[Second Section] Panel Discussion

A panel discussion was held with participation with corporate professionals who actually conduct business in China. Despite the short time allotted for discussion, each participant actively expressed their unique position and opinions.

Panelists (honorific titles excluded)

Taizo Kayata (Visiting Professor at Chuo University, former Senior Corporate Executive Officer at Komatsu Ltd.)
Shinji Shimabara (Former Representative of Toyota Motor Corporation’s China Office, Secretary General of the Japan-China Investment Promotion Organization)
Kanehisa Watanabe (Vice-President of OLIVE des OLIVE)
Masahito Ota (Manager of the China Business Promotion Department, Shiseido Co., Ltd)
Chen Jianan (Professor, Graduate School of Economics, Fudan University)

Moderator

Professor Kenji Hattori (Chuo University Business School)

Hattori : First, please discuss the impact of the anti-Japan demonstrations which occurred last September.

Watanabe : OLIVE des OLIVE is an apparel manufacturer. Clothing was stolen from our 3 Heiwado stores and sales suddenly fell to 60% at all of our stores.

Ota : Shiseido offers special Chinese brands such as Aupres in China. However, we are well-known as a Japanese corporation and suffered greatly due to the recent demonstrations. Some of our Aupres stores were damaged and we were unable to do any of our annual end-of-the-year promotions. We were also asked to shrink our displays at supermarkets.

Shimabara : In our case as an automobile manufacturer, we are well-known as a Japanese corporation despite operating all of our companies through mergers with Chinese corporations. When the anti-Japan demonstrations began in September, the driver of a Toyota Corolla in Xian was severely beaten and left half-paralyzed. As a result, driving a Japanese car became viewed as dangerous and consumers refrained from buying a Japanese car.

Kayata : We are a BtoB corporation dealing in production materials, so we weren't impacted very much. I think it was good that our factory is located in an industrial park which actively recruits foreign capital, and that we have strengthened our relationship with the local government.

Chen : Young people in their 20s and 30s were the main participants in last year's anti-Japan demonstrations. I believe that the demonstrations arose from the fragile emotional state of lower class people who live in poverty while the wealth belongs only to a privileged few.

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Hattori : Please discuss how you will expand your business in the future.

Watanabe : We plan to withdraw from internet sales because of the many restrictions and how information cannot be conveyed in a straight line. Instead, we plan to cooperate with various brands to increase our sales channels and improve our image as a casual brand for a little younger generation.

Ota : Although our company suffered during the demonstrations, we will not change our basic stance. We will continue to sell the Shiseido brand in China, a top-priority market which will expand further in the future.

Shimabara : It's true that China is the world's No. 1 market and cannot be ignored. In the future, it remains necessary to develop products which satisfy local needs and to base business in the community. In particular, it is important to strongly appeal the fact that automobile manufacturers are all joint ventures with Chinese corporations and to create a sense of unity with Chinese corporations.

Kayata : Based on the number of units sold, China is also the world's No. 1 market for construction machinery. In the future, our company intends to continue calm, honest and fair business with China. Urbanization is necessary for the growth and stability of Chinese society. Our business is directly linked to urbanization, which is a great business chance.

Chin : In any industry, the key to the future is to reevaluate changes in the Chinese market and then to reconstruct a global organization by implementing integrated production systems in China and transferring technology in order to gain an advantage in domestic/international competition.

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Hattori : What do you think about China risk?

Ota : It's necessary to consider countermeasures in advance. Each company has already prepared manuals for business continuity.

Watanabe : Our company suffered actual damage, so our first priority is to stabilize our business. Based on our experience with last year's demonstration, I would like to enter other fields such as the wholesale business.

Shimabara : We view the issue of anti-Japan demonstrations as being taken into consideration. It is necessary to thoroughly study correct historical perceptions, even when interacting with local Chinese employees.

Kayata : We are holding meetings in order to share information on risk management among our offices in China. We are seriously considering the extent to which compliance is implemented in China.

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Hattori : Japan-China relations have changed greatly during the past 40 years. Modern China has reached a condition in which ethnic groups exist in order to protect political parties. There is no compassion towards Japan, and Japanese citizens are losing their compassion towards China. Therefore, it is imperative to link the principle importance of Japan-China relations and individual compassion which have been formed. This is one way in which to start improving Japan-China relations. Management strategy is a severe field, so there is great importance in work which includes summarizing conditions and finding regularity.