From Crisis to Opportunity: How Japanese Companies are Rising to the Challenge of Economic Security
In the past year, Japanese companies have had to navigate multiple geoeconomic challenges, ranging from the ongoing conflict in Ukraine to rising tensions between the United States and China and uncertainties surrounding Taiwan.
These were the main findings of a recent survey conducted by the Institute of Geoeconomics, which polled 79 Japanese firms considered essential to the country’s economic security and vulnerable to shifting geopolitical dynamics.
This was the second such survey, with the first conducted by the Asia Pacific Initiative, the institute’s predecessor, in December 2021, covering 100 Japanese companies and research organizations.
While the initial survey highlighted the risk of being caught between the U.S. and China and the challenges of balancing economic interests and national security, the latest poll revealed that global geoeconomic risks have grown more unpredictable for Japanese companies due to the ongoing conflict in Ukraine and the potential for a Taiwan Strait crisis.
Sanctions on Russia
The invasion of Ukraine by Russia in February 2022 has brought about significant changes in the international climate, and Japan has not been spared from its impact.
A recent survey revealed that a staggering 82.1% of respondents reported being affected by the Russian invasion of Ukraine and the subsequent sanctions imposed on Russia. In contrast, only 17.9% of the participants stated that they were not impacted.
Among those who reported being affected, approximately 50% of companies reported a drop in sales, while 41.8% had to reorganize their supply chains. Additionally, 38.8% had to examine their business partnerships, and 37.3% reported experiencing increased costs due to sanctions.
These findings demonstrate that the Ukraine crisis has caused significant financial harm to Japanese companies, with both declining sales and increased costs being key factors.
Taiwan contingency
The latest survey revealed that Japanese companies are increasingly concerned about uncertainty in U.S.-China relations, with 72.2% of respondents stating it as one of the biggest challenges facing their efforts to address economic security issues.
This issue topped the list in the previous survey and remains high on the list, with only a slight drop in percentage. Gathering information on international affairs and risk assessment were also cited as challenges by 65.8% and 63.3% of respondents, respectively. Notably, 50.6% of respondents cited a possible Taiwan contingency as a growing concern, nearly double the percentage that chose uncertainty over sanctions on Russia amid the Ukraine crisis.
The survey also revealed that 63.2% of respondents are affected by the intensified confrontations between the U.S. and China, with 64.4% stating they are facing higher costs due to tighter regulations imposed by the U.S.
Source: japan times
