Osaka - Sunday, August 21, 2011
Nikkei, the leading Japanese newspaper specialized in economy and business, reported today that the Japanese government is to set up a back-up system in which western Japan can complement government function when a disaster should occur such as a huge earthquake that directly hits Tokyo, the capital of Japan.
This is because from the Japan disaster that occurred in March this year it became prominent that a system in which regions outside Tokyo can complement government and administrative functions in an emergency is critical for as business continuity and risk management.
1. What kind of functions are planned to be backed-up outside Tokyo for an emergency?
They are administrative including foreign diplomacy, defense, police and central government offices that are responsible for economic policies. Each function will set up complementary offices in western Japan so that the newly set-up offices will be able to replace the administrative functions should an emergency occur in Japan.
2. Where will such new complementary offices be established?
Locations of the new complementary offices will be decided based on disaster risk analysis including strength of the ground, possibility of landslides and earthquakes, and transportation convenience. Candidate prefectures include Osaka, Nagoya and Fukuoka.
3. How will new complementary offices be equipped?
New offices in western Japan will be equipped with video conference rooms and satellite phones that are less unlikely to fall into communication failure should a disaster such as earthquake occur. Data centre and IT systems will be established so that information and data necessary for each ministry to continue operating in emergencies will be stored. Also staff members required to manage the offices will be allocated.
4. Why the Japanese government made such a decision?
Simply put, it is a Business Continuity Management (BCM) of Japan by minimizing risk of government/administrative functions becoming paralyzed and economic activities falling into a chaos even if a disaster should strike Tokyo.
Currently the Japanese administrative organizations have no back-up organization/system(s) based on an assumption that a disaster covering a large area occurs and whole of Shutoken (Tokyo and its neighbours such as Yokohama, Chiba and Saitama) becomes paralyzed, which is almost equivalent to the country becoming paralyzed.
Complementary offices of central government offices are mostly located in Tokyo. Aligning with such a situation, over 60% of head quarters of large companies are currently located in Tokyo, and over 25% of GDP and population are concentrated in Tokyo. Thus, Japan is often said as “a country heavily concentrated in Tokyo, its capital”.
From the March 11 Japan disaster, it became clear that if a disaster should occur in Shutoken area it is quite possible that the economic activities throughout Japan will be in a chaos and the country will become paralyzed. Therefore, the Japanese government concluded that they would need to strengthen risk management by strengthening back-up organization/system of administrative functions by setting up complementary offices in western Japan.
5. Has there been any discussion of changing “Tokyo centralized country” before?
Yes, there has been such a discussion, such as relocating the Diet and administrative functions outside Tokyo. However, the discussion has cooled down because such a plan would require more than 10 trillion yen. Long lasting economic stagnation is a negative factor as well.
In comparison, establishment of back-up organization/system of government and administrative functions would require less cost, which is the reason why the Japanese government decided to study and discuss in earnest to put into action.
6. How the Japanese government is to proceed?
Ministry of Land, Infrastructure, Transport and Tourism (MLIT) that is responsible of mid- and long-term land and infrastructure planning is to request budget for the study (tens of million yen) in the upcoming 2011 budgeting revision in autumn. Committee constituting from experts from various fields will be established by the end of September, which is to create a report by the end of the fiscal year (March 2012) about the topic.
MLIT, Ministry of Finance, Ministry of Internal Affairs and Communications etc. are to set up cross-ministry meetings in 2012 to start discussing concrete issues of the topic, including review and improvement of legislation if necessary.
Resources:-
Japanese government/administrative functions have long been concentrated in Tokyo, the capital of Japan but the government decided to establish a back-up system in western Japan by setting up complementary offices of central government offices etc. This is because from the March 11 Japan disaster, it became prominent that business continuity and risk management is necessary to avoid paralysis of administrative function and economic activity chaos should a disaster covering large area occur, hitting Tokyo.
2010年10月3日日曜日
Risk Management and Interdependence in Today’s Global Economy
Osaka – Sunday, October 3, 2010
Various Japanese media such as The Japan Times have been reporting since September 29 that Japanese companies started to rethink their risk management strategy and take measure for dispersion of risk of importing rare earth elements, since the China government reportedly banned exporting them to Japan as part of its diplomatic spat with Japan over the disputed Senkaku Islands. (The U.S. recently insisted clearly that the islands were returned to Japan from the U.S. in 1972 together with Okinawa mainland, and that Japan’s recent actions have been appropriate and sufficient). Report also includes the fact that the U.S. started to take measures in its own ways with similar concept.
1. How Japan has been rethinking rare earth sourcing and its risk management strategy?
1) Companies (sourcing)
Japanese companies, who had already been concerned about rare earth shortages as early as July, when China cut its export quotas to bolster prices and ensure domestic supplies, immediately started to take concrete actions such as sourcing rare earth metals from other countries such as Kazakhstan to disperse risk. China produces and supplies over 90% of the world’s rare earth metals but their reserves is only around 30% of the world total. This means remaining 70% are available in other countries.
As reported by The Japan Times and other media, Sumitomo Corp. signed a deal with Kazakhstan's national nuclear power company Kazatomprom to establish a joint venture and produce rare earth metals in the country, including neodymium and dysprosium, which are crucial to building motors for electric vehicles. And, Toshiba Corp. said it signed up with the same Kazakhstan firm in June to establish a joint venture to produce rare earth metals coming out of uranium mines in which Toshiba has a financial interest. The electronics maker said it hopes to set up the venture by the end of the year and start producing rare earth elements used in motor magnets.
2) Companies (R&D and others)
Research of technologies to reduce use of rare earth elements has been in progress as reported in a recent Japanese TV news programme. Honda Motor Co. has been conducting research and development to find alternatives for the rare earths. Toyota Motor Corp., the world's largest maker of hybrid cars, has set up a task force on rare earths metals earlier this year to explore new sources for rare earth elements and ways to recycle used parts, the Nikkan Kogyo newspaper reported Wednesday, according to The Japan Times..
3) Government
It was reported in a recent Japanese TV news programme that the Japanese government signed a memorandum with Kazakhstan of supporting Kazakhstan extraction of rare earth metals.
2. How about the U.S.?
With sense of crisis, the U.S. also started to take measures for risk diversification such as restarting mining of rare earth metals in California. The U.S. used to mine and supply approximately 50% of worldwide rare earth metals but with emergence of cheap products from China, the U.S. lost their global competitiveness and its worldwide market share dropped dramatically. As a result, the U.S. rely their rare earth sourcing from China. Rare earth metals are used in their nation’s “critical” equipments and systems such as military communication systems. For this reason, the U.S. also started to rethink their rare earth sourcing strategy and take measures in earnest.
3. What is the final thought of the author?
Being a marketing versatilist with management literacy and not an expert in politics and diplomacy, the author has nothing to say about politics. To the author, it seems that what China has executed (i.e. banning rare earth metal export to Japan as a part of diplomatic spat) triggered Japan and the U.S. (at least) to rethink rare earth sourcing and risk management strategy and take concrete measures, to be less dependent on China, although risk diversification does take time. This means decrease in China’s rare earth business in the long run.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that in an APEC meeting held on October 2 in Gifu Prefecture in Japan, Japan’s Minister of the Ministry of Economy, Trade and Industry (METI) requested to his China counterpart to proceed smoothly to re-start rare earth export to Japan, to which China answered “would like to make effort to solve the problem. Economic interaction with Japan is important also for China”. This is a step forward because China simply has been insisting that “the Chinese government have never banned exporting rare earth metal to Japan”.
It seems that this incident delivers a strong message that an economic sanction by a country as a part of diplomatic spat is never effective in a global economic world in which countries are interdependent. It would lead to negative effect to the country executing the sanction in the long run. After all, countries need to diversify their risk while be cooperative for sustainability and co-prosperity.
References:-
Hiroko, Nakata (2010), Firms Rethink Rare Earth Sourcing
http://search.japantimes.co.jp/cgi-bin/nb20101002a1.html
Various Japanese media such as The Japan Times have been reporting since September 29 that Japanese companies started to rethink their risk management strategy and take measure for dispersion of risk of importing rare earth elements, since the China government reportedly banned exporting them to Japan as part of its diplomatic spat with Japan over the disputed Senkaku Islands. (The U.S. recently insisted clearly that the islands were returned to Japan from the U.S. in 1972 together with Okinawa mainland, and that Japan’s recent actions have been appropriate and sufficient). Report also includes the fact that the U.S. started to take measures in its own ways with similar concept.
1. How Japan has been rethinking rare earth sourcing and its risk management strategy?
1) Companies (sourcing)
Japanese companies, who had already been concerned about rare earth shortages as early as July, when China cut its export quotas to bolster prices and ensure domestic supplies, immediately started to take concrete actions such as sourcing rare earth metals from other countries such as Kazakhstan to disperse risk. China produces and supplies over 90% of the world’s rare earth metals but their reserves is only around 30% of the world total. This means remaining 70% are available in other countries.
As reported by The Japan Times and other media, Sumitomo Corp. signed a deal with Kazakhstan's national nuclear power company Kazatomprom to establish a joint venture and produce rare earth metals in the country, including neodymium and dysprosium, which are crucial to building motors for electric vehicles. And, Toshiba Corp. said it signed up with the same Kazakhstan firm in June to establish a joint venture to produce rare earth metals coming out of uranium mines in which Toshiba has a financial interest. The electronics maker said it hopes to set up the venture by the end of the year and start producing rare earth elements used in motor magnets.
2) Companies (R&D and others)
Research of technologies to reduce use of rare earth elements has been in progress as reported in a recent Japanese TV news programme. Honda Motor Co. has been conducting research and development to find alternatives for the rare earths. Toyota Motor Corp., the world's largest maker of hybrid cars, has set up a task force on rare earths metals earlier this year to explore new sources for rare earth elements and ways to recycle used parts, the Nikkan Kogyo newspaper reported Wednesday, according to The Japan Times..
3) Government
It was reported in a recent Japanese TV news programme that the Japanese government signed a memorandum with Kazakhstan of supporting Kazakhstan extraction of rare earth metals.
2. How about the U.S.?
With sense of crisis, the U.S. also started to take measures for risk diversification such as restarting mining of rare earth metals in California. The U.S. used to mine and supply approximately 50% of worldwide rare earth metals but with emergence of cheap products from China, the U.S. lost their global competitiveness and its worldwide market share dropped dramatically. As a result, the U.S. rely their rare earth sourcing from China. Rare earth metals are used in their nation’s “critical” equipments and systems such as military communication systems. For this reason, the U.S. also started to rethink their rare earth sourcing strategy and take measures in earnest.
3. What is the final thought of the author?
Being a marketing versatilist with management literacy and not an expert in politics and diplomacy, the author has nothing to say about politics. To the author, it seems that what China has executed (i.e. banning rare earth metal export to Japan as a part of diplomatic spat) triggered Japan and the U.S. (at least) to rethink rare earth sourcing and risk management strategy and take concrete measures, to be less dependent on China, although risk diversification does take time. This means decrease in China’s rare earth business in the long run.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that in an APEC meeting held on October 2 in Gifu Prefecture in Japan, Japan’s Minister of the Ministry of Economy, Trade and Industry (METI) requested to his China counterpart to proceed smoothly to re-start rare earth export to Japan, to which China answered “would like to make effort to solve the problem. Economic interaction with Japan is important also for China”. This is a step forward because China simply has been insisting that “the Chinese government have never banned exporting rare earth metal to Japan”.
It seems that this incident delivers a strong message that an economic sanction by a country as a part of diplomatic spat is never effective in a global economic world in which countries are interdependent. It would lead to negative effect to the country executing the sanction in the long run. After all, countries need to diversify their risk while be cooperative for sustainability and co-prosperity.
References:-
Hiroko, Nakata (2010), Firms Rethink Rare Earth Sourcing
http://search.japantimes.co.jp/cgi-bin/nb20101002a1.html
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