Karakuri and Abenomics
Last Thursday I addressed the annual forum of Dujat, the Dutch & Japanese Trade Federation that has been very active and successful for the past 30 years in strengthening the ties between the Japanese and Dutch business communities. The theme of the forum was “Made in Holland, Made in Japan”.
In my welcome speech, I explored the question regarding what ”Made in...” stands for today in an environment of further globalization and shifting markets, and whether this concept still matters as much as it did 20-30 years ago. It was an interesting discussion about how both countries have different macro-economic challenges to overcome, but both still maintain a strong position in the forefront of technological developments in global markets.
Karakuri and Abenomics, forces behind the Japanese economy
At this year’s event, two macro economists shared their views on the Japanese and Dutch state of economic affairs while two professors shared their views on the theme Made in Holland, Made in Japan. Many Dutch (Bluetooth, wifi) and Japanese (Walkman, calculators) inventions have travelled around the world. Nowadays, more and more Japanese parts are included in an iPhone, but that does not make it a Japanese product. Still, Japanese are known for their quality and Dutch for their inventions, despite the fact it is not visible from the outside of a product.
The Dutch economy is progressing according to ING economist Maarten Leen as the housing market seems to be bottoming. Massive pension reserves, a strong export led economy and a great investment climate according to the OECD and WEF, should help the Dutch economy. The fact that there are such big pension reserves also explains why the Dutch are so gloomy despite the fact that we are one of the wealthiest and happiest people; we have a lot to lose! According to the same statistics the Greeks are also very 'happy', also explained by the fact that they don't really have to worry about their pension reserves...
Jeroen Plag is head of international corporate clients at ING Commercial Banking.
Currency strategist Hidetoshi Honda from Japanese Mizuho bank described the static state of the Japanese for the past 10 years with close to zero inflation. The current policy of Abenomics is based on three pillars, around monetary and fiscal policy and a focus on growth. Since the Japanese yen and the Nikkei stock index are moving in parallel, any (orchestrated) weakening of the yen is positively impacting the export led Japanese economy, boosting the Nikkei, weakening the yen etc. Also, Abenomics has more staying power. While before the Japanese have had 6 prime ministers over the same number of years, Abe however has retained his approval ratings and therefor can implement more in popular measures, like the recent consumption tax.
The two professors, Kruit from Delft and Fukuda from Nagoya, covered the various developments in their respective fields, robotics, microscopes and nano technology. Especially in microscopes (FEI and Hitachi) and semiconductor (ASML and Nikon) lead globally, which explains Dutch and Japanese technology inside the approximate 7 billion (!) cell phones we use globally everyday!
Interestingly enough the pendulum technology invented by Dutchman Christian Huygens in the 17th century serves as the backbone for the Karakuri technology. The use of springs inside typical Japanese wooden dolls allows them to move mechanically. Even today the technique of Karakuri is applied by Japanese carmaker Mazda, a great showcase of using historic applications in modern automobiles. Watch the enthusiasm the Mazda manager displays in using a very simple technique to produce something simple but esthetic and useful.
While structural changes in the Dutch housing sector seems to provide for a rebounding of the economy, Abe needs structural positive approval ratings in order to continue his three pillars of Abenomics. And the application of Karakuri in present day car making as well as Dutch and Japanese chips in your cell phone shows that it is not the outside but the inside that matters, and that Made in Holland or Japan after many years still indicates state-of-the-art technology.
Initially published by Dutch daily 'Het Financieele Dagblad', with permission re-published by ING.