Elon Musk trumps Warren Buffett in today’s Japan

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With all due respect to Shinzo Abe’s family and colleagues, I am so sick of the late politician’s era in Japan.

The former prime minister Death of July 8– at the hands of a crazed shooter – has generated a bull market in stories where to go now. Bizarre really, because Abe’s nine years in office split into two governments – one from 2006 to 2007, the other from 2012 to 2020 – was more about taking Japan back to the 1980s than propelling the nation back into the 1980s. the front.

Tokyo really should have left “trickle down economics” in the past, which, let’s face it, Abenomics ended up being. Now, as the world wonders what Prime Minister Fumio Kishida could do to awaken Japan’s animal spirits, an unlikely inspiration arises: Elon Musk.

This suggestion may seem strange to readers who observe that the richest man in the world appears to be destroying a company – Twitter Inc. – that he claims to want to buy. Or watching Tesla Inc. walk away from the big bitcoin stake that Musk had been touting.

Here in Japan, meanwhile, Musk managed to offend the masses with a May tweet about demographics Armageddon. Musk said: “At the risk of stating the obvious, unless something changes so that the birth rate exceeds the death rate, Japan will eventually cease to exist. It would be a great loss to the world. .

Still, it’s Musk’s battery partnership with icon Japan Inc. Panasonic Corp. which holds great potential to change the dynamics in an aging and uncompetitive nation. Almost single-handedly, Musk is reminding Japan that its future should be less about making cars and more about reaping the rewards of investing in sustainable ways to power them.

Musk’s relationship with Osaka-based Panasonic is a complicated one with lots of drama and ups and downs. A good place to start is 2014, when Musk set up his $5 billion Gigafactory in the Nevada desert. One of his first calls was with battery pioneer Panasonic. Over the past 104 years, few tech companies have amassed a richer history of innovation and reinvention.

Over the years, Panasonic has given the world appliances, lights, radios, televisions and, most importantly, some of the most advanced research and development on compact and powerful rechargeable batteries.

Now Panasonic is opening a massive $4 billion battery factory in Kansas to up its bet not just on Tesla, but on America’s accelerated shift to electric cars and trucks. According to Governor Laura Kelly, it will be one of the most ambitious battery factory projects in U.S. history and the “largest private investment in Kansas history.”

Yet Panasonic’s bet – and Musk’s doubling down on the company – also reminds Japan Inc. that the most lucrative industry of present and future is devising new ways for a few billion Asians to grow rapidly. their savings without choking. Panasonic is just one reason Japan seems uniquely qualified to lead the charge on carbon-neutral energy sources.

Unfortunately, Abe and his Liberal Democratic Party spent the past 15+ years doubling down on nuclear power. Yes, reactors produce renewable energy. But the Fukushima radiation crisis in 2011, and Japan’s vulnerability to seismic shocks in general, turned people against nuclear power.

Abe spent his premiership from 2012 to 2020 working to reopen reactors, without encouraging alternatives. Since Russia’s invasion of Ukraine, soaring energy prices are pushing Kishida to do his part to get the reactors back online.

Fair enough. But Kishida should look into Musk’s interest in the Japanese economy, which has outweighed Warren Buffett’s investments here in recent years.

In August 2021, the “Oracle of Omaha” finally overcame its infamous aversion to investing in Asia’s second largest economy. The more than $6 billion bet made by 91-year-old Berkshire Hathaway involved five old-school trading houses that the world had largely forgotten: Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. .and Sumitomo Corp. That’s partly because some of them date back to the 1850s.

For Buffett, these “Sogo Shosha“Companies are diverse, cash-rich, and unloved enough to make them a solid value investment. But the part of Japan Inc. that intrigues Musk holds far more promise for disrupting change- and risk-averse Japanese corporate and political cultures and creating millions of well-paying jobs.

As post-Abe Tokyo picks up the pieces, Kishida is expected to reinvigorate Japan’s innovative engine. Panasonic, founded in 1918, is Exhibit A for discussions of how Japan Inc. once dominated global technology. Kishida’s first reform priority should be to catalyze a startup boom, particularly in the area of ​​renewable energy.

In recent weeks, Kishida has been laying the groundwork to enable the $1.45 trillion Government Pension Investment Fund, the largest entity of its kind, to help increase the number of tech “unicorns” in the world. Japan. When it comes to producing startups valued at $1 billion or more to disrupt business systems, Japan lags far behind India, Indonesia and South Korea.

Ironically, the world’s largest venture capitalist is a Japanese national. And yet, SoftBank Vision Fund Son of Masayoshi unfolds very little at home. Many in Bangladesh, Brazil, China, Colombia, Finland, India, Indonesia, Kenya, Spain and Taiwan. But only small amounts in aging, low-productivity Japan.

Kishida pledges to change that by aiming for Japan not in 1985, as Abe did, but in 2025 and beyond. Whether you like his antics or not, Musk is showing Japan which sector holds the most promise.

Now Kishida has his own electoral mandate to take for a spin. He could do worse than follow Musk’s hint and replace Japan’s innovative batteries.

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