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Hitachi Research Institute

Interview

Interviews with experts and opinion leaders from our research network

Global Management in an Age of Geo-economics
- Towards a Multi-polar Paradigm: Business Strategy Based on Multiple Progressive Structural Changes -

In an “era of geo-economics” where interrelations among economics, geopolitics and security have been intensified, the paradigm of world economics is beginning to shift from excessive concentration on the United States to a multi-polarity, and various problems such as structural economic downturns and growing disparities are having an impact. For this interview, we invited Takashi Mitachi, Senior Partner and Managing Director, former Co-Chairman - Japan of the Boston Consulting Group, to discuss the future global business environment and business strategies from the perspective of geo-economics.

Mr.Takashi Mitachi

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Senior Partner & Managing Director
The Boston Consulting Group (BCG)


Born in Hyogo Prefecture in 1957. Graduated from Kyoto University, Faculty of Letters and joined Japan Airlines in 1979. Received a Master’s of Business Administration (MBA) with High Distinction from Harvard University in 1992. Joined the Boston Consulting Group in 1993, where he served as Co-Chairman - Japan from 2005 to 2015.

Served as Vice Chairman, Japan Association of Corporate Executives; Chairman, Tourism-Oriented Nation Committee, Japan Association of Corporate Executives; Board Member, Japan Association for the United Nations World Food Programme; Visiting Professor, Graduate School of Management, Kyoto University

Publications: Senryaku, No wo Kitaeru – BCG-ryu Senryaku Hasso no Gijutsu (Toyo Keizai Inc., 2003), Tsukau Chikara (PHP Business Shinsho, 2006), Keiei Shiko no Hojosen (Nikkei Publishing Inc., 2009), Henka no Jidai, Kawaru Chikara (Nikkei Publishing Inc., 2011), The Age of Geo-economics (Nikkei Publishing Inc., 2015) (co-author), etc.

World shift to multi-polarity

Shirai:In the world today, various aspects of a “geoeconomics” era in which economics are closely related to geopolitical risk and security are becoming more prominent. I found The Age of Geo-economics (Nikkei Publishing Inc., 2015), your recent work which you co-authored with Ian Bremmer of the Eurasia Group, quite engaging and I empathized with you what you had to say. If we take a look at the period from the end of the 20th century until today, the world has embraced an idealism that transcends the interests of individual countries as demonstrated by organizations such as the World Trade Organization (WTO) and the European Union (EU). In recent years, however, I have the feeling that in contrast to an idealism that embraces globalism and regionalism, the nationalism of countries has been coming to the fore. How do you view the world of today?

Mitachi:In the so-called post-modern era, that is, from the period when nation states vied with each other for hegemony, regional collectives like the EU were established, and even organizations on a world scale like the WTO came into being. The advance of digitalization and an awareness that the world is one or the “world is flat,” came after the Cold War. The Soviet Union disintegrated and Russia ceased to be a major threat to the United States. It was also one of the factors that the disintegration of the Soviet Union made various East European countries gravitate toward the EU. There was an assumption in the world following the breakup of the Soviet Union that the United States, as the world’s police, would assume the role of maintaining the world’s security. It may be easier to understand this arrangement if we consider it as having an upper structure and lower structure. When there is security in the lower structure, which functions as a kind of OS, activities like applications will operate more efficiently in the upper structure. At present, however, the lower structure is shifting from a “Pax America” situation, too focused on the United States, to multi-polarity, and the impact of that is beginning to be felt. As we approach the second half of the 21st century, population and economies alike will become multi-polar in the future. It will be a world comprised of three poles — the United States, China and India. Whether the EU can survive as a pole remains to be seen. While the United States and the EU at present remain somewhat consistent in their views on political systems and security at present, the views of China and India are unclear. At present this shift in paradigm from a uni-polar to a multi-polar world is still in progress and, therefore, it is not yet clear how things will settle. In a world dominated by uncertainty, countries will attempt to protect their own respective interests. Against this backdrop, China’s rapid economic rise is having an impact in various forms. In his work, An Ecological View of History, published in 1957, Tadao Umesao described how empires in Eurasia were created, eventually destroyed, and the regions plunged into chaos, over and over again. This book is still quite interesting even if we read it today. Countries that remember they were once powerful nations that wielded significant influence in the world, such as China, India and Iran, may believe that they can again build empires should the United States relinquish its role as the world’s policeman. This would certainly apply to China, and perhaps India’s true intentions. This tendency is also becoming evident in the hegemony-conscious actions of Iran and Turkey. Russia also probably feels that it should not be the only country to be left out. This tendency is set to become more and more widespread. At the same time, it is undeniable that bankrupt countries where governments are not functioning have also emerged, such as countries that have failed in civil wars, Libya, Iraq and Yemen. It is my view that because we are in an unstable period in between two large paradigms, ideas of imperialism and legacies are surfacing strongly in people’s sentiments.

Reciprocal relations between China and the West

Shirai: Underlying this era of geo-economics is the rise of China. Anyone who reads China2049,* which has been much talked about recently, will understand that China has been stepping up its efforts to strengthen its economy and military under a long-term national strategy to enhance its presence in the world, with a view to wresting from the United States its position as world leader by 2049, the year that marks the 100th anniversary of the establishment of the People’s Republic of China. It cannot be denied, however, that the economies of United States, Europe and Japan have profited significantly from China’s economic growth. China, which until now has maintained rapid growth, has reduced the speed of its growth and adopted long-term sustainable growth as the “new normal,” and is making efforts at structural changes to achieve this goal. As China overcomes various challenges, the question remains as to whether it can enhance its influence as a major power alongside the United States.

*
China2049 by Michael Pillsbury, translated into Japanese by Kyoko Nonaka and commented by Satoshi Morimoto (Nikkei BP, 2015). The original English title is The Hundred-Year Marathon: China's Secret Strategy to Replace America As the Global Superpower

Mitachi: According to research by British economist Angus Madison, it is believed that GDP following the agricultural revolution in every country converged at around $400 per capita. On the other hand, in industrial societies following the industrial revolution, per capita GDP rose to over $10,000. It is in industrial societies that this incredible difference arises. While China is enhancing its presence as a global power, it has still not adequately achieved shift to the “industrial society.” As it has a very large population, various possibilities will become evident only after shift to the industrial society has been successfully achieved and per capita GDP increases. To get to this stage, China will have to overcome many challenges. If we look at Japan in the period from the 1950s to the 1970s, every time a problem occurred in areas such as environmental countermeasures, they repeatedly changed the model. China will have no choice but to follow a similar path but it is likely that it will be able to create an industrial society to some extent. In the era of an agrarian society in the year 1000 or 1500, and even after the First Industrial Revolution in 1820, the combined GDP of China and India accounted for 50% of world GDP. At that time, they were formidable major powers. Around 1950, however, the combined GDP of both countries had fallen to a mere 7% of the world GDP due to their colonial occupation. While Japan’s GDP rose, following on from the GDP of United States and Europe, China continued to experience painful economic conditions. Efforts toward a rebalance are likely to continue but whether or not they will be lasting or whether the country will quickly arrive at a mature society and stagnate remains to be seen. Either one or the other will occur. A look at fluctuations in population, which supports GDP, shows that China’s population of productive age has already begun to contract, and the population as a whole will begin to contract in the 2030s. Prior to reaching the status of an affluent society, China will face the same problems from which Japan is suffering in the 21st century. The aging of society in Western countries and Japan occurred after they had become developed countries. On other hand, the contracting of China’s population will begin at a stage when there is still a significant disparity between the rich and the poor, and the government should be feeling a sense of urgency.

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Shirai: In the media, there is a tendency to view the U.S.-led Trans Pacific Partnership (TPP) and China-led One Belt, One Road (Silk Road vision of sea and land) as conflicting structures. At the same time, at least in economic areas both countries are making efforts to strengthen their relationship through firm cooperation to reap mutual benefits. Although the ideologies of the two countries differ, what kind of reciprocal relationship do you think they will establish in the future?

Mitachi: There are a number of plausible scenarios but in the short term the level of tension in relations will be determined by U.S.-China government policies. In the extreme sense, it will all depend on the results of the U.S. presidential election. There is no question about establishing relations that are beneficial to both sides from an economic viewpoint. For example, cooperative relations also exist where the United Kingdom, the United States and China co-host science and technology summits. The point is these are cooperative relations other than military cooperation. Even if relations should cool for a period, failure on the part of both parties to cooperate will only result in weakening the national power of both the United States and China. I would not go so far as to use the analogy of whales in a pond, but extremely large fish must not blight the entire pond, so it is unlikely that their ability to cooperate with each other will compromise their stance of cooperation. Irrespective of the shift from excessive concentration on the United States to multi-polarity, the United States is unlikely to accept an arrangement where security of its country is relaxed. China is attempting to determine how far it can go before the United States resumes its super policeman role in earnest. China also views the problem of the South China Sea as a trial for testing security. The country standing in a difficult position in its involvement in diplomatic relations with the United States and China is Japan. Moreover, Japan has problems in its relations not only with China but also North Korea. In Europe, at the time of the establishment of the Asia Infrastructure Investment Bank (AIIB), Great Britain was the first to announce its participation, and various countries followed suit thereafter. Germany has also been proactive in its economic cooperation with China for some time now. Unless countries become strongly involved in security, the current direction of the EU is unlikely to change.

Shirai: Do you think economic relations between Europe and China will become deeper in the future? If ties between Europe and China become stronger, will this have an impact on the United States and the North Atlantic Treaty Organization (NATO), which has supported postwar world security? Or will it be possible to clearly isolate economics and security? What are your views?

Mitachi: I believe the United States, Europe and China respectively have incentives to view economics as economics and security as security in isolation. Ultimately the focus will be on whether the respective countries can protect their own economic interests with their own will. Under the 20th century economic model, ensuring market access and energy access were extremely important in the protection of a country’s own economic interests. At present, I believe important market access is a question of strategic area such as the latest in digital technology, for example. Energy access, on the other hand, is a question of whether or not we achieve a low-cost energy society independent of fossil fuels through innovations in technology, and this will change the future. If we are able to achieve this, we will no longer have to worry about energy security, and there is also a possibility that reciprocal economic relations will proceed favorably.

Two problems Europe faces

Shirai: Since the end of the Cold War, a peaceful era has continued to prevail in Europe but Europe faces “threats from the East” as symbolized by Russia’s recent annexation of the Crimea, “threats from the South,” as represented by civil war in Syria and the influx of refugees into Europe. In addition, Europe also faces “internal threats,” such as the economic crisis in Greece and the United Kingdom’s exit from the EU. How do you see the future of the EU?

Mitachi: I believe the EU overcame the crisis of a split with a ratio of 7:3, and we will see a return to the idealism seen at the time of its inauguration. That said, it may take up to approximately 10 years for things to settle. To begin with, there were three factors underlying the establishment of the EU. The first was a determination to learn from the past based on the fact that two countries, France and Germany, had gone to war with each other repeatedly. There was a desire to join hands, particularly for these two countries, in efforts to avoid making Europe a battleground again. The second was the existence of a common cultural spirit rooted in the ancient Roman Empire and the legacy of the Hapsburgs. The third factor was the significant difference in Europe’s economy with that of the United States and the need to join forces to gain potential economic benefits. At present the EU has two problems to contend with. The first is Germany’s position as the sole winner in the EU. This stems from the contradiction of the EU’s unification of currency without achieving financial unification. Germany alone has effectively reaped the benefits substantially similar to having currency depreciation and has strong competitiveness. It has an impressive trade balance while the surrounding countries are experiencing severe conditions. The reason I initially stated a period of 10 years earlier is because this is the number of years required for discussing the issue and achieving a rebalance. The other problem Europe faces is aging. Germany has been accepting refugees with the understanding that there are economic advantages to be gained from an increase in the population. Objecting to this stance of the government are people looking for jobs, who call for improvement in the country’s high unemployment rate and oppose the acceptance of refugees. Discussion of the refugee issue continues, but in the future there is a need to consider the possibility of prospects for a certain level of growth despite a contraction in the population. In response to this issue, as an individual I am convinced that moves toward the expansion of a so-called the Fourth Industrial Revolution will become more widespread and in 10 years we will witness the arrival of an era where IoT will boost per capita GDP. A look at history shows shifts to the industrial society was driven by the innovations in electricity and mass transport sectors, and the scale of the world market pie increased significantly. The world as a whole became more affluent, its population grew, and the average lifespan increased. Unfortunately, IT has yet to match the same level in terms of increase in productivity. There is even some discussion that IT has contributed nothing to improvement in productivity. For example, earlier I mentioned that shifts to industrial society resulted in raising per capita GDP from $400 to $10,000. When the time arrives where IT raises the current $40,000 per capita GDP in Japan to $60,000 or $100,000, a point I noted earlier, it will again become a topic of discussion. Until that happens, I believe the road ahead may be somewhat bumpy.

Effective measures for getting out of a long-term recession

Shirai: In the world economies, the ratio of developed countries is declining while the ratio of developing countries like India and China is increasing. In December 2015, the United States at last brought to an end near-zero interest rates but negative interest rates still persist in Japan and Europe, which are struggling to break away from deflation. I believe the current situation of an ongoing lack of demand and stagnation in investment is related to the assessment of the IT revolution, which I touched upon earlier. As observed by Harvard University’s Professor Lawrence Summers, a former U.S. Treasury Secretary, the protracted recession of the developed countries has widened, and there are people who argue that the current situation of low interest is the “new normal.” Do you think that we will be able to overcome long-term recession through new innovation in areas such as IoT?

Mitachi: The fact is, it can be said that overcoming long-term stagnation will be difficult without creating innovation. From the latter half until the end of this 21st century, the world’s population will begin to contract. It is already evident that growth in world GDP, which depends on the industrialization of emerging countries, is gradually coming to a halt. To inherently break free of this situation, raising the productivity by IoT and ICT is essential, and it is my personal view that this can be achieved. From the 1990s until the beginning of the 2000s, the growth of BRICs drove the world economy. On the other hand, Japan, the United States, and countries in Europe implemented financial policies whereby they increased and continued the supply of paper money. As a result, turnover of enterprises slowed. When countries attain a certain degree of affluence, the environment becomes such that it is difficult to promote regeneration even through political means. In the United States, it can be said in one sense that the strength of capitalism remains almost abusively strong, and regeneration occurs. In Germany too, labor transition is possible under Schroeder reforms, and this is promoting regeneration. Although Northern Europe pours considerable funds into welfare, economic regeneration measures are implemented, and the economies have robustness. Western European countries, with the exception of Germany and Northern Europe, and Japan are unable to achieve regeneration and their economies are in recession. To overcome long-term stagnation, innovation is essential but this requires mechanisms for regeneration capable of facilitating the flexible movement of capital and people. In the future, I believe that Japan, Western Europe excluding Germany, and China will be able to achieve increased productivity by promoting metabolism through innovation from political, educational and social safety net aspects.

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Shirai: The widening of the disparity is not only a major social problem in developed countries but in developing countries like China as well. In the United States in 2011, the “Occupy Wall Street Movement” occurred. In this year’s U.S. presidential primary election, Bernie Sanders, who campaigned to address this social disparity, increased his support base much more than expected. Despite the increasing gravity of the disparity problem, no country has found a way to address it. A stable society is a vital prerequisite for business but the disparity between rich and poor in countries is undermining social stability. Do you think that this disparity will improve in the future or become more serious, and what impact do you think it will have on society in various countries?

Mitachi: I see this disparity as a problem related to distribution measures including taxes and size of the pie. When the pie is growing in size, nobody worries about the disparity. I often cite the example of the movie Always Sunset on Third Street , where people clung to a belief that today would be better than yesterday, and tomorrow would be better than today, so parents felt that if they worked hard, life would be better for the next generation, and if their children received a proper education, they would have a bright future. The taxation system also plays a part here but in the United States and China the disparity in education lies at the root of poverty across generations. This “across generations” is a major problem. In Japan, while there is an absolute value defining poverty, I do not believe the disparity is significant. Japan has a tax system that could be called socialistic. It has a mechanism where assets of a certain scale are consumed by inheritance taxes in the course of three generations. In other words, the disparity does not span “across generations.” In a BCG survey, the financial assets owned by the wealthy segment in developed countries was 40 to 50%. In contrast, that ratio in Japan alone was in the 20% range. Therefore, the disparity in Japan is relatively low, and the wealthy also decline in number with the change in generations. A taxation system like that in Japan exists in neither the United States nor China. In many countries, the wealthy segment has vested rights. Therefore, eliminating the current mechanism through legislation holds the key to resolving the disparity issue. Unfortunately, no country has taken up for discussion on distribution measures or size of the pie, which lies at the root of the problem. On the other hand, it should be possible to alleviate Japan’s poverty problem if efforts are made to improve social safety nets and education to promote the regeneration.

Corporate management in an age of geo-economics

Shirai: In 2015, world per capita GDP fell for the first time since the global financial crisis of 2008. This decline is based on dollars, and the effect of the strong dollar was responsible in part. Nevertheless, this was a phenomenon not seen for some time, and reflects the level of difficulty of the environment for business in the global market. In an age of geo-economics, what kind of perspective do you think is important for Japanese companies in order to sustain growth while controlling various risks?

Mitachi: I think there are two noteworthy points. The first is deployment of business overseas. While it is impossible for companies of a scale of 10 trillion yen to avoid linkage to world GDP when considering overseas business, it is not absolutely necessary for companies of a scale of some hundred billion yen to be linked to world GDP. Whether companies were able to make money in developing countries governed their growth in the first five years of the 2000s, and there is a significant difference between those companies that succeeded in achieving sound profits in their businesses in China and those that could not. This is not to say that those companies which will succeed in business in China will be the winners in the future. Companies must again set their sights on business in developed countries as well. As a geographical balance, I would recommend companies to enhance their U.S. portfolios. For a time, the idea of “China +1” was viewed as a valid strategy for avoiding risk, and the focus was on ASEAN countries. However, this is not the case today at a time when global risk has increased significantly. Whether companies can grow their business in the United States where the economy is strong and security risk is low will have a decisive impact on their future. The U.S. market is open and competition is fierce but success in the market there will contribute strongly to a company’s results. The second point is innovation. The next 10 years from now will be a period of innovation. Demand is certain to increase in Japan in the services area including health, nursing care and tourism. The problem is productivity. Labor productivity in particularly is low; if Japan can overcome this, the market is sure to grow. As we approach the year 2025, we will enter the optimal period for medical and health care for the baby boomer generation. It is already clear that hospital and nursing care facility capacity will be insufficient and, therefore, it is necessary to provide solutions for managing this problem. After a good model is established in Japan, companies can use it to develop business in countries like China and in Europe, where aging is progressing. Although I do not like using the expression “an advanced country in tackling serious issues,” if companies are able to offer this unique Japanese model to the world ahead of other countries, valuable opportunities could be generated in this area. Of course this will not be an easy task as medical insurance and pharmaceutical regulations differ from country to country, but companies that can create appropriate models which conform to the environments of those countries can have overwhelming power, particularly in the areas of personnel saving, labor saving and productivity improvement. I believe the opportunities for growth of companies that can grasp the needs of a changing society will be remarkable.

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Shirai: Despite having its own particular difficulties, the Chinese market has proven to be a successful market to some extent in the deployment of conventional products. If the U.S. market is to be the main battlefield for innovation, business managers will have to achieve results including new challenges in that market while paying attention to economic and geopolitical risks. Future corporate leaders will have very challenging roles to play, but can you describe what kinds of qualifications and capabilities you think are required of them?

Mitachi: In today’s business environment, having a number of time frames is a requirement. While I am not sure a system that focuses on quarterly results is useful, businesses that cannot continue to achieve results in one-year time frames will find it difficult to obtain the support of partners in the capital market. On the other hand, it is not possible to make medium-term investments on the basis of one-year time frames alone. While paying close attention to the one-year period ahead, companies must invest in business three years and five years in advance. Conversely, it is also necessary for businesses to gain approval of capital markets on spending money for developing potential business / products that have not yet appeared in the market. In an era of high uncertainty the qualifications that will make this possible are a (1) a track record and (2) structural reforms. This means a company’s track record in earnings, capacity for investment and a balance sheet that is sound. As changes occur more rapidly in a period, a company will not be able to invest in the future unless it has greater stamina than its competitors to keep it afloat. It must consider what the population issue will be like in terms of a 100-year time frame, what events might occur within a 30-year time frame as the world moves toward multi-polarity, and how social needs will change. While paying attention to these issues, it will be also be important for a company to allocate resources to businesses that will generate profits in a time frame of three to five years later. Thinking along these lines, business leaders must have the ability to perceive various contradictory phenomena at all times. To simultaneously maintain a number of time frames, I believe that those leaders who exert the same amount of effort in paying attention to changes in present technology and science as they do to exploring fundamental views of phenomena through history and liberal arts will achieve success.

Consideration of risk advantages

Shirai: Despite interests rates being at zero level, Japanese companies on the whole have been accumulating deposits and have shown little appetite for investment. It appears that they are unable to put their faith in the future and have made up their minds that it is better to hold on to their cash than to invest it and earn returns. How do you perceive this gap?

Mitachi: One concept that I believe business leaders require is risk advantage. By risk advantage, I mean less risk than the competitor but with the same returns, or the same amount of risk as the competitor but higher returns. If we assume “returns of 110 with risks of 100” as the market average, there will be some people who attain returns of 150 with risks of 100, while there will also be others who obtain returns of 110 with risks of 80. For example, companies that engage in business in the Middle East with contract know-how should take business risk at a level of 80, while others without contract know-how have to take business risk at a level of 150. As capital and risk are closely connected with the business, executives at financial institutions consider on a daily basis how to achieve higher results at the same level of risk. On the other hand, companies in general do not view risk in this way. In the event risk actualizes, unlike financial assets, it is not easy to sell a factory. So, companies that are too intent on eliminating all risk tend to stop making investments. I feel that business leaders must have a mindset that believes, “If we have a risk advantage over our competitors, we will end up the winners in the medium- to long-term.” At present we are in the midst of a paradigm shift, not at a stage where enormous amounts of capital investment can be justified. I believe that it is also important to plough returns back into the capital market while paying attention to the balance of essential investments. This means not only share buybacks but also cautious decision-making after careful scrutiny of the balance sheet. I believe that IoT and AI will begin to change the world in the next 10 years. Therefore, investment in R&D in these areas and experiments in business models like ventures and entrepreneurs will also be effective under the lack of clarity in terms of what will give a company the upper hand.

Shirai: In the automobile industry, for example, business has been a matter of producing and selling cars. In the future, however, automatic driving and self-driving cars as well as car sharing will become the norm, and individuals may no longer need to own cars. It would seem that the thought of such future possibilities would cause increasing anxiety for companies in terms of what areas they should invest in.

Mitachi: I believe the automobile industry’s investment in R&D and experimentation is also important. For example, Toyota has various scenarios in regard to its view of the future, and invests in various small companies related to these. Where very large scale investment is concerned, it basically comes down to either using resources for the acquisition of companies related to its existing business or for capital investment. Companies that operate globally are engaging in M&A in some area where they can anticipate the future to some extent. However, I have the feeling that we are in a period where companies will not engage in large-scale capital investment. For example, even if companies undertake production system reforms using process data in factory automation, they are at a stage where it is difficult for them to forecast with a high degree of accuracy ideal arrangements for the future. There is a possibility that their investments will be obsolete in 10 years’ time, so they need to exercise caution in their decision-making. At the same time, investment in education and training for AI engineers including engineers in data analysis and design planning, and the retraining of employees whose line of work will change with the penetration of AI will be necessary. Although the cost may not be that significant, I think there is an overwhelming lack of resources for this. What lies ahead is not yet clear, yet once it becomes visible, the area where I believe we will see a bottleneck is not in financial but in human resources. Japanese companies should direct their attention to investment in human resources in order to develop multi-skill workers to utilize IoT rather than in their factories. To learn cutting-edge technology and acquire know-how will require taking advantage of the most advanced regions globally. Therefore, the optimal approach for companies will be to head for Silicon Valley in the United States where there is a concentration of forefront technology. The level of technology in China and India is rising, and both countries have an environment conducive to mass production, but when it comes to cutting-edge technology, I believe Silicon Valley wins hands down.

Providing unique observations

Shirai: Before we conclude our interview, I would like to ask you about your private life, if you don’t mind. For many years you have been active on the front line of business. Could you please tell us if you have any foundation or philosophy that you value and refer to when making judgments or decisions?

Mitachi: By nature, I am a consultant so I always try to have a unique viewpoint. If I direct my efforts to learning about advanced case studies or catching up on what others are thinking, I feel that I will simply arrive at an understanding of phenomena in a manner that is completely lacking in any unique perspective. For me, the challenge is not in being able to provide a viewpoint in line with other ordinary viewpoints but in being able to provide unique observations. When I co-authored The Age of Geo-economics with Ian Bremmer, while I learned a lot from his views as a political analyst, I felt that I wanted to be able to provide unique observations from viewpoints such as how economic entities were supposed to act or from the perspective of an Asian viewpoint of history.

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Shirai: I understand that because of your work you have to travel quite a bit all over the world. However, can you tell us how you reenergize and what pastimes or interests you have?

Mitachi: As I think my intellectual foundation is very important to continue having unique observations in a global world, I have made studying Japanese culture and history my pastimes. Recently I also began to study Buddhism. For example the meaning of the saying, “Every form in reality is empty, and emptiness is the true form” essentially means that the reality of phenomena is in their relationship with one another, and the power to create life is called life itself. In Buddhism, this is said to be “Engi” (Dependent Origination). These are topics that are related in some way to the latest biology and physics. There are cases where people’s pastimes lead them to turning their attention unexpectedly to subjects like these. Old things and ideas often lead to the latest ways of thinking. One of my teachers once explained to me about Japanese Buddhism, saying, “Buddhism came to China from India and, its principles became advanced as a philosophy. The religious principles of that time were introduced by Kukai and Saicho, who in some ways further elevated Buddhist doctrine. In China, Buddhism subsequently faced a period of adversity and, therefore, in some ways Japanese Buddhism is at the forefront of Buddhism as a doctrine.” I have also begun to learn tea ceremony. After I reached a certain age, I found a desire to learn more about things Japanese. To drink delicious saké, I have traveled far and wide in Japan, and I have even visited saké breweries. I find these types of activities refreshing and, ultimately, they prove to be useful in my work.

Shirai: Thank you for coming here today and speaking to us about a number of interesting topics despite your busy schedule.

Mitachi: You are quite welcome. It was my pleasure.

Editor's Postscript

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In this interview, Takashi Mitachi, former Co-Chairman - Japan of the Boston Consulting Group, a worldwide consulting group, offered a wealth of suggestions as he spoke about world trends and corporate management from the perspective of geo-economics. Speaking in a manner that was easy for everyone to understand, he related how the world today is shifting away from excessive concentration on the United States to multi-polarity, where future developments are unclear and every country is making efforts to protect its own interests. He also explains that innovation is essential to overcome the long-term stagnation in developed countries but to do this countries must create mechanisms of regeneration that will enable the flexible movement of capital and human resources.