Industry May 2014

Fertile field

Government-business relations have evolved significantly in the past 20 years

  • Involves reaching out to a broad cross-section of influencers
  • Policymaking process has opened up to foreigners
  • An essential element of any business strategy in Japan

This year, Asia Strategy celebrates 20 years of assisting corporations to navigate the policymaking process, with founder Keith Henry having witnessed a true transformation in his field of expertise—government-business relations.

Henry came to Japan in 1984, lured by this nation’s incredible promise, as illustrated in Ezra Vogel’s Japan as Number One and Chalmers Johnson’s MITI and the Japanese Miracle.

BCCJ ACUMEN: What does government-business relations encompass?
Henry: We analyse the intersection of business, politics and policy with the aim of improving our clients’ competitive position in Japan.

We do this by engaging in business research that identifies the policy positions of other firms, analyses the policy debate in political and government circles and assesses how the private and public sectors create regulations that impact the competitive infrastructure of our clients’ markets.

With this research, we provide senior executives with a strategic plan of action so they can more effectively advocate their interests in policy debates and anticipate and prepare for debate outcomes.

What are the common pitfalls in your industry?
Japan’s consensus-based, bottom-up policymaking process means that an effective government relations programme must include not only politicians and bureaucrats, but also a broad cross-section of key opinion leaders and stakeholders from relevant trade and business associations, academia, consumer groups and think tanks.

Reflecting this broad approach, Japanese firms refer to staff who engage in government relations activities as shogaikatsudo (external affairs) specialists, supported by external relations departments or divisions.

How has this field evolved since the 1980s?
Twenty-five years ago, when I began work as a secretary to a prominent Liberal Democratic Party member of the Diet, most senior executives of foreign-based firms saw the business-government relationship as a black box best not to open.

Matters pertaining to policymakers were commonly seen as “trade issues” best left to the government official responsible for ironing out such disputes with Japan.

Since then I have seen a positive change. Today almost all multinational firms with a significant stake in Japan recognise a government relations programme is integral to their corporate strategy.

At the same time, the policymaking process and relations among politicians, bureaucrats and private-sector leaders have become more transparent and open to input from the foreign business community.

While before, foreign firms had to fight simply to get a seat at the table, the real challenge now is to strategically choose what debates to join and how best to participate. This is where our firm steps in to assist.

How do government-business relations activities here compare with those in the UK?
In both countries, political appointees want to bring about change through the work of bureaucrats.

Bureaucrats have rich institutional memories of policy details and extensive networks within the ministries where they tend to work over a lifetime. Armed with this knowledge, there is an interest in focusing on incremental change and, at times, preservation of ministerial perks and prerogatives.

However, politicians have the power of the purse, as their imprimatur is required to fund projects drafted by the bureaucrats.

Many politicians desire to make a mark for themselves by effecting high-profile policy initiatives, but lack the technical expertise to engage in detailed policy debates.

This means that many policy decisions are finalised after a long process of lobbying among bureaucrats and politicians.

In what industries are government relations most important?
Any industry that is impacted by public policy.

Our clients come mostly from the pharmaceutical, healthcare, banking and insurance, energy, information and communications technology, transportation and logistics, and consumer retail sectors.

How has Asia Strategy been involved with M&As?
To date we have been involved in four multi-billion dollar acquisitions in the consumer retail, high technology, energy and insurance sectors.

Our experience has been that those firms that succeed in winning over a broad cross-section of stakeholders through the implementation of a strategic external relations effort—including government relations—are the ones that not only succeed in their acquisitions, but that are also better positioned to manage their newly acquired business in Japan.