Published 10 October 2014

Japan

– opportunities for Sweden where Trade meets Innovation

Japan is now, after decades of stagnation, showing willingness to change. The current Prime Minister Abe has brought the necessary political leadership, and there is a great determination from the government to pursue and implement necessary structural reforms. In other words, there are good arguments to reassess Japan as an economic partner.

On 24 June this year, Japan's parliament decided on structural reforms that constitute the "third arrow" in Prime Minister Abe's efforts to open up and boost growth in Japan. The general consensus is that the first two "arrows" - with inflation and stimulus packages - have been successful, but will not be enough to boost the economy long term.

Experts disagree about whether "Abenomics" will succeed or not, but the fact remains that sweeping changes are decided that challenge culture and tradition as well as current power structures. Almost two years after Abe's admission, it is the ability to execute the changes that is examined and also questioned. Time will tell to what extent the implemented policies are enough to revitalise the Japanese economy.

The most important policy aspect of Japan's path forward is to open and liberalize the economy and to make Japan's citizens prepared to meet the challenges and opportunities that globalization offers. So far the progress is slow, but yet, there is a progress. Japanese policy makers are aware of the country´s weakness in innovation and research exchange, and understand the importance of stimulating cross-sectorial work and avoid silo structure in research as well as politics. The search for international exchange, and the deregulation of markets, with the aim to create an open economy is undoubtedly most interesting for Sweden and should provide new opportunities for collaboration between the countries at the interface between innovation and trade.

On-going deregulation applies to both labour market and the general conditions of employment, and to specific sectors such as energy, health and medical and agriculture. Japan's government wants, in other words, to turn the country's challenges into opportunities to create new growth engines for the country.

The new openness has already been identified by the organizations at the Swedish Embassy in Tokyo. There are many examples of on-going collaboration between Japanese and Swedish research groups and universities - often described in a very positive way by those involved. Swedish companies established in Japan are growing faster than the market in the country, as reported by Business Sweden, which implies that Swedish companies are appreciated and have the right offers to meet the needs in Japan. Life sciences and medtech, ICT and industrial technology are sectors where Swedish companies are already established and have successful cooperation. Japan's challenges on energy and natural resource management bring potential opportunities for Swedish players in sectors such as forestry, recycling and energy (generation, efficiency and infrastructure). This goes for both policy and business collaboration. Prime Minister Abe has highlighted the low level of internationalisation amongst Japanese small and medium enterprises, in terms of exports and international cooperation. Sweden's reputation as an innovation nation, which is strong in Japan, might thus be a great asset, especially for smaller Swedish knowledge intensive companies. For policy areas such as sustainable development, welfare and gender equality there are some established relationships and certainly a strong interest and confidence in Sweden from the Japanese government and authorities. Japan's increasing awareness of demographic challenges, and the fact that the issues are highest on the agenda of the current government, provides opportunities for Sweden to develop cooperation in policy development as well as in the fields of business.

It should be noted that the positive testimony of Swedish companies and researchers in Japan is from these who have had the patience and made the effort to build good relationships with the Japanese stakeholders. It is not a “quick fix”. Therefore, an initiative to strengthen the cooperation between Japan and Sweden on a policy level needs to be built with the same genuine and long-term commitment.

Title
Japan – opportunities for Sweden where Trade meets Innovation

Serial number
Direct response 2014:20

Reference number
2014/248

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