Japanese Firms to Benefit from Global Supply Chain Transformation
In the not-so-distant past, global trade focused on cost efficiency, resulting in supply chains that spanned multiple countries and continents. In recent years, however, supply-side disruptions combined with geopolitical tensions and technological advancements have compelled multinationals and governments to reconsider the framework of global trade, placing an increased emphasis on stability.
To Japan, this period of transition represents a unique opportunity that is being compounded by macroeconomic factors, such as the devaluation of the yen, creating an environment for corporate groups to expand. Mr. Hiroshi Majima, president of Iwatani Corporation, a leader in industrial gases and hydrogen which also holds the top share of the Japanese LP gas market, argues that the current environment is bolstering Japan’s attractiveness as a production hub. “The current depreciation of the yen presents an opportune moment. This devaluation has not only attracted investors back to Japan but has also encouraged Japanese companies to reconsider domestic production,” he states.
Early signs of this development were seen in the semiconductor sector, where the world’s largest chipmaker, TSMC, partnered with Sony to build a new semiconductor plant in Kumamoto. To Mr. Majima, this increase in domestic activity casts a bright light on the company’s future. “We perceive significant opportunities to supply our industrial gases and machinery in this context,” he explains. “Given the current economic conditions, we believe there is great potential to expand our operations.”
The realignment of global supply chains also presents opportunities for Japan’s famous Sogo Shoshas, also known as general trading companies. Having invested in a plethora of different industries and sectors, these traders are now able to create synergies among their business divisions to create new ecosystems. In 2023, Japan’s general traders received the backing of one of Wall Street’s most famed investors, Mr. Warren Buffet, who recognized their potential to lead supply chain transformations.
Chief among these enterprises is Mitsubishi Corporation, whose various investments in renewable energy projects are paving the way for the creation of a more sustainable and reliable energy system. Mr. Katsuya Nakanishi, president and CEO of Mitsubishi Corporation, believes that his firm can play a transformative role in the Japanese and global economy. “By connecting strong business groups, we can create new value. By engaging in closer communication with both internal and external stakeholders, our goal is to transition into a ‘value chain creation’ company,” he explains.
In our rapidly changing world, Iwata unlocking new business value also stems from the integration of digital technologies. Mitsubishi Corporation, with its eight distinct business groups, is uniquely positioned to leverage innovative technologies across a wide range of divisions. “The technology landscape has evolved significantly due to innovation and the incorporation of AI,” explains Mr. Nakanishi. “Given the uncertainties of the future, our potential for growth is substantial, driven by our diverse resources and extensive portfolio.”
Beyond the country’s large corporate groups, Japan can also count on the robustness of its industrial suppliers to navigate the current period of transformation. In an era where the focus of supply chains has shifted from cost efficiency to stability, Japan’s historical strength in quality control and high-spec products has never appeared stronger. Mr. Takuya Iwata, president of Iwata & Co., a comprehensive chemical trading firm, highlights the strengths of Japan’s chemical industry. “The biggest strength of the Japanese chemical industry is the materials. In addition, Iwata another core strength is the quality the industry can produce. Japanese companies can produce products with high levels of purification, and thus we see them being supplied to the semiconductor industry,” Mr. Iwata explains. He also emphasizes the role of high-quality equipment, which is essential for semiconductor production, as a significant competitive edge for Japanese firms.
As global trade shifts from cost efficiency to stability, Japan finds itself uniquely positioned to capitalize on this transition. Macroeconomic factors, coupled with Japan’s strengths in quality control and innovative technologies, offer a promising future for both large corporations and industrial suppliers in the evolving global market.