China's growth fuels investment from Japan

China's booming market has opened more industries for Japanese investors and more investment from China to Japan should be welcomed, researchers said.

Japan’s dependence on China has grown stronger since 2000, when the Chinese economy began to blossom and rapidly develop, Tsugami Toshiya, a researcher at the Tsugami Workshop, said at the "Prospects for Sino-Japanese Relations: From the Past to the Future" forum on Wednesday in Beijing.

Kenji Hattori, a Japanese professor, takes pictures during a forum in Beijing to commemorate the 40th anniversary of both countries normalizing diplomatic relations on Wednesday. Zou Hong / China Daily

The forum was held in commemoration of the 40th anniversary of the normalization of Sino-Japanese relations and hosted by the Chinese Academy of Social Sciences.

In 2011, the amount of trade between China and Japan reached a record $340 billion, from about $1 billion four decades ago.

China is now Japan’s largest trade partner and the second-largest destination for Japanese exports. Japan is China’s fourth-largest trade partner.

Japanese companies can play a bigger role by working with local partners in green industry, energy and environmental protection. This can lower their costs to compete with other foreign joint ventures from Europe and United States, Toshiya said.

Video games, cartoons and fashion are also new industries where young Japanese entrepreneurs can play a larger role, he added.

Jin Baisong, a researcher with the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, said China’s trade dependence on Japan dropped to 7.6 percent in the first seven months this year from 25 percent during the peak period, while Japan’s trade dependence on China grew to 19.6 percent in the first seven months.

Jin said cooperation in high-speed rail between the two countries will make both very competitive players in the global market.

Japan is the third-largest source of China’s foreign direct investment. By the end of 2011, Japan had $83 billion worth of accumulated investments in China.

Many Japanese companies have for years invested in China because of the low cost of labor. They are also eying China as a massive end market.

Kenji Hattori, a professor at Chuo University’s graduate school of strategic management, said he has been impressed by the rise of Chinese enterprises and consumers.

With the emergence of China as the world’s second-largest economy, he suggested Japanese enterprises learn from their Chinese counterparts.

“Their decision-making process, energetic altitude, flexibility and the women’s status at work have contributed to their success stories,” he said.

Chinese companies take action on their decisions very quickly, Toshiya said. But he worries that the economic environment that has favored State-owned enterprises might not be ideal for privately-owned companies, in addition to the burdens of taxation and sharp fluctuation of policies.

Though technology know-how, branding and management are the strengths of Japanese enterprises, it often takes a long time for Japanese enterprises to make a decision in China because they lack decision-making power, he said.

Costs are also high for Japanese companies that have very little access to the local market, he added.

In recent years, a rising number of Chinese companies have invested in Japan, a move that should be welcomed, Hattori said.

To penetrate the Japanese market, Hattori said Chinese companies should cultivate a long-term strategy for overseas investment and build their global brands in the developing overseas market.

wangzhuoqiong@chinadaily.com.cn