Junichi Ihara, Consul General of Japan in Los Angeles, speaks at the panel discussion on the relationship between Japan and Southern California on June 7.

Japan Matters to Southern California: Launch Event in Los Angeles


Japan’s economy faces short term challenges in the wake of the devastating March 11 earthquake and longer term challenges related to its debt, aging population, and economic malaise, but the country nevertheless continues to remain an important partner of the United States. Such were the conclusions of a panel of business leaders and academics at a conference entitled “Japan Matters: Japan’s Positive Impact on the Southern California Economy.” The panel participants analyzed the many ways Japan and the Los Angeles area have become very close partners in many areas. The conference was hosted in Los Angeles on June 7, 2011 by the East-West Center, the Japan America Society of Southern California, and the Sasakawa Peace Foundation USA.

The March 11 earthquake has demonstrated a high degree of mutual interdependence between Japan and the United States, said Junichi Ihara, Consul General of Japan in Los Angeles, in the panel’s opening remarks. The government and people of Japan are extremely grateful for the US support, he said, and the relief effort Operation Tomodachi has been the largest US-Japan joint operation to date, involving over 100,000 Japanese defense personnel. “I have no doubt that America matters for Japan,” he said, echoing the title of the project, but the Japanese government “needs to address whether Japan continues to matter for America.” For Japan to have a continuing impact, it will need to address some pressing domestic issues, such as tackling its social security burdens, deciding whether it will join the Trans Pacific Partnership, and shifting some of its power generation to green energy and power conservation.

The recent Japanese earthquake has restored, at least temporarily, US interest in the country, said Daniel Bob, Senior Fellow and Director at the Sasakawa Peace Foundation USA. US interest in Japan has dropped precipitously since its height in the 1980s, when it looked like the country might overtake the US economy. Now, much of that concern is directed at China, not Japan. Some of that public perception turnaround is justified, yet Japan remains the world third largest economy and second largest contributor to international organizations like the World Bank and International Monetary Fund.

Japan’s continuing importance to the United States was reiterated by Satu Limaye, Director of the East-West Center in Washington and of the Japan Matters for America / America Matters for Japan project. Notwithstanding China’s incredible economic growth, Japan remains an extremely important US partner in Asia and around the world. In trade, Japan is a top ten export destination for 44 US states. Japanese investment supports 665,000 US jobs. And there are over 775,000 Japanese Americans in the United States today. No other country boasts such a wide-ranging relationship, over so many variables, and across so many states in the US.

Japan is the number one foreign investor in Los Angeles County, said Nancy Sidhu, Chief Economist at LA County Economic Development Corporation, citing her organization’s recently released report, Japan & Los Angeles Growing Together (PDF). The report also found that the county has over 1,400 Japanese-owned business establishments which employ an estimated 49,600 California residents. In addition, there are now more than 102,000 Japanese residents in Los Angeles and at least 1,000 Japanese attend LA Country colleges and universities. Japanese are integrated into all areas of life in Los Angeles.

One major Japanese company with extensive operations in Southern California is Panasonic, which once hosted manufacturing facilities in the area but now focuses its North American operations on research and development. Kappei Morishita, General Manager of Panasonic R&D Company of America, who first worked with the United States in the mid 1980s to export televisions to the US and later guided Japanese investment into the US, now works with the major entertainment production studios. He said Panasonic has made large investments in the Los Angeles area because of the region’s highly talented workforce and access to major entertainment corporations. For example, when Panasonic launched the DVD standard, it was critical to have a manufacturing facility in Southern California, because the content-producing studios were located nearby and the studio executives demanded to check the production quality on-site.

Looking at Japan’s economy, the earthquake-tsunami-nuclear “triple disaster” was a severe blow, worse than anticipated, said Edward Lincoln, Director of the Center for Japan-U.S. Business and Economic Studies at New York University. The quake destroyed some production capacity, disrupted supply chains, and created electrical power shortages in Tokyo, all of which reduced the country’s economic production. Over the past 6 months, Japan’s GDP has shrunk at an annual rate of 3%. The hardest hit sectors have been automobiles (down over 50% in March from the previous month) and electronics. Services were also hit hard, especially tourism. Yet, Japan is already beginning to enter a recovery phase and the long term prognosis is good.

The panelists were optimistic on the long term Japanese economy. William McMorrow, Chairman and CEO of real estate firm Kennedy Wilson, one of the first foreign companies to go public in Japan, said, “We’re looking for ways to grow our Japan business,” not shrink it.