 Looking to the east with Steve Zercher at Kansai Gai Dai University in Kobe, Japan. Keeping us current on what's going on in Japan, which is one of the favorite places in the world. Hi Steve. Good morning. Good to see you Jay. Thank you for joining us. Japan's one of my favorite places as well obviously. Then you should continue to teach and be part of the university there. As far as I know, that's going to happen. At least that's my plan. So we talked before the show and it sounded like things were getting better in Japan? Yeah. The state of emergency has been lifted in the majority of prefectures in Japan because the infection rates have been going down. And even in the major metro cities like Tokyo and Osaka, the rates are beginning to flatten. So the policies of the government and encouraging people not to work, although many people still worked, when you go out to protect yourself and others by wearing masks and congregating in larger groups, all of the same strategies that have been used in the successful countries and states like Hawaii. Seems to have worked, although we're not really 100% sure why it's worked because for one, in one case, the amount of testing that Japan has done of its citizens is below 1%. It's the lowest of any of the developed countries. Japan had kind of, in essence, an anti-testing strategy from the very beginning. So that was one key element that the Japanese government did not apply to try and thwart the virus. But regardless, it seems overall to be working. I think, in part, that's due to the government's actions as half-hearted as they may have been. But also, as we talked about before, Japanese culture, I think has some elements to it as well. Certainly wearing masks, which in, can I say this, Jay, in your country, that seems to be an issue and people are being harassed and even shot if they're insisting on wearing masks. We don't have that issue in Japan at all. When you go out now, 95% of the people are wearing masks. Some of that is because of allergies and so forth. But most of that, I would imagine, is because of the coronavirus. The testing troubles me, the lack of testing. I'm actually reminded of some shows we did back 10 years ago involving the Medtronic Corporation, which is an MDT trades on the big board we're doing right now. And they were trying to get into Japan. And they were having trouble because of cultural things. Now these guys were specializing in invasive surgery to put heart devices, electronic devices in your heart around your circulatory system. And the medical establishment in Japan, the community in Japan resisted this because they didn't like invasive procedures like that. And I'm wondering if the testing with the unpleasantness of the swab all the way up into the top of your throat there, your throat actually, is invasive enough to meet with cultural resistance. Is there anything like that happening? As far as I can tell, it's not so much cultural issues. It's more the strategy of the Ministry of Health. I'm going to simplify this, but I think their thought was that if we do more testing, we're going to find more sick people and will overwhelm our hospitals. So let's not do testing and wait till people get really, really sick and then we'll accept them into the hospitals. So that in a nutshell is what the strategy was to reduce the amount of testing and perhaps this is a legacy from the SARS days. But this pandemic and that one is completely different. SARS, the numbers were relatively limited. This is millions now. So the strategy was outdated, but yet they stuck to it, even though they were pretty harshly criticized by the WHO and other medical organizations. There has been some lifting of this strict requirement to get testing, but still, they have some mosquito flying around to be here. Mosquitoes are not affected by the virus apparently. They're still doing quite well and things are warming up here in Japan. But anyway, they've changed their strategy a little bit now because they're recognizing that they're asymptomatic people walking around, potentially spreading the disease and they're not being found because there is really no active testing. Like for example in Korea, a part of Korea's strategy was testing everybody. And that really, really helps. So Korea's results are much better than Japan's. It worked better. We had a show on it two hours ago involving a Korean law professor who teaches here who spoke of what the procedures were in Japan. I'm sorry, in Korea. Clearly they were focused on testing. They tried to CDC type test at first. Those failed. Then they invented their own test and then they put these temporary testing areas together all around the country. And it worked. They really lowered the numbers dramatically. Korea is only the testing. Korea is playing baseball and Japan is not. So there's your signal. They got to the point where they can actually have that and in Japan, we're still waiting for baseball to start. They see what I think this is a missing link in public thinking. It's not just the testing. It's what you do with the tests. It's the tracking. And it's when you find somebody who's been exposed or has a disease, what do you do about that person? And so Korea has all these systems and people abide by it. And they're in one mind. They are all together on it from the government to the business to the universities to the individual citizens are all together on it. And when people get together on this kind of thing, I think it works really well. Obviously it doesn't work so well in the US. No, I was a general manager for a software company in Korea for a few years. So I really enjoyed living and working there. And my observation is the same as what you stated. Korea, number one, is so unbelievably connected through technology way more than anything you can imagine or anything that exists in where I live in Japan. So people find out about things instantaneously. So it's a part of Korean culture to share information, but then it's multiplied by technology. Everyone is connected to each other. Everyone finds out everything instantly. And it creates a kind of mass consensus process. So just very briefly, where I really saw this very clearly. I was working in Korea during the World Cup when it was hosted by Japan and Korea, and the Korean team was doing terribly. I went to the World Cup ticket office and I asked, I'd like to buy a ticket and they said, oh, we have tickets for the final. I said, there's tickets for the World Cup final still available. It was because the Korean team was doing poorly. So the consensus was, we're not going to go see them. We're not interested in the World Cup. And then they won a couple of games. I went to the ticket office a week or so later, all sold out. So it just switched just like that Koreans team was awful. They're good. Now we want to follow them and all the tickets were sold out immediately. It was just, it just shocked me. So I didn't get tickets to the final because I couldn't, they wouldn't accept my credit card the first time I went. But that's an interesting aspect of Korean culture. And that's part of Asian sense of community and collectivism as Steve talks about the culture leans in that direction. But I think Korea because of technology is just the most furthest out in terms of building that group consensus in the country. So in the US now, thanks to Dr. Trump, I call him Dr. Trump because I know we must have medical knowledge there somewhere. You know, we have a call to return. I quote, we're back. We haven't done anything, but we're back. And we're going to reopen the economy, whatever the reality is, we're going to find out whether it works, it doesn't work or whether we'll have a second wave or more. But, you know, the question really is, how is it going to work in terms of coming back? Because we've been away from an active economy, a national economy for three months. Thereabouts. Right. And Japan has been pretty much in the same, the same place. And so you can say that it's no longer a national emergency. You can say the numbers are down. You can say that people are now able to go out. And I don't know, continue entertainment and work, what have you. But my question to you, Steve, is, how is the reopening going to work in Japan? Is Japan ready to bounce back into a vital economy, such as it was, or is it going to take a little time? What are the considerations? I think as opposed to what I have been able to read and understand about the US policies, I know it varies by state, right, because it's the governors who are making the final decision on this. That's also true here in Japan, it's the governors of the prefectures, which is the equivalent of the state. But there's more of a sense of a staged process here, a more incremental process. We're going from closed to open. That's not going to happen. So in the prefectures that are beginning to open up things, it's step by step. So some businesses can open. Some still cannot. And let's see how this goes. It's more of a measured process, I think, than just saying, okay, now we're back to normal. Everybody just go back and do what you did before. That's not how it's being administered or how the policy is being done here. We're still under a state of emergency, even though it's been lifted in various prefectures at various levels, depending on the instruction from the governor. So it's a much more kind of a step by step approach, I think, which is probably wiser, because there's always a risk of the infections taking off again. And there's a sense that if that does happen, then the restrictions will come back in place quickly. Yeah, and so yeah, I mean, I like that approach because the messaging there is that we're trying this out. We're not sure it's going to work. If it doesn't, we're going to be watching it very carefully. Yeah, if it doesn't work, we're going back to previous, previous controls. This is true at the general level, but it's also true at the industry segment level. I was on a call a few days ago with the Consul General, and also with the ACCJ, the American Chamber of Commerce in Japan. And we've been focusing on the tourism industry. And as you know, I built a hospitality management program at Kansai Gaidae. And we were thinking, how can us, the Consulate and the American Chamber of Commerce, help the tourism industry come back from, you know, near death? The tourism, the foreign tourism has gone down by 99.4%. Wow, wow. It is just completely evaporated. Well, that sounds like Hawaii, doesn't it? Yeah, yeah, Hawaii has the same issue. I'm sure the people at the Hawaiian tourism agency or other agencies in the Hawaiian government are trying to figure out how do we introduce tourism back in a safe manner. So that's something that's a challenge for us that are focused on the tourism industry that in particular has been heavily damaged by the coronavirus. So we don't have an answer yet on that. I mean, how, Jay, how would I convince you to get on a plane and come to Japan? I mean, there's many steps that we're going to have to go through to make you feel that it's safe to do and that you're willing to fly in a plane and come to a country when this virus has been not as bad as the United States, but still, it's here. And there's a risk for traveling in this country like many, many other countries. Well, let's unpack that because the same issue exists here in Hawaii. Right. So the first thing it has to be is that your air flight has to be reasonably safe. I don't think the airlines get this yet because they're not separating people in the planes. Maybe some airlines are some aren't. Yeah, Emirates. So last week they were not requiring people to wear masks on the planes. So that's going to keep me off a plane. I'm not going to do that. Right. Emirates announced Emirates Airlines that they will test people before they get on the plane. But they're the only one that I've heard of that's done that. I think there's a lot of progress on fast tests. The Korean professor I talked to this morning said that, you know, they had achieved like a five or 10 minute test cycle. Yeah, test anybody who wanted to be tested just like Trump said about the US. And that really helps. And I think that that is what the world is demanding now. Right. So what's happening in Emirates is probably going to happen in other places. Imagine that that would be the step that the airline would take in order to assure people that once you get on the plane, you're not going to be infected. Yeah. And it's not only they're testing you, they're testing the guy in the next seat. Yeah, it's a way, you know, right. So I think it's going to change the airline industry is probably going to make tickets more expensive but hey, I'd rather pay that then, you know, then get sick. Right. The other thing is, so how about the country itself. I'd be looking at the curves in the other country. Right. I'd be looking at the way they handle things. I'd be looking at the people the number of people with masks. I'd be looking at the way they handle my experience in a restaurant or in an entertainment venue. And if I had a good feeling about it or if the press reported that the experience is, you know, in gender's confidence and a sense of safety, then I would be much more likely to go. And it has to be not only good, but it has to be excellent. It has to be better than other travel venues. Right. And, you know, we had a conversation with another fellow today. And how does that work in Hawaii? Well, Hawaii has to not only return to tourism, but it has to return to the safest tourism in the world. A sense of excellent outstanding safety. It's not so easy. Right. But Japan can do that. I think the questions you're asking, the points you're making are the ones that Japan, the hotel industry, the airline industry, all the subsequent parts of that tourism equation are going to have to figure out how to prove exactly that to prospective visitors to this country. And Hawaii has to do that as well. It's a worldwide challenge right now. Because tourism is such a big part. It was edging into 7% of the Japanese GDP was it was expected to go to 10% in the next five years. It's, you know, it's gone. It's a huge setback right now. But once we're, I think able to make that case and people feel more comfortable traveling than it should be the most vibrant industry in Japan again. It was before Corona came. Who are the people who come to Japan put, you know, as a tourist destination. Well before Corona virus it was worldwide if you if you go to Kyoto. Before this was occurring and you're just walking around the streets. It's like Manhattan. You hear every single language you hear Russian and German and French and Korean and Chinese it was. It was a huge draw for people all over the world if you looked at the, the aggregate numbers though it was primarily Asian and the majority would be Chinese and Korean those are the two largest groups. So Chinese tourism is zero now. And Korean tourism actually dropped off before Corona virus because of political tensions that exists between the two countries. This is another example of the Korean consensus. Once the word came out from the Korean government that Japan's not our friend anymore don't go zoom. The tourism rates just went way down because Korean said we're not going to go to Japan anymore and furthermore we're not even going to buy Japanese goods in Korea that that was another aspect of this tension. It was troubling them. Yeah, so it was troubling them. Yes, it's a long history a long tension that exists between Japan and Korea coming out of the colonization of Korea and also World War two. So issues like comfort women the sexual slavery that the Japanese military orchestrated, which is still denied in many parts of Japanese society and to some extent by the Abe administration so that's very creating for a Korean so they're still Korean women that I mean they're really old now but they went through this experience and they get up and they talk about what happened to them so it's very clear that this was an orchestrated effort by the Japanese government and some Japanese academics have reported on that as well. So the history between the two countries and the colonization of Korea was it a like the article that you sent to me about the beneficial influence of Japan in China that that sense that Korea benefited from from the Japan occupation. And that periodically that's been kind of quiet but every once in a while a Japanese politician will say something along those lines, and that gets reported into the Korean press and it just really makes the Korean people upset there's there's a tremendous still true and all by the way. Yeah, I know I know but. Yeah, the first time I went to Korea, I was in the late 70s and I spoke Japanese. And the owners of the hostel where I stayed were old enough that they were actually trained to speak Japanese because at when Japan occupied Korea they tried to eliminate the Korean language they say you're going to speak Japanese now not not your native language. So she could understand everything that I was saying, but she would not speak. She just refused. Yeah, she could have but it was such an emotional thing for her that she just didn't want to speak that language like that to. Yeah, so what about China, you mentioned that the Chinese are not coming to Japan these days. I get a couple of questions in my mind, one is maybe that's okay with some Japanese, because the Chinese, you know, maybe they're sick. Maybe they still have the virus although it sounds like the Chinese have got a control right now. Another thing that comes to mind is this is this phenomenon that we see with Trump, where he is first he's engaged in the para form that was before the virus. And now he's engaged in a war of words with Xi Jinping blaming everybody blaming each other and, and really ruining our foreign policy with the country ruining it. And I wonder if Japan is inheriting some of that. Well, yes, to some extent because Japan's foreign policy foreign strategy, usually is in lockstep with the United States. And that comes out of World War two it's been that way for decades for example. And there's this issue with the WHO as to whether or not to let Taiwan in as an observer. Right, so America's advocating for that to try and use that as a way of fighting with with China because China obviously believes in the one China, they don't really see Taiwan as a separate country and therefore they should not be in the UN or any other other kinds of international organizations, but Japan is supporting them as well. It's in lockstep when it comes to those political issues but the fact is that China is the number one trading partner for Japan it has been the number one trading partner for Japan for seven, eight, nine years now. I'm still that's true even today, post Corona. And it's kind of in this difficult situation where, when it comes to foreign policy and politics they look to Washington DC, and they always have an obey and Trump as you know our buddies they play golf together all of that. But when it comes to economics. I think that interaction is more with China, but I'll be now and I see the Trump is also following this is trying to de invest in China, to some extent part of it has to do with the political tension between the US and China and also between Japan and China and part of it is that I think they've recognized that they were over dependent on Chinese sources for their manufactured products it would be better to have their manufacturing base more diversified. So the Japanese government is actually created a fund to help Japanese companies who have manufacturing sites in China to exit from China. And it's gotten to that point where the Japanese government is actively funding disinvestment by helping Japanese companies move out of China and set up their manufacturing. What Abe wants of course is in Japan, but it'll probably be some other location other than China costs of doing business in Japan are quite high. It's ironic, you know, that in the US, there's been this need for masks and, you know, you get the ladies in the sewing circle are making masks but there's not a lot of original manufacturing of masks going on in this country and, and as I understand that he applied activated the Defense Production Act to make masks, but the, and then the states have and the, and the hospitals have been competing on a limited supply to buy a limited supply of masks, and that raises the price of masks. So the federal government wanted to buy masks and they wanted to buy hundreds of millions of masks, which is a good thing. It's a place they could buy them from except China. Yeah. And then you have also the thing about the, the mask, the quality of the mask. There was an article recently I saw about how there was some scammers in China, making scam scam low quality masks. And the whole thing is really a sad story that although we're fighting with them. We, we have no choice but to buy masks from them in a time of crisis. It's so interesting what's happening. And I don't, you know, I think, I don't think that's going to change I don't think that this is going to result in, you know, a new, a new level of manufacturing in the United States. And that's my suspicion as well that these types of symbolic investments or statements is probably temporary, because in the end the business has driven by its costs. And it's trying to increase its profits and if you can manufacture something still in China at a lower rate in a more reliable way. You know, so much of waffles sourcing is in China they've been very quiet on this issue. So, if we can move to another topic maybe not quite so serious and there's this discussion I've read it in various articles about the new post corona lifestyle in Japan. So we've talked a little bit about this before that because of this crisis there's been kind of a lifting of the normal pressures on Japanese business and Japanese societies to remain pretty much doing things as they've always done it. Like for example, we talked about the Hong Kong or the chop in the last show that that's something that Japanese business still does it's 2000 year old technology so there's been some effort by the government to say look, let's move beyond that we clearly see through the lens of this pandemic that that kind of practice is outdated. It's forcing people to come to work when we were saying don't come to work but they have to come to work because they put their chop on on these papers. So there's this discussion about how things were going to change in Japan, as a result of this new lifestyle issue then there's some positive aspects to that like this change in business also, maybe a D emphasis of the business card. Well, I remember the whole thing about the business card. We had through the 80s and into the 90s was a whole ritual with the business card. Yeah, very, very important part of Japanese business culture and that's now being looked at all of that can be replaced by technology overnight you don't need the actual paper cards you don't need the introduction process so that's a couple examples of some potential changes But for that matter you don't need having a dozen, a dozen managers sitting around a table when one would suffice this just happened in Hawaii when they were here buying hotels and the like in the 80s. It would never be one person it would always be, it was always be a group of a dozen people. And the way you could tell who was in charge was he never said anything. That's right. But he had a young woman with him who attended to his personal needs. And he and she would traipse along behind him. If you looked at the young woman, then you would find out who was running the group. Yeah, my experience is as well and when I was negotiating with a touch you and I worked for hula packer that was the same type of thing. But there is some focus now on that companies are beginning to recognize the evaluation process which is usually based on longevity. And how many hours you put in at the company it's a it's a measurement of time invested. It's not a measurement of effectiveness or your accomplishments. This is kind of built in baked into the Japanese business culture. But there are companies now and it's been accelerated somewhat by this recent experience over the last three months to recognize that people are now working remotely and guess what, they're getting their work done. And in some cases they're actually doing more than when they're sitting in the office pretending to do work. So there's some changes that are occurring some companies are beginning to say, look, we're not going to evaluate on time any longer. We're going to evaluate on results. So some companies are major change. It is it's it's happening around the edges but it's been catalyzed by this, this coronavirus that's one positive these are positive things. Now one negative thing, which I found interesting is that when this all started going down Jay, you know I'm a professor so I have a freedom of time so I stay at home and I go out and I spend time with my kids and so forth. So I would walk out and I would see couples with their kids. Their husbands were being told don't go to work right so they were actually in the home, and the wife would be looking very very the mother very happy because her husband was with her and then I look at the husband. Do I have to do this, you know they had that do I have to do this face. So all of a sudden they were thrown into a domestic role because they were working out of the home and the wife was saying hey, you need to help me take care of the kids and so forth so there was an article actually the New York Times about the Japanese couple. I saw it. So the husband began to complain because hey, I'm doing my chores and then the wife came out with a detailed list said yeah, you do 21 things. I do 210 things. So Japanese men, partly because of the requirement of this time. Nature of business have been working for long hours and they don't do much in the home and I think the average is 20 minutes to put in a day doing domestic chores. But now they're in the home and the wife is saying hey, you know in many cases the wives are working as well. So we need to share responsibility so now there's a the corona divorce effect. Beginning to take place actually in China. That was one of the when the when the lockdown was lifted the divorce rate went up. So that's may happen here in Japan I don't know about Hawaii Jay my wife's actually upstairs here so I have to be careful about talking about this I don't know what what's what situation you're in Jay with your wife given the lockdown and so forth. Well, the day of the day of the Dona son is over. No, but I think it's true. It, you know, it's like COVID reveals so many things about so many aspects of our lives including exactly what our marriages are made of. And that's that's a lesson from China but everywhere. Yeah, so Steve, I think we're out of time I'm sorry to say it because I really love these conversations. I do to it goes by so quickly. Yeah, well life goes by so quickly that's that's one of the strange things about being locked up. Yeah, so I build into each other. I won't be able to make it out this summer has it looks like the quarantine is going to be extended, probably through the summer this is what I'm hearing through the University of Hawaii. So I'll be teaching my classes remotely. This time, and I'll still be here so no no martinis no safe social distance enjoyment of that drink that we were planning to do, but anyway I look forward maybe next year when things calm down and travel is is we achieve those hurdles that people feel comfortable traveling. But we can keep talking Steve and we will. Okay. All right, thank you so much. Steve searcher. University in Kobe. Thank you so much for joining us.