2017 has been a year of sharp policy shifts all over the planet. Amid this complicated backdrop, continuity in the perennially strong U.S.-Japan relationship has become crucial in assuring stability not only in the Asia-Pacific Region, but also around the world.
Following the February meeting between Prime Minister Shinzo Abe and President Donald Trump that included a round of golf, both leaders acknowledged how much they value the relationship, with the U.S. president describing the U.S.-Japan alliance as a “cornerstone of peace” in the Asia-Pacific region, while citing Japan as an “important and steadfast ally.” For his part, Abe hoped that his U.S. visit would “usher in a new era of bilateral relations.”
Of course, trade remains a focal point of discussions between both countries, following the U.S. withdrawal from the highly touted Trans-Pacific Partnership agreement.
A historically humble partner
As businesses navigate the changing landscape of global politics and trade, it has become increasingly important for the private sector on both sides to clearly communicate to their leaders the value of the relationship, and more importantly, the impact of their contributions toward assuring mutual economic prosperity. Having said that, the contributions made by Japanese companies in the U.S. are arguably misunderstood, largely due to Japan’s understated and humble ways.
“Japan is still the No. 1 source of foreign direct investment in Southern California,” said Japan Business Association President Satoshi Okawa. “Japanese companies have been contributing a lot, but quietly. Our mentality by nature is defined by modesty. This is a virtue of Japan.”
This has led to some reflection on the Japanese side, translating into a consensus belief that more effort should be put on creating awareness of Japan’s contributions to the U.S. economy.
“We have a huge presence here already,” stated Consul General of Japan in Los Angeles Akira Chiba, “We need to keep sharing with the American people how Japan has contributed to society. We create jobs, invest and import American goods.”
One step toward this objective is the establishment of the JAPAN HOUSE, a project aiming to promote a deeper understanding of Japan in the international community. With Los Angeles being one of only three selected locations in the world (along with Sao Paulo and London), this platform offers an opportunity for intellectual exchange between Japan and the U.S., thereby generating new business opportunities.
Along those same lines of intellectual and cultural exchange, top institutions of higher learning such as the University of California in San Diego (UCSD), University of California in Los Angeles (UCLA) and Abe’s alma mater, the University of Southern California, have all ramped up efforts to increase interactions with Japanese counterparts, as Japan’s push to internationalize its students and workforce intensifies.
“International education opens up new opportunities for collaboration. It builds bridges and establishes a high level of trust among people. We have a very durable and solid relationship with Japan. It’s critical,” said UCLA Chancellor Gene Block.
“The innovation within Japanese companies is just spectacular. We want to build stronger and deeper relationships in Japan. Much deeper than we’ve ever had before. We are open,” UCSD Chancellor Pradeep Khosla pointed out.
While in the past, Japanese investment was widely tied to large corporations, an influx of small and medium enterprises (SMEs), particularly in food and beverages, advanced technologies, medical devices, life sciences and services, have ventured into the U.S. market.
Many of these SMEs once catered to the Japanese giants, preparing them well for new customers in the U.S. With challenging demographic issues in Japan, these companies consider the U.S. as an opportunity for sustainable growth, with many of them selecting Southern California as the starting point for their U.S. operations.
“Many Japanese companies are very interested in business overseas. Interest in the U.S. is growing. Japanese companies still understand the attractiveness of Southern California,” said Japan External Trade Organization Los Angeles Chief Executive Officer Keiichi Nishimoto.
“Because of the large Japanese-American community and because Japanese-Americans have such prominent roles now in Southern California — in business and as members of the community — Japanese feel comfortable here; the climate is very positive for them to do business in Southern California,” Japan-America Society of Southern California President Doug Erber said.
An apt illustration of this evolution is the city of Torrance, located in the South Bay region of Los Angeles County, the home of Toyota’s North American headquarters for 33 years. While the auto giant’s move to Plano, Texas, was much publicized, the city still hosts the U.S. headquarters of 200 other Japanese companies. And the city continues to draw interest from Japan as new space has now become available.
“Torrance is very much open for business. Our doors continue to be open to Japanese companies,” Torrance’s Economic Development Manager Fran Fulton stated.
Ranked as one of the top-10 safest cities of its size in the U.S., located midway from two major ports and airports, the city boasts many advantages for businesses looking to establish their U.S. footprint. The city is also seeing an influx in biotech and research and development facilities, as well as a slew of emerging companies.
Pentel of America, present in the U.S. for over half a century, noted the livability of Torrance as one of its most attractive qualities.
“Because of the unique Japanese community, it’s like I’m back in Japan here. It is a great place to live,” said Pentel of America President Chotaro Koumi.
Beyond Torrance, the Westside of Los Angeles has also been drawing interest. Dubbed “Silicon Beach,” the area is home to over 500 tech companies.
“In Silicon Valley, most companies are already well developed. Here in Silicon Beach, it’s in the beginning stages so it’s the perfect time for investors and companies from Japan,” explained Nishimoto.
“Within the Silicon Beach name, the word ‘beach’ is very important. Japanese tend to associate innovation with factories and research and development facilities. We need to change that mindset. Our younger generation is seeking a better work-life balance, so this setting is very attractive to them,” he added.
This hub for innovation has brought Japan — and the world — a lot of interesting tech, most notably the current social media darling, Snap Inc.
Another company headquartered there is cloud-based talent management solutions provider, Cornerstone OnDemand, which has set its sights on Japan and the Asia-Pacific, as it looks to assist Japanese companies adapt their traditional career management approach to changing global practices.
“Technology can be supportive of both local and global practices required to succeed around the world. Japanese companies are starting to think differently in order to realize maximum potential,” said Cornerstone OnDemand Vice President and General Manager for Asia-Pacific and Japan Frank Ricciardi.
Deepening connections: Looking forward
As both sides continue to show increasing interest in developing business, connectivity only becomes more and more important. The direct Japan Airlines flight connecting Tokyo to San Diego, for instance, has proven to be a critical artery that feeds into the economic development of the region.
The San Diego County Regional Airport Authority, which has been a staunch supporter of the direct flights, is now undertaking an expansion plan that aims to further amplify the volume of passengers and cargo moved across the Pacific.
On the ground, logistics companies such as Dependable Global Express (DGX) continue to assist Japanese businesses with North American operations. As optimism about their prospects grow, expansion of frontline points in Japan are planned.
“We’ve barely scratched the surface. I have high hopes that in 10 years we will definitely have more than a Tokyo office, the question is how many,” explained DGX President Brad Dechter.
Meanwhile, market conditions in Japan and a growing acceptance of Asian flavors in the U.S. have led to an explosion in the food and beverage industry. This was an opportunity identified by Advanced Fresh Concepts Franchise Corp. (AFC Corp.) as it now enters its third decade, standing as the largest North American franchisor of service counter concepts, serving sushi and other Asian flavors.
As opportunities multiply, it becomes evidently clear that the partnership between Japan and Southern California — and the U.S. — is stronger than any cyclical political headwinds. Its prosperity is based on well-established relationships and a never-failing appreciation for each other’s contributions.