Business Orientation: Japanese Preferences

Tokyo, Japan: One of the defining principles of the Japanese economy has been the determination by all stakeholders to ensure full privatization as espoused by liberalism. This has resulted in the state shying away from business and instead creating the requisite environment for businesses to flourish. The benefits of the Japanese model can be seen in several successful business of which the railways is but one.

It is significant to note that many African countries including Ghana are in the process of finding partners or buyers of what are effectively the last vestiges of the colonial economy: railway lines that were designed for the haulage of mineral ore to the ports for shipment to the colonial metropolis. Yet, there have also been cases of African countries that have recorded mixed results due to privatizations of the rail sector. It is in the light of this that the Japanese experience is worthy of examination.

According to Tatsushi Morishita, manager for the International Department of Central Japan Railway Company (JR-Central), the inability of many African countries to record success stories is due to their preference for Concessioning as against outright Privatization. In an interview at the JR-Central Headquarters, Mr. Morishita said that based on the success story of the Japanese model, outright privatisation was the best option of offloading railway companies into private hands instead of concessioning. He outlined the extent to which since the privatization process was implemented fully for Japan in 1987, the company now records a staggering ?1.3trillion per annum. For him, the fact that the company was restructured into 6 passenger and a freight haulage subsidiaries has ensured that the use of vertical integration can sustain the profitability of their business venture.

Asked about the possibility of JR extending its operations into Africa and possibly Ghana due to the Government of Ghana?s decision to privatize railways, Mr. Morishita categorically stated that his company had no such intentions because of the risks involved. He emphasized that ?the risk of investing such technology in Africa is quite high. We also consider the market to determine whether it is possible to make reasonable returns on our investment. Africa also lacks the required technology to run such an investment, apart from the fact that your governments always want concessionary arrangements that are not attractive and profitable for companies like ours?.

He however noted that JR was ready to offer technical expertise to any African country that wished for such help, stating that his company had not only given such assistance to some developing countries but also opened regional offices in Washington, London and Australia to observe market trends. As at March 2004, JR-Central?s operating area covered just 23.7 percent of Japan?s 380, 000 square meters land area and accounted for 58.4 percent of the country?s 125 million population and 63 .4 percent of the country?s Gross Domestic Product (GDP). With the introduction of the N700 series bullet trains, travel time has been greatly reduced as people are ferried over long distances at 270km/hr, making it possible for workers to shuttle to and fro Tokyo and other major cities conveniently. JR has also recorded zero percent in passenger fatalities, no derailments or collisions based on daily routine maintenance from midnight to 6am while delays have only infrequently been caused by natural occurrences such as heavy rains, typhoons and heavy snowfall.

Similarly and yet somewhat differently, Toyota Motor Company has been seeking innovative ways of maximizing profits while ensuring that their 65,000 employees remain a happy family. Within Japan, Toyota has successfully marketed their new Prius Hybrid Car that is energy efficient, environmentally friendly and reasonably priced for the consumer. The car uses both fuel and electricity for power, consuming 1litre over 35.5Km. Both local and foreign buyers are queuing to buy the vehicle in the light of rising prices of fossil fuel. Furthermore, Toyota has produced 60 hydrogen powered 4x4 Kluger cars for the Japanese and US markets and although at a trial stage, commercialization is set to be delayed due to environmental concerns and lack of hydrogen fuel dumps in many countries among others. Asked whether global competition poses a threat to Toyota?s profits, the Chief Engineer at Toyota Headquarters stated ?when you have a company that is run on an employee suggestion system, you are always ahead of the competition?. According to their company reports, Toyota recorded 600,000 employee suggestions in 2005, 94% of which were taken and implemented to enhance efficiency in production while the workers were in turn motivated with cash rewards between ?500 and ? 200,000 depending on the value of the suggestion.

Contributing to the debate about Japanese investment in Africa and the establishment of plants and industries within sub-Saharan Africa, the head of Japan?s Investment in Africa of the Japan External Trade Organization (JETHRO) Mr. Osamu Hattori stated that although Japan?s trade balance with Africa is a paltry 1%, he is nevertheless optimistic that trends would change in the near future, given the interest Japanese businessmen are expressing through his organization. He cited the example of large cashew exports from Kenya operated by a Japanese citizen and the efficiency that has been brought to bear in that sector of Kenya?s agriculture, to the extent that all cashew nuts consumed on British Airways flights are sourced from this investor. For him, the basic framework must be put in place to make it attractive for the private sector in Japan to look more towards Africa. He also revealed plans to open a vehicle assembly plant in an African country although he said ?we are still weighing the options about which country to cite this plant?. Asked whether the Japanese market is opened to African businesses, he called for increase in capacity and regularity of production, stating that delays and inconsistencies were a constant threat to profitable ventures with African partners. He also indicated the Japanese business community?s interest in the lessening of risks, protection of foreign investment through an expeditious and concise legal framework and the elimination of one-off business entities from the business community among others.

At the Japanese International Cooperation Agency (JICA), Mr. Aiichiro Yamamoto, senior assistant to the director-general stated that it might be mutually beneficial for African countries to adopt the ?One Village, One Product? (OVOP) concept that has been successfully implemented in Malawi and other states. By this, emphasis is placed on the identification of a single product which is then promoted at the village level and given the requisite market for sale in Japan and other markets. This is highly visible at ports of entry where the Narita airport for example openly displays Ghanaian traditional stools, Kente stoles and other handiworks that are receiving massive patronage from the Japanese public. After its initiation in 1979 by the Governor of Oita Prefecture, OVOP has received governmental approval to the extent that Prime Minister Koizumi has made it part of his broader TICAD to underscore his commitment to help poor countries access markets in the developed world. ?The challenge then is for African villages to identify profitable ventures and thereafter take advantage of this initiative to improve the lot and economic fortunes of their various societies?, Mr. Yamamoto emphasized.

For Ghanaian businessmen, it must be possible to take advantage of this OVOP initiative to widen their scope of operations by focusing on ventures like tomato product exports. This view is premised on the fact that the Japanese love to drink raw tomato juice with their meals, right from breakfast to dinner. Granted that Ghana usually experiences tomato gluts annually with some left to rot after harvest, the challenge is now being thrown for the food processing industry, the non-traditional export sector and indeed various farming concerns to take advantage of this window opportunity to diversify business with the people of Japan.

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.