CART : $0.00 USD

$0.00 USD

Tokugawa Era Hangover Trims Japan’s Economic Growth Outlook

November 29, 2018

The Tokugawa period in Japan began in 1603 and lasted some 250 years. During that era, the country of Japan existed in isolation from the rest of the world. The Shogun ruler believed that influences from abroad such as trade, Christianity, and guns could shift the control balance that existed between himself and the feudal lords or his constituent control. On July 8, 1853, Commodore Matthew Perry of the United States Navy changed that setting when he sailed into Tokyo harbor and demanded that the Japanese sign treaties opening the country up to trade and the outside world.

Somehow that historic period of isolation crept into the DNA of the Japanese such that they have generally not integrated well with other ethnicities. The author lived in Japan three years and has a number of Japanese acquaintances. However, the Japanese seem to have certain inhibitions to closeness which may be a function of their social structure and history of isolation. Therefore, they have maintained strong barriers prohibiting immigration from other countries. As an island country, they are fortunate that they do not have to build a wall to protect their puritanical isolation. However, big moats are only effective until naval fleets arrive. As an example, the Japanese love their version of a sweet, mild curry but have very few Indians living there. For an American, it is a bit hard to understand the Japanese ethnic isolation when our country was built by immigrants though some paranoid movements today seem to ignore that history.

Moreover, when the author lived in Japan from 1970-1973, during the personal Vietnam War era furlough which ended at the end of that period until May 1975, Japan and its business practices were extolled as an economic miracle. That time did result in dramatic economic growth. However, the Nikkei Asian Weekly recently published a series of articles regarding the Japanese economy. Given an aging population and shrinking workforce, Japan is one of the world’s oldest per capita economies. Moreover, given the structure of Japanese companies and the rigidity of the “salary man” stereotype, they retire long before their productivity has diminished. Accordingly, there are clear indications that these demographics are impacting economic growth.

In the first three months of this year, Japan’s economy contracted by .2 per cent over the previous quarter ending eight consecutive quarters of economic growth which represented Japan’s longest period of uninterrupted growth since 1989. It is now the only major economy to begin 2018 with a shrinking economy. Moreover, Japan’s economic stagnation has resulted in the country’s GDP growth becoming the lowest in the past twenty years, ranking second only to Italy.

The IMF have concluded that an aging population coupled with a shrinking labor force have impaired economic growth. In fact, Japan’s population is smaller than it was in 2000. It may be an illusion, but the author’s reaction several weeks ago in a visit to Tokyo was that it was a different world compared to the days of commuting when pushers crammed people into train cars. Accordingly, initiatives have begun by the commercial sector to turn around their positions in the economy though it may be too little, too late to reverse the overall economic trend.

Several Japanese food chains are seeking growth abroad to overcome a labor shortage coupled with a shrinking population. Zensho Holding, the country’s biggest restaurant operator, is to accelerate overseas openings of its Sukiya “beef on rice” chain to 100 a year. The focus is on China and other Asian markets at a growth rate 10 times greater than that of Japan.

Ringer Hut which has a chain of noodle shops intends to triple its foreign outlets by 2020. In order to expand their operations, they moved abroad into regions with large Muslim populations where they will modify their soup base to be chicken rather than pork which is banned in Islam. The employment challenge in Japan is evidenced by the statistic that there are 3.5 cooking positions for every job seeker which is the highest ratio in 23 years when the government began tracking that statistic.

Zensho Holdings also announced they will acquire a U.S. sushi takeout chain given the labor difficulties in Japan coupled with a shrinking domestic demand to support indigenous growth. It is a bit incomprehensible that a Japanese company would acquire a foreign firm specializing in a product that was created in their home country.

There is a fabulous Japanese restaurant in London called Onodera that is owned by a famous Japanese chef in Tokyo. He has three restaurants in Tokyo with each specializing in a specific Japanese cuisine-sushi/sashimi, tempura or beef. On the other hand, the one in London offers all three options. The rigidity in high-end Japanese dining is that you go to specialist restaurants for one of the three pillars of Japanese cuisine. Izakaya Japanese restaurants offer all three food categories but they are not considered to be in the first flight of quality. Therefore, here comes Onodera London and the patrons do not know that their choices in Onodera Japan would be reduced by two-thirds in a single sister restaurant. Moreover, can you believe it is easier to find Japanese chefs and servers in London than Tokyo and that one has to go abroad to expand their very high-end customer demand? Moreover, the Japanese staff in London blend seamlessly with predominantly eastern European staff.

On the other hand, Japanese Prime Minister Abe’s cabinet has approved legislation to admit more foreign workers following heated exchanges in parliament. Two visa categories will be created to provide unskilled workers the right to stay in Japan on a single status without family for five years with no possibility of extension. The other is for skilled people who will be allowed to bring their families and extend their stay. Who knows, maybe the Indian worker shown below in a 7 Eleven could advance to become a chef and prepare a proper curry for the Japanese.

We can only speculate what the labor situation in London might be in a post-Brexit environment. Hopefully, the food scene will not retreat to the early days of gray meat and potatoes. All you can say is that some people may feel better living in a homogeneous, stagnant population such as the old days of Tokugawa Japan. However, we know Tokugawa Japan succumbed to free trade which led to the economic miracle of modern Japan. That economic powerhouse has since fallen victim to limited immigration and workforce contraction. Is the world crawling back to the Tokugawa era?

A perfect stocking stuffer...these river rocks are collected from the shore of the Mekong River in Chiang Saen, Chiang Rai Thailand and hand painted with acrylic paint to resemble elephants.  The artist utilizes the natural shape of each rock to create a unique work of art.
$15.00 each

Share the love!!!