One year after innovative reforms of the Japanese Chamber of Commerce and Industry in China, the investment environment has started to improve

One year after organizational reforms of the Japanese Chamber of Commerce and Industry in China

One year has passed since the Japanese Chamber of Commerce and Industry in China (CJCCI) attempted to strengthen its functions through organizational reforms in April 2023.

CJCCI changed the one-year rotation system in which five major trading companies took turns to undertake the chairmanship and adopted the new system under which it chose the representative of a business as chairman for a term of several years without sticking to trading companie.

Mr. Tetsuro Homma, Representative Director & Executive Vice President and Group Regional Head for China and Northeast Asia of Panasonic Holdings Corp. took office as the new chairman.

At the same time, the Japanese Chamber aims to establish closer cooperation with the chamber organizations of Japanese businesses in various parts of China.

In the past, chamber organizations in various regions were more like regional mutual-aid societies, but after the reforms, through cross-regional cooperation, the Chamber enhanced the function of putting together Japanese companies' requests for investment improvements across China in its organization and collectively requesting the Chinese government for such improvements.

These functional enhancements are supported by several new projects and the steady efforts of the Chamber's executives to strengthen cross-regional cooperation as described below.

(1) Request to improve the investment environment through the implementation of questionnaire surveys on economic and business environment awareness

In September 2023, the Japanese Chamber began the above-mentioned questionnaire survey on a quarterly basis.

Since early on, the Chamber had annually compiled the White Paper on the Chinese Economy and Japanese Businesses, in which it analyzed the issues facing Japanese businesses in various parts of China, put together their requests for a solution to the issues, and promoted dialogue with the central and provincial governments.

The activities of CJCCI, however, compared unfavorably with those of its American and European counterparts, which frequently conducted business surveys and prepared written requests for improvement of the investment environment and actively approached the Chinese government.

Compiling the results of this newly launched survey has enabled the Japanese Chamber to frequently communicate Japanese businesses' requests for the Chinese investment environment to the Chinese government, thereby reducing to some extent the functional gap with the chamber organizations of the United States and Europe.

At present, since China is faced with its worst economic situation since 1990, the Chinese government is focusing more aggressively than ever on attracting foreign-affiliated businesses. For this reason, it highly evaluates the move by Japanese businesses to request improvement of the investment environment through this survey.

The reason is that if the investment environment is improved in various regions in accordance with those requests, it could be expected to promote a wider scale of direct investments by Japanese businesses in China.

In the first questionnaire for some 8,300 companies (with results published in October 2023), CJCCI received valid responses from 1,410 companies, and in the second questionnaire for some 8,000 companies (results published 2024), it did so from 1,713 companies.

Both the American Chamber of Commerce in China and the European Union Chamber of Commerce in China are carrying out similar business surveys, but the number of valid responses received by CJCCI is much larger than that of responses received by its American counterpart (about 900) and that of responses received by its European counterpart (about 600).

Partly because of that, regular meetings with high-ranking officials of the Chinese Ministry of Commerce have begun, and as exemplified by this and other developments, the Japanese Chamber's survey has become an important basis for communicating the requests of Japanese companies in China to the central government for improvement of the investment environment.

Since the questionnaire survey conducted by the Japanese Chamber reflects the real voices of local businesses, it should also help clear up misunderstandings of the Chinese economy in Japan.

For example, in the second survey (with results released in January 2024), 54% of respondents said that they were "very satisfied" or "satisfied" with the business environment in China (up three percentage points from the previous year) while 78% replied that they were "treated more favorably than Chinese companies" or "treated equally with Chinese companies" (down three percentage points from the previous year).

These figures indicate that Japanese businesses operating in China have a relatively high evaluation of the Chinese market.

This is very different from the negative image many people have of the Chinese market based on media reports in Japan.

So far, however, media reports in Japan have failed to provide a complete picture of the objective analysis of the survey results, emphasizing only the negative aspects of the market such as the fact that about half of the businesses are currently reluctant to increase investments, while only 15% are active.

Therefore, the results of the questionnaire survey have not been properly communicated to the Japanese audience.

So far, owing to these biased negative reports, misunderstandings about the Chinese market have not been cleared up.

It is expected, however, that such misunderstandings will gradually be dispelled in the future as explanations given at press conferences by, and articles of interviews with, the chairman of CJCCI are increasingly covered by mass media and information on the frontline of Chinese business is shared.

His positive comments on the investment climate in China have already been presented in some mainstream media outlets, giving a different sense of the frontline from the general media coverage.

(2) Strengthening cooperation with chamber organizations in various parts of China

After its organizational reforms, in order to establish closer cooperation with the chamber organizations of Japanese businesses in various parts of China, CJCCI has worked to communicate more closely with such organizations by carefully providing feedback information on the results of the questionnaire survey to these Japanese businesses which have cooperated in the survey.

In addition, executives of the Japanese Chamber visit chamber organizations of Japanese businesses in major cities such as Shanghai and Tianjin to exchange opinions and build closer relationships through face-to-face communication.

In particular, the Chamber is focusing on bolstering cooperation with the chamber organization (Shanghai Japanese Commerce & Industry Club) in Shanghai, the world's largest cluster of Japanese businesses.

To that end, some executives also serve as members of the Board of Directors in both Beijing and Shanghai, and they are working to establish closer cooperation with them by mutual exchanges through sharing information at the Board of Directors and other meetings held regularly.

(3) Strengthening communication with business organizations in Japan

Major Japanese business missions that recently visited China recognized the business improvement issues of local Japanese companies through dialogue with senior managers of CJCCI, and based on this, the mission members met with officials from the Chinese government.

For this reason, it is believed that representatives of major missions have become able to exchange opinions on matters closely related to the business issues in China during interviews with senior officials of the Chinese government.

Thanks to these achievements, leaders in the Japanese business community, too, seem to appreciate the significance of the existence of the Japanese Chamber.

It is highly likely that meetings between senior leaders from both sides will be regular as the Japanese Chamber attaches importance to exchanges every time large missions visit China.

(4) Support from the Government of Japan

The Japanese Embassy and Consulate General in China, too, are paying attention to the fact that the strengthening of the functions of the Japanese Chamber is beginning to work effectively in securing new channels of communication with the Chinese government.

There has been cooperation between the Embassy and Consulate General and the chamber organizations of Japanese businesses in various regions since early on, but this is expected to deepen further in the future.

Just last week, when Kenji Kanasugi, Ambassador of Japan to China, visited Tianjin City, senior managers of CJCCI attended his meeting with Mr. Chen Min'er, secretary of Tianjin City, and a dinner hosted by the city government.

Likewise, when the Ambassador meets with senior officials of a provincial government in China, he is accompanied by a senior manager of CJCCI to promote dialogue between the provincial government and Japanese businesses.

As described above, within a short period of one year after its organizational reforms, CJCCI has strengthened cooperation with Japanese businesses in various parts of China, the central and provincial governments in China, the Japanese business community, and the Japanese government and assumed important hub functions.

This is highly significant.

Behind the organizational reforms that produced such great results was the contribution of trading companies which abandoned the vested interests that they had enjoyed on a rotating basis.

In fact, it is extremely difficult to give up individual interests for the overall benefit of improving the investment environment of Japanese businesses, but there was who did that.

And there were people who supported his leadership. These cannot be done without the spirit of altruism. It is the invisible virtue of the people who dug the well.

That spirit has been carried on by the current executives of the Japanese Chamber, and under the leadership of the new chairman, the excellent contributions to the development of the economies of both China and Japan have continued beyond the interests of individual companies.

I sincerely hope that in the future, cooperation with Japanese businesses in various parts of China, the central and provincial governments in China, the Japanese business community, and the Japanese government will be further strengthened and that the hub function of the Japanese Chamber will contribute significantly to the further improvement of the investment environment and the economic development of both Japan and China.