Japan cashes in its chips

Insight: Japan is giving its semiconductor business a new lease of life with government cash subsidies aimed at bringing key players in the industry to Japanese shores. The initiative, so far, has proven a resounding success, with TSMC, Micron, Rapidus, Sony Group, Western Digital and Samsung all investing in the country. TSMC’s massive facility in Kumamoto Prefecture, described as a ‘Nightless Castle’, has already opened its doors, churning out chips in a bold 24-hour production cycle. 

Impact: Japan’s big chip renaissance was a contributing factor in the Nikkei stock market’s historic February peak that eclipsed even the country’s fabled bubble-era performance, as chip-related stocks led surging gains across sectors. Meanwhile, fresh news out of the U.S. indicates TSMC and Intel suppliers are delaying their U.S. plant plans, citing surging costs of construction materials and labour shortages. This could present even more opportunity for Japan to swoop in with its conveniently weak yen and take the chipmaking throne for good.  

5.28%

The average wage increase won by Japanese workers this year and the biggest raise since 1991. The fact that most large employers fully agreed to union demands is a sign both of deepening labour shortages and higher profits, fuelled by a weak yen. And it helped persuade the Bank of Japan to finally abandon negative monetary policy by hiking interest rates for the first time in 17 years this week.

Insight: You might be forgiven for thinking that the concept of globalisation no longer holds the sway it once did, with 'decoupling' and 'de-risking' clearly now the Zeitgeist. But a group of regional international affairs experts meeting in Tokyo last week begged to differ. Guests at the 17th Japan-Singapore Symposium heard spirited pleas for the preservation of open economies and diverse supply chains in Asia, underpinned by an expanded Comprehensive and Progressive Agreement for Trans-Pacific Partnership. But why should multinationals pay attention to such debates? 

Impact: One key reason is that the popularity of security-focused, subsidy-based protectionist policies in many countries is only likely to increase during this 'Year of Elections'. Out of necessity, senior executives are being asked to take on a greater role in making the case for free trade policies that support their global business ambitions, for example Mercedes-Benz CEO Ola Källenius with his recent plea to Brussels to cut tariffs on Chinese EVs. Companies (and strategic communicators) may have to step outside their comfort zone to deliver stronger narratives with a political punch – emphasising the real-world impact of deglobalisation on growth and, importantly, jobs. And pick the right opportunities, including such regional events and symposiums, to achieve cut through with a wider audience.

Insight: Navigating China’s huge consumer market and protecting one’s reputation can sometimes be a difficult task for both domestic and international brands. The recent ‘315 Gala’, an official annual consumer event that names and shames unfair or unethical practices, left most brands, but not all, unscathed. One German auto maker was forced to apologise to customers for technical defect issues, while well-known domestic milk tea and sliced fruit brands were exposed for selling non-fresh products. Beyond the Gala, one of China’s biggest bottled beverage brands also suffered significant reputational loss recently when nationalistic netizens accused it of using too many Japanese design elements on its packaging. 

Impact: Chinese consumers expect brands to have a nuanced understanding of Chinese culture and localise accordingly without sacrificing brand identity. Multiple global brands have faced the ire of netizens for replicating or copying Chinese designs without giving due credit. Amid tense geopolitical relations, brands that publish content or are affiliated with brand representatives that do not demonstrate ‘political correctness’ may also find themselves in the hot seat. So, how to prepare for a consumer crisis in China? Regularly monitoring and analysing leading trends and hot topics, cultivating a company-wide mindfulness around gaps in cultural sensitivities, while engaging key spokespeople and media, are essential first steps for brands. 

The 2024 World Happiness Report highlights the importance of wellbeing in Asia. 

Insight: Singapore is the happiest country in Asia for the second year in a row, according to the 2024 World Happiness Report, which ranked the Lion City 30th globally overall. Drawing on data from organizations including the World Bank, World Health Organization and the Gallup World Poll, the report analysed six key areas: GDP per capita, healthy life expectancy, social support, freedom, generosity, and perception of corruption. Singapore scores particularly strongly on the first two.

Impact: The report's authors believe that 'happiness', or achieving high levels of wellbeing, should replace traditional economic metrics as a country’s main policy driver. While they may not have made much headway in influencing national governments, the corporate world is taking notice. Employees in Asia are increasingly demanding a meaningful company purpose and for their wellbeing needs to be taken seriously. According to the Straits Times, a new benchmark is being developed by charity leaders in Singapore to help local employers improve the sense of wellbeing among staff and to show them the business value of doing so. Employee experience has become a pivotal reputation driver and, with workforce transformation on the rise, companies across the region must develop communications strategies that build cooperation, engagement, and advocacy among key internal stakeholders. 

Read the 2024 World Happiness Report here