"Korean Ioniq 5 Taxis Operating, Japan Now Investing... Companies Reluctant to Innovate"

Interview with Professor Aoshima Yaichi
"Japanese Companies Increase Profits Benefiting from Yen Depreciation
Corporate Reserves Exceed 500 Trillion Yen
Minimal Investment Hinders New Industry Development"

Professor Aoshima Yaichi of Hitotsubashi University in Japan is being interviewed on the 13th at Sogang University in Mapo-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

"Due to Abenomics, the operating profits of Japanese companies have surged. However, since companies are not investing their retained earnings into new industries, Japan's innovation is being delayed."

On the 13th, in an interview with Asia Economy, Yaichi Aoshima, a professor in the Department of Commerce (Business and Economics) at Hitotsubashi University in Japan, pointed out that Japanese companies benefiting from the weak yen induced by Abenomics are showing stingy investment behavior, preventing a virtuous cycle of funds throughout the Japanese economy.

Professor Aoshima explained, "Because the Japanese government injected money through Abenomics and induced a weak yen, export industries grew and corporate operating profits increased. As a result, the retained earnings of Japanese companies have exceeded 500 trillion yen (approximately 4516 trillion won)." According to statistics from the Japanese Ministry of Finance, last year, the retained earnings of large Japanese companies reached a record high of 511.4 trillion yen.

However, he added, "While corporate profits increased, the outstanding balance of government bonds held by the Bank of Japan (BOJ) rose to about 500 trillion yen," and evaluated, "It seems that companies earned profits equivalent to the amount of debt issued by the government." Japan has implemented a large-scale monetary easing policy of unlimited government bond purchases for 10 years, resulting in the BOJ's government bond holding ratio increasing to 53% (576 trillion yen) as of last March.

Professor Aoshima pointed out that, given Japan's industrial structure, such corporate behavior could affect the overall economy. He emphasized, "Japan's large companies possess both technology and talent," and "Since the resources they hold are not flowing into new industries, the venture and startup sectors are not growing significantly."

He believed that with the concentration of funds and human resources in companies, Japan should have had its own innovation momentum, but even that seems delayed. Professor Aoshima analyzed, "Nowadays, taxis in Korea also operate with electric vehicles like the Ioniq 5," and "Japan is searching for new revenue sources as Toyota belatedly invests in new industries (electric vehicles), but it seems to be a step behind."

He continued, "Although Japanese automobile companies are currently strong, given that the transition to electric vehicles is inevitable, it is questionable whether they can remain strong companies in the future."

Recently, the Kishida Fumio Cabinet announced a ‘New Capitalism Policy’ aimed at achieving a virtuous cycle of distribution and growth, as corporate profits have not spread throughout the market. Regarding this, Professor Aoshima said, "The basic stance of this policy is to maintain the framework of capitalism while also promoting distribution," and evaluated, "Although it is uncertain whether it will be effective, I view it positively as it aims to lead capitalism while reducing polarization."

This content was produced with the assistance of AI translation services.