This chapter draws from Masahiro Miyazaki and Tetsuya Watanabe’s book The Corona Great Depression: The World Excludes China, examining the fate of Japanese companies operating in China and SoftBank. It discusses how the Wuhan coronavirus forced Japanese firms to reconsider their dependence on China, criticizes executives who continue to cling to China, and raises questions about political judgment, risk management, public funds, and the transfer of technology.

June 17, 2020

Executives who still kowtow to China.
Japan, too, has seen an increase in fraudsters who look Japanese but are like Chinese.

The following is from Masahiro Miyazaki vs. Tetsuya Watanabe’s “The Corona Great Depression: The World Excludes China,” published on May 1.
The Fate of Companies Expanding into China and SoftBank
Opening section omitted.
Executives Who Still Kowtow to China
Watanabe:
With the Wuhan coronavirus, it is certain that Chinese people will disappear from all over the world, and among Japanese companies as well, those that had been looking for an opportunity to withdraw from China will use this chance to withdraw all at once.
For example, under these circumstances, if a company were to keep Japanese employees stationed in China from returning home and continue operations there, and as a result one of them contracted pneumonia and died, the family would naturally file a lawsuit against the company.
The media would jump on it, and the same thing would happen as in the 2015 case of the young female Dentsu employee who committed suicide from overwork.
If that happened, it would not end merely with executives losing their positions.
From the standpoint of corporate management, it would certainly mean causing losses to the company, but in Japan, when the issue becomes one of money versus human life, life weighs more heavily.
In other words, the company would be judged as one incapable of risk management.
The executives who made such a judgment themselves would be exposed.
The question is whether they could endure that.
If they think they cannot endure it, they had better decide to withdraw quickly.
Miyazaki:
Watami was quick to decide to close all of its stores.
Watanabe:
Even though “all stores” originally meant only a few outlets, the fact that even a company that had been criticized so harshly as a “black company” decided to withdraw should be taken seriously.
Miyazaki:
Nidec, affected by the U.S.-China trade war, had fallen by 40 percent year on year in the April-to-June quarter of 2019.
Yet I was astonished when that very Nidec announced in February of this year that it would reinvest 200 billion yen in China for EV motors.
Watanabe:
At this timing, all one can say is that the management must be out of its mind.
The founder and current CEO, Shigenobu Nagamori, had been writing a management blog in the Nihon Keizai Shimbun, and he wrote something like a statement of reflection, saying that because Japan’s corporate tax was about 20 percent higher than those of other Asian countries, and because the yen was strong in 2009, he voted for the Democratic Party of Japan against his wife’s opposition and even recommended it to others, but once the DPJ administration was established, things became even worse.
The piece was titled something like “If You Tell Me to Leave…”
Incidentally, Mr. Nagamori served as an outside director of SoftBank Group until 2018.
Miyazaki:
One has to say that he understands nothing about politics.
In the first place, it is wrong for merchants to intervene in affairs of state.
Watanabe:
He said, “My wife got angry at me, and I feel uncomfortable even at home.”
People who do not understand politics are not suited to be executives.
For better or worse, management is the ultimate form of politics.
Also, in November 2019, China’s major semiconductor company Tsinghua Unigroup decided to appoint Yukio Sakamoto as senior vice president, and this man is truly a “traitor.”
He is the former president of Elpida Memory, once Japan’s major semiconductor company and the world’s third-largest DRAM maker.
After selling that company off cheaply to America’s Micron, he is now apparently trying to sell that technology to China.
In 2009, Elpida became the first company to receive support under the revised Industrial Revitalization Act, obtaining 30 billion yen in public funds, and yet it went bankrupt.
However, there are suspicions that this bankruptcy may have been a “planned bankruptcy.”
Moreover, because of the bankruptcy, a burden of up to 27.7 billion yen was passed on to the Japanese people.
Miyazaki:
Japan, too, has seen an increase in fraudsters who look Japanese but are like Chinese.
This article continues.