. Therefore, it is deemed that Japan should
export more of their creative industry further, as Japan has many globally known
resources in their creative economy. Japans pop culture is well known and items
originating from Japan are ubiquitous in other regions in the world. For example,
Doraemon, a cartoon-animated character from Japan, is probably Japans most
popular pop culture export as it is heavily recognized in many regions worldwide and
its cartoon series is consistently being re-run for other generations to watch. 2014 is
especially a landmark year for this animated series, as it embarks a new chapter on its
worldwide popularity. Doraemons last movie, titled Stand By Me, is aiming for a
worldwide release in December 2014 while its animation TV series was shown for the
first time in North America in the summer of 201412. Doraemons constant re-runs of
episodes worldwide and its introduction to North America will prolong its appeal to
the next young generation and new audiences. Therefore, utilizing Doraemon as well
as other pop culture icons by including it in more creative products is recommended
as their popularity could boost the exports of Japans creative industry and promote
Japans creative industry more ahead of the 2020 Summer Olympics. Japans creative

9 Japan Watching. (2010, September 17). Efficiency, innovation and entrepreneurship in Japan.
Retrieved from http://japanwatching.com/economy/156-efficiency-innovation-and-entrepreneurship-injapan
10Creative Industries Division, Ministry of Economy, Trade and Industry. (2012, January) Cool Japan
Strategy
Retrieved
from
http://www.meti.go.jp/english/policy/mono_info_service/creative_industries/pdf/120116_01a.pdf
11 Lies, E. (2013, July 20). "Cool Japan" gives anime heroes a new mission: boost the economy.
Retrieved from http://www.reuters.com/article/2013/07/21/japan-cool-idUSL4N0FP0ZH20130721
12 Bricken, R. (2014, May 9). Japan's Most Beloved Anime Character, Doraemon, Is Coming To The
U.S.
Retrieved
from:http://io9.com/japans-most-beloved-anime-character-doraemon-is-comin1574139911

content has recently faced competition from other countries, especially from
neighboring South Korea. A survey conducted by Japans Ministry of Economy,
Trade and Industry show that Hong Kong consumers rate Korean products more
highly compared to Japanese products. Therefore, the Japanese government needs to
set up better policies and increase their efforts to promote Japanese culture abroad.
The Japanese government, for example, can use South Korea, the U.S. and the U.K.
as the benchmark. South Korea is of more interest, as it has been gaining worldwide
attention in a relatively short amount of time. The methods and mediums in which
South Korea have promoted their creative content, for example, can be studied by
Japan to regain its position as Asia, especially as exporting creative content is
nowadays easier.
Exporting creative content is easier nowadays due to the increasingly rapid
development of technology. Technology allows information to be transmitted more
easily between nations and the rate of content becoming viral has been increasing. For
example, distribution of media nowadays requires shorter processes compared to the
early days of the Internet being viral. Citing South Korea as an example, previously
in the 1990s when Internet usage was rare and Japanese pop culture was unrivaled,
South Korean officials had to first persuade TV channels in Hong Kong and China to
carry programming from South Korea and the media, which was stored in VHS
format, had to be delivered by a diplomatic package to avoid custom charges13. In
addition, public funds had to be used for the distribution of the media and replacing
the Korean audio with the Chinese audio. Today, less bureaucratic hurdles are needed
to replicate the same procedure. Videos can become viral with hundreds of millions of
views thanks to video sharing sites, especially YouTube with its 1 billion subscribers.
Moreover, what can make content go easily viral is videos can now be watched on
multiple devices anywhere with an Internet connection. Fourth-generation mobile
data networks now have become ubiquitous in many countries and some countries are
now preparing standards for the fifth-generation. Therefore, leading up to the 2020
Olympics it is highly expected that content will not just be available on conventional
viewing screens such as a television or computer but practically anywhere. Thus
barriers to trade and share information have become non-existent. It is due to such
situation that can be suggested to Japan to develop its resources in the creative
economy. A particular industry that its newcomers can benefit from exposure in
YouTube is the music industry. Currently, although YouTube is quite popular in
Japan, media from Japan on YouTube still lags behind compared to media from other
countries and hence can be considered underdeveloped. Citing the most recent data as
of this writing from Tubefilter Inc., a U.S. Company that focuses on the online
entertainment industry, no channels originating from Japan are included in the Top
100 most viewed YouTube Channels worldwide in June 2014. In comparison, the
U.S. tops other countries by having 57 channels represented in the list while Japans
neighbor, South Korea came in third place and represented by 6 channels14. Although
Japan has alternative video streaming sites aside from YouTube such as Niconico,
YouTube is deemed the best site to promote music. YouTube claims five of the top 10
trending videos on YouTube for 2013 were music videos and 10 of the 20 channels on

13 Hong, E. (2014). Birth of Korean Cool: How One Nation is Conquering the World Through Pop
Culture. New York. Picador
14Cohen,

J. (2014, July 28). Top 100 Most Viewed YouTube Channels Worldwide-June 2014 Retrieved
from: http://www.tubefilter.com/2014/07/28/top-100-most-viewed-youtube-channels-worldwide-june2014/

YouTube that gained the most subscribers in 2013 were music channels15. Therefore,
utilizing YouTube more to increase promotion of Japans creative industry, especially
music, to the world is a must. Moreover, Ernst & Young has classified several issues
that can be considered as popular global trends in the near future, one of which is the
increasing influence and importance of emerging markets. Internet penetration rate in
emerging markets is still low but is increasing by double digits annually and these
countries tend to have a relatively young population, attributes Japan does not have
currently. For example, as of 2013, only 28 percent of Indonesias 248 million people
are connected to the Internet and only 23 percent own smartphones16. In addition, the
median age in Indonesia only 27.9 years old, compared to 44.6 years old for Japan17.
Therefore, emerging markets should be the focus to distribute and promote Japanese
creative content.
The ideas stated above to promote Japanese culture and creative economy
abroad require industry players and policy makers to set up regulations and a space
where creativity can be innovated and promoted. According to a study by the
European Union Open Method of Coordination, culture-based development has
relevance for a region, whether the region is still in need support for infrastructural
development or where adequate infrastructure already exists18. Being a developed
nation, it is likely that Japan fits into the latter category. According to the study, if
adequate infrastructure already exists, the infrastructure and other local resources
available can be exploited to enhance the competitive advantages of the local
economy to spur creativity. The potential of the creative economy in local regions can
encourage creative urban planning strategies in order to support the creativity and
gain recognition nationally and globally. Japan actually has some cities or regions that
are already deemed creative, such as Kanazawa. Kanazawa is recognized as a creative
city by UNESCO and a major factor in gaining this contribution can be attributed to
the 21st Century Museum of Contemporary Art, which created 32.8 billion yen in
economic effects to the city19. In the years leading up to the 2020 Summer Olympics,
Japan could develop more cities like Kanazawa. For example, one candidate city
could be is Kawasaki city, home to the Fujiko F Fujio Museum, honoring the late
author of Doraemon. It was in this city where the late Fujiko F Fujio created
Doraemon and due to Doraemons popularity worldwide, foreigners are not
uncommon to be found visiting the museum. Another city that could receive such
treatment is Mitaka, which is home to Studio Ghibli. The hosting of the 2020 Summer
Olympics will likely bring an increase in the number of foreign tourists in Japan as

15Manarino,

M. (2013, December 17). The YouTube Musiconomy: Just How Big Is It? (Infographic).
Retrieved from: http://www.thevideoink.com/features/special-issue/the-youtube-musiconomy-justhow-big-is-it-infographic/#.U_XG9YCSzaa
16 The Jakarta Post (2014, January 15). Number of RI Internet users increases to 71.19 million in
2013: APJII. Retrieved from: http://www.thejakartapost.com/news/2014/01/15/number-ri-internetusers-increases-7119-million-2013-apjii.html
17 Intercultures (2014, March 28). ASEAN Countries Are Selling. Are You Buying?. Retrieved from:
http://www.intercultures.de/news/?p=978
18 European Union Open Method of Coordination Expert Group on Cultural and Creative Industries.
How can cultural and creative industries contribute to economic transformation through smart
specialization?
:
Retrieved
from:
http://s3platform.jrc.ec.europa.eu/documents/10157/0/120420%20CCI%20Policy%20Handbook%20(F
INAL).pdf
19 Creative

Industries Division, Ministry of Economy, Trade and Industry. (2012, January)

well as domestic tourists. Promoting more of creative cities as a resource of Japan will
also likely result in an increase in interests by tourists to visit such designated cities
and therefore will stimulate more of the local economy.
The privilege of hosting the 2020 Summer Olympics is expected to bring
dynamic changes to Japan as well as an increased spotlight on the nation. It can be
concluded that Japan has many resources it can further develop and promote in the
years leading up to hosting the 2020 Summer Olympics. Although Japan is short of
natural resources, it has an abundance of intellectual capital and a unique culture that
should be more shared to the world. Using the Sogo Shosha and the corporate sector
as the backbone of Japans soft power agents as well as highly supportive government
institutions and policies, Japan has strong fundamentals in order to capitalize the
spotlight given to her leading up to the 2020 Summer Olympics. Moreover, Japan
should extract more from the creative economy due to the rapid development of
technology and the popularity of Japanese pop culture and products worldwide.
Emerging markets should naturally be the prime destination to promote Japanese pop
culture and products worldwide. In addition, it was determined that specific strategies
need to be carried out in order to nurture creativity and innovation within Japan and to
promote more of what Japan has to offer and share to the world. However, to fully
utilize the resources that Japan has and transforming it to be competitive, some
adaptation might be needed by Japanese corporations and society. Embracing such
adaptive measures might not be in the best of interest of Japanese corporations or
society, however a successful attempt in adapting is likely to lead a higher chance of
the resources Japan has to stand out more in the global stage. With the addition of the
privilege of hosting a major sporting event such as the Olympics, an opportunity to
stand out should not be passed up.

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Summary
Japans successful bid to earn the rights to host the 2020 Summer Olympics in
Tokyo should be capitalized by developing and utilizing every resource the country
has. Although Japan lacks natural resources, Japan has an abundance of corporate and
creative resources. Japan has the Sogo Shosha, which are one of the backbones of the
post-war Japanese economy and Japan has many companies listed in the prestigious
Fortune 500 index. However, many companies are losing market share to competitors
from other countries due to a lack of innovation in products and corporate strategies,
which often overlook the potential of global markets. A dynamic change in corporate
strategy and structure may be needed in order to further utilize the resources in the
corporate sector to be more competitive globally. Moreover, Japans creative industry
is also a resource that should be promoted further. Japans creative goods and content
are popular in the world and the global market for creative goods and content is
valued at 900 Trillion Yen. In addition, the rapid development of technology has
allowed for creative content to be exported easier, especially through video sharing
sites such as YouTube. Moreover, emerging markets with its young population and
increasing Internet penetration rate are naturally a lucrative destination to export
creative goods and content. However, despite the vast popularity of Japanese creative
goods and content, Japan is a net importer of all creative goods and content categories
with the exception of video games. Coincidentally, the video game industry is one of
the few industries where Japanese companies tend to have a global outlook strategy as
next generation gaming consoles tend to be released earlier than in Japan.
Furthermore, the 2020 Olympics will likely bring more tourists into Japan and
designating areas as creative centers is likely to spur creativity and local uniqueness to
attract more tourists into a locality. Therefore, it can be concluded that utilizing more
of Japans creative and corporate resources is necessary if Japan were to capitalize on
the spotlight given from the privilege of hosting a major sporting event such as the
2020 Olympics.