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Japan evolving, not ‘stagnant’: UC professor Schaede
Unraveling Japanesecompanies
HIROKO NAKATACONTRIBUTING WRITER

It has been a long time since critics started
to say Japan had entered what became
its post-bubble “lost decades.” They say
its global competitiveness has declined,
proved by the fact that old Japanese bluechip companies had dropped out of the top
world rankings.
But Ulrike Schaede, professor of Japanesebusiness at the UC San Diego School ofGlobal Policy and Strategy, casts doubt on
that. Although she admits Japan has beenslow to adapt to a fast-moving global business environment, she says that does notnecessarily mean the country has declined.
She stresses that a number of Japanesecompanies are in the process of changing
themselves to achieve growth, though that
often takes a long time.
“Do we know for a fact that the competitiveness has been declining?” Schaede said
in a recent interview in Tokyo. She said thelast three decades following Japan’s bubble
economy of booming stock and land prices
from the late 1980s to early 1990s, whose

HIROMICHI MATONO

collapse brought banking crises, were not“lost” but “a period of transformation.” Thecountry’s underlying strength is proved by
its GDP and other data, which show thatJapan, with only the world’s 11th-biggest
population, is still the third-largest economy even after the long downturn. “Things
are moving slowly in this country,” she continued. “But ‘slow’ is not ‘stagnant.’”
Schaede said one reason why the poor
assessment of Japan’s global competitiveness has prevailed is that consumer electronics from Japanese brand names likeSony and Panasonic — TVs, mobile phones,laptop computers — have long been overtaken by those from South Korean companies like Samsung and LG Electronics. But
the professor said a significant part of products’ components are still made in Japan:“People conclude ... that Japan must havelost it, but I don’t think it’s true at all.”What happened in the late 1990s andearly this century, she said, is that the world
saw South Korea, Taiwan and China copy
Japan’s capabilities in the mass manufacturing of high-quality consumer products.
Japanese companies realized they could
not beat those countries’ strong price competitiveness in home appliances, except for
high-end items. “So getting out of the end
products is strategically a sound move. It
just took very long — maybe too long,” sheadded.
Some Japanese companies responded
by moving upstream in the value chain
into products such as fine chemicals andhigh-tech components, for instance theSony sensors in some consumer products,
she said. That is where they can apply theiraccumulated expertise, which is not easy
for assemblers to gain or imitate, and winhigh profitability.
Schaede said one good example of aJapanese company that successfully conducted strategic repositioning is JSR. It wasestablished in 1957 as a supplier of synthetic
rubber for auto tires, but after the oil crisisin the 1970s it launched a diversification

Ulrike Schaede, professor of Japanese business at the UC San Diego School of Global Policy andStrategy HIROMICHI MATONO

strategy and developed polymer technologies for electronic devices. It later utilized
those technologies to manufacture materials for products like semiconductors andflat panels. The company also has applied
its biochemical expertise in the field ofhealth since the early 2000s.
Schaede also said Japan’s reputation has
waned because the economy is affected by
the 80/20 rule, in which 80% of the country’s economic success comes from just
20% of its companies — including a small
number of growing firms like JSR.
Why does it take such a long time formany Japanese companies to reinvent
themselves? Schaede said the transformation is slow partly because they haveneeded to move away from the conventional model of lifetime employment,
which had helped achieve the postwargrowth.
The professor said this kind of longprocess is not bad for a country that values social safety. The real problem is thatmany firms tend to take too much time to
execute change.
“If you want to unravel something asimportant and basic as lifetime employment, maybe it’s a good idea to make thattake 20 years,” Schaede said, adding thatlifetime employment has been part ofJapanese corporate responsibility. “If you
think about the stakeholder capitalism or
the corporate social responsibility, and if

Villa del Nido
Italian restaurant blossoms in lush, rugged setting

Address
Villa del Nido313-2 Tairako, Kunimicho, Unzen-shi,
Nagasakihttps://ameblo.jp/villadelnido/

TAKEO TERAOCONTRIBUTING WRITER

Mount Unzen is an active volcanic complex
in the center of the Shimabara Peninsula,
Nagasaki Prefecture. In 1934, Unzen National
Park became one of Japan’s first nationalparks and in 2009, the Unzen volcanic area
was designated a UNESCO Global Geopark.
Villa del Nido is an Italian restaurant inUnzen, a small city of fewer than 10,000 people in the northwest of the peninsula. Witha mild climate and temperatures that vary
little throughout the year, the area boasts thehighest potato production in Kyushu. Villadel Nido is surrounded by farms that growstrawberries in winter and melons and moroheiya greens in summer, reflecting the natural bounty of the region.
Takafumi Yoshida, the owner-chef ofVilla del Nido, was born and raised on thepeninsula. A job at a restaurant in the city of
Fukuoka set him on the path toward cooking, and at 26, he traveled to Italy. After training in the Piedmont region, he returned to
Fukuoka and took a job at a cafe. It was therethat he found his direction as a chef.
“Everyone who worked at the cafe wasvery committed to conservation. Seeing
them was a wake-up call. I decided that I
wanted to engage with the natural environ-ment of my hometown.”
In 2015, he opened a six-table restauranton the grounds of his childhood home.
Yoshida cooks and his wife, Haruna, serves;
they are the only employees. At both lunch
and dinner, there is one prix fixe menu,
made up of eight to 10 dishes including dessert, for ¥18,150 ($130).

The food, much of which incorporates garden ingredients, has a pure, delicious flavor.
Ninety percent of the ingredients come fromShimabara. Yoshida says that as he worked
to create a restaurant rooted in place, he connected with local producers. Valuing thoserelationships led naturally to an emphasis on
locally produced food.

KENGO OISHIGOVERNOR OF NAGASAKI PREFECTURE

HIDESABURO KANAZAWA
MAYOR OF UNZEN

I would like to express myheartfelt congratulations
to Villa del Nido over being
selected for Destination Restaurants 2022. The Kunimi
district of the city of Unzen, where Villa delNido is located, is a treasure trove of appealing ingredients such as seafood from theAriake Sea and vegetables harvested fromthe fertile soil of the Shimabara Peninsula.
We hope that people from all over the world
will come visit Nagasaki Prefecture, enjoy
chef Takafumi Yoshida’s Italian cuisine madewith local ingredients, and experience theunique food and culture of Unzen.

I am very glad that theItalian restaurant Villa delNido in the Kunimi districtof our city of Unzen has
been chosen as a Destination Restaurant 2022.
Chef Takafumi Yoshida, who was born
here, opened the restaurant after studying in Italy. He provides his own distinctive
form of Italian cuisine using local products
and incorporating Japanese items.
I hope that many people from aroundthe world will come to our area, surrounded by beautiful sea and mountains,and enjoy his great Italian cuisine!

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there is a good story, then I wouldn’t mind
it as much. But I think that the problem ofJapan is challenge. Too many companies
in this country are not as efficient andpowerful as [they] could be,”, and this canlead to the potential loss of future business
opportunities.
Changing such a situation is like turninga huge cargo ship around. To do this, somecompanies are already practicing organizational “ambidexterity,” which is defined by
Charles O’Reilly, a professor at Stanford’s
Graduate School of Business, and Michael
Tushman, a professor at Harvard Business
School, as a corporate growth strategy tosimultaneously carry out “exploration” of
new business activities and “exploitation”
of existing business methods.
Schaede said Japanese companies thathave managed to do this successfully all
had powerful leaders.
For example, AGC, one of the world’s
largest glass makers, was established in1907 as a manufacturer of flat glass butlater developed its business into four
major sectors: sheet glass, automotive
glass, chemicals, and components for electronics, showing its ability to explore newmarkets and capabilities while exploiting
its existing business. For example, AGC
developed chemically strengthened glass
for smartphones and started to make theproduct in 2011. It also extended its corecompetence in chemicals to life sciencebusinesses such as pharmaceuticals andagrochemicals. In 2015, Takuya Shimamura became the president and CEO andproceeded to revitalize the company byreforming its corporate culture.
Turning a gigantic ship around is hard,
but Schaede suggested there are somesteps companies could take. She said Japanese companies should get rid of threeyear midterm business plans because they
inhibit the taking of long-term perspectives and seizing future business opportunities. “It takes attention away fromthe larger questions,” she said. “The larger“Things are moving slowly in this country,”
she said. “But ‘slow’ is not ‘stagnant.’”
HIROMICHI MATONO

strategy questions are ‘What business arewe in?’ ‘How do we compete?’ ‘What kindof companies are we? ‘What are our corecompetences?’ ‘How can we be ambidextrous?’ and ‘How can we extend to newmarkets, new capabilities and new waysof doing business?’”
Schaede also said Japanese firms needleadership and management skills thatcan lead them to their goals amid externalpressure, which often hampers their transformation. “I think what [it] takes to win isvision and some very aggressive and boldbets. … The Japanese public is very criticalof those things. [Companies need] not only
vision, but very good management skills toget there,” Schaede said. “It would be nice if
Japanese people are a bit more welcoming
to people who make bets like that.”
Schaede also said Japanese corporations
need to actively apply their strategies.
“What you need, to develop very consistently … is to execute the strategy and toactually do it. That has something to dowith your core competence, your people
and the way you manage that corporateculture,” she said.
The Sustainable Japan section highlights
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see https://sustainable.japantimes.com