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Japan: Germany’s Weaker Asian Link

The German-Japan connection is not what it used to be, neither culturally nor economically. Ties between the two exporting countries have faded in the last years, as Germany looks more towards China.

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Japan's image in Germany has faded recently


When Chancellor Gerhard Schröder’s plane touched down in Tokyo on Wednesday, it was only the second time the German leader had paid an official state visit to Japan since taking office. Compared to six visits in so many years to neighboring China, Schröder and his government have not been nearly as attentive of the only Asian member of the G8 club of wealthy nations.

Even during his current Asia tour, the message was clear: Germany is in China fever and clearly aims to be the number one foreign player in the rapidly growing Asian market.

Schröder in Japan

German Chancellor Schröder arrived in Japan on Wednesday

With some 20-plus business contracts signed and in the bag, Schröder headed to Japan, where not a single trade issue landed on the agenda. That the two-day stop-over and visit with Prime Minister Junichiro Koizumi was not regarded as an economic highlight became clear when 10 of the 40-some business leaders traveling with Schröder headed home after meetings in Beijing.

Reliable but boring

After enjoying decades of positive relations with Tokyo, the interest in negotiating new business deals linking Japan and Germany has become little more than routine. Viewed from the perspective of Tokyo the relationship doesn’t look much better.

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“The Japanese regard Germany more as a museum and not as an example for a modern industrial economy,” said Franz Waldenberger, economist and professor at the Japan Center in Munich. “Even the cultural image of Germany is reduced to the old clichés of beer drinking, sausages and soccer.”

Although business continues to run smoothly between the two countries, Japan and Germany have both re-orientated themselves. According to Waldenberger, while Germans look more towards China, Japanese business leaders are discovering Eastern Europe.


Does that mean Japan has become Germany's second-tier trading partner in Asia? Not necessarily, said Waldenberger.

Despite all the new-found enthusiasm for China and all the high-profile contracts linking the two countries, one thing remains clear: German companies on average continue to turn bigger profits in the land of the rising sun than the People’s Republic, Waldenberger said.

Mid-size firms are the key

In the third quarter of 2004, Germany exported goods worth €3.3 billion to Japan, some 8.4 percent higher than during the same period a year before. For Waldenbeger, that’s reason enough not to view the fading official relations as an indicator of declining economic interest.

“Economic ties to Japan are quite mature,” the Japan expert said. “It’s now up to small and mid-size companies to venture into the Japanese market, and that’s not something that can be encouraged through political framework. German companies have to play an active role and take advantage of the opportunities available."

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Japan's economy may not be booming like China's, but it is stable.

Although the Japanese market will never again experience a boom like the current one in China, there’s still quite a bit of room for German companies to get their foot in the door. They have especially good chances of succeeding in the areas of construction, environment and medical technology, and unlike China, German investors don’t have to worry about a sudden collapse of the economy, Waldenberger said. The Japanese economy is currently on the upswing.

Keeping the friendship alive

Just to make sure the message is getting out that Germany has not completely neglected its old trading partner and is still interested in doing business in Japan, the government is launching a new image campaign in 2005 entitled “Germany in Japan.”

Regardless of developing ties elsewhere, Berlin wants to make sure the world’s second and third largest economies continue to enjoy good cultural and economic relations. Maybe then, a new wind will blow the chancellor’s airplane back to Tokyo.

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