KATTOULAS: Is Japan’s economy recovering? SON: Japan is experiencing difficulty switching from an industrial to an information society. The United States had a very good education system for [building] an information society. As a result, Americans were more creative and aggressive embracing [it] than the Japanese. However, when you have to have a paradigm shift you rewrite all of society’s systems from old to new, and Japan is doing that now. In the long term I am optimistic. But [change] will take some more time.
Apart from education, what other factors restrict Japan’s transformation? Deregulation is definitely needed. Japan has too many government regulations. You have to break those rules. But it’s not just the government. Society also has a lot of customs that must change.
Like what? Big companies are happy to talk to each other but make small companies go through complicated processes just to get an audience. That means small companies in Japan suffer, whereas in the U.S. there are great opportunities for smaller companies and young people. In Japan, younger people are considered less worthwhile than older people. As a result, Japan is not open to many younger companies.
What is driving Japan’s transformation? It’s always younger people who change from the old culture to the new culture or from the old structure to the new structure. I am encouraged that many young companies are being born as part of Japan’s Internet revolution.
Why, after years of resistance, is Japan suddenly changing? Corporate Japan went over the cliff. For 10 years it had been hesitating, standing at the edge of the cliff afraid to move. When the government started injecting taxpayers’ money into the banks [late last year], people on the street began to criticize the government and the banks. Bankers realized that if they don’t restructure and change themselves even after injections of taxpayers’ money, they’ll probably go to jail. To avoid that, they are finally restructuring.
So why did they all jump? For 10 years they’d been holding each other’s hands at the cliff saying, “We don’t want to jump because the water’s cold.” But once several guys start making changes, others don’t want to be left behind. You should not underestimate how quickly Japan can move once there’s a consensus. That consensus now exists.
You’re optimistic. Not for the next couple of years. Japan has hit bottom, but we’re not back up yet.
