David Warren

UK Foreign and Health Ministers in Japan

The big economic news here this week is the collapse of Japanese exports in January - 46% down on last year.   The big firms are laying off staff, cutting back production (but not R and D) and generally settling in for a long and difficult haul.

But not quite everywhere.   Alan Johnson, the UK Health Secretary, has been with us for four days, with a high-powered delegation from the Department of Health and the UK industry (as well as the head of the National Institute for Health and Clinical Excellence) to talk to the Japanese pharmaceutical companies.  They're major investors in the UK - doing research, sales, manufacturing, and employing hundreds of people.  The UK team give detailed presentations about the new NHS framework, stressing how important innovation is going to be in developing cost-effective treatments, and explaining the new pricing arrangments for companies.  The Japanese firms listen closely, ask questions, raise issues, for example about how fast new drugs can be approved. The impression I get is that this sector is less affected by the economic downturn than others.  Indeed, a number of companies look interested in expanding their investments at some point.   Eisai, one of the largest Japanese pharma firms, is opening a new "Knowledge Centre" in Hatfield in June.   

Meanwhile, the focus of much of the rest of our work remains the economic crisis, and particularly the London Summit of the major economies on 2 April.   Foreign Office Minister Mark Malloch-Brown visited on 19 Febraury and called on Prime Minister Aso and Foreign Minister Nakasone, as well as talking to the press.   He emphasises the need to have a co-ordinated international response to a global crisis on this scale, and to ensure that we don't just slip back into the bad old days of protectionism - and that we also make sure that the poorest countries don't suffer in a crisis that is not of their making.   The Japanese agree on all these points.  They're loaning the International Monetary Fund $100 billion to make it easier to lend to countries in need.   And they're also focusing their assistance specifically on Asia and Africa.   Japan has to find a way of stimulating its domestic demand, like everyone else.   But its most important leadership role is more likely to be to get global demand moving.

The questions to Mark at the Foreign Correspondents Club tend to be about the Japanese Finance Minister who had to resign after allegedly being drunk, rather than the state of the world economy, but that's life (and news), I guess.

Posted at 16:27 02 March 2009 by David Warren  |  Comments[1]

Building a closer relationship with Japan

I am delighted to become one of the FCO's bloggers.  I'll be posting reports and comments in English and Japanese about the work we are doing in Japan to build an even closer relationship with the world's second largest economic power.

This week, the focus has been on science and innovation.   The British Government's Chief Scientific Adviser, John Beddington has been visiting with a large team from the UK Research Councils.  He saw Japanese scientists and scientific facilities in Tokyo, Osaka and Kyoto.  He also had a day's conference with his opposite numbers in the Japanese Government to take stock of the collaboration that is going on and identify new areas in which we can do more.

Of course, climate change and management of natural resources are high on the list.  John is a specialist in the latter area and on Thursday night, he made a powerful speech in the Embassy about the challenge facing the world.  We need 50% more food, 50% more energy resources and 30% more water by 2050 to meet the needs of a population that will grow to 9 billion - that's equivalent to adding another country the size of Japan to the world every two years.  

The Japanese audience - journalists, scientists, MPs - listen closely and ask some penetrating questions.  What about GM crops: are they publicly acceptable?   What about population control, ditto?  The Q and A session belies the traditional stereotype of Japanese public meetings being formal, slightly bland affairs.  The tone is friendly but the questions are probing.   The hour that John spent beforehand at a "science media cafe" in the Embassy with a dozen science editors and journalists will have helped.

Japan accounts for nearly 25% of the world's spending on R and D, with just 2% of the world's population.   And there is no evidence that the world economic slowdown, for all that the effects in Japan have been severe, is going to reduce that priority. How to help UK scientists and engineers be part of this activity is a major challenge for us.

Meanwhile, that same night, the news is breaking that the Agility consortium, which is led by Hitachi, have been named as preferred bidder for the new UK Inter-City train contract.   This will be an important new investment from Japan into the UK.  The Super Express will be longer and lighter than its counterparts, and greener as well - some will operate as bi-mode (diesel and electric).    But I'm struck by some of the negative comment in the UK the following day.   

There's a sense that Japanese involvement in this project is somehow unpatriotic, despite the jobs that will be created, or safeguarded, in the UK.   The reality is that Hitachi is one of over 1400 Japanese firms who have invested heavily in the UK over the last thirty years - some going back even further than that - and the close industrial and business links that have grown as a result between all parts of the United Kingdom and Japan have been a real success story.  We mustn't let the sort of protectionist sentiments that find a voice at a time of economic crisis threaten that.  And remember, the UK sells £8 billion worth of goods and services to Japan every year as well.  Trade and investment links are win-win.

Posted at 22:57 18 February 2009 by David Warren  |  Comments[1]