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Japanese urge nations, sectors to pull together to escape crisis

| Tuesday, July 7, 2009

Editor's Note: Andrew Conte is traveling in Japan as a fellow with the East-West Center's Japan-United States Journalists Exchange program.

OSAKA, Japan -- Meet Kamila. The 6-foot-tall, cardboard robot soon could model clothing at a department store near you.

Costing as little as $5,000 and easily modified, the robot interacts with shoppers and could help its manufacturer, Eager Inc., find an edge in the retail market when consumers start spending again.

"We think this crisis is a chance for us," said Kazunari Kuroki, CEO of Eager, a startup here with about $300,000 in capital and $4 million a year in revenue.

The success of that plan depends on not only the creativity and know-how of the engineers, but also the recovery of the world economy. And that, in turn, depends on a common strategy, experts here said.

As world leaders prepare to meet in Pittsburgh for the Group of 20 summit in two months, Japanese business executives, economists and government officials appear to agree on one thing: We're all in this together.

No one country -- not Japan, the United States or any of the other 17 participating countries and the European Union -- can hope to pull through on its own.

"We're in a disaster situation indeed," said Noriko Hama, an economist at Doshisha University in Kyoto. "And please, please, please, don't believe anything about green shoots and the bottoming out of the Japanese economy. ... We are in pretty bad shape."

Governments and private corporations need to work cooperatively -- even outwardly, and at times, beyond their own self-interests -- for everyone to survive, she and others said.

Some Japanese firms have started that transformation by returning to the 12th century philosophy of sampo yoshi, or focusing not just on profits, but on the harmony of society, customer and self.

"A huge mental leap is required," Hama said.

'Everyone found out'

Japan's economy was not in the strongest shape before the credit crisis, and it weakened after investment firm Lehman Brothers declared bankruptcy in September, according to an analyst at Nippon Keidanren, the Japanese business federation.

"No one expected it," said Kiyoaki Fujiwara, director of Keidanren's economic policy bureau. "With Lehman Brothers, everyone in the world found out about the instability in America's financial system."

Gross domestic product, exports, industrial production and other economic measures dropped dramatically since then, Keidanren's statistics show. Other indications such as homelessness and unemployment rose. Japanese carmaker Toyota Motor Co. posted the worst financial numbers in its 71-year history, and executives said they expect bigger problems this year.

"I don't think (the Japanese) blame the United States," said Arthur Mitchell, a Tokyo lawyer specializing in international trade and investment, "but everyone blames Wall Street and the regulators."

Rather than looking inward, governments should search for ways to help each other improve, Japanese experts said. That includes stimulus spending by Japan and China, countries that hold large amounts of U.S. Treasury bonds, as well as fewer trade restrictions, they said.

"Buy American" provisions in the Obama administration's February stimulus package require that steel and industrial products going into public works projects be made in the United States. The clause will have little direct impact on Japan's value-added steel exports to the United States, but it sends the wrong message to countries that could seek their own tariffs and restrictions, said Kazutaka Yasumi, managing director of the Japan Iron & Steel Federation in Tokyo.

Companies need to be held accountable for mistakes and allowed to fail when they deserve it, Hama said.

In the buildup to the credit crisis, companies and investors around the world could make a case for "plausible deniability," saying they had no way of knowing about problems and little responsibility to find them, Kiyohiko Nishimura, deputy governor of the Bank of Japan, has said.

Then, when problems started to occur, governments rushed in to protect the largest companies such as insurer AIG and carmaker General Motors from failing. It's defeatist for governments to take over accountability for private businesses, Hama said.

"It is necessary for those who deserve to fail, to fail," she said, adding that government should, however, make sure those failures happen with the least amount of pain.

And then there's the case for innovation, and Kamila the cardboard robot.

Despite its overall economic problems, Toyota has high demand for its Prius gasoline-electric hybrid cars. It plans to restart weekend production this month at its factory near central Japan, where robots and workers turn out hundreds of cars each day. Some of the newest come with a solar roof panel.

Executives at TKX Corp., a grinding manufacturer in Osaka, are expanding their business by finding ways to slice silicone wafers for solar panels, and green tea growers in rural Shizuoka are developing blends that could appeal to broader international tastes.

Kuroki, the CEO of robot-maker Eager, meanwhile, stands in a small office, surrounded by engineers working to come up with the latest thing. They show off one robot that specializes in facial recognition, and another that could be used in the entertainment industry.

With Kamila, they hope to take a 1 percent slice of the global market for retail mannequins. Her cardboard pieces can be adapted to various heights and shapes, or painted with marketing slogans.

If retailers are unwilling to purchase the robots, Kuroki said, Eager could lease them out at a lower monthly rate.

"At a corporation like ours," he said, "we think this crisis is a chance for us."

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