A GrAteful nAtion by qingyunliuliu


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                                                               everyone from school-
                                                               children to businesses
                                                               to governments joined
                                                               in to help after tohoku
                                                               was dealt a mighty
                                                               blow in March. the
                                                               people of Japan are
                                                               thankful for the leg
                                                               up, and determined to
                                                               move forward              photograph illustration by credittk
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                                                                       nless you lead an unusually sheltered life, you are
                                                                       aware that Mother Earth has spent a good part of
                                                                       2011 reminding us she has a mind of her own. The
                                                                       Tohoku region of Japan’s East Coast received more
                                                                       than its fair share of disaster on March 11, when a
                                                       powerful one-two punch of an earthquake and tsunami left the
                                                       nation and much of the world in a temporary state of shock.
                                                           Disaster unfailingly brings out the better angels of our human
                                                       nature. In “normal” times, we muddle along with a tendency to
                                                       worry about our own lives, our own surroundings. But when Earth
                                                       and its atmosphere stun us with the kind of brute force that makes
                                                       us feel insignificant in the grand scheme of the universe, we rally to
                                                       each other, renewing the bonds that define humankind at its best.
                                                           As images of the events of March 11 were seen worldwide,
                                                       there was immediate concern from every quarter, and the generous
                                                       offers of help provided comfort and solace to the Japanese people.
                                                       The list of countries, organizations and individuals who have
                                                       helped is a long one, and a list of how they helped is equally long.
                                                       Noriyuki Shikata, Deputy Cabinet Secretary for Public Relations
                                                       at the Japanese Prime Minister’s Office, is quick to express the
                                                       gratitude of the government and people of Japan for this invaluable
                                                       assistance, which proved a great morale booster to the victims and
                                                       the general Japanese population. “We were struck by all the good-
                                                       will extended to Japan from all over the world,” says Shikata.
                                                           In one dramatic example of this international cooperation, Ja-
                                                       pan’s Self-Defense Forces quickly performed their largest mobiliza-      S2
                                                       tion ever (about 107,000 service members), and were joined by
                                                       more than 20,000 members of the U.S. Armed Forces who worked
                                                       alongside the Japanese in Operation Tomodachi (Japanese for
                                                       “friend”), helping to rescue those trapped beneath rubble, to clear
                                                       away debris and to search for the missing. U.S. Ambassador John
                                                       Roos has also been praised following his words and actions in the
                                                       wake of the disaster, as he worked hard to reassure the people of
                                                       Japan that the U.S. continues to be Japan’s best friend in times of
                                      In support of:   trouble. “We have received so much support from the U.S. govern-
                                                       ment, the private sector and from individuals, including schoolchil-
                                                       dren,” Shikata says. “This is something that we appreciate deeply.”
                                                           A person watching TV in Denver or Durban or Denmark could
                                                       hardly be blamed for assuming the entire nation of Japan had
                                                       been overwhelmed by the occurrence. In fact, the damage was
                                                       limited to only the Miyagi, Fukushima and Iwate prefectures. The
                                                       rest of Japan, including the major Tokyo and Osaka regions, were
                                                       almost completely unaffected by the quake and untouched by the
                                                       tsunami. There were, of course, disruptions to services and some
                                                       relief efforts took longer than hoped for, but on the whole, first
                                                       responders, aid groups and the people themselves worked tirelessly
                                                       in the nascent stages of the recovery.

                                                       Everyone plays a part
photograph illustration by credittk

                                                       Japan’s key spiritual strengths remain in place. The toughness and
                                                       willingness of the Japanese people to endure and bounce back,
                                                       expressed best in Japanese by the term gaman, have impressed
                                                       those around the world. Jose A. Hernandez, President and CEO of
                                                       Chartis Far East Holdings KK, the leading property-casualty and
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                                                                                                                     REBUILDING EFFORT
                                                                                                                     A worker in Minamisanriku,
                                                                                                                     Miyagi Prefecture, Japan, helps
                                                                                                                     construct temporary housing
                                                                                                                     units for survivors of the March
                                                                                                                     11 earthquake and tsunami.

                                                                                                                    clothes or necessary survival
                                                                                                                    items, such as flashlights, radios
                                                                                                                    and batteries (one maker alone
                                                                                                                    donated over half a million of
                                                                                                                    the latter), to make life easier for
                                                                                                                    those in need.
                                                                                                                        International organizations
                                                                                                                    such as the Red Cross, Habitat
                                                                                                                    for Humanity and International
                                                                                                                    Rescue Committee, and their
     general insurance company that has had a presence in Japan                 local branches in Japan, have been providing assistance, both
     since 1946, says, “The Japanese people are very resilient, orga-           financial and volunteer, to the impacted areas to help rebuild some
     nized and extremely disciplined. They take care of each other, and         of about 150,000 homes, and to clear away the debris. Compa-
     are very quick to focus on the task at hand. I’m not at all surprised      nies have also set up programs where employees can volunteer to
S3   at how quickly everyone got back to business.”                             assist with reconstruction or provide services to residents.
         As an example, Hernandez cites the tale of a Chartis employee,             Volunteers have arrived in Tohoku from all over Japan and other
     a woman of short physical stature, who survived the initial quake          countries, many giving up their vacations and paying their own
     and was making her way home by car when she was set upon by                way. “What I want to tell people,” says a 20-year-old volunteer
     the tsunami wave. She dashed into a convenience store, climbed             working in Tohoku, “is that residents are getting back to their nor-
     atop a shelf and braced her hands against the roof. The water rose         mal lives, but more support is needed. This is my mission: to tell
     to her neck, where it stayed for five hours before receding. She was       people about my experience and return here to volunteer.”
     back at work the following week, and when Hernandez heard her
     story, he asked in amazement, “What are you doing here?”                Reconstruction and reform
         “I have work to do,” came the reply.                                The scope of the disaster is best illustrated by the Japanese gov-
         The willingness of Chartis employees to throw themselves into       ernment’s assessment that it will take 10 years for reconstruction,
     the cause also led to innovation. “The greatest number of losses        with the first five designated as the “concentrated reconstruction
     was in property—households and people who had homeowner’s               period.” The estimated cost to national and local governments is
     policies,” says Hernandez. “It was going to be nearly impossible        23 trillion yen (about $300 billion), and surely that might grow.
     to do this quickly. There weren’t enough claims adjusters, and we       Still, planning is well underway. PPPs are a key element of the
     couldn’t get them to the sites. But our employees came up with                reconstruction effort, and so are “New Public Commons,” enti-
     a brilliant plan using the camera on the iPad2, which was                          ties that will include NPOs, local companies, national
     newly released at the time.” Within a week, Chartis had             Japan’s            construction companies (on a town-wide scale) and
     a program in place to send images in for quick dam-             key spiritual             local organizations. A vital piece in all of this is the
     age assessments, negating the need for engineers             strength remains               involvement of local businesses and governments,
     in the field. Using remote images is now part of op-       in place, as does the             together with the involvement of the citizens, to
     erational procedures at Chartis, and this evolution      toughness and willing-              make these newly rebuilt communities better and
     is spreading globally through the company.                                                   safer places to live.
                                                                ness of the Japanese
         Japanese companies, foreign companies that                                                   Japan will continue to learn from the disas-
     work in Japan and companies with no direct ties              people to endure               ters, and can repay the help that has been offered
                                                                                                                                                           kimimasa mayama/bloomberg; aar

     to Japan at all worked with energy and generosity to             and bounce               from around the world by offering its experience and
     help the nation regain its footing. Prominent Japanese               back.             assistance in the event of future tragedies elsewhere.
     industrialists, such as Masayoshi Son of Softbank, Tadashi                         Even though the events of March 11 were an enormous
     Yanai of Fast Retailing and Hiroshi Mikitani of Rakuten, have               humanitarian tragedy, Shikata feels there are opportunities that
     pledged large sums of their own money, as well as committing            go well beyond reconstruction, including reform in the stricken
     their companies to providing immediate and long-term assistance.        areas, such as the building of new industries, and the deregulation
         Other Japanese and overseas companies operating in Japan            of land-use rules to produce new types of communities which can
     have also responded, both in terms of financial assistance and          then serve as models for Japan and future developments in other
     providing goods and services. Some companies have provided              countries. —Hugh Ashton

                                      from Harm to Home
                                      At work today in over 40 countries and 22 u.S. cities,
                                      the irC restores safety, dignity and hope to millions
                                      who are uprooted and struggling to endure

                                                                   ith more than 75 years of experience responding to humanitarian emergencies
                                                                   worldwide and helping survivors rebuild their lives, the International Rescue Com-
                                                                   mittee (IRC) reacted to the Tohoku disaster with its trademark swiftness. The IRC
                                                                   gave immediate assistance to three experienced, highly capable, well-regarded Jap-
                                                                   anese aid groups already operational in the affected area: JEN, AAR (the Association
                                      for Aid and Relief in Japan) and Peace Winds Japan. This decision reflected the IRC’s longstanding practice
                                      of working with capable local partners. To meet the needs of survivors, IRC’s partners in Japan responded in
                                      numerous ways. Among other things, they cleared sludge and rubble, distributed household items and created
                                      safe community spaces for evacuees to gather. When mosquitoes and mold became a problem in evacuation
                                      centers, they distributed insecticides, electric fans, dehumidifiers and new bedding. The IRC’s partners also
                                      rehabilitated facilities for seniors, assisted local businesses in selling fresh food near evacuation centers,
                                      helped farmers find safe, sustainable ways to sell produce, and supported traditional end-of-summer cultural
                                      events (matsuri) that honor the spirits of ancestors and loved ones who have died. To find out how you can
                                      assist IRC’s global work, visit rescue.org/how-you-can-help.
photograph illustration by credittk

     no fear of Commitment
     Chartis has served Japan for more than 60 years, and its dedication
     to employees, partners, customers and the citizenry remain strong

           t’s common these days to speak of serv-
                                                                                                                        Jose A. Hernandez, President
           ing a global market as if it were a recent
                                                                                                                        and CEO of Chartis Far East
           phenomenon, but Chartis, a world                                                                             Holdings KK
           leading property-casualty and general
           insurance company, has been thinking
     and acting globally for more than 90 years.
     Chartis serves more than 70 million clients
     in over 160 countries and jurisdictions,
     with particularly strong ties to Japan, where
     Chartis’ forebear AIU Insurance Co. dates to
     1946, when it became the first foreign gener-
     al insurance company in postwar Japan.
          “Our Japan operations are the largest
     Chartis has outside the U.S., and with
S5   about 8.5 percent market share, we are
     the largest foreign insurance operation in
     Japan,” says Jose A. Hernandez, President
     and CEO of Chartis Far East Holdings KK.
     “So after the events of March 11, it was
     very important for our company and our
     employees to be very active, not only in the
     immediate recovery and relief efforts in the
     first weeks, but also in terms of how we’re        we distributed over 80 tons of emergency        Children’s Support Program,” which provides
     going to help Japan rebuild.”                      supplies,” says Hernandez. “And there were      children and their families in the affected
          Of primary concern for Hernandez and          a number of centers around Tokyo receiving      areas with physical and emotional support.
     the company after the initial impact of na-        goods for the general community, so as we           “It’s interesting to notice how our em-
     ture’s fury was the well-being of the 15,000       delivered supplies for our employees, we        ployees reacted,” says Hernandez of 3/11’s
     Chartis employees in Japan. “We were con-          would make runs to those centers, as well.”     aftermath. “I can say without a doubt, our
     cerned on two levels,” says Hernandez. “We                                                         employees feel proud to work for this com-
     care about our employees and wanted to             Commitment at every level                       pany, because the company not only took
     make sure they were safe. And we needed            Knowing the determination of its employees      care of them, but also looked after the best
     to make sure they were safe so they could          to help those in need, the AIG Relief Fund      interests of the Japanese community as a
     go to work and help our customers. That            was established. Employees around the           whole. If you extend that circle, you’re talk-
     was important, and that was done.”                 world contributed $672,000, matched by          ing about your first line, your supply chain,
          The company’s wide geographic pres-           the company, which in turn donated an ad-       so these are your partners and producers.
     ence in Japan proved a huge asset. Using           ditional $2 million. In addition, The Chartis   I spend a lot of time with our producers,
     Fuji Fire and Marine’s (which Chartis ac-          Cup, a charity rugby match in Hong Kong         with the heads of our different producer fed-
     quired in 2010) Osaka offices as a base to         sponsored by Chartis, also raised $50,000       erations and with our partners, and while
     reach Sendai, employees were able to truck         that was presented to “Shine On! Tohoku’s       mutual respect and cooperation existed be-
     needed supplies such as food, blankets                                                             fore, that’s been enhanced. We have deep
     and basic goods to employees, as well as to                                                        roots in Japan and we believe the market
     some distributors and producers within the                                                         is underserved from a product and service
                                                                                                                                                         kiyoshi ota/bloomberg

     affected communities. When fuel short-             “Chartis is committed                           standpoint. We will leverage our global
     age became an issue, the company began             and historically linked                         attributes and resources for the benefit of
     airlifting supplies using company assets                                                           Japanese corporate and individual custom-
     and supported by Chartis employees who
                                                        to the Japanese market,                         ers. Chartis is committed and historically
     packed and unloaded aircraft on numerous           and plans to remain so                          linked to the Japanese market, and plans to
     occasions. “Within the first three weeks,          for a very long time.”                          remain so for a very long time.”
 SUP                      ARE
    PO                               UD
      RT                 the
                              of J ing
                                                                                                        Chartis delivers.
                                                                                                       With a network providing claims
                                                                                            services to more than 70 million clients
                                                                                            worldwide, we can respond swiftly and
                                                                                         decisively to our clients’ claim resolution
                                                                                                     needs. Let us do the same for you.
                                                                                      Learn more at www.chartisinsurance.com

Chartis employees assisting with the Japan aid effort
                                                           All products are written by insurance company subsidiaries or affiliates of Chartis Inc. Coverage
in the tsunami and earthquake-affected region.            may not be available in all jurisdictions and is subject to actual policy language. For additional
                                                        information, please visit our website at www.chartisinsurance.com.

     industrial-Strength Knowledge
     Mizuho Corporate Bank provides a bridge for its customers to develop
     operations and strong relationships in Asia

                     s one of Japan’s megabanks,
                                                                                                                        Yasuhiro Sato, President
                     Mizuho Financial Group is
                                                                                                                        and CEO, Mizuho Corporate
                     providing assistance to the                                                                        Bank, Ltd., President and
                     stricken areas of the country.                                                                     CEO (Group CEO), Mizuho
                     Together with Mizuho Bank,                                                                         Financial Group, Inc.
     Mizuho Corporate Bank has invested in
     an equity fund to encourage business
     development in the hardest-hit areas of
     Tohoku. “We at Mizuho are making a full-
     scale effort to assist our customers and the
     damaged region, as well as to contribute
     to the recovery of the business community
     by utilizing our knowledge and expertise,”
     says Yasuhiro Sato, President and CEO,
S7   Mizuho Corporate Bank, Ltd., President
     and CEO (Group CEO), Mizuho Financial
     Group, Inc. The Tohoku fund is designed
     to help the Tohoku community and its busi-
     nesses, including those who are not existing
     Mizuho customers, and the company is
     working with regional financial institutions
     to meet specific business needs.
                                                      was taken in order to rapidly provide accu-      Mizuho Corporate Bank’s business relation-
     In-depth knowledge of industry                   rate information to all of Mizuho’s clients      ships with about 5,000 global clients, and
     The Industry Research Division, a key func-      when they need it most, and to facilitate        Sato’s forging of personal relationships
     tion of Mizuho Corporate Bank, has been          future business discussions.                     with leaders of the top 150 companies
     actively examining the post-earthquake               Mizuho Corporate Bank’s customers            in Europe, Asia and the Americas. These
     industrial landscape. The division’s 140         make use of the “industrial knowledge”           combine to assist Mizuho Corporate Bank
     specialty analysts examine the industrial        exemplified in its research operations,          in its aim to become a “leading presence
     spectrum and provide detailed short- and         but also incorporate specialist knowledge        as a financial institution in Asia.”
     mid-term outlooks. Such expertise includes       on different industries into their strategies.       The bank continues to consolidate and
     the rest of Asia beyond Japan, making this       Internationally, for example, eco-friendly       expand its operations around the world,
     data an invaluable resource for any com-         developments, such as those in Tianjin,          with 68 offices spread across 30 countries
     pany wishing to enter the Asian market.          China and Chennai, India, tapped Mizuho          and regions. The Asia Pacific region alone
         The Industry Research Division pro-          Corporate Bank’s industrial knowledge            has 33 offices, the most recent being a
     duces reports at regular intervals, but the      from the earliest phases of their planning       Malaysian subsidiary that started opera-
     events of March 11 and the related effects       processes.                                       tions in September. In Sato’s words: “We
     on Japanese and global industry created                                                           will work to identify the various structural
     urgency for fact-finding and reporting. By       A global bank oriented toward                    changes taking place in industry around
     the end of March, they had produced an           global clients                                   the world, and, by mobilizing our knowl-
     80-page comprehensive survey (now in its         With its long history and size, the Bank can     edge and understanding of industries, and
     13th version with 120 pages) of the              play a bridging role between Japan and the       all of our capabilities, we aim to be the
     effects of the disaster on Japanese              rest of Asia, as well as between Asia and        financial institution that is the best possible
     industry, following over 300 visits and          the Americas and Europe. It can achieve          partner for our customers as they imple-
     interviews with policymakers and industry        this by leveraging the Group’s business          ment their strategies. We will also fulfill
     leaders. The Bank has also translated this       relationships with around 80 percent of          our social mission as a supplier of global

     report into English and Chinese for the          TSE-listed Japanese companies (many              industrial finance to facilitate the develop-
     benefit of non-Japanese clients. This step       of which have a strong global presence),         ment of corporations and industries.”
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     tHe future
     JAPAn inC.
     the nation examines alternative,
     renewable power sources for a
     greener future

                  he events of March 11 dealt a series of body blows to
                  Japan’s energy policies. Nuclear power plants account-
S9                ed for about a third of Japan’s energy prior to March
                  11, and their shutdown for inspection removed 12GW
                  of capacity from the Tohoku/Kanto regions (including
     Tokyo). This reduction in energy production can be partially made
     up in the short term by using pumped-storage generation from
     hydroelectric plants, and by bringing mothballed thermal genera-
     tion plants back online. LNG (liquefied natural gas) seems to be
     the fuel of choice for the immediate future, with its lower carbon
                                                                                 LET THERE BE LIGHT: TOKYO
     footprint than most other thermal fuels, but it is far from an ideal        AT DUSK, MARCH 17, 2011
     long-term solution.                                                         As it looks to its future, Japan
         Japan endured a long, hot summer this year, often with tempera-         must consider alternative
     tures of 95˚ or more and air-conditioning turned to 83˚. The usual          sources of energy.
     salaryman uniform of dark suits was replaced by polo and Hawaiian
     shirts and light trousers, underscoring just how much Japan depends
     on electricity to live comfortably. Decisions on the nation’s future      Making things
     power supply are obviously not to be undertaken lightly, with some        Manufacturing will undoubtedly suffer right alongside aspects of
     industry experts, such as independent energy economist Osamu Fu-          everyday living. According to Mizuho Corporate Bank’s Industry
     jisawa, predicting a third “lost decade” for the Japanese economy if a    Research Division, shortages of electricity and a lack of parts could
     rush away from nuclear is made without proper planning and thought.       cause production in the bellwether Japanese automobile industry
         With the potential for consumption to outstrip supply, thereby        to drop 7 percent in fiscal year 2011 compared to forecasts made
     resulting in blackouts, the call to reduce energy consumption has         before March 11. (Automobile parts makers are also subject to
     been heard and acted upon. Companies have adopted off-peak                energy shortages, and several were located in the quake-hit area.)
     working hours, and even off-peak working days—adopting Thursday           This could all lead to a midterm realignment, or even a hollowing
     and Friday as a “weekend,” in the case of the automakers—to spread        out, of the traditional Japanese monozukuri (engineering) indus-
     the load. Commuters have trudged up halted escalators in half-lit rail    tries, as more operations move offshore, parts makers are acquired
     stations, with remarkably few complaints, as these are viewed as tem-     by entities from other countries (notably China) and the SMEs
                                                                                                                                                       tomohiro ohsumi/bloomberg

     porary stopgap measures. The days of the all-electric, ultra-convenient   that currently supply the majors go through a process of Darwin-
     Japanese home drawing its energy from a central grid may well be at       ian selection—adapting to the new environment, or falling by the
     an end, however.                                                          wayside and perishing.
                                                                          businessweek.com/adsections Special advertiSing Section

                                                                                                              nuclear ignore several cost fac-
                                                                                                              tors on the nuclear side.
                                                                                                                  While PV panels typically
                                                                                                              have a relatively low efficiency
                                                                                                              (the proportion of sunlight
                                                                                                              that is converted to electric-
                                                                                                              ity) of around 15 percent, it is
                                                                                                              theoretically possible to produce
                                                                                                              multilayer PV panels whose
                                                                                                              efficiencies might exceed 50
                                                                                                              percent, a goal toward which
                                                                                                              Japanese PV panel makers
                                                                                                              are striving. Already there are
                                                                                                              Japanese-developed units from
                                                                                                              makers such as Sanyo (now
                                                                                                              part of the Panasonic group)
                                                                                                              with efficiency figures of nearly
                                                                                                              40 percent, and other leading
                                                                                                              Japanese developers of this
                                                                                                              technology, such as Sharp and
                                                                                                              Kyocera, are also producing ad-
                                                                                                              vanced PV panels to keep Japan
                                                                                                              in the lead. Even without such
                                                                                                              developments, there is powerful
                                                                                                              backing to deploy PV as a future
                                                                                                              power source. Projects such           S10
                                                                                                              as the recently opened 7MW
                                                                                                              TEPCO PV facility at Ukishima,
                                                                                                              south of Tokyo, and a future
                                                                                                              13MW facility close by, also
                                                                                                              to be operated by the utility
                                                                                                              giant, are helping to mitigate
                                                                                                              the effects of the nation’s offline
                                                                                                              nuclear plants.
                                                                                                                  Masayoshi Son, the CEO of
                                                                                                              mobile carrier Softbank, has
                                                                                                              launched a private initiative to
                                                                                                              construct PV generation facilities
                                                                                                              of about 20MW each, with 35
     However, pending legislation aims to break the present energy-       (out of 47) prefectures signing on to a plan where Softbank con-
producing and -transmitting regional monopolies, by allowing central      tributes 10 percent of the funding and local governments supply
government to set the price for feed-in tariffs for all kinds of energy   about 10 percent, with bank loans providing the remaining fund-
generation (currently limited to photovoltaic (PV) only, and at the       ing. Construction is soon scheduled to begin on 10 of these plants
utilities’ discretion). This move contains a sweetener for industry,      of 20MW each. More of these may follow.
which has so far opposed such feed-in controls, by providing a sub-
stantial reduction in the price of electricity for large-scale users.     The answer is blowing in the wind
                                                                          Pending feed-in legislation shows a move towards wind power
Letting the sun shine in                                                  as another energy alternative. Especially in Tohoku, where
Given Japan’s lack of fossil fuels, and past pledges to reduce carbon     winds blow in from the Pacific Ocean, wind power would seem
emissions, renewable energy sources would seem to be the only pos-        to provide at least part of the answer. Some estimates put the
sible long-term forward path for Japan. One area that has seen many       potential there as high as 22GW of power, and project that the
recent advances is PV generation; solar panels are now a common           cost of wind power, according to the same estimates, will come
sight on the roofs of new Japanese houses. Even so, the total PV          in at only slightly more per kWh than non-LNG thermal, and is
generation capability of Japan, at 2,600MW, is a mere 10 percent of       still cheaper than geothermal or solar. Various plans are in place
the previous output of the Fukushima Daiichi nuclear plant.               to start up wind farms in the area, and Japan already has some
    It appears that China is starting to take a lead in the low end of    expertise in this field, though the plans here are not nearly as
this market, producing lower-cost panels than Japanese equivalents.       ambitious as those in, say, the U.K.
Even so, PV is undeniably expensive to install, though it appears that         Though the cost of producing wind generation facilities in Ja-
some statistics claiming PV installation to be 10 times the price of      pan is high (estimated at $2,256/kW, compared to around $1,300
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                                                                                                                       SOAKING IT ALL IN
                                                                                                                       Solar panels atop the Itochu Corp.,
                                                                                                                       in Tokyo. Alternative sources of
                                                                                                                       energy, such as solar, are part of
                                                                                                                       a plan for Japan to generate 20
                                                                                                                       percent of the nation’s electricity
                                                                                                                       from renewable sources by the end
                                                                                                                       of the next decade.

                                                                                                                         Making the most of it
                                                                                                                         Simply generating electricity is
                                                                                                                         not enough. Any future plans for
                                                                                                                         Japan must also include discus-
                                                                                                                         sions on transmission, storage
                                                                                                                         and management of electricity.
                                                                                                                            Japan needs to make strides
                                                                                                                         forward in the national transmis-
                                                                                                                         sion system, even though Ja-
                                                                                                                         pan’s electricity supply is stable
                                                                                                                         and of almost uniformly high
                                                                                                                         quality. With half of the country
      in the EU or U.S.), economies of scale and system consolidation            using AC electricity at 50Hz and the other half at 60Hz, it has
      would help to bring down the cost of setting up such facilities.           proved impossible to achieve a true national grid system. The gate-
S11                                                                              ways between the two regions can transfer a mere 1GW between
      Going underground                                                          the six utilities in the West and the three in the East (where the
      Geothermal power would seem to be one source from which Japan              badly affected Tokyo and Tohoku utilities are located). While time
      could increase its proportion of generated electricity, as advocated       and cost have been cited as factors hindering national unification
      by no less a personage than Yoko Ono. As has been so tragically            of the AC frequency, the time when the utilities alone could dictate
      demonstrated, Japan is a geologically active nation, with many             policy seems to be receding, and this is now a more open issue
      volcanoes and frequent earthquakes occurring throughout the                than it has been in the past.
      country. This would seem to make it an obvious candidate for the               Japan is, however, well-placed in the area of storage, with
      wide deployment of geothermal technology. In fact, it has been             battery technology from Panasonic and other makers—among the
      estimated that the potential of Japan’s geothermal capacity is the         world’s leaders in this field—widely accepted globally. Battery solu-
      equivalent of 23.5GW, approximately the output of 32 nuclear               tions for the home are already available, and more uninterruptible
      reactors, but, disappointingly, some experts feel that it may take         power supplies are expected to soon hit the market, bringing econo-
      until 2050 to get even 10 percent of this capacity online.                 mies of scale as the price drops below the “magic” figure of $250/
           Since 2010, a consortium that includes major banks and trad-          kWh (as determined by a recent Smart Energies Forum), which
      ing companies has been involved in promoting Japanese exports              will benefit not only houses, but electric vehicles and other markets
      in this area to other countries, such as Indonesia, while seem-                 where constant portable power is needed.
      ingly ignoring the potential for the home market. A major                                  Energy management systems, installed along
      problem is that so many of Japan’s potential geother-            Simply gener-             with PV roof panels, are starting to make their
      mal sources are under national parks, with the result                                        appearance in Japanese homes, allowing
                                                                      ating electricity
      that geothermal sources in Japan currently generate                                            homeowners to monitor, adjust and optimize
      a mere 0.54GW. However, in a sideways move by                isn’t enough. future               their residential energy demand. Such systems,
      bureaucrats, new regulations permit the drilling of          plans for Japan must               together with the associated generation systems,
      diagonal holes from outside park boundaries to tap          include the transmis-               inverters and metering systems, now form a
      the reservoirs of heat underneath. However, the                sion, storage and                key sales point in TV advertisements for new
      natural hot-spring baths—onsen—that result from                 management of                  homes, which appear along with advertisements
      geothermal activity are a traditional part of Japanese              electricity.             for eco-friendly appliances that use less power
                                                                                                                                                              tomohiro ohsumi/bloomberg

      life, and tapping the hot water that feeds them would                                      than their predecessors.
      be seen as near-sacrilege in some quarters.                                                Even as individual consumers are offered more
           If these national-park and hot-spring problems can be over-                choices than ever before, the Japanese power industry is in a
      come, any electricity generated in this way would qualify for the          state of flux. Many more changes—in the corporate structure of
      feed-in tariff, which would be needed, at least initially, to assist in    Japan’s utilities, the commercial aspects of the energy business,
      the setup of the generating facilities; and geothermal could eventu-       and the technology used—seem to be in the cards, as Japan
      ally end up being an important source of power for Japan, the              adjusts to the newly changed circumstances in which it finds itself.
      country with the third-highest untapped geothermal potential.                                                                         —Hugh Ashton

      AnA: first in Class
      Boeing’s new “Made with Japan” 787 flies first for All nippon Airways

                        ll Nippon Airways (ANA) has
                                                            Shinichiro Ito, CEO and President of ANA
                        recently taken delivery of the      and Jim Albaugh, President and CEO of
                        first production Boeing 787         Boeing Commercial Airplanes
                        Dreamliner, allowing ANA to
                        take the lead in ushering in a
      new era of air travel throughout the world.
      Although the development and deploy-
      ment of this aircraft suffered many delays,
      its difficult birth has made it a much-loved
      child, as Shinichiro Ito, CEO and President
      of ANA, has remarked.
           Following an unprecedented collabora-
      tion between ANA and Boeing in the de-
      sign of the Dreamliner, which involved ANA
S13   engineers working alongside their Boeing
      counterparts in Seattle for four years in the
      “Working Together” program, the world’s
      first airliner to use 21st-century technology
      on a large scale boasts a number of unique
      aspects that confer significant advantages
      for both the carrier and its passengers.
           For ANA, which this year celebrates
      25 years of international service, a 20                A 30 percent drop in maintenance             rhythms adjust to the daily pattern at their
      percent reduction in fuel consumption will         costs, achieved partly through a centralized     destination. (This may not entirely eliminate
      allow the medium-sized 787 to fly long-            network system that allows easy monitoring       jet lag, but it surely will help.) Advanced
      distance routes that were previously the           by engineers of all parts of the aircraft, not   air-conditioning systems, with a nominal
      preserve of larger aircraft. As of August,         only saves money, but increases the rate         pressure of 6,000 rather than 8,000 feet,
      ANA flies 912 scheduled international              of on-time departures—of benefit not only        also help passenger comfort.
      flights per week over routes connecting 29         to passengers, but also to ANA, which can             As the launch customer of the 787, ANA
      cities, with 4.8 million passengers carried        thereby maximize the use of its fleet.           is in position to demonstrate the aircraft’s ca-
      over international routes in the previous                                                           pabilities, particularly with 46 business class
      12 months. Mitsuo Morimoto, a Senior               A plane with a view                              seats on each long-haul international flight.
      Executive Vice President of ANA, which             Composite materials, developed and pro-          The placement of these seats is staggered for
      is a Star Alliance member, says, “We               duced in Japan (where up to 35 percent of        privacy, and each folds down to make a full-
      intend to use the Dreamliner to expand             the whole aircraft is produced), are used        length, fully flat bed. Ample storage space
      our business, particularly our international       for key structural elements of the aircraft,     for shoes, headsets and carry-on baggage,
      routes.” However, the Dreamliner is flex-          including the fuselage, also lowering the        together with luxurious touches such as a
      ible enough to also be used on Japanese            cost of maintenance.                             17-inch touchscreen entertainment system,
      domestic routes, where ANA enjoys the                  Upon entering the aircraft, passengers       and a full array of power, USB and iPod
      number-one position.                               are presented with a high architectural entry    connections, combine to create an extremely
                                                         that provides a sense of spaciousness, fur-      comfortable environment for work and rest.
                                                         ther emphasized by windows that are about             ANA’s 55 Dreamliners on order, 20 of
      who Built it?                                      30 percent larger and placed higher than         which will be in service by March 2013,
                                                         those in the Boeing 767. A novel electronic      are expected by the airline’s management to
                                                         dimming feature on each window eliminates        achieve ANA’s goal of becoming the leading
                                                         the need for window blinds, and innovative       airline in Asia, not just in passengers and
             35%            35%           30%
                                                         LED lighting features color and brightness       revenues, but also in the areas of quality,

                           Boeing       others           adjustments to help passengers’ circadian        customer satisfaction and value creation.
      Special advertiSing Section businessweek.com/adsections

      A DreAM
      tAKeS fliGHt
      Boeing’s new 787 has a heavy dose of
      Japan in its DnA

                   hirty-five percent of the new Boeing 787 Dreamliner’s
                   major structural components are sourced from Japan,
S15                as well as some of the finishing touches. Indeed, Jim
                   Albaugh, President and CEO of Boeing Commercial
                   Airplanes, says, ”You could say this is a Japanese
      airplane.” One key aspect of the 787’s construction is the coopera-
      tion of companies around the world in the design and produc-
      tion of large subassemblies, rather than focusing only on parts
      manufacturing. This was a challenging process from the start, and
      has required innovation, precision workmanship and attention to
      detail—qualities where Japanese industry excels, and which may
      be summed up in the Japanese word takumi (expertise).

      Spinning new threads
      As soon as you catch sight of the 787, Japanese technology is
      on full display. All Nippon Airways (ANA)—the lead customer
      responsible for many operator-suggested ideas incorporated into
      the design of the 787—recommended the use of durable Japanese
      paint, which has double the life of Boeing’s original choice, thereby
      reducing maintenance costs.
          One of the most notable innovations in the construction of the
      Dreamliner is the cutting-edge materials in the main structure.             Toray’s work on aircraft composites goes back to 1982, and
      Rather than the aluminum alloys typically used for airliners, the       its experience with CFRP led to its selection as the supplier of the
      787 employs modern composite fiber in much of its construction.         composite material used in the tail of the 787’s forerunner, the
      Such carbon fiber reinforced plastic (CFRP) has been specially de-      Boeing 777. However, further development and engineering work
      veloped for the Dreamliner by Toray Industries, the Japanese fiber      was needed before the Dreamliner’s composite material could be
      and material manufacturer, and it accounts for about 50 percent         put into production. “It’s not like material used for sporting goods,”
      of the 787’s weight. This material is lighter than the metals used      says Nobuyuki Odagiri, of Toray’s Department of Advanced Com-
                                                                                                                                                       tomohiro ohsumi/bloomberg

      in previous aircraft—a significant advantage when it comes to fuel      posite Materials Technology. “People entrust their lives to it.”
      economy. Indeed, there is a 20 percent fuel savings over previous           Not only did Toray develop this material, but the technology
      airplane models of similar size.                                        used to produce it in quantity also had to be developed, as
                                                                       businessweek.com/adsections Special advertiSing Section

                                                                           A FLYING LEAP
                                                                           A Boeing 787 Dreamliner built for All Nippon Airways in its hangar
                                                                           at Haneda Airport in Tokyo. Many Japanese companies partnered
                                                                           with Boeing in the Dreamliner’s engineering and construction.


more than 30 tons of CFRP are used in each 787. Toray                  the first time that Boeing has used CFRP for the wings of a large
worked on the development of the fiber itself and the “pre-preg”       aircraft, and the first time that such wings have been produced by
(pre-impregnated) material used to form key sections of the air-       a partner company. Takashi Matsuda, of Mitsubishi’s Aerospace
craft. This material had to be lightweight, and strong and resistant   Systems’ Engineering Division, spent two years in Seattle working
to impact. As well as providing weight advantages, the strength of     with Boeing engineers to develop the production technology,
this new material allowed for significant design changes, such as      sending test results to Nagoya within minutes of the tests being
larger passenger windows, and has reduced maintenance costs            carried out. This collaborative production was a world first, and
because composites don’t corrode like metal. The extra strength        to make matters more challenging, the design of the aircraft kept
provided by CFRP also allows the cabin pressure to be increased        changing, even as the production technology was being developed.
compared to previous models.                                               Creating the 787 wing, a panel 30 meters long and five meters
                                                                       wide, is a considerable undertaking. Building the wing to the
Making the mold                                                        precision demanded by the aeronautics industry—and combin-
The wings are obviously a vital part of any aircraft, and Boeing       ing this precision with enough strength for the wing to act as a
entrusted the construction of the Dreamliner’s to Mitsubishi Heavy     fuel tank—is even more remarkable. Matsuda is justifiably proud
Industries in Nagoya. The development of the Dreamliner marks          of Mitsubishi’s and Boeing’s achievements. “Though Japan is a
      Special advertiSing Section businessweek.com/adsections


      small country with few natural resources,” he says, “it can take           Fuji Heavy Industries was contracted to produce another vital
      advantage of industry being concentrated in a small area and be        element of the Dreamliner, the “center wing box.” This component,
      active in many fields.”                                                again constructed from CFRP, is the unseen section that supports
          One of the challenges faced by the program partners who            the wings at the point where they meet the fuselage. It demands
      created the Dreamliner’s subassemblies is the sheer size of its        hyper-precise workmanship combined with almost incredible
      structures. ANA’s web page on the making of the Dreamliner             strength to perform its function.

                                                                                                                                                    tomohiro ohsumi/bloomberg (2); interior: ana; seats: stuart isett/bloomberg
      reports that Kawasaki Heavy Industries, Ltd.’s Toshikazu Sana,             Fuji had previously produced center wing sections for the
      who was responsible for the production of the forward section of       Boeing 777 using traditional methods and aluminum alloy.
      the fuselage and critical parts of the wings, was surprised at the     Yasuhiro Toi, of Fuji Heavy Industries, is quoted on ANA’s “Made
      planned method of construction. Sana was expecting Boeing to           With Japan” web page as saying that the use of CFRP for the
      specify a traditional split-panel assembly method, using composite     center wing box turned the 787 into a “game-changer in many
      material rather than metal. When he discovered that the fuselage       ways,” although Fuji’s experience with composite materials goes
      was to be produced as a complete tube (the “one-piece barrel”          back 30 years. For Toi, this use of the new reinforced composite in
      method), he was astonished.                                            such a crucial role “proves the reliability of composite materials.”
          Creating a tube 6 meters in diameter to the tight tolerances           Not only is the use of the composite material an innovation,
      required by aeronautical engineering is no joke. The jigs needed       but the designation of Fuji as a Tier 1 partner, with more work and
      to do this weigh over 60 tons each, and the challenges faced by        responsibilities than in previous projects, was also a new develop-
      the team assigned to this project were unprecedented. Draw-            ment that drove production technology through the challenges
      ing on Japan’s traditional strengths of precision toolmaking and       presented by the Dreamliner’s construction.
      metalworking, Kawasaki had to design and produce the world’s
      largest autoclave to harden the composite material. Emphasizing        Touching down safely under pressure
      the “program partnership” nature of the project, Kawasaki not only     Even the most advanced aircraft must eventually come down to
      produced the outer composite skin, but also the internal frame,        Earth. As with other vehicles, tires support the plane, but the
      wiring and flooring, which added another layer of complexity to the    tires used on a large airliner such as the 787 are of a completely
      project. However, the end result of all this hard work is a seamless   different nature than those found on a car.
      fuselage for the Dreamliner, and, according to Sana, “a very beauti-       To start with, a Dreamliner is a very large machine that travels
      ful piece of airframe” that will encourage people to fly in it.        at very high speed. The tires have to take the strain and absorb the
                                                                        businessweek.com/adsections Special advertiSing Section

                                                                            Clockwise from far left: Dreamliner wing sections being assembled at
                                                                            Mitsubishi Heavy Industries Ltd.’s Nagoya Aerospace Systems plant      S18
                                                                            in Nagoya City; the interior of the business–class cabin; component
                                                                            assembly at the Fuji Heavy Industries Ltd. plant in Handa City; the
                                                                            in-flight entertainment system, by Panasonic Avionics.

force of over 172 tons (landing weight) hitting the runway at about      Creature comforts
140 knots (158 mph), and coming to a halt within a mile or so.           Japanese technology in the Dreamliner makes for a more enjoyable
This is way beyond what the average family car’s tires are expected      passenger experience as well. The entertainment system, provided
to do, and airliner tires must be designed to deal with this kind of     by Panasonic Avionics, uses wireless technology to deliver content
strain. In addition, the loads involved demand that aircraft tires       to each seat. Communication and information systems are also
be inflated to high pressures—between six and seven times the            provided, with state-of-the-art touch-screens (17-inch, wide-for-
pressure of an ordinary car tire. This stretches the rubber casing of    mat in ANA’s long-haul international business class), multilingual
a typical airplane tire, opening the tread and placing the tire in a     menus and a choice of audio-visual programs, topped off with iPod
state that is much more prone to damage such as scuffing and                 connections, USB chargers and universal power outlets.
scarring. No ordinary airplane, the Dreamliner seemed                                  For greater passenger convenience, Boeing has fit the
worthy of an innovative tire solution. Bridgestone                                     Dreamliner with the latest in lavatories, supplied by
provided one.                                                    reducing the            Jamco. And ANA’s lavatories go a step further for
    Bridgestone, the Japanese partner responsible            tension placed on            their customers. As anyone who has visited Japan
for all of the Dreamliner’s tires, met these chal-       the surface of the tire,          knows, Japanese toilets offer a variety of buttons
lenges by designing a stronger tire casing. By           the risk of a deep cut is         controlling warm-water sprays and flushes for the
reducing the tension placed on the surface of the         lessened in the event            ultimate in hygienic experiences. The lavatories
tire, the risk of a deep cut is lessened in the event                                      on ANA’s 787s will include these “Washlets” from
                                                            the wheel comes in
that the wheel comes in contact with a foreign ob-                                        Japanese maker Toto, continuing a trend set earlier
ject on the runway. This “Revolutionarily Reinforced
                                                            contact with a for-          with ANA’s luxury “Inspiration of Japan” long-haul
Radial” (RRR) technology, as Bridgestone calls it, is             eign object.         777-300ER flights, adding another touch of home
the advanced radial construction with high elastic modu-                           for Japanese passengers, and a gentle introduction to
lus/strength cords which results in higher abrasion resistance,              Japanese domestic technology for those traveling to the country.
allowing for greater durability in the tires. The advanced radial            As the Dreamliner clearly shows, Japan’s deep tradition and
construction also makes the tires lighter, contributing to improved      well-earned reputation for precision manufacturing is alive and
fuel efficiency and reduced environmental impact. As a result, both      well, and the country continues to supply the world with quality
Airbus and Boeing now select RRR tires as original equipment on          products that employ state-of-the-art materials and workmanship
their new airliners.                                                     of the highest standards of excellence. —Hugh Ashton

      Helping Japan to Survive
      Bridgestone is about more than just tires. its products are part of
      the foundation on which Japan rests

                              hen the earth quakes,                                                                             in the Kanto (Tokyo) area and
                              buildings shake, and                                                                              points north were not them-
                              often fall. Over centu-                                                                           selves damaged in the March
                              ries, Japan, the world’s                                                                                      11 disaster, some
                              most seismically active                                                                                       other Bridgestone
      country, has learned this the hard way.                                                                                               facilities suffered
      Traditional lightweight wooden construction                                                                                           slight damage. Within
      methods are not suitable for modern houses                                                                                            a few days, the com-
      and apartment blocks, let alone the sky-                                                                                              pany had a plan to
      scrapers and office buildings that comprise                                                                                           restart production at
      the skyline of Japan’s major cities.                                                                                                  the plants, taking
          There are two basic methods by which                                                                                              into account the
      buildings may be protected from structural                                                                                            possibility of serious
      damage in the event of a quake: seismic                                                                                   aftershocks and the geographi-
S19   resistance, which depends on a reinforced                                                                                 cal location of the plants.
      structure for its effect; and seismic isola-                                                                                  Maybe more significantly,
      tion, which seeks to reduce the impact of a                                                                               Bridgestone management
      quake and minimize the secondary effects                                                                                  realized that there would be a
      of falling furniture and the like.                                                                                        demand for truck and bus tires
          The isolation system perfected by                                                                                     to assist with the recovery of
      Bridgestone uses multilayer sandwiches of                                                                                 devastated areas, and placed
      rubber sheets and steel plates to support                                                                                 the highest priority on their pro-
      a building against vertical movement, and                                                                                 duction. Indeed, within a week
      provide seismic protection against horizontal                                                                             of the quake, production at the
      shaking. Bridgestone claims that shaking                                                                                  plants had restarted.
      (and consequent damage) can be reduced                                                                                        In addition, given that
      to as little as 25 percent (dependent on           A seismic isolator (inset) beneath the Capital Mark Tower in           electricity was foreseen to be
      various factors, including the building and        Tokyo. The isolator is part of a system that supports buildings        in short supply, Bridgestone
      the ground on which it stands, the type of         against vertical movement and horizontal shaking.                      rapidly decided on a set of
      earthquake, etc.) of the input force using                                                                                energy-saving measures, that
      this technology.                                   Tested—but not to destruction                             included cutting down on use of nonessen-
          The success of such a system depends           Sadly, this Bridgestone design has been                   tial lighting and elevators.
      on many factors, including an appropri-            put to real-world tests. In the Hanshin-                       Bridgestone didn’t just help itself. The
      ate choice of materials. The rubber used           Awaji (Kobe) earthquake of 1995, as well                  group gave generously to assist those
      to cushion the shock must be of a special          as the 2004 Niigata Chuetsu quake, it                     who lost everything in the disaster. From
      high-damping resiliency, and the steel             is claimed that no buildings fitted with                  subsidiaries and associated companies, the
      plates to which the rubber is bonded must          Bridgestone’s seismic isolation technology                amount was about $900,000, and from
      be firmly attached. In both these factors, as      were damaged, and no one in those build-                  Bridgestone Corp. itself, cash in the value of
      well as the physical design of the absorbers,      ings was injured.                                         about $2.3 million was given. As a leading
      Bridgestone is probably the world leader.              The evident value of such seismic                     maker of bicycles in Japan, the company
                                                         isolation can also be seen in the fact that               donated these and other goods, such as
                                                         several important buildings in another                    bedclothes, to the value of $1.2 million.
                                                         earthquake zone—California—employ                         In addition to financial support, nearly 150
      the isolation system                               this system. Los Angeles City Hall, for                   Bridgestone employees formed four volun-
                                                                                                                                                                     bridgestone (2)

                                                         example, underwent a retrofit, and LAPD                   teer teams to work in the affected areas,
      perfected by Bridgestone                           buildings are likewise protected, as is the               clearing away debris and providing other
      uses layered sandwiches                            PIXAR animation studio in Oakland.                        assistance to the victims. These volunteer
      of rubber and steel.                                   Though Bridgestone’s five factories                   activities will continue until November.
Bridgestone is organizing replanting
activities that help to make a better
world for all of us.                         Look! Bridgestone is using natural rubber and is
                                             researching ways to enhance quality and performance.

And Bridgestone's promoting eco-friendly    It’s not only what
                                            you make, it’s also
and safety driving campaigns that help to
save fuel and lives.

                                            how you make it.
                                                                                                      Constantly finding ways to
                                                                                                      make our factories even more
                                                                                                      environmentally friendly.

We're working on social activities
like clean-up programs on beaches
in many locations.

                                                                                                    We're producing low rolling
                                                                                                    resistance Ecopia tires and
                                                                                                    are retreading the tires for trucks
                                                                                                    and buses. These products and
                                                                                                    practices help to reduce fuel
  And we're even making parts for solar
  panels that harness the sun’s energy.
      Special advertiSing Section businessweek.com/adsections

      out to tHe
      As Japan bounces back, it sees vast
      potential for international growth

                      s a supplier of goods and services to the world,
                      Japan remains as strong as ever. The industrial
S21                   sector and the business community have bounced
                      back beyond expectations, and Japanese enterprises
                      are continuing to show an underlying strength by
      acquiring and partnering with foreign companies. Michael Alfant,
      President of the American Chamber of Commerce in Japan, says,
      “We’re well ahead of any of even the best-case scenarios that any
      reasonable person could have come up with in March.”
           One reason for the quick rebound was a general state of emer-
      gency preparedness, of which Hitachi, Ltd., offered an exemplary
      example. Takashi Hatchoji, Group Chairman for the Americas
      and Chairman of the Board, Hitachi America, Ltd., says, “We were
      fortunate to have had an earthquake recovery plan in place that
      helped us to respond quickly to the situation. Our response office          NUMBER ONE, WITH A BULLET
                                                                                  An East Japan Railway Co. Shinkansen bullet train sits in Tokyo Station.
      was operational the day the earthquake and tsunami struck,
                                                                                  The nation’s fastest train, it sold out of tickets for its debut run in 40
      allowing us to begin to compile and confirm information regarding           seconds, spurring sales optimism for the company and driving down its
      the safety of our employees and their families, and also to under-          credit risk.
      stand the amount of damage done to Hitachi buildings, equipment
      and production facilities.”
           Patrick Hogan, Head of Global Japan Institutional Sales for Mer-
      rill Lynch Japan Securities Co. Ltd., is impressed with the resilience   feedthrough), DIC Corp. (printing inks), Sumitomo Bakelite Co.
      of the supply chain and believes that initial concerns were overstat-    Ltd. (semiconductor encapsulating materials) and Renesas (auto-
      ed. “The corporate response has been magnificent. Production has         motive integrated circuits and other microcontrollers) products are
      resumed much faster than expected,” says Hogan.                          uniquely produced and vital to the world’s economy. According to
           Japanese companies are world leaders in many fields, and            Hogan, the events of March 11 reemphasized the importance and
      often behind brands that are among the most recognized on the            relevance of Japan as a supplier of parts to the world.
                                                                                                                                                               haruyoshi yamaguchi/bloomberg

      planet, such as Canon, Toyota and Sony. Many Japanese manu-                  During Apple Inc.’s earnings conference call in April, COO Tim
      facturers are the world’s leading suppliers in their field, and in       Cook said, “We source hundreds of items from Japan, ranging from
      some cases are the only supplier of specialist components and ma-        components such as LCDs, optical drives, NAND flash and DRAM,
      terials. Murata (multilayer ceramic capacitors), FerroTec (vacuum        to base materials such as resins, coatings and foil that are part of
                                                                        businessweek.com/adsections Special advertiSing Section


the production process several layers back in the supply chain ...      Japan. International links between Japanese manufacturers and
Since the disaster, Apple employees have literally been working         their business partners helped fuel the recovery, as well.
around the clock with our supplier partners in Japan and have              Akira Arima, President and CEO of NTT Communications,
implemented a number of contingency plans ... In the aftermath of       points out that although many cables connecting Japan to the U.S.
this disaster, [our long-term Japanese partners] have displayed an      were knocked out, the remaining cables still handled the traffic,
incredible resilience such as I’ve personally never seen before.”       and repairs to the affected cables were completed by early August.
    As another example of this resilience, after a brief cessation in      In many ways, the disruptions that occurred after 3/11 were
production, the Renesas Hitachinaka factory in Ibaraki resumed          a wake-up call. Companies were compelled to review business
the creation of vital chip wafers a mere three months after the di-     practices by the realization that a body blow to any part of a single-
saster, and full production resumed at the end of September, ahead      source supplier is felt by its customers around the world.
of the original schedule outlined by the company.                          With the loss of power in some areas, and the rolling blackouts
                                                                        that affected others, some companies felt that their day-to-day
Reconnecting Japan to the world                                         operations were vulnerable. Not only were their supply chains and
A key factor in this speedy recovery was the restoration of commu-      production lines threatened, but the integrity of their corporate com-
nication between plants in Tohoku and their sister offices around       munications and data infrastructure appeared to be at risk, too.
      Special advertiSing Section businessweek.com/adsections

      Using the cloud to spread the load                                         From the desktop to the laboratory
      Although corporate IT infrastructures were relatively undamaged,           Among the cutting-edge trends in Japan, its companies are pushing
      power shortages (real or threatened) prodded many companies                the boundaries of high-performance computing. Fujitsu, working in
      to seek more resilient data solutions. As a short-term measure to          conjunction with RIKEN, the Japanese natural sciences institute,
      assist Tohoku businesses, NTT Communications provided free                 is developing the K computer system. (K is a pun on the Japanese
      cloud computing services to some of the businesses in the                  word kei, 10 quadrillion, or 10,000,000,000,000,000.) With over
      quake area, gaining the company Red Hat’s Cloud Leadership                 80,000 eight-core Fujitsu-produced CPUs (roughly equivalent to
      Award in July.                                                             100,000 of the latest model of desktop computer), the K system
          NTT Communications’ Arima says that post-quake interest in             will occupy more than 800 racks when it is fully operational in
      NTT Communications’ data center and cloud services is five times           November 2012.
      the volume of pre-quake figures. Companies are moving data from                Even before its completion, the K computer is ranked as the
      their own premises, sometimes even outside the region where                world’s fastest supercomputer, with a measured speed of 8.162
      those premises are located.                                                petaflops (quadrillion floating point operations per second), topping
          Thanks to the capabilities of NTT Communications to provide a          the TOP500 list. The high performance and efficiency (a comput-
      one-stop solution for communications and cloud computing services          ing efficiency of 93 percent) results from the large number of CPUs,
      on a global scale, it is possible for companies to integrate their over-   their six-dimensional mesh/torus interconnectivity and the specially
      seas and Japanese data operations. Using a single provider for these       optimized software environment—proving Japan’s continued ability
      ICT services is a more efficient manner of helping businesses.             to innovate at the forefront of computer technology.
          Beyond the simple storage of data, cloud services are being
      developed by such Japanese companies as Canon (whose product               Serving the world
      line includes world-class printer technology) to promote their             Japan is often also regarded as a world leader in the field of eco-
      solutions overseas. Canon Information and Imaging Systems Inc.             technology. With a goal of reducing citywide CO2 emissions by 50
      (a subsidiary of Canon U.S.A. Inc.) recently announced a new               percent from 2005 to 2050, the city of Kitakyushu in southern
      cloud-based application, Forms and Print Services for Salesforce,          Japan has been designated by the Japanese government as an
S23   that allows users to design and produce forms, reports and other           EcoModel city, and has set up the Kitakyushu Asian Center for
      documents using the data in the Salesforce system. The resulting           Low Carbon Society to encourage local development of low-carbon
      documents can print directly to a designated Canon imageRUN-               technologies through the transfer of such technology to Japan’s
      NER ADVANCE multifunction printer without the need for special             Asian neighbors.
      printer drivers or settings to be made on the computer.                        Specific examples of such a transfer include a recycling project
                                                                                 within Kitakyushu itself. A 60 billion yen investment has cre-
                                                                                 ated employment for 1,300 people, and reduced CO2 emissions
                                                                                 by about 380,000 tons per year through 23 recycling projects,
                                                                                 including office equipment, home appliances and motor ve-
                                                                                 hicles. This initiative has led to a collaborative project to promote
                                                                                 recycling-oriented urban design, with three major Chinese cities
                                                                                 involved: Qingdao, Tianjin and Dalian.
                                                                                     Kitakyushu has also assisted the city of Phnom Penh, Cambo-
                                                                                 dia by installing a block system for water distribution with a total
                                                                                 pipe network length of over 800 miles. The proportion of non-
                                                                                 revenue water has decreased over the 13 years preceding 2006
                                                                                 from 72 percent to 8 percent.
                                                                                     The Center is keen to match its offerings to each recipient’s         tomohiro ohsumi/bloomberg; robert gilhooly/bloomberg

                                                                                 stage of development, meeting their needs as flexibly as possible,
                                                                                 and incorporating technologies and maintenance services that are
                                                                                 truly needed. Technology transfer is not viewed as an end in itself,
                                                                                 but often as a facilitator of social change. In a two-way transfer, the
                                                                                 development of new methodologies for the benefit of Asian coun-
                                                                                 tries can often help to solve problems in Japan (the aging society
                                                                                 and a lack of natural resources, for example).

                                                                                 Thinking smart
                                                                                 Japanese companies continue to see opportunities outside the
                                                                                 country. In one dramatic example, Toshiba recently purchased
                                                                                 a $1.4 billion controlling interest in Swiss-based Landis+Gyr, a
      As this young man using his electronic device in Tokyo demonstrates,       maker of smart meters.
      we can, and rather efficiently, too. As ever, Japanese companies are           Landis+Gyr is a founding member of an alliance that now in-
      on the cutting edge of electronic and communication innovation.            cludes GE and Germany’s SAP among its members. The aim of the
                                                                                 alliance is to produce standards for the U.K.’s smart meter initia-
                                                                         businessweek.com/adsections Special advertiSing Section

                                                                          President and CEO of
                                                                          NTT Communications,
                                                                          Akira Arima

                                                                          in Tohoku either by Japanese manufacturers or foreign companies
                                                                          invited to Japan, and placed in an advantageous position along Ja-
                                                                          pan’s windy northern Pacific coast to provide energy for the Tokyo
                                                                          region, using the grid already in place. It is estimated that based
                                                                          on a 1GW/year program, turbine manufacturing, deployment and
                                                                          maintenance could provide jobs for nearly 15,000 people.
                                                                              If it is to be attractive to the Japanese and international busi-
                                                                          ness communities, such a move would require decisive action in
                                                                          the form of deregulation of the power industry and incentives for
                                                                          both the manufacture and deployment of the generating plants,
                                                                          and the establishment of attractive feed-in rates for such power
                                                                          suppliers. Vague or opaque plans are not going to attract invest-
                                                                          ment, Mizuho points out.

                                                                         Linking to the world
                                                                         ICT services will play a key role in these new industries, as well
                                                                         as the increasing expansion of Japanese business overseas.
                                                                         Such communications and data services will not be restricted to
                                                                         Japan and Japanese customers; inter-country communications
                                                                         are increasingly critical to business as the supply chain becomes
                                                                         more internationalized, and Japanese and overseas companies
                                                                         strengthen their ties.
                                                                              The NTT Communications initiative dubbed “Vision 2015” hopes
                                                                         to expand and grow the company’s operations. With 77 overseas
                                                                         offices in 29 countries, the aim is to expand the existing customer       S24
                                                                         base to include more companies already operating in Asia.
                                                                              The primary concepts underlying Vision 2015 are innova-
tive, where the target is to place 53 million of the devices in U.K.     tion—providing the most up-to-date services; reliability—ensuring
homes and businesses by 2020. Smart meters allow appliances to           continuous provision of these services; and seamlessness—pro-
use the power grid economically and efficiently, and can monitor         viding “invisible” worldwide services. Starting in 2012, the NTT
and meter “feed-in” electricity from solar, wind and other sources.      Communications Global IP Network, based on the company’s
This information, as well as that provided from the meters back          Global Tier 1 IP Backbone, will form a seamless “Asian Triangle”
to the grid, will save an estimated 7.3 billion pounds sterling over     cloud platform, with new submarine cables linking Singapore, the
the next 20 years. Given the U.K.’s leading status as a promoter         Philippines, Malaysia and Hong Kong to Japan, and expanding
of smart meters, Toshiba’s investment in Landis+Gyr, and the             NTT Communications’ global presence.
company’s role within the alliance to promote inter-manufacturer              New NTT Communications data centers will open over the next
standards, are proof that major Japanese corporations are looking        few years in Hong Kong and Singapore. Acquisitions in Australia
outside Japan for future growth.                                         and elsewhere will expand the company’s Asia Pacific presence
                                                                         with file servers, Web mail, applications and more, with secure,
New opportunities                                                             reliable access in a global cloud package.
Although Japan already enjoys leadership in a number of                                 The virtualization of both servers and networks to
areas, the “recover what used to be” mentality is to be          Acquisitions           create a highly reliable, location-independent service
avoided, according to most observers. New indus-                                          has been made possible by technology developed in
                                                               in Australia and
tries and large-scale projects based on renewable                                          Silicon Valley by associates of NTT Communica-
energy are an area where Japan can simultane-                beyond will grow               tions, which is currently looking at this technology
ously help its domestic population and build up a         ntt Communications’               with a view to its possible inclusion as part of its
substantial export business for the future needs of       Asia Pacific presence,            ICT service offerings. Of his wishes to expand the
the whole world.                                           with reliable access             business conducted by NTT outside Japan, Arima
    One such project, as proposed by the Industry             in a global cloud            says: “Though our cloud services are important,
Research Division of Mizuho Corporate Bank, would                  package.               we also want to remind customers of our data
involve the conversion of auto parts plants in the                                      centers, and of course the networks and cables. We
Tohoku region to the production of components for wind                              want to emphasize that we are providers of a global cloud
turbines, a sector where Japan already enjoys leadership in the               computing service, based on a very firm infrastructure.”
making of key components such as bearings and the carbon fiber                Arima’s words could serve as a symbol of Japan’s future
material used in the blades. (Osaka-based NTN Corp. recently an-         industry as a whole: a firm infrastructure, providing global partners
nounced an investment of 15 billion yen to build a Chinese factory       with a reliable and efficient source of goods and services, that
specifically to produce such bearings, and also plans to boost its       continues to expand overseas to work with foreign partners and
production of them in France.) These turbines would be assembled         bring Japanese skills and expertise to the world. —Hugh Ashton

      A Businesslike welcome
      the skill and talent of the Japanese people make their country an
      ideal place for foreign companies to set up shop. with the added
      bonus of government incentives, many are doing just that

                    he Japanese External Trade           companies, especially those in the fields        designing and constructing whole town-
                    Relations Organization (JETRO)       of “green” electrical development (such as       ships are welcome. Third, because Japan’s
                    is a government-related orga-        makers of photovoltaic panels and electric       aging society needs special attention that
                    nization that works to promote       vehicles). In more conventional electron-        cannot always be met by local enterprises,
                    mutual trade and investment          ics, and other specialist activities including   Nagashima sees room for the entry into the
      between Japan and the rest of the world.           apparel and materials, Japan also holds a        market of companies providing elder care
      Nobuyuki Nagashima, JETRO’s Director-              leading position as a source of innovation       management services.
      General, Invest Japan Dept., points out that       and production.                                       JETRO’s more traditional targets,
      while Japan is the third-largest market in             The market for foreign companies doing       still very welcome in Japan, are what
      the world, its concentrated geographical           business in Japan is far from saturated          Nagashima describes as the “four Ks”:
      area makes it ideal to conduct business.           (foreign direct investment is 3.7 percent of     Kankyo—environment, including automo-
      Many foreign companies took advantage              Japan’s GDP), and there are three specific       bile industries; Kanko—tourism, including
      of this fact in 2010 by investing in ICT,          areas where Nagashima sees increased             hotel management and low-cost carriers;
      retailing, tourism and hospitality, real estate,   opportunities for overseas visitors as the       Kenko—the health-care industry; and
S25   helicopters and elder care, to name but            result of the events of March 11. The first      Koyo—employment, such as retail and
      a few sectors that held enough appeal to           is renewable energy, as Japan starts to          service industries, and maybe the most
      prompt initiatives.                                rethink its energy policy. Second, as the        important of all. ICT industries are also
          Japanese companies and know-how                government works on new ideas for the            encouraged, and JETRO’s San Francisco
      also offer many advantages to overseas             renewal of Japan, enterprises capable of         office concentrates on this sector. JETRO

                                                                                                                                                       nobuo oyama/eurocopter; atsushi shibuya

      A Eurocopter EC225
      Super Puma. Japan’s
      Coast Guard uses it for
      search-and-rescue and
      law enforcement.

                                                                                                                        President and CEO
                                                                                                                        of Eurocopter Japan,
                                                                                                                        Stephane Ginoux

offices around North America concentrate                                                                                      These op-
on other targets (e.g., New York, health                                                                                  erations have been
care; Chicago, automotive), but Nagashima                                                                                 welcomed and
also emphasizes that Asian (e.g.,                                                                                         facilitated by METI,
Singaporean and Taiwanese) companies                                                                                      as well as by the
are welcome.                                                                                                              local governments
     Ideally, JETRO would like to see foreign                                                                             of Hyogo Prefecture
companies setting up their Asian hubs in        Case study: Eurocopter                           and the city of Kobe. Eurocopter’s R&D
Japan, which has not always been the            For over 50 years, Eurocopter has been           activities will receive a subsidy, and
first choice for such corporate operations.     delivering its products to Japan, and for the    this move will cement the long-term
Japan is taking action, however, to remove      last four decades it has been engaged in         relationship between Eurocopter and
the most troublesome barriers to entry.         partnerships with Japanese organizations.        Japan. The Kobe R&D facility will
Incentives backed by METI (the Ministry         Recently, the European helicopter maker          utilize the EADS (European Aeronautic
of Economy, Trade and Industry) help to         tapped Japan’s quality and technology            Defence & Space Co. N.V.) network to
pave the way for foreign entry, including       resources by establishing high-tech heli-        connect the Japanese R&D activities to          S26
some that apply to R&D activities. For          copter equipment R&D operations in Kobe,         the global market, thereby creating sustain-
foreign companies considering operat-           assisted by METI subsidies.                      able growth in the Japanese aeronautical
ing R&D facilities in Japan, the nation’s            In the past, the twin-engine EC145          industry, and putting Kobe on the world
inventiveness (in 2008, 3.78 percent of         helicopter (Japanese designation BK117)          aeronautical map.
Japanese GDP was spent on research; the         was a joint development between Eurocop-             Naturally, the users of Eurocopter
comparable U.S. figure was 2.68 percent)        ter and Kawasaki Heavy Industries, and           helicopters in Japan and worldwide will
and highly educated population (in 2008,        this remarkably successful aircraft, FAA-        benefit from these developments. Advances
Japan had 51.5 researchers per 10,000           certified in 2002, is now produced on two        in safety, usability and the cost efficiency
population; the U.S. had 47.6) make it a        assembly lines, one each in Germany and          of operations are expected, and Eurocopter
prime location.                                 Japan. In 2009, a joint venture, Eurocop-        cites safety and innovation as pillars for
     Subsidies are available to help cover      ter Japan, was set up with Itochu, provid-       future growth, with the Japanese R&D
survey design costs, facility and equipment     ing sales and support activities including       center contributing in these areas.
costs, and facility leasing fees. Up to half    pilot training. Later that year, Eurocopter          In the immediate aftermath of the
of such costs may be covered for SMEs,          Japan T&E was established as a joint             events on March 11, Eurocopter helicop-
and one-third for larger enterprises, to a      venture with All Nippon Airways, provid-         ters proved vital in rescue operations and
maximum of 1 billion yen ($13 million).         ing maintenance, repair, retrofit, design        logistical support. Eurocopter donated
Such subsidies are, of course, subject to       and engineering services for aircraft. The       the use of aircraft, as well as providing
certain conditions—for example, operating       Eurocopter Japan group comprises these           round-the-clock emergency maintenance
the regional headquarters or R&D center         two companies, and is the first foreign-         response for those helicopters operated by
for at least three years; being registered in   affiliated company to provide a full range of    the Japanese civil and parapublic forces.
Japan; and running an actual business in        helicopter services to government and civil      Thanks to their local Japanese operations,
at least two or more countries. To help leap    entities in Japan.                               Eurocopter ensured that helicopter services
the language barrier, and speed up and               Eurocopter provides 55 percent of the       were operated in the most efficient and
simplify the process, applications to receive   civil and parapublic share of helicopters        cost-effective manner.
these incentives can now be submitted in        operated in Japan. Demand for its products
English (the application period this year       continues to grow, and in line with its
closes on October 31).                          global policy of keeping close to customers,
     Strategic zones, formed in cooperation     Eurocopter is expanding Japanese opera-          eurocopter cites safety
with local governments, will also provide       tions, moving from Itami Airport to larger       and innovation as pillars
extra help in these areas as new govern-        premises in Kobe, and stepping up training
ment initiatives for regional development       for both pilots and mechanics, including
                                                                                                 for future growth, with
take effect, with green energy develop-         the installation of a full-flight simulator (a   the Japanese r&D center
ments particularly welcomed.                    first for Japan).                                contributing to both.

                                                                                                      typhoid fever, whooping cough and menin-
                                                                                                      gococcal meningitis, as well as pediatric
                                                                                                      combination vaccines planned for launch
                                                                                                      in the future.
                                                                                                          With the pharmaceutical industry in
                                                                                                      Japan at full trot, changes are taking place
                                                                                                      in the way that drugs are being priced and
                                                                                                      approved for use. The appropriate ministry
                                                                                                      (Health, Labour and Welfare) has been
                                                                                                      working proactively with the pharmas,
          In the future, Eurocopter foresees          second-largest pharmaceutical market,           including sanofi-aventis K.K., on a number
      an expanded need for its products and           with 2010 sales of $96.5 billion. The           of deregulatory projects. One of these
      services in Japan. The mountainous              demographics of the Japanese population         is a pilot pricing scheme to protect the
      topography of the country makes the use         make the country an attractive market for       research investment on new drugs during
S27   of helicopters vital for medical, search-       the healthcare industry, and the government     their patent or exclusivity period. This will
      and-rescue and logistical purposes, and         continues to demonstrate its commitment to      promote innovation, and also help to close
      Eurocopter perceives a need for Japan           healthcare for its citizens. Projections show   the so-called “drug lag,” enabling Japanese
      to continue to expand its helicopter fleet.     that by 2015, 25 percent of the Japanese        patients to have more rapid access to in-
      Confirming that belief, the Japanese Coast      population will be aged 65 or over, a figure    novative medicines developed overseas, in-
      Guard recently placed an order for three        that will increase to 40 percent by 2050.       cluding those from Sanofi. It is hoped that
      more EC225 Super Puma aircraft to be            Such a population structure drives the need     this pilot will become a permanent part
      used both for vital law enforcement and         for pharmaceutical products related to age-     of the Japanese medical scene, thereby
      search-and-rescue operations.                   related conditions, but there are also needs    encouraging pharmaceutical development
                                                      at the other end of the age scale.              and R&D activities. Another development
      Case study: sanofi-aventis K.K.                     A wide-ranging Japanese government          is a new disclosure policy by the Japan

                                                                                                                                                      paul skelcher/rainbow/getty images; moulding: sanofi-aventis; habitat for humanity
      Sanofi-aventis K.K., the Japanese arm           objective to make immunization programs         Pharmaceutical Manufacturing Associa-
      of European pharmaceutical leader               routine for the Japanese public has been a      tion, which should lead to greater transpar-
      Sanofi, was established in Japan in             shot in the arm for sanofi-aventis (whose       ency in operations, and greater trust from
      January 2006, but the companies that            Senior Vice President for Japan and the         caregivers and patients alike.
      came together to form the European              Pacific Region, Jez Moulding, is shown
      parent company have been operating in           below). In 2010, three new vaccines from        Here for the long haul
      Japan for more than 40 years. Currently,        the group were approved for use, and using      Foreign companies continue to play an
      sanofi-aventis K.K. employs about 3,000         one of these, Sanofi Pasteur’s ActHIB®, 1.4     increasingly large part in the Japanese
      people, and is a significant contributor to     million babies in Japan were immunized          economy and business life. As Michael
      the global operations of the group, with        against Haemophilus influenzae Type B.          Alfant, President of the American Cham-
      net sales in Japan accounting for 1.368         The company’s vision to “become the most-       ber of Commerce in Japan, says, “We
      billion euros in the first half of 2011. This   trusted healthcare leader” is underscored       [foreign companies] look at ourselves as
      represents nearly 8.5 percent of global net     by a developmental pipeline that includes       intrinsic organic components of the society
      sales, and a year on year growth rate of        innovative vaccines to protect against polio,   here. We’re not leaving, we’re not going
      27.2 percent (on a reported basis). The                                                         anywhere, and we’re not rethinking our
      headquarters of sanofi-aventis K.K. and                                                         commitment to Japan at all.” Words
      Sanofi Pasteur are in Tokyo, with R&D                                                                       which will resonate with
      activities carried out in Tokyo and Osaka.      A Japanese government                                         Nagashima’s desire to see
      Kawagoe, in Saitama Prefecture, is the          goal to make immuniza-                                         foreign companies set up
      center for manufacturing, while distribu-                                                                      shop in Japan, taking full
      tion is done out of Misato, also in Saitama
                                                      tion programs routine                                          advantage of Japan’s large
      Prefecture, and Osaka.                          has been a shot in the                                         markets, and the skills and
           Japan currently ranks as the world’s       arm for sanofi-aventis.                                               talents of its people.

                                      rebuilding lives
                                      Habitat for Humanity works to make people and
                                      places whole again

                                      Since its founding in 1976, Habitat for Humanity has helped over 2.5 million people improve their shelter
                                      conditions. In Japan, where the earthquake and tsunami of March 11 sent more than 120,000 people to
                                      evacuation centers, Habitat’s efforts are especially welcome. Before families can return to damaged
                                      homes, debris and damaged furnishings must be cleared, repairs made and homes sanitized to prevent
                                      the spread of disease. This effort is part of a wider approach to revitalize communities, and also includes
                                      public areas such as parks. Habitat is also supporting other organizations to distribute thousands of “home
                                      starter kits,” providing items like mattresses and household goods to affected families as they begin their
                                      new lives. In order to maximize the effectiveness of its efforts, Habitat for Humanity Japan has teamed with
                                      All Hands Volunteers in Iwate Prefecture, and Peace Boat, a Japanese INGO, in Miyagi Prefecture. Although
                                      the strength and resilience of those in the affected areas have been an inspiration to the world, many
                                      survivors, especially the elderly, are in no position to rebuild their homes and their lives, and the gratitude
                                      shown toward Habitat volunteers is palpable as they give their time and energy to help.

                                      To volunteer, donate or find out more, visit habitat.org/japan
photograph illustration by credittk

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