Russia and Japan have a bright future

The Russian-Japanese Forum “Points of Common Ground: Business. Technologies. Culture” completed its work in Tokyo. With the support of a wide range of Japanese, Russian state, public, and business organizations, it was held by Rossiyskaya Gazeta and the Mainichi newspaper.

Among the dozens of topics discussed at the forum, there was the following: a super-advanced country in all technologies, a third world economic power and our closest neighbor Japan, in general, in terms of investment in Russia, it is hardly in the top ten among foreign investor countries.

Of these, direct investment – the most effective, carrying new technologies, advanced management methods – is less than a billion dollars. This level cannot be considered satisfactory. What are the reasons and what to do? We asked this question to Deputy Minister of Economic Development of the Russian Federation Alexander Likhachev.

Alexander Likhachev: Firstly, not only Russian companies find it difficult to work with Japanese ones. Japanese entrepreneurs value their reputation and take a very responsible approach to cooperation with business partners both at home and abroad. If they organize production, they strive to ensure high quality.  Careful study of all issues before making important decisions often irritates more temperamental foreign partners.

At the same time, both Japanese and Russian companies should have a clear understanding of whether it is beneficial for them to cooperate with each other or not. Business is not a charity, but a very serious and sometimes very risky activity.

These features of doing business have largely determined the economic and technological achievements of Japan and it would be simply ridiculous to overcome them. Russian enterprises have their own strengths and the essence is to complement each other in joint work. I know many successful examples of the implementation of joint Russian-Japanese projects.

Let’s take the cooperation between Power Machines and the Japanese industrial corporation Toshiba, we have adopted the distorted name Toshiba, taken from the English transcription. So, last year they created a joint venture in St. Petersburg, which is building a plant for the production of powerful transformers for the needs of the Russian energy sector.

the CIS countries and the Baltic States, at the end of the year the plant will be ready for launch. Indeed, there were quite a few difficulties on the way to the formation of the project, but I would not say that they stemmed from Japanese partners. Rather, the specifics of the industry affected, where demand should be linked to plans to modernize the network infrastructure, and these are already strategic issues for many decades, at least.

Reference. The name of the joint venture is Ashore Transformers LLC, the start of production is scheduled for 2014.

Or, say, in the automotive industry, where we sometimes forget that in Russia there are not only Toyota, Nissan, Mitsubishi, Komatsu with 100% Japanese investments. The Russian “Sellers” has been working shoulder to shoulder with “Isuzu” within the framework of the joint venture for the sixth year already, producing small trucks that our economy so much needs now.

Reference. Since 2007, the Sellers-Isuzu joint venture has been operating (50% Sellers, 45% – the Japanese automaker Isuzu Motors Ltd and 5% – the Japanese universal trade and investment company Soji’s), which in 2007-2011 G. carried out the assembly of 5 ton Isuzu trucks in the Alabama SEZ, and since June 2012 it has been producing it at the Ulyanovsk Automobile Plant.

And if there had been dissatisfaction, which you are talking about, then Sellers would not have gone further along this path and would not have created two more joint ventures with the Japanese in Vladivostok. We would then be left without the Russian assembly of both Mazda (and it is in no hurry to create its own production here), and the Toyota Land Cruiser Prado SUV, which they are literally now starting to assemble there.

Reference. In April 2012, in Vladivostok, Sellers established a JV OOO Mazda Sellers Motor Manufacturing Rus with another Japanese automaker, Mazda, and in September 2012, during the APEC summit, this joint venture held a solemn opening ceremony of the plant.

First Deputy Prime Minister I.I. Shuvalov, Minister of Economy, Trade and Industry of Japan Y. Edan. At the first stage of production, the capacity of the enterprise will be 50,000 vehicles per year, while the design capacity is 100,000 vehicles.

In 2011, Sellers created a joint venture in Vladivostok with the Japanese trading and investment company Mitsui Bussan.

Reference. JSC “Trennels” (Platoon village, Tenrikyo district, Primrosy Krai) successfully cooperates with one of the largest Japanese trading and investment companies “Sumitomo Corporation”. It all started with the export of round wood, then two joint ventures were created: CJSC PTS Hardwood and CJSC STS Technovud,

which produce and supply finishing and glued structural lumber for house building to the Japanese market. Most lumber is certified according to the Japanese quality system JAS. Then Sumitomo acquired 45% of the authorized capital of Trennels OJSC itself, and in July 2009 two new factories of Trennels OJSC opened in the village of Platoon: a veneer plant (a semi-finished product for plywood production) and a sawmill.

In these two plants, Trennels invested 150 million euros received with the help of Sumitomo from the state-owned Bank for International Cooperation (JBIC) as a loan for 10 years. All products of these factories are exported.

Convinced? Then, nevertheless, I note that I would like to have many more such examples. And we are working on it.

RG: What are the priorities by industry? What could be the driver, the quickest way to stir up economic cooperation?

Alexander Likhachev: Our priorities are to develop the Russian economy and modernize industry. But there is a sectoral structure of bilateral cooperation that has developed over decades, over centuries, which comes from basic economic interests, from the international division of labor. Over the years, Japan did not have more oil or gas or, say, uranium.

In addition, the Japanese economy is based on the processing of raw materials and the production of high-tech products. In fact, we are now following the same three “tracks” as Japan in the post-war years, namely, the deepening of the processing of resources, the introduction of innovations in industry, and at the same time the improvement of infrastructure. Based on these processes, there are three groups of industries that correspond to our priorities and are of interest to the Japanese economy.