Thursday, June 30, 2011

How the Disaster May Help Japan's Brand

The March 11 earthquake, tsunami, and resulting nuclear accident have led some to question the health of Japan's "brand." Japanese products, services, and business partnerships in recent years have enjoyed a halo effect emanating from Japan's reputation as a land of safety, efficiency, and trustworthiness. As renowned Japanese columnist Yoichi Funabashi put it this week, "Instead of viewing Japan as a haven of immunity from danger and inconvenience, many around the world now perceive the country as fraught with peril and discomfort." The impact of the recent disasters on Japan's reputation or brand has been one of the focal points of experts who worry that the disaster would damage the prospects of Japan's strategic growth industries such as cuisine, tourism, and services. But this is not the whole story.

Rather it is the perseverance and calm that Japanese society demonstrated during the crisis that remains the enduring image of Japan in the minds of many people. This positive story was featured widely in the U.S. media immediately after the earthquake and remains relevant today. A case in point today is in Vietnam, a country I visited last month to conduct research on attitudes toward Japan and the United States. Every Vietnamese expert I spoke with told me that their impression of Japan had been further enhanced since the March 11 earthquake. In Vietnam, Japan's reputation was already positive in part due to Japan's vital role in Vietnamese economic development, for example as the largest contributor of foreign aid after the World Bank.

But more interestingly, many Vietnamese admired Japanese discipline, order, and perseverance during the recent crisis. Some Vietnamese want their society to resemble that of Japan as a leading Asian Confucian society, described in T.R. Reid's classic book Confucius Lives Next Door.

Vietnam is no outlier on this view. According to a survey conducted May 9-18 by the AIP-Hakuhodo Earthquake Recovery Project on the "Image of Japanese Products Internationally," positive attitudes of those surveyed toward Japan and Japanese products outnumbered negative ones. A total of 2,700 people were surveyed in China, Korea, Thailand, India, Indonesia, Russia, the United Kingdom, the United States, and Brazil. Most people were aware of the earthquake and nuclear accident but wanted to see Japan recover quickly (62.8 percent) and felt sympathy for Japanese people (56.8 percent). As for products, more people responded that their desire to purchase Japanese goods had increased compared with one year ago than those who said it had decreased.

These positive attitudes stand in stark contrast to those in Vietnam toward China. Vietnam's relationship with China reached a "critical mass" in 2008 and has deteriorated since then, reverting to the previous unfriendly relationship that prevailed for the past millennium. Vietnam's brief friendship with China in the 1990s was seen as naive by many of the experts I spoke with. I was in Hanoi during which China's maritime aggression was on display in the South China Sea, when one of its ships cut the underwater cables of a Vietnamese gas survey ship. These episodes have pushed Vietnam closer to the United States and Japan.

China's approach in other areas also has resulted in bringing Vietnam closer to Japan and the United States. Delays in the construction of power plants by Chinese contractors and Vietnam's reliance in its territorially-sensitive northern provinces on China for hydroelectric power have also had this effect. Meanwhile, the appetite for nuclear power and cooperation with Japan in this area remains strong in Vietnam despite the Fukushima crisis. The immediate need in Vietnam is for reliable, affordable electricity, and nuclear power will be a major source in providing that electricity.

Another area is the export of rare earth supplies, which China has restricted, sending prices skyrocketing recently. These strategic metals are used in the production of batteries and high-tech electronics. Demand for rare earths in Japan will increase as its economy recovers in the short-term and as it explores alternatives to nuclear power in the longer-term. China began restricting exports of rare earths to Japan in September 2010 in response to the detainment of a Chinese fishing boat captain by the Japanese coast guard.

Chinese manipulation of the rare earths market again has pushed Japan closer to its neighbors. It has led the Japanese government and companies to promote exploration of rare earths projects in Vietnam and other countries. But one Vietnamese expert told me that he believes that China will begin dumping rare earths on the global market once other countries attain the capacity to produce the metals. This perception that China plays a zero-sum game is common in Southeast Asia and has convinced many that Japan represents a more trustworthy partner that values a positive-sum business ethic.

Many Japan watchers have called the March 11 earthquake a pivot point for Japan's future trajectory. Japan could very well seize this moment to promote innovation, for example in the areas of clean energy and efficiency, and build stronger relationships with its neighbors. But it is a step too far to say that if Japan fails to take advantage of this situation fully, the other path is ruin. It is rather more likely that Japan will face more of the same, with its long-term problems persisting. As one of the most coherent nation-states on Earth, Japan isn't going anywhere. Even if its government fails to come up with a winning strategy, Japan will remain one of the world's most influential economies for years to come.

It is certain, though, that the disaster and the country's response have humanized Japan and shattered stereotypes, making it a country that is more accessible and closer to the rest of the world.

Also published in the Huffington Post.

Photo by Marc Veraart.


Nimo said...

They say there's no such thing as bad press. They also say that a good product will sell itself,no salesman required. {i'm starting to think they are Japanese...}

James said...

@Nimo I disagree, there is deff. bad press. There everywhere!