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Messages from "Economic Trend", May 2010

Entering a New Age of Revolutionary Change

Vice Chairman, Nippon Keidanren
Chairman of the Board, Panasonic Corporation

We are now in an age of a revolutionary change on a global scale.

In politics, we have observed a historical turnover of power in both Japan and the United States last year. And in regard to the economy, the financial crisis, which was triggered by the Lehman Shock two years ago, very quickly developed into a global recession, and the world has not yet made a complete recovery. On the other hand, the increasing power of emerging nations including China has given rise to a new middle-class, and markets are expanding dramatically. The force of such emerging nations and globally optimized business operations using IT have brought out products sold at unthinkable prices. For example, we see men's business suits being sold for 5,000 yen (around 54 US dollars) and a pair of jeans priced at 690 yen (around 7 dollars and 50 cents). In addition, due to a growing awareness of global environmental issues, a revolutionary change is taking place following in line with the industrial revolution and the information revolution of the past. This transformation is something that could be called a “green industrial revolution.” Under such circumstances, all companies face a crisis of survival unless they prioritize living in harmony with the global environment. Needless to say, such a trend is not a temporary thing. It will never cease and will continue to exist in the very structure of things with the increasing globalization of the economy.

At present, no country, region, company or individual in the world can remain unaffected by the globalization of the economy. As a matter of course, companies must be increasingly agile in spurring on self-reliant efforts to strengthen their competitiveness. However, companies will not be able to fully sharpen their competitive edge without adequate systems and infrastructure provided by the countries and regions that support their corporate endeavors. If we take for example the effective corporate tax rate, while governments in Europe and Asia have lowered their rates over the past few years, the rate in Japan stands at a strikingly high level of approximately 40%.

This global revolutionary change is expected to gain speed and momentum looking to the future. While we need to regenerate ourselves by starting anew each day, it is also desirable that the government have a global point of view and sense of urgency in putting into practice measures that are conductive to improving the competitiveness of companies.

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