China Direct

Japan’s Chinese lesson – diversifying only production is not enough

Europe lags behind Japan in managing economic interdependence with China. Aya Adachi and Koki Shigenoi say European companies have to look at sourcing.

The Russo-Ukrainian war and growing concern over Chinese intentions on Taiwan have triggered a serious discussion among European executives and policymakers about diversifying economic ties away from China, just as they are doing from Russia. Given the higher economic interdependence between Europe and China, European companies would be in a much more vulnerable position if they had to unwind business operations in China at the speed and severity with which they acted in Russia. Japanese companies have a similar problem, but have for a decade been pioneering ways to reduce economic dependence on their country’s big neighbour. Europeans could learn a thing or two from them.

To read this article please click here.

Our sincere thanks to Aya Adachi and Koki Shigenoi for the analysis which was published by Merics on 07 November 2022.

 

China-Japan Relations: latest insights from CSIS

 

In this episode of the ChinaPower Podcast, CSIS Japan Chair Christopher Johnstone joins Dr. Bonny Lin to discuss the current state of Japan-China relations.

Mr. Johnstone argues that Prime Minister Kishida’s policies have picked up from where his predecessors left off in terms of taking a more hardline China policy. He states that China’s deepening relations with Russia and its assertive behaviour in Asia is alarming Tokyo, weighing on Japanese public sentiment toward China, and fuelling proposals to increase defence spending.

Despite these tensions however, Mr. Johnstone notes that he has not seen significant Chinese economic coercion toward Japan in recent years, which speaks to the close economic relations that persist between the two countries. Lastly, Mr. Johnstone comments on rising Japanese support for Taiwan, discussing the growing Japanese consensus that Japan’s security and Taiwan’s are increasingly linked.

Christopher B. Johnstone is senior adviser and Japan Chair at the Center for Strategic and International Studies. Prior to joining CSIS, Mr. Johnstone served in government for 25 years in a variety of senior positions with a focus on U.S. policy toward Japan and the Indo-Pacific. He served twice on the National Security Council, as director for East Asia under President Biden and director for Japan and Oceanian affairs under President Obama (2014–2016).

The State of Japan-China Relations: A Conversation with Christopher Johnstone

Our sincere thanks to Ms. Bonny Lin, Director, China Power Project and Senior Fellow, Asian Security at CSIS for sharing this information.

 

NE ASIA TRADE & INVESTMENT FACT SHEET: JAPAN

 

 

Dear CBI Members and Partners,

Kindly find the latest NE AsiaTrade and Investment fact sheets covering Japan:

Download Japan-trade-and-investment-factsheet-2021-04-09

Our thanks to DIT for kindly sharing this information.

AstraZeneca signs $6 billion deal with Daiichi

CBI member, AstraZeneca, has announced that it has entered into a global development and commercialisation agreement with Japanese drugs manufacturer Daiichi Sankyo, for the promotion of Daiichi Sankyo’s DS-1062, an antibody drug currently undergoing clinical trials to test for efficacy in the treatment of small-cell lung cancer and triple negative breast cancer.

AstraZeneca and Daiichi Sankyo will jointly develop and commercialize DS-1062 worldwide, except in Japan, where Daiichi Sankyo will maintain exclusive rights. This agreement represents the second global antibody drug conjugate collaboration between the two companies, following a similar agreement in March 2019 between AstraZeneca and Daiichi Sankyo for the Japanese manufacturer’s ENHERTU drug, which is aimed at addressing multiple tumours with one treatment plan.

Pascal Soriot, CEO, AstraZeneca said: “[AstraZeneca] see significant potential in this antibody drug conjugate in lung as well as in breast and other cancers that commonly express TROP2 (a protein that forms on the surface of cancer cells) […] We are delighted to enter this new collaboration with Daiichi Sankyo and to build on the successful launch of ENHERTU to further expand our pipeline and leadership in oncology. We now have six potential blockbusters in oncology with more to come in our early and late pipelines.”  

AstraZeneca and Daiichi Sankyo will share equally development and commercialisation costs as well as profits from DS-1062 worldwide, except for Japan. Daiichi Sankyo is expected to book sales in U.S. and certain countries in Europe, while AstraZeneca is expected to book sales in other markets worldwide, including China, Australia, Canada and Russia.

Toyota invests $400m in Chinese self-driving auto start-up

 

 

CBI member, Toyota has announced that it has invested $400 million in Chinese technology start-up Pony.ai in a bid to develop a self-driving vehicle with connectivity services.

As a result of Toyota’s investment, the Japanese car giant will hold a 13% stake in Pony.ai, which following its latest funding round, which totalled $462m is now valued at $3 billion.

Subscribers to China Direct may remember that last September, Toyota launched its pilot self-driving car in China, Apollo, in partnership with Pony.ai. According to a statement issued by Pony.ai, the latest investment by Toyota will sustain that project while extending collaboration on mobility services.

According to a statement issued by both companies: “Strengthened ties will enable deeper integration of Pony.ai’s autonomous driving system with Toyota’s robust vehicle platforms and technologies.”

According to fellow CBI member, McKinsey, China has the potential to become the world’s largest market for autonomous vehicles. Foreign manufacturers face many market access hurdles in their efforts to enter the market, however, given that the Chinese government has only licensed the essential mapping data needed to inform an autonomous vehicle to domestic manufacturers. Pony.ai has already begun testing its autonomous vehicle software in Beijing and Guangzhou, and has licenses to further test its systems in California and Shanghai.

Ocado partners with Japan’s biggest supermarket operator

CBI member, Ocado has announced that it has gone into business with Japan’s biggest supermarket operator, Aeon in a bid to launch and popularise online grocery shopping in the market.

Online grocery shopping has yet to take off in Japan, where consumers are accustomed to shopping daily for fresh ingredients. However, competition to be the first to harness the technology and logistics of online shopping is emerging between Japan’s two largest grocery stores: Aeon and Seiyu.

Aeon, which operates more than 21,000 stores in Japan, said that it would use Ocado’s software and expertise to build a new online business with a national network capable of handling $5.5 billion in sales by 2030, and just over $10 billion by 2035.

The deal between Ocado and Aeon will be the group’s first in Asia.

Aeon will use Ocado’s product picking software within parts of its existing store network, and offer click-and-collect services from selected sites. Aeon will also integrate Ocado’s robotic warehouses model into its own distribution network, adopting Ocado’s renowned customer fulfilment centres system.

Initially, Ocado-managed customer fulfilment centres will serve Japan’s Kanto region, with the first planned to go live in 2023, followed by other regions over the next two years.

Ocado shares leapt by as much as 15% in early Friday trading last week, as investors welcomed the partnership, whose technology deals have become more important that its original business of selling food online.

Despite only holding a 1.4% share of Britain’s grocery market, Ocado’s technology has powered the group to a £8.1 billion stock market valuation and partnerships with leading supermarket groups, including Kroger in the United States and Casino in France.

Mitsubishi Corporation secures $7 billion SinoSteel deal

 

 

CBI member, Mitsubishi Corporation has announced that it has entered into an agreement with China’s state-owned, SinoSteel to divest its interests in an iron ore mine and rail and port infrastructure project in Western Australia, in a deal reportedly valued at $7 billion dollars.

Mitsubishi acquired an original 50% stake in the project in 2007 for $100 million, and bought the project outright in 2012 for an additional $225 million. The project revolved around the refurbishment of the Jack Hills iron ore mine, as well as a proposed rail and port facility for the export of iron ore. Before acquiring the site, SinoSteel had been set to be a major customer of the port and rail facility for the export of iron ore to China.

Mitsubishi said in a statement that the Japanese group agreed to exit the project considering its own divestment strategy, which sees the company transition to place a higher emphasis on ‘green investments.’

Shares were reportedly transferred between Mitsubishi Corporation and SinoSteel on Friday. At that time, the Jack Hills iron ore mine project, named Crossland Resources, had capital of $375 million. Mitsubishi revealed that development had been expensive while withholding the sum, but disclosed that it was satisfied with the agreement it had drawn up with its Chinese partner. 

Mitsubishi to invest in UK green energy

CBI member, Mitsubishi Corporation has announced that it will acquire a 20% stake in the UK-based innovative energy service provider, OVO Group.

OVO Group is an energy supply company based in Bristol. The company hopes to revolutionise domestic energy supply, by utilising digital technologies, such as AI and IoT, to position itself as an energy ‘platformer’ and improve the management of the supply of energy from renewable sources.

Mitsubishi Corporation’s existing investment portfolio in renewable energy in Europe predominantly concerns offshore wind power generation. The company has plans to expand its presence in Europe and its role as a leading supporter of innovation within the sector.

Mitsubishi Corporation issued a press release highlighting how: “This investment in OVO is not only an opportunity for Mitsubishi Corporation to contribute to developments in the industry by establishing a new type of energy business that makes use of digital technology; it also stands to stimulate more growth in what is currently a very stable business portfolio by strengthening [Mitsubishi Corporation’s] operations in the service sector and downstream business.”

The specifics of the deal see Mitsubishi Corporation obtain 20% of shares in OVO and will dispatch a director to join OVO’s management team. The acquisition is part of Mitsubishi Corporation’s Midterm Corporate Strategy 2021, which aims to incorporate digital technologies and make them a core part of Mitsubishi’s business across all sectors.

 

Mott MacDonald brings sunshine to Japan

 

 

 

CBI member, Mott MacDonald has completed work on the Setouchi Kirei solar power plant in Japan. The 235MW plant is now the biggest operating solar plant in Japan and will operate as a clean source of energy for a minimum of 20 years. The plant, along the sea-front in the eastern city of Setouchi, has further green credentials, having been built to incorporate a seawall that positions the solar plant as a barrier protecting an existing habitat area of rare species; including the marsh harrier and black-faced spoonbill bird.

Mott MacDonald was responsible for overseeing the construction and managing operation costs of the plant, carried out plant performance and energy yield assessments, and due diligence of design checks on the project.

Project manager Tatsu Kikuchi said: “[Mott MacDonald are proud to be a part of creating the largest solar power plant in Japan. The plant will cut 192,000 tonnes of CO2 emissions, which is half of Setouchi’s current emissions” and create enough energy to power about 80,000 households.

The site consists of 900,000 solar panels over 260 hectares. Thought was given to the location of the plant, ensuring that the plant maximises the benefit it brings for Setouchi city. The plant is located on Setouchi’s former salt fields – previously the largest salt field sites in East Asia until closure in 1970 – making the salt fields area productive for the first time in over 40 years.

The plant plays a further role in protecting Japan’s endangered black-faced spoonbill. The bird is restricted to coastal East Asia, and migrates to Japan during the winter. Major preservation efforts are taking place across South Korea and Japan to protect the birds, who were classified as ‘critically endangered’ in 1990. Their situation has improved, and the birds are now considered ‘endangered.’

Protecting wildlife, rejuvenating areas of un-used land, and cutting CO2 emissions, the Setouchi plant is pioneering in its approach to commercial energy generation. Mott MacDonald hopes this model will soon become the norm in Japan. The consultancy is working hard to improve the accuracy of solar resource estimation systems in Japan, which are vital to securing investment from lenders, and financing the spread of similar environmentally friendly green-energy initiatives.

To read more about the Setouchi Plant, please follow the link.

 

 

WPP acquires full ownership of agencies in South East Asia, Taiwan and Japan

CBI member WPP has acquired full ownership of Y&R and Wunderman joint venture agency assets across Southeast Asia and Taiwan, and Dentsu Sudler & Hennessey in Japan, following a share swap transaction with Dentsu Inc.

Southeast Asia is home to many of the world's most dynamic economies. This transaction marks WPP's continued commitment to expanding in key growth markets and supporting clients through a strong pan-Asian network offering.

The transaction includes Y&R in Malaysia, Singapore, Thailand and Vietnam; Wunderman in Taiwan and Thailand; and Dentsu Sudler & Hennessey (to be rebranded as Sudler) in Japan.

Collectively WPP companies across Asia Pacific generate revenues of almost US$4.8 billion including associates and employ more than 53,000 people.

Please read more here.