Most Japanese companies have meanwhile reported their results for the  fiscal year ending March 2018. The figures speak a clear language. Sales of companies listed on the first section of the Tokyo Stock Exchange have increased by 8 percent, net profits are even up by 26 percent on average.

Many companies such as Toyota, Hitachi and even former black sheep Sony could report record figures. Export-oriented companies fared in particular well, helped by a relative weak yen. But cost reductions and strong overseas markets also contributed heavily to these brisk earnings.

While wages and salaries have continued to rise slightly, the overall feeling of the Japanese people is not that of record earnings. Public sentiment is merely stagnating and the willingness of consumers to spend is remaining stubbornly low. No good sign for a nation whose individual consumption stands for 60 percent of its gross domestic product.

Even the opinion-making newspaper Yomiuri is concerned and lamented the gap between corporate performance and public sentiment in its editorial yesterday. The Yomiuri is right in pushing the government to accelerate the implementation of its growth strategy and promotion of domestic investment.

Judging from experience, the well-noted gap will remain. There are three reasons for this out of which one is not at all negative.

First, there simply is little room for the Japanese economy to expand significantly while the population is shrinking and immigration remains strictly controlled.

Second, equal distribution of wealth was always a myth in Japan. The well-being of companies has always been prioritized over that of employees or the people at large. I would argue that there is a silent but clear consensus on that.

Third, most Japanese firms will continue to get better and improve efficiencies despite the state of the domestic economy. The built-in sense of urgency will prevent any lethargy over profits.

According to Toyota President Toyoda his firm and the entire industry face a “life-or-death battle” over the years to come. You find the same attitude at most Japanese companies regardless of record earnings or not. It is this urge for continuous improvement that will keep Japanese firms competitive globally.

This does not mean immediate benefits for the people back in Japan. But it could be much worse if Japanese firms did not have this hunger for lasting success.

Jochen Legewie

Jochen Legewie

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