Jeremy Sy, Kajal Vatsa and Melody Zhou write:
The year 2015 finds Japan halfway between two moments that will have long-term repercussions on its future: the 2011 Tohoku earthquake, and the 2020 Tokyo Olympics. How Japan navigates this period of change will determine whether its future is one of managed decline, or of renewed growth.
On 11 March 2011, Japan was hit by the strongest earthquake in its recorded history. The magnitude 9.0 quake and the associated tsunamis left nearly 16,000 dead and more than 200,000 homeless. They also caused a number of nuclear incidents, primarily at Fukushima, which both rendered large areas of the country uninhabitable, and constricted the supply of electricity for an extended period. Taken together, the events of March 2011 were “the toughest and most difficult crisis for Japan” since the end of World War II, as the then-Prime Minister Naoto Kan said.
The disasters of 2011 marked the culmination of Japan’s long decline. After two decades of global dominance, Japan’s economic bubble burst in 1990, as its leading companies struggled to compete with challengers from China, Korea, and the West. This led to an extended period of economic stagnation, made worse by a concurrent demographic crisis, as Japan’s population began to shrink and age more quickly.
The Tohoku earthquake shook both Japan’s physical topography, and its soul. In the aftermath, Japanese consumers were forced to re-evaluate deeply held values and priorities. In the face of increased danger from their physical environment, Japanese consumers’ high levels of risk-aversion increased even further. Our Global MONITOR data shows that agreement with the statement “I prefer to play it safe and not take unnecessary risks” has increased from 68% in 2010 (pre-Tohoku), to 73% in 2014. Disappointed in the government response to the Tohoku crisis, Japanese consumers have learned to depend on themselves more than ever. In 2010, only 48% of Japanese consumers agreed that “Being as self-reliant as possible will increase one’s chances of succeeding in today’s world.” This rose to 63% in 2012, and hit a high of 70% in 2014.
While 2011 marked an end for Japan, it by no means marked the end. Japan has had to pick up the pieces before, as it did in the aftermath of World War II in 1945.
Winning the right to stage the 2020 Summer Olympics has given Japan a boost to national morale, as well as an impetus for national renewal. As the 1964 Olympic Games did for a post-war Japan, the 2020 Tokyo Olympics are expected – or hoped – by many to mark the dawn of a new Japan on the international stage.
There are already initiatives to make Japan a more friendly and accessible place for foreigners visiting for the Olympics. These include wide-ranging English tuition (street vendors included), and changes to public signage. All of this is creating a sense of change for citizens, as well as an impression of living in a nation with a global outlook. More importantly, these preparations have the potential to help create a Japan that’s less insular, and better prepared to take advantage of the possibilities of a more globalized world.
What will determine whether Japan succeeds in realizing a new future post-2020? What do companies need to do to succeed in Japan today and into the future? Part 2 is here.
The image at the top of the post is courtesy of the Tokyo Games Organizing Committee.